SKZ - SKZ11 : 7 Things That Clicked When I Was Learning Bitcoin

Episode Date: June 30, 2023

In this episode, I cover 7 things that clicked for me in my journey of learning about bitcoin, especially when comparing it to other assets like fiat, stocks, and cryptocurrencies. Let me know if any of these resonated with you and what clicked for you as you were learning about bitcoin. NOTE: I recorded this while walking. I was walking on rocks for the first couple minutes but realized it was loud, so for the last 90% the audio should be decent. Suffer through and stay for the signal!

Hey everybody. My name is Joe. I'm a doctoral student studying clinical psychology. I also go by Alaska's. That's my Twitter handle. You can find me on Fountain at Laskees. And this is the SKZ podcast. This is actually attempt number two at this podcast. So let me explain. I'm visiting my in-laws. I'm just walking around in the backwoods in North Carolina. And I was about a minute to two minutes, into recording this. And I actually got chased by a dog. The dog got out of its owner's cage and or kind of its fence. I started chasing me. So I just turned around. I'm going back towards my in-law's house. Wish me luck on that. Hopefully I don't encounter any more dogs that get out of their fences. But no bites or anything. I haven't been bitten by a dog in the past. I won't get into

that now. Didn't get rabies or anything, but it was kind of scary. But yeah, I, If I'm out of breath during this, it's because I'm, well, I just got chased by a dog, and I'm out on a walk. And I figured, you know, I hadn't recorded in a while, and I'd just go for it. And I was thinking about something out of my walk, so I figured I'd just talk through it and see what you guys think. Oh, and by the way, if the audio quality of shit, then just let me know. And I could always re-record, you know, and you could listen to the rest of it with better

audio quality when I'm back home. But, yeah, I was thinking about kind of some of the stuff. the things that clicked for me while I was learning about Bitcoin. And of course, everyone's going to have different, you know, mental processes that kind of click for them and help them understand anything in life, really. But I figured I'd share the ones that clicked for me, see if that is kind of helpful for anyone else. And when I say clicked, it's just, it's kind of some aspect of Bitcoin made sense or the reason why, specifically I'd say the reason why it's different than other assets made sense based on kind of these things that click.

And I'm going to, it's not going to be super simple things like it being 21 million, because that, of course, I did see the importance of that and the finite supply, just more almost like the phrases that came to mine or things like that that really helped it kind of just cement in my brain and click. So yeah, that's what I'll be talking through today. and I wanted to start with comparing fiat and bitcoin. So six things total, two related to fiat, actually seven things total, two related to fiat, four related to shikcoins, because I mean shit coins are pretty easy to differentiate from bitcoin. And lastly, differentiating from stocks. So to start with fiat, the first thing that really clicked for me, help me understand why bitcoin is so important, is that.

that basically if money is printed or if money is created, it has to go somewhere, right? It doesn't just get kind of disappeared into the nether. I don't even know if I even thought about where it went, but I will say, I mean, several years ago back when I was in college, I was kind of like a Bernie bro. I think I've mentioned this before. But I mean, I was a fan of Bernie Sanders. I liked his ideas. I was kind of anti-big government or just anti-the-way.

the way the government was and kind of put my faith in someone who said they were going to change a lot and provide a lot more services to people, right? But I, you know, have come to a point within the last few years of just kind of apathy about government and just realizing I shouldn't put my trust in any politician because I don't think any of them really have our best interest at heart that'll actually kind of get to the next point. But I mean, they're everyone self-interested to extent, right? And if you're in a situation of power or a position of power, you're not going to just do the most perfectly virtuous thing. Or even if you were trying to, how are you going to actually execute that with all the bureaucracy and things like that? So, yeah, just realizing that the money that

gets printed, you know, with Bernie's policy, for example, I know that recently when there was the pandemic and a lot of money got printed, I think we ended up. doing like a one trillion dollar in the United States do like a one trillion dollar which is an insane amount of money but you know somewhere in the ballpark of one trillion dollars of stimulus to individuals of stimulus checks and you know to businesses things like that and i think that bernie proposed a plan or started with a plan that was 10 trillion dollars that was his proposal and i mean we're already getting a lot of inflation but imagine if we actually did 10 trillion instead of you know one to two trillion or whatever I ended up actually being.

But, and I forget if this was the stimulus or if it was like kind of the built back bed or Biden plan, you know, it all kind of blends together. But within the last couple years, one of those kind of government packages, infrastructure bill might have been that. But anyways, just thinking like, okay, that money that's created, it has to go somewhere. And basically, it's inevitably going to go into one of two places or essentially, both, you know, almost necessarily it goes to both. But the two places would be either going to inflation, right? So for example, with stimulus checks, okay, that's more money for

people. I'm actually not super opposed to stimulus checks just on their face because it is somewhat equal in a sense of everyone is getting some money. So if everyone's taxed, everyone gets the money back, it's like, well, you know, it's almost like a tax refund or something like that. I'm sure you could find flaws with it. Yada, yada, yada. But anyways, in its core, it's like, okay, it's kind of evenly distributing the money. So in a sense, there's some benefits to that. But, you know, that's going to give people more purchasing power and it'll lead to inflation or, again, essentially another form of inflation would be what I would call like dis-deflation. So if there would have been deflation or things would

have got cheaper because people weren't making as much money and therefore people weren't spending as much money. I mean, we have, this is another thing I didn't really put on my list, but we have this kind of belief deep in our society that the number always has to go up, right? That's why people get into Bitcoin is because a number grow up technology. But we believe that businesses, their stock value always has to go up. And while price is going up, that's just kind of part of life. It's, you know, inflation equals growth. I know some people kind of called out the kind of precariousness of using the term growth. But yeah, I mean, we have this belief that if prices go down, that's a bad thing.

But in reality, you know, if you listen to Jeff Boov, and I believe in that really deflation is the way that history has gone and the way that we move forward as a society. I mean, if you think like we used to have to spend 100% of our time and energy and money, basically. Well, money is kind of a proxy for timer energy. But we had to spend like 100% of that being farmers, right, to just do subsistence farming. But now, I mean, I can spend 50 bucks a week at a grocery store for my wife and I to eat pretty well. And that's maybe, I'm just ballparking. I don't really know the exact percent. But let's say that's like 1% of what we make. So we basically went from we had like 99% deflation in food prices because we used to spend 100% of our time

and energy on it now we can spend like 1% if you're really frugal um so yeah but anyways our natural course of history is deflation but we're convinced the other way um so i'm kind of off on tangent this is another thing that kind of clicked for me is that inflation versus deflation that i didn't put on the list but when i'm talking about money printing i mean okay so deflation isn't actually that bad, but we think it's bad. So we had to give everyone money to be dis-deflationary, as in less deflationary than it would have been. So maybe it goes, you know, prices go down 1% instead of going down 5%. And the central bank thinks that's great. But yeah, I mean, it's still kind of just slowing down that, in a sense, progress as a society of things

getting cheaper. And the other place, so I was, you know, the main point I was trying to get to was that there are two places money printing go. It can either go to inflation, as in price is going up because people have more money, they're spending it, or it can go to unearned wealth inequality. Now, I know a lot of people would emphasize, and that's why I said unearned, a lot of people would emphasize that wealth inequality will always be with us, right? wealth inequality isn't necessarily a bad thing. We might say, you know, a quality of opportunity is a bad thing because if someone's just completely screwed over, they're, you know, born a slave or something like that and they just, there's no way to get out of it. That sucks and that's

completely unfair. But if people had generally similar opportunities, one person ended up earning more money than another person, then, you know, that's just the way the world goes. And that's always going to be with us. But the reason why I emphasize it's unearned wealth and equality, is because of the fact that people who are closer to the money printer end up getting a higher percentage of that. Or, you know, ultimately the government is creating the money and getting to decide where it goes. So, you know, the things that government is most interested in is going to get the money. And it's not necessarily just kind of earned by someone, you know, using their potential, using their energy, using their time to earn more money than someone else.

So ultimately, the main point is that money printing has to go somewhere, right? It's either inflation or unearned wealth inequality, and in reality, it's almost always both. So next, this is comparing Bitcoin to Fiat still in terms of just things that really clicked for me, is that when someone's in power, this thing about kind of central bankers, you know, the Fed, when someone's in power, the only options that they have with power are corruption or incompetence, right? And a common thing people say is that absolute power corrupts absolutely.

And, you know, even that didn't really click for me in a sense before this or thinking through this, but absolute power, you know, I used to think that, okay, if you have absolute power, you're going to be tempted by things, you're going to end up being an asshole. But it's even less of that. And this is something Peter Saint-Ange said, I think on the TFC podcast. He's probably said other people. places, but really, if you are in power over someone else, then you don't really fully understand that person's wants and needs, especially if it's someone you live in D.C. and someone lives

in California or someone lives in New Mexico or something, you don't really fully understand their needs, right? So someone saying, okay, I can decide the price of money or, you know, interest rates, things like that, because I, you know, think this is going to be better for society. Well, even if you have the best intentions, then you're going to be incompetent because you're not fully understanding the whole system. No one does, right? So that's why free markets are so important because free markets kind of use that collective intelligence of everyone, having different wants and needs, being willing to pay different prices for things. And then we kind of, have the economy the way it is based on that, right? But if there's people who think they can

centrally plan, then it's not like they're all pure evil. It's just that like the only options are corruption or incompetence, right? Even if you're not corrupt, even, which I don't necessarily believe central bankers aren't corrupt, but even if you aren't corrupt, even if you have the best intention, then the only other option other than corruption is incompetence because you don't understand someone else's wants and needs, especially when you're trying to do, you know, the whole world or 330 million or just estate, anything like that. So let me actually jump to the one for stocks because it kind of bounces off of that one pretty well.

But I was mentioning kind of the free market using this collective intelligence, right, to price things because everyone has different wants and needs. They're all willing to pay different amounts for things. But when it comes to stocks, now a lot of people say, you know, the stock market or any market, you know, there's this collective intelligence. intelligence that leads to the price. So if a certain, you know, Microsoft is, I think it's worth 200, you think it's worth 300, then the equilibrium price would be 250. We would trade there, you know? Or if there's, you know, 99 people who think of 300, I think it's 200. Well, the price might actually be 299. And I think I'm getting a huge discount, but maybe 300 people are more right and they're getting, you know, a $1 deal by buying it for $299. So anyways,

We think it's this collective intelligence, which it would be in a free market, right? But I really think, and I don't know if I've gotten this idea from someone, I'm sure it's kind of slipped in for multiple different people talking about the stock market. But the idea that really clicked for me and I've come to is that I don't think the stock market actually is kind of run by collective intelligence. I actually think it's collective naivete. And the reason I say that is because basically, everyone in the country kind of wants to own stocks. Now, that's an overstatement, right? Because only about 50, I don't remember the exact numbers. I think it's like around 40 some

percent of Americans don't have any kind of investable assets. So we're talking Bitcoin, cryptocurrencies, stocks, real estate, bonds, whatever it is. They're just living off their savings, right? So those are the people who really get screwed by inflation. But, Anyways, where was that going with that? Oh, with the collective intelligence. So we think it's collective intelligence, right? But everyone who's, you know, earning a good amount of money, they have enough to put away for retirement.

They're told as part of the collective wisdom, you know, or the conventional wisdom, I mean, that they should put it in the stock market. Oh, but you're too dumb. No one sells you this. But honestly, I kind of told myself this, right? is that, oh, you're too dumb to, like, trade or, like, you're too dumb to pick stocks. No one does that.

So you just put it in an index fund that, you know, is set for your retirement year. Or you put it in a mutual fund or, you know, an ETF, something like that. And I think that leads to the thing to be way overvalue because no one's, you know, if everyone has all this money in their retirement account and it's just tied up in the stock market, because, and no one tells them the part or clarifies the part that, well, the reason why you're doing that is because if you just have it in savings, it's going to get inflated away. You're not going to be able to buy your dream house or be able to live off your savings for retirement.

You need to put it in the stock market. So I think that basically every stock is overvalued because of that. I'm not an expert, so I can't tell you by how much. But that's just my idea that that's the thing that click through there of Bitcoin versus stocks is that I think the stock market is really. You know, we think it's collective intelligence, but it's really more collective naivete. Now, you could maybe say the same thing about Bitcoin, right? Of, okay, I told some of my siblings to put money in Bitcoin.

They don't really fully understand that they just ape in, right? But those are the people that would get shaken out when there's, you know, a 90% drawdown versus the people who really understand Bitcoin, have that collective intelligence. Or so the people that understand this value properties compared to these other assets and want to hold it. Now, those are the two for Fiat, one for stocks. And just while we're on stocks, I will say that I really still kind of struggle with comparing Bitcoin of stocks when people ask me.

I have a friend's parent who I have to talk about Bitcoin when I visit them. And, you know, that's his big thing is that, well, if Bitcoin is going to cause this kind of renaissance, if you will, then all these things. stocks are going to go up too, so I don't really need to buy Bitcoin. I can just stay in my stocks. So if anyone has any other thoughts, do a boost of grammar, any kind of comment, let me know what your thoughts are on Bitcoin versus stocks, because I'd love to have kind of more of those things that help it click for me, and I can help it click for other people. But moving on to shit coins, I got four things listed here that really, you know, I went through

a shit coin phase. I think I never had more than, you know, 20% of my quote-c Crypto-port portfolio in shit coins versus I always had like at least 80% Bitcoin. Couldn't really give you the exact numbers.

But now I'm, you know, in terms of Bitcoin exposure, or quote unquote crypto exposure, I know we think Bitcoin's different than I agree with that,

but in terms of that exposure, it's all Bitcoin is not in any of these different shit coins. But speaking of shit coins, one thing that really clicked for me is when I heard about on a YouTube video, the Coinbase effect.

And I don't know if it's specifically named that but that's what I remember it as. But the coin-based effect is basically this occurrence where if a coin or, you know, a cryptocurrency is listed on Coinbase, then it has a big price increase. And they might not mention this, but then it has a big price decrease, right? And this is because it's, once it's listed on Bitcoin Base, then it's exposed to all these new people. They kind of 8-bin without understanding it. And then, once I've understood this part is what clicked, is that VC's venture capitalists

were just dumping their, you know, pre-mined coins on these people and making a bunch of money. That's why the price went down. So when I heard about the coin-based effect, researched it, that's one of the things that clicked. And just realizing that most cryptos have, you know, 70% pre-mines that is allocated to VCs, and they can dump that on retail. So that's one of the things that clicked for me. Next one is I think this clicked for me with Safedines book, the Bitcoin Standard, and just thinking about the blockchain versus Bitcoin or whatever you want to say there,

but just thinking about how there's really no use for the blockchain other than money. Now, the number one thing that kind of clicks for me here is with NFTs, right? Okay, there's all these little, people talk about skins for gaming, things, like that. It's like, okay, any kind of cryptocurrency that you're going to have it on, and this is kind of the next, this gets into the next point of Bitcoin versus crypto, but, or Bitcoin versus shitcoin specifically, which is everything else, basically. But, uh, in terms of NFTs, okay, as a gamer, I can at least have some understanding of why people would want and ifts, I don't own any myself, but you could say, oh, well, you know, you know,

know with NFTs, you could have like a unique skin in a game or something like that. But once you realize that all these other cryptocurrencies are either super centralized already or moving in that direction of becoming more centralized, then like why would you want to own it on this thing that probably has some fees, even if they're not super high. But Ethereum, we know, still has super high fees. But why would you want to do it on this thing that has fees? Or, you know, people say, oh, it's the gas versus Bitcoin mean currency. Ethereum's the gas, which, I don't know, why do you need its own currency if it's gas?

But that's a different, a whole different discussion. But anyways, with NFTs, it's like, why would we need it on the centralized blockchain that's slower and has some fees associated versus if I just have it on my like Microsoft account, which, okay, you know, it's still centralized, but, you know, it's going to be like fee free if I want to trade it to my brother who also has a Microsoft account because, you know, if the other blockchains are centralized anyways, then you're not like losing anything by doing Microsoft instead of a blockchain. That's not Bitcoin. So anyways, just that clicking for me of like, I'd rather, if I ever wanted an NFT of some sort, I'd way rather own it on Microsoft or

World Warcraft or something versus like on some blockchain that honestly might become outdated or irrelevant in a few years. So I got two more things related to things that kind of click for me with Bitcoin versus shit coins. Next one is this idea that decentralization is a spectrum. Now, I couldn't tell you who the guest was, but this was a year or two ago on what Bitcoin did, Peter McCormack's podcast. there was this guest on who, well, there might have been multiple guests, honestly,

but they were talking about kind of decentralization and centralization being a spectrum. And Peter was saying, no, that's, it's really more black or white. And I think he was arguing that just in terms of people use this idea, oh, decentralization is a spectrum to say, well, okay, of course, Bitcoin is more decentralized than we are. But there's, you know, 100 different nodes here. So that's pretty decentralized. So our, you know, our cryptocurrency, Ethereum or whatever it is, is, you know, decentralized enough. And it's kind of a spectrum, and we're not as decentralized as Bitcoin.

But one of the things that clicks for me, I will say, I do think decentralization is a spectrum. Like if you just had to ask me, because I think most things in life are a spectrum, right? If there's 10 nodes, that's more decentralized than one, but maybe not very much. But anyways, I think one thing that's stuff for me that Peter mentioned in this regard is really it matters your direction, the way you're moving. And I think Bitcoin is always moving towards being more decentralized because, you know, for example, in the block size wars, when there was a question of should we increase the block size, but that'll decrease centralization or, you know, increase centralization or decrease decentralization because fewer people would be able to run nodes. the one that kind of won out is the one that can run more nodes, which is just Bitcoin not Bitcoin Cash, versus anything that's proof of stake, which obviously includes Ethereum now, is moving towards centralization because it's basically recreating our current financial system

where people who are rich can stake their money, quote unquote, or tie it up and get money back for it, versus, you know, proof of work, you have to actually spend money to be able to mine Bitcoin and use energy that's connected to the real world. It's not just all, you know, you have like Lido and five other Ethereum, you know, services or whatever having like basically all staking going on. I'm not a big expert. I haven't really followed Ethereum in a while, but that's my understanding. I'm sure someone could argue it better than me. But those, anything that's proof of I would argue is moving closer to centralization versus Bitcoin is always moving toward decentralization. So that's one of the things that clicked for me.

The last thing is, and it kind of goes back to this idea of no use for blockchain, but I guess the sentence that clicked for me is if you have a business idea, then why would you need to invent your own currency related to it, right? And honestly, I think this kind of goes on with stocks too, right? some stocks, you know, increase their supply or decrease their supply or give more out to employees versus other stocks, you know, as incentives. So stocks are kind of their own currency that the CEO or CFO or the board, they're kind of like setting a monetary policy, which I don't really like about stocks. But anyways, shitcoins are obviously a lot worse about this.

They, you know, I remember this is honestly the day that it clicked for me is I had a friend who we were both kind of into crypto, I will say. And he was definitely more the crypto bro. I was the guy who was like, I'll dabble in this, but I'm mostly Bitcoin. And I remember he showed me one called Bankor. And I was like, he was like, oh, I saw you. It was Bit Boy Crypto, right? Which I'm sure BitBoy was just pumping his own bags with this.

But he saw a Bitboy video talking about this bankor coin, like B-A-N-C-O-R. And I was like, okay, let me check this out for you just to look into it. I saw that it has like a 50% inflation rate per year or something, like for the foreseeable future. And I just committed that out to me and I'm like, do you really want to be in a currency that has a 50% inflation rate? Like, how are you going to make any money on that? And there was another one. I want to say it was like pancake swap or something like that where I remember you could earn 100% interest if you like staked it here or whatever. I'm like, oh, that sounds really good.

But that means the inflation rate must be at least 100%, right? If they're paying out 100%, I didn't look into it that deeply. But yeah, it's just that idea like all these coins, why do you need to create a coin that has its own monetary policy? When there's already Bitcoin that has an unchanging monetary policy and it just is what it is, it's set in stone. If you want to have, if you have a business idea, you know what, even if it is selling NFTs, which, you know, some ordnals or whatever,

honestly, I'm fine with that. I mean, like, just it's built on Bitcoin and it's selling NFTs. It's selling a product using Bitcoin in a sense. I know there's more nuance to them with the data usage and stuff like that. But like, to me, it's, well, okay, it's another product that you can buy on Bitcoin. You know, there's plenty of products I'm never going to buy, like, I don't know, makeup or something. I'm a guy, right? So I don't need to buy makeup.

But if someone wants to buy makeup using Bitcoin, that's great. I'm good on them. I'm probably never going to buy. buy an NFC, but someone's going to buy an NFC on Bitcoin. Good on them. They're using Bitcoin to buy it versus some shit coin or something. So anyways, that was kind of a tangent there, but the basic idea is that if you have this business idea, such as selling NFTs, why not do it on Bitcoin versus doing it on some stupid shit coin that has its own monetary policy that, you know, the 100 people on a Discord for Solana or whatever can all change the monetary policy if they want to. Or if the Talek really wants something. I'm sure it will change. Another mini thing that kind of click for me, I didn't include it on the list that is that if you have a roadmap and you're not decentralized, right? So Ethereum that has this roadmap of, okay, we're going to change this way in 2024. We're going to have this upgrade in 2025.

If you have that, then there's some central party coming up with that roadmap. So it's not decentralized. So I don't understand how any cryptocurrency, it's just false advertising to say it's decentralized other than Bitcoin. So anyways, that's what I got for you today. That's the list of different things that clicked for me. So just to kind of read them through to summarize, the two that clicked for me for Fiat, money predicting has to go somewhere,

and it's either inflation or unearned wealth inequality. Number two is the only options with power are corruption or incompetence. When it comes to stocks, collective intelligence has turned into collective naivete. And when it comes to shit coins, before the coin-based effect, the no use for blockchain other than for money,

decentralized as a spectrum, and if you have a business idea, why invent your own currency related to that business idea? So anyways, this is kind of a longer episode. I wasn't sure if it was going to be longer or shorter, but I think I kind of went on some tangents. But let me know if you enjoy this one. It's a little different than my previous episodes,

the audio quality might be worse. Didn't get chased by a dog for the last 29 minutes, which is really great. and I'm going to try to avoid that area when I'm walking back. So anyways, I hope that you enjoy this and please leave me a boost and a comment. If you have any thoughts or if there's anything that clicked for you based on this video, or if you have other things, especially in the stocks category, that could kind of help it click for you.

I didn't go over bonds, so you could go over bonds if you want to or any kind of other asset class I'm not thinking of. I guess I didn't cover gold too. That's another good one. So if you have any ideas of how Bitcoin is differentiated from these other asset classes. Leave it in the comments. I'd be happy to read it in the next episode. And I actually forgot to mention this, but I think, I don't know if the name is pronounced Pius, or if it's Margo Paias, basically, but P-I-E-Z on the fountain app left me a boost. I'm not looking at it right now. As I said, I'm out on a walk, but I think she said

something about this being Signal, and this is the way what she's been doing on. a lot of podcasts such as what Bitcoin did and, you know, Marnie Bent and Matt O'Dell's podcasts. So I really appreciate you for leaving me a boost. Anyone else who leaves a boost, I'd be happy to shout you out on a future episode, especially for this one because I think this could be more interactive and you could, you know, give me some feedback on it. So let me know and have a great rest of your day.