TFTC: A Bitcoin Podcast - #142: Elisabeth Préfontaine

Episode Date: March 24, 2020

Join Marty as he sits down with Elisabeth Préfontaine, founder of Octonomics, to discuss: - Elisabeth's experience in the banking + financial worlds - Problems with transparency in the traditional financial world - Bad incentives in the traditional financial system - Why Bitcoin only? - How Quebec messed up their opportunity to court bitcoin entrepreneurs - Defining Bitcoin - Why bitcoin isn't a security - PC creep into the boardroom - much more Shoutout to this week's sponsors. Cash App. Start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse you download the app.

What's up, freaks? It's your boy Marty here to introduce this episode of Tales from the Crypt. I had the immense pleasure of sitting down with Elizabeth Prefontaine, who's been putting out some incredible content pertaining to Bitcoin on her blog, Octonomics. We had a far-ranging conversation about her experience in the analog banking world before it went very digital. She started working, I believe, when she was 11, if I recall correctly, and has a lot of experience in the traditional finance world, particularly in Canada and Montreal, and has a lot of unique insights into the lack of transparency within the banking and financial industry, particularly in Canada. the analog nature of the traditional systems and how they compare to Bitcoin and how Bitcoin is just a huge inflection point in terms of tech and philosophy

of how the system shall be run. We should be run, shall be run. We also talk about political correctness leaking into the boardroom and a bunch of other stuff including how to define Bitcoin or why you should not attempt to define Bitcoin as anything other than a scarce information space and messaging system. It is free speech at the end of the day.

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you're going to get ten dollars and ten dollars going to go to our good friends at owls lacrosse spread the word about this right if you have friends that don't have the cash out they're not listening tell them to use the code stacking stats too because ten dollars going to them and then to owls lacrosse it's just great it's a great cause owls lacrosse download the cash app from your local app store today please enjoy this episode with elizabeth prefontaine i know i certainly did okay You've had a dynamic where money's become freer than free.

When you talk about a Fed just gone nuts. All the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. What is up, freaks? Welcome back to Tales from the Crypt. It's your boy Marty Bent here for another quarantine episode of Tales from the Crypt.

Getting acclimated to the remote interviews. I prefer to do these in person. My guest today, we were scheduled to meet in person, but the virus got in the way and we are both speaking from home now. I'd like to introduce you freaks to Elizabeth Prefontaine, founder of Octonomics, and just a Bitcoiner that's hopped on my radar recently, has been putting out some incredible content on her blog by the name Octonomics. She's been syndicating that on the Knox blog as well. So Elizabeth, I think we should start basically just getting to know you a little bit more. What were you doing before Bitcoin and how did you find Bitcoin?

It's a pleasure to meet with you and to your audience. In a nutshell, I started working at 11 years old. So I had my first steady job at 11 years old. So I got acquainted with financial independence quite early on. I kept it until I was 14 and then started working in the financial service industry at 17. So I was a cashier in a bank branch where I'm therefore old enough to have cashed a physical coupon bond in a bank branch. It happened only once. But also I have seen all the banking before internet was even a thing.

And yet I'm young enough to have picked on Bitcoin. So there's a lot of financial technology innovation in between. And there were lots of parallels when I've discovered Bitcoin in the boiling ecosystem that made me go back in time into the thing of internet banking and online banking and virtual banking. You know, when it was cool at the time. So there was parallels there. So the background is 25 years of financial service industry experience, including online banking, capital markets, swaps, swaps, derivatives, swaps and bonds, and also investments such as edge funds and ETFs. Wow. Started working at 11.

That's awesome. mm-hmm um and i think we can dive in here particularly you recently spent two years i believe attempting to start a fintech startup and really became acquainted with the the rough world of regulations and trying to create new financial technologies within the incumbent financial system uh the the name of the app was escaping me right now great i didn't spend two years i say in in fintech startup i understood something very quick is fail fast by testing the most difficult assumption first and is what i did but i i wish rate of was a was a failed uh business because at least i could have learned something

And the only takeaway from Rative I was able to get is how profoundly corrupt the financial system industry is. That was really my last attempt at making things right for the end customer by increasing drastic transparency on the financial service industry. And then I got to realize very quickly that incumbents, regulators, nobody has interest in transparency. And they can cherry pick innovators. they can literally chip so i so that's why uh when you have permissioned innovation it's a no-go like there's no there's no innovation and uh i found i grew very frustrated by them because if if you're not able to have transparency on the very job you're selling project essentially what rated was about is i wanted to know who are the best investment advisors

not with words with numbers they are finance professional portraying themselves as money managers and institutional money managers have statistics but retail advisors like wirehouses rias there's no there's no statistics where you from from an end customer point of view okay where do i rank versus my peers not in blah blah blah but in art truth mathematical statistical basic quantitative methods. And I grew very upset with the local market. I'm in Canada. So there are only six banks and 85% of wealth is controlled by a small number of institutions. So after you've knocked at four or five doors, that's it. Like there's, you are not building. Screw you. And then, and then even don't try to look at this globally. It's just not happening. Oh, that was

It's my short, fast, failed attempt at trying to make a legacy-style fintech business. What were some of the particular pain points that you ran into? Obviously, you said the incumbent industry doesn't want to be transparent, and it's sort of hard to become a member of the club. uh what what do you think this is just a product of complacency in the r.i.a r.i.a space particularly they're they're able to just put things on cruise control and and assist off fees for a while you think it's just well r.i.a's i think are have a good gig because they're registered independent advisor okay and i think that they are out that they have uh potentially more leeway in terms of venturing into really portfolio management and they don't have like this big wire houses pre-selecting

pre-selecting products however the requirements to become an ria versus the canadian equivalent is much lower in the u.s the point is perhaps you're a superstar at managing money perhaps you're not but there's no way of there's no way of knowing it so the the the roadblocks were that you need to ask permission to have access to the data and then there's the to have to empower and cost and customers so really i've tried to launch it in in the in canada and it is the the canonical answer was not a strategic priority well how can knowing if you're doing your job well that the job that people are paying you for not being a strategic priority this should be there from the base layer design and so they're just making money of people's money without any accountability

and they they deserve way they they have way too much trust placed in them for really uh what it is and i i um i i stumbled onto the complacency uh at the outside the regulator where this says bah if banks don't have to do it they won't do it it's okay well wait wait a minute who's who's looking at who's looking at the end customer here no one and then there was a technological roadblock I think just within the institutions themselves sharing information sharing data is complicated and then you have all those say it's a bit it's it's an IT infrastructure that was built before the internet it's it felt not suited for the internet anymore and it's just like there's a financial

institution in Canada here that has 4,500 people working in the IT department and And it's a small, it's a small institution, 4,500 people working for the IT department. And yet their entire database has been leaked for $500 worth of chicken delivery gift card. It's a big joke. It's a big joke. Like this represents like 50% of Quebec people's identity

have been breached in that single event. And yet they're not able to compute a standard deviation an investment account. It's ridiculous. That's insane. And we're actually, the pain points of the incumbent financial system built on tech from the 70s and 80s has really come to light now as people are being forced to work from home. And a lot of these trading desks have a lot of manual processes that they have to handle in-house, back office processes that people need to physically be at the office by the uh the infrastructure the the servers to to actually settle this stuff at the end of the day it's not built for for a work from home

internet age um so i guess how do you did your experience uh with attempting to make this fintech product sort of push you to search for alternatives and that's how you find bitcoin was bitcoin on radar before this it was it wasn't the radar at the same time i met someone i i volunteered for three years at the technological innovation advisory committee of the local regulator to uh bring the perspective of uh non-bank owned fintech uh and i met someone there who introduced me to to bitcoin so i had already it got onto my radar uh three years ago and he He essentially showed me how it worked. At the same time, I was trying my last attempt in the legacy system.

When I saw that, I saw Bitcoin, it reminded me of an experience I had in the 1990s. I was part of M-Banks, which was Bank of Montreal's attempt to become the first virtual bank in the world. Like we're in 1996, 1997. and it was a all cool beautiful website a very uh avant-garde and uh it totally failed so that's why people never never heard never heard about it it was too ahead of time and there was there was um a beautiful front end but no back end and i remember and i remember and i remember that so when i saw when i saw bitcoin uh i i did not understand it at all at first like he he did the transaction he showed me and I said, I don't understand it all.

I don't see a glossy website, but I see a tech that's working. And if there's only 10% of what you're telling me, that's true. This is huge. This is huge. And then I started just peeling and peeling and digging and understanding the various, the various aspects. And, and I am profoundly grateful for, for, for Bitcoin. I'm profoundly grateful. I'm grateful that it exists.

And I saw Earth connected, like the people on Earth connected through the censorship-resistant, borderless technology that cannot be stopped. And I was enlightened and hopeful because of it. because I clearly see that the previous previous system doesn't provide the as as reaches end of his useful life in a sense but that was before I understood money and that was before I understood money that's just the technological infrastructure and then as a as a finance highly trained finance professional I'd say a parrot in the end right we all really really well versed into repeating what i was supposed to repeat and spitting out formulas on piece of paper i started studying other other perspective and that other perspective i wondered why this was not available

in my school courses uh and it made much more sense to me but i had to de-learn and relearn stuff so that's why i think finance professional in general are at a disadvantage when it comes to learning bitcoin yeah i know somebody was in finance uh as well there was definitely a lot of deprogramming somebody studied economics in college and was was force-fed the neoliberal keynesian view of the world there was definitely some deprogramming that was necessary and so what were the steps that you took to understand money like how how did this understanding happen for you uh reading uh nick zappos is shelling out the origin was uh was one of them i really enjoyed also um the primer on austrian economics uh i i listened i i read the the bitcoin standard

by safety namus uh and it just just started to reflect and they went when you think that the when you think that a sip of scotch can be money into the right into the right circumstance then you have a different forgot the barter ability and then just re-looking at things differently the debasement, the monetary policy

the central banks and so on and so forth yeah it's crazy that we're born into this world we're taught that it runs a certain way and then the most important tool I would argue money and monetary good is a

tool at the end of the day nobody really understands and that that's what was one of the most enlightening things for me about learning about bitcoin was oh my gosh people don't even understand money and that's all they care about there was a there was a phd economist uh uh and and teacher okay locally who wrote an opinion piece in the paper two years ago and he said he's a phd economist and he teaches to people he said twenty dollars will twenty dollars will always be twenty dollars should it be in one three five ten years because it's backed by the bank of canada i was like what what what are you saying like it's just absurd absurdity and the bank of canada sold all of its gold reserves slowly over time too correct oh it's just a passage to passage

the printing and now just just look at how much food you were about to buy in the 70s with 20 dollars and what what 20 buys today is just just that you see that it's a denominal versus real and so i was just shocked that an economist with the well-paid the state-funded the pension fund would be allowed to to uh say such an opinion that's absolutely false yeah it's not even opinion it's just a falsehood there's a falsehood yeah yeah a credible a credible mainstream media opinion falsehood yeah well that's the other beauty of bitcoin it's it's helping us realize that there are a bunch of intellectual yet idiots out there they really don't understand what they're talking about and that is i think what you're getting to in the beginning of this

episode when you're describing your your experience trying to start a startup within this system is that people really don't care and they're sort of a strong incentive for cognitive dissonance that just hey this is working for me up to this point it's working well don't don't ruin it for me um i don't care i don't care about the uh the the actual integrity of the system but let me be good and virtue and signal virtue by saying that i'm inclusive of diversity we've got the women on board we look like the ymca we are good people but no don't don't don't stick out don't be different don't try stuff it's permissioned innovation let's just be contained ask permission and then we'll we'll grant you if you wanted to to do it like play play with us and uh that's just

not that's just not how innovation can occur and and and bitcoin is um is permission less innovation you didn't ask obviously that when you when you look i think when you look look back at what happened uh need to be grateful of all the those years of research and development that that led to that there are like when you read the stuff like a crypto manifesto and they're very very forward-thinking people of 10 20 30 years ago uh very grateful for the all the rnd and the thought process they they went through and i think that everybody that ends up in bitcoin has his own little story all own little angle but the the important thing is that we that that it exists that it exists and it allows us to be connected with that bitcoin is and that is enough

and like i was saying earlier you've just hopped on my radar um more recently because of the content you've been putting out which has been incredible thank you for producing it uh and And one of one of one of the best piece pieces you put out, which I think we should dive into, is why Bitcoin is not a security. And it's basically just a good article to send individuals who think it may be security and describing why Bitcoin is special. you don't really come out and say it outright I don't believe in the article but you describe Bitcoin's immaculate inception and how it's probably impossible

to replicate via Bitcoin 2.0 3.0 at this point because any further iteration is going to be centralized well the object it was to put some context last year the Canadian

Securities Regulator wanted to Canadian Securities Regulator and IROC, which is a self-regulated organization, well, essentially the banks, bank regulator, securities regulator, a proposal where they wanted to regulate a crypto asset platform. But they are not, they, it looked like a regulatory, regulatory capture. That's really what it looked like. And they were purposely bundling everything together.

And they were putting Bitcoin with all the cryptocurrencies, crypto asset, crypto kitty, all the shit coinery. They were putting all that together. And the other cryptocurrencies that are indeed securities, I'll carve out a little something for them in the sense that I don't see value in that. But that's people who want to remove all the scammers and stuff. I think the only positive message that was sent there is, hey, we're trying to get organized globally to raise global crowdfunding. I think that's what the message was. But it was completely missing what the technology is. And I don't see value in it.

But regulators and the bankers and the blockchainers wanted it to be a thing. And I saw that, Canadians, I knew that what the regulators wanted to do would change nothing to Bitcoin. it would do nothing to bitcoin the only people who would be armed are the canadian canadian people who would have lower services lower development this that's the only thing they would achieve so that's why i i wrote i took personal time to write a long piece of which the article is an is an extract to to demonstrate that bitcoin is just not under their turf like it's just not in their regime they have no business in in doing that and the more you dig into bitcoin and my article was not trying to define what bitcoin is i'm just way too humble and i will uh i would not

attempt to to to define it but rather to explain why it is not the security and therefore not under securities securities regulator and uh i think even if they were to put it as a security which it's demonstrated, and even the Securities Exchange Commission said it's not, the only thing they would achieve is to stall local development and stall people and just

further make other jurisdictions benefit from that development. We as Canadians would be the net losers of that. Yeah, you'd be on the wrong side of the jurisdictional

arbitrage that's playing out yeah and it's a pure it's a pure emotional reaction that they're doing it's it's a pure because there was a quadriga cx like an exchange a guy uh went to die on whatever the story was like e e e um 250 million this vanished right and so regulators we need to do something about this well that's that's an emotional reaction because if you don't understand the technology you're dealing with you don't understand the differences and you you think that fraud or if if regulators think that fraud or incompetence can be regulated away they're stupid right both fraud is fraud by definition it's already illegal by a code of law right and incompetence cannot be regulated against because that would mean like cannibalizing themselves

all right and instances like this uh really highlight the need for education i mean the need for education bitcoin is basically an alien technology and people are so used to the incumbent system where again there's centralized control and there's ways to to get your money back if if fraud does happen but the nature of bitcoin being a digital bear asset really uh should force people to to rethink how they interact with this system particularly but they just assume uh that it acts like the traditional system and so there's there's a level of education needed to to get people to a certain point to have an aha moment and understand this well i think also that uh if we go back at one of the key characteristics of bitcoin is that

it's uh it's one way it's forward there's no there's no charge back right you cannot you cannot reverse a transaction and and and you are about to do that digitally without um an independent third party and that's not sufficiently appreciated uh when you because um i will come in Canadian credit cards but here if there's a fraud on your credit card you get reimbursed right yeah so good job to him to make people more responsible oh no it's okay if say I'll be I'll be reimbursed well everybody pays those those frauds right it's passed by by the banks and the merchant and the fees and say we we all everybody pays everybody that uses a credit card the piece for

that because it's put in the merchant price the merchant price increases the goods or services sells and so on so forth so when you think that all those identity breach that have been that didn't name it there's been so much identity identity breach our credit card model is still holding up so back what does Bitcoin on like it's an uncensorable one-way no charge back payment and just for that component I think is is a who s like it's a very important characteristic and people focus on the the price swing prices is not completely irrelevant because it's part of the financial incentivization we

all like to know that there's sufficient ashing power backing the security and so on so forth but I think there's been a misplaced attention on on the price and not enough on what it does no uh and it's hard we're humans right we're we're uh addicted to short term especially in in in today's day and age where we live on consumerism and short-term thinking and uh we're in a high velocity trash economy the price swings are really grab people's attention but like you were mentioning the innovation of bitcoin being a push system and not a pull system is massive and as somebody who's been in the financial sector for almost 30 years now how does this change people's interactions with with merchants with

potential banks in the future how does this empower or disadvantage people potentially in this new system well i i think that uh right right now the tradition the legacy system still functions right it's still it still operates uh decently well and there's the understanding of the the value of money and the printing so we'll leave that aside but so far people are able to wire by by email they're able to use their credit card they're able to use atm but the it's the the what if what if i don't have access to that and what we've seen recently if i look at the financial market um you've and i compare with bitcoin no central bank intervention they didn't

it's a bitcoin during all that turmoil no central bank intervention no short no short circuit no stock no stock market closure uh operated the 24 7 365 does exactly what it's supposed what it's supposed to do uh without uh repo without etc etc so i think it's severely under underappreciated how much the legacy system needs plumbing fixing and interventions interventions intervention that started way before corona like the the repo market the repo market was hiccuping since uh last fall right so these these were and and the curve invest the curve inversed like i think 12 months ago so these these were all signals signals ahead of time so more more more more more more more intervention bitcoin beautiful does what it's supposed to do

yes other than the price nothing nothing has changed it does exactly what it's supposed to do so what it changes for for consumer merchant adoption uh i think that there's a an education curve um for uh an individual people to understand how it works and uh i try to do that as much as possible they locally they know people know that i support and accept bitcoin i help with showing transaction where to buy and to want to onboard people but it's still seen as great it's still seen as crazy it is still seen as crazy it is it is still very early but i think it is important to circle back on the fact that interventions have been happening pretty aggressively since last fall with the repo markets particularly uh a lot of people are going to blame

coronavirus on this big slowdown and the market failure where it really is just a spark that lit a bunch of fuel that's been building up for for quite some time um convenient culprit excuse me convenient convenient culprit yes exactly and that's one thing it's on my mind right now is is how do we like a lot of people are going to blame corona how do we how do we get through to people that this this corona was only uh the impetus for laying bare the the problems that have been systemic throughout the system i i think it uh i i wouldn't i wouldn't tackle it tackle it this way uh corona is a is an emotional uh it's an emotional reaction like to to population like right now people are uh not i'd say there's i think that there's a high level of general

anxiety uh lots lots of unknown let's say that they are are you it requires a empathy a lot of empathy and and because it's a emotional people are scared we are completely an uncharted uncharted territory we've both from a pandemic step economic they aggressively print doing interventions this doesn't change the this doesn't change the country on effect which means that people that are closest to the money printing will benefit first so what happens down the road if everybody's yeah you may throw helicopter money at people they will feel good momentarily but they will not go back to

restaurants and spend their they may hoard it or they may realize that the price of goods has significantly increased like that's that's and that's why i say wow why is my money why is my money buying so so few goods so so few of what i need and then people get to understand the notion of of inflation and currency dilution and they and for example my local currency canadian dollar has been trashed like we've lost so much so imagine what we need to import like people will feel the price and i think that there will be the best moment yes to to explain how you can uh store in something something in an alternative right yeah and it is heavy like how how bad do you think things get uh this time around do you think

you think uh here i mean i i am very american centric just because the fact i live in the u.s and so that's who's always on my mind the fed's reaction and then our our federal government's reaction do you think the u.s federal reserve this time around can really uh keep the system persisting in stasis as they did after the 2008 crisis um or have things gotten too out of hand at this point i don't i don't i i i don't know uh i but i don't uh want to think of a really catastrophic scenario because I want people to have the time to have an alternative. I think there's an intermediary step where the Fed will try everything they can in their model without going to negative interest rates that I don't think the U.S. will do. But I think it'll

be a concerted effort both on the tax breaks, helicopter money. They have already taken their rates to zero the printing the playing with the the reserve rates and and so on so far they will play with all the levers but uh powell john powell had already hinted a few months ago that they were running out of ammunitions so if they're they're running out of ammunitions that means that if they've they've got to the end they've got to the end of what they were of what the model model is When you take rates to zero, and if you look at the history of previous crisis, I'll just go through the history of while I was working. I went through long-term capital management, the tech bubble, the real estate, the mortgage, the squeeze in 2008, and this one. And it felt like long-term capital management was the hedge fund, the over-levered, slash fraud, the over-levered.

and then the technobubble, and it was sectorial, right? It was not widespread in the economy, and that's what's so worrying right now is that now the main street will feel it, right? Previously, it was the Wall Street that felt it. Now, main street is feeling it, and it's feeling it in all sectors. And people are in debt.

People are in debt, and that's what worries me, worries me the most because how do we reconstruct and rebuild and people uh bored people with the not enough money not not lots of money ahead scared anxiety with times stuck at home like i'm i'm i'm i'm afraid that people may develop bad habits right we need to stay uh in good shape and and healthy so the prediction the prediction is we'll come out of that uh but it's going to take long and and how that i don't know yeah yeah no we are in uncharted territories and that's really the the most saddening thing about the situation with the coronavirus shutting everything down and people being asked to stay home for two weeks at least potentially more

potentially a couple months it's really highlighting the fact that people don't have savings most people your average joe does not have a savings account a rainy day fund to to weather this storm and that's even being percolated up the ladder to small businesses and even larger businesses like boeing uh the the incentivization of our system has made it so people don't have savings and this is i mean like how the population will react to payouts like they don't i don't think the population i don't think most people or many have connected that yeah you're saving those big corporations with your own money right it's uh you socialize you democratize you you gain just to just a few and then you socialize the loss but they don't

feel it because we have economists saying that twenty dollars is twenty dollars so they don't see the digits change in their in their bank account if anything they're going to get helicopter money which increases the number of digits in their bank account but they don't they so so it's a manipulative scheme where they enrich again the the riches and the cronies just let just let those business go down and then someone else will pick it up with capital and they'll they'll do it they'll do a a new model but that's hard and that's when and when people are emotional uh you cannot tell them yeah you're just gonna be a cold cold shower and then we rebuild yeah no it's it's disgusting seeing trump talk about bailing out the cruise line industry right now like something

that's completely unnecessary i don't think it's trump specific i think it's any politicians right now i don't think there's i don't think i absolutely don't think it's trump specific and they and it is the normal move and the system it operates in like that that's how things work i'm not saying that this but they they will they will all do that because that's that's what they do they want the voters to sustain that societal organization yeah no that's a very good point it highlights the different incentive structures that exist between the incumbent system and now bitcoin where bitcoin i think it's the most beautiful incentive system ever ever created uh it just it it exists and creates this beautiful feedback loop where

uh everybody's somewhat forced to cooperate for for the better good of the system and at the end of the day the better good of each individual within the system and yeah so do you think bitcoin's ready if we had to transition to bitcoin right now do you think uh the network and the the stacks above it are are ready i mean i i personally think we we need a little bit more time but are you happy with where bitcoin is at this given point in time being 11 years old um uh the the technology at the protocol level and the things being built on top of it well i'm super proud of what it has it has achieved i'm very proud of what it has achieved i'm grateful grateful it exists uh more time will always be always be needed but

it it but during this crisis uh if bitcoin weathers that can you imagine after it was yeah it weathered it weathered corona no closure 24 7 etc etc etc now is it ready for a a massive onboarding, I would like to see the ASH rate which is already high, but much higher. Much, much higher. And that will build

through time with the economic equilibrium built into it. But I would like to see it consuming more, more, more energy. You're going to boil the oceans though.

oh yes we're going to go to the oceans of course so it's a good transition into um something in quebec uh hydro quebec particularly they seem to misunderstand uh the incentives of bitcoin so what was the situation there they they miners were allowed to use the excess energy from hydro quebec to mine at very low prices but then once it hit a certain scale the government sort of enacted taxes that made it unprofitable and pushed push miners away i'll tell you i'll tell you the story because i was pretty close to that but before just on the boil of the ocean when you understand bitcoin bitcoin is the cleanest technology and when it's on when it's understood that you don't spend bitcoin on trash on disposable stuff and that you are much more deliberate into

what you're buying and you're going for the higher quality longer lasting you're much more prudent with your expenditure, then we may solve a lot of the environmental concern of consumption society. I think Bitcoin is super green. I just think it's just not understood. Yes. I like to say Bitcoin is the real green new deal.

I do think so. Yes. Yes. Anyway, let's go back to the mining in Quebec. The story goes like that. Here in Quebec, we have hydroelectricity, so renewable, renewable power, and we have yearly surpluses. Hydro-Quebec, the state-owned energy provider, was actively trying to do business development with both data center and miners. they were so successful in their endeavors that too many demand came all at once and they didn't know what to do their claims is that they received for 18 000 megawatts of demand where quebec's

capacity at peak is is 40 000 megawatts so they were claiming that the miners wanted to have wanted to have half of our power and so they went to the government government did not understand cryptocurrency and with one decision says no we're going to do a moratorium decree and the crank price by three times and put all this bureaucratic administrative whatever so there was a public uh public audience in front of quebec energy board and you should have seen the people that showed up like it was packed this was all the all the entrepreneurs of a small medium larger side that that they say hey we you have you have extra power we want to buy the power we don't we're not asking for any government subsidy we're not asking to pay cheaper than other clients you

are actively uh soliciting us we want to we want to operate in quebec and then uh because of that one mr moreau uh that minister moreau uh really did did not want to understand um what the energy what it was about which it doesn't need to understand there's no electricity police anyway so they there was lots of people that showed up in the um that public audience and everybody was super upset there were so many people they had to put in another room and then the 18 months of bureaucratic administrative governmental bs mining went elsewhere and so so what what is a shame is quebec still has energetic services that are that are going to waste we're trying to catch deals with our neighbors to to sell that the that extra extra electricity and then this

Hydro-Quebecs was claimed that they received 18,000 megawatts of demand, and now they're barely able to fill 300. Please explain what happened between 18,000 and 300. And it's, oh, the demand has been smaller than expected. Inaccurate, false, bullshit. The mining, the hashing power has been deployed elsewhere. over that same period it more than uh i think it's 12x 12 to 14x the ashing power on the bitcoin network so it's not true that demand was lower you just the business went elsewhere along with the

the revenues the tax the jobs the the just being able to develop locally yeah no they got priced out and then so there was a thread that i was a part of and uh it was a bunch of uh yourself included montreal citizens uh debating in french and from what i could gleam at one point somebody from hydro quebec said there there wasn't enough miners like even if you wanted to consume that energy people want to have enough miners to bring it which which seemed like a straw man as well oh no they're there i don't think their objective was to understand like they wanted they wanted all cryptocurrency to be consuming of energy they sometimes when i when i look back i really wonder were they they were they well uh informed who was

informing them they could there be someone that told them no no don't worry bitcoin is boiling the ocean we have something better that doesn't consume energy that bitcoin is just a fad well whatever it is have they how can they be in a position to decide which business have access to electricity or not right I think it's a dangerous dangerous rope and and in the end they put the condition so miners can can come here but it took so long like you snooze you lose you snooze your new business when business went elsewhere and now that's it yeah and how could how can miners ever trust them not to not to do what they did the first time around right like why would you invest

that much capital into an operation with the the uh the uh unknown of the canadian government coming in and just stopping at any given point in time with one comment from one minister he was able to triple the rate and drag them into this long process i've seen cool projects here like i've seen like a cool prototypes people wanted to try stuff with the heat with the with the energy consumption with all sorts of stuff that's that's all gone all that innovation is just not happening here but but let's be all happy we have a minister of innovation i feel so much better like i feel so much better we have at the government level a minister of innovation that that should save us all well really it really highlights the the uh conflict of top down versus bottom up bitcoin's

very bottom up emergent and these centralized governments and systems are very top down and i think people are beginning to wake up that this is not not a way to run stuff micromanaging whole economies from the top down just doesn't work it creates uh roadblocks and really stifles innovation like you just described so do you have any hope for canada sort of moving away from the policies uh that have been the norm for the last decade no no no no i i really don't i don't see uh i don't see things changing here and i think that in the 10 15 20 years from now just like that imagine if we go back in 1994 okay and imagine like google and those internet companies wanted to build a data data center in middle like in prime prime land downtown data

center they would have said no now they now 25 years later they are providing tax breaks tax break red carpet subsidies they all want those businesses that's exactly what will happen and in 10 5 10 15 years the businesses the bitcoin business will have developed elsewhere and there won't be service locally or will be serviced by uh the tax revenues well it will be elsewhere and they'll be upset just like the media right the media are struggling i think the same thing to find a banking financial is happening uh than than than in the media and so i i uh i hope that there's uh more more ways to create and i think it will always be ways to create uh but i think that's why it's important to when there's a possibility to push back like when i wrote

why bitcoin is not a security it's important to stand out and push back like this this is not not for them to regulate it will just arm us more yeah it's uh no thank you for pushing back and it's actually sort of ironic because some of the most creative bitcoiners are in canada you have rodolfo novak with cold card you have francis paulette with bull bitcoin yourself uh with all the work that you've been doing the content you've been putting out uh it some of all the others you don't see and all the others that are invisible yeah and i feel i feel for my canadian friends uh up north and i mean we we don't have or i don't think our problems are as bad as uh as yours may be here in america but um i do i do uh i do hope that we we are able to avoid uh sort of

reactionary policies in our government and luckily we've had a few representatives stand up on capitol hill and defend bitcoin but uh it's more than it's more than defend bitcoin is to defend your constitution right it's to defend the fundamental rights right and as there's a new uh because there's as there's a new onboarding and there's this needs to be defended this cannot be taken for granted like you weren't born with these uh these were fought for and i think that That's what's at stake. And I think that in situations like we are right now in Corona, people are emotional and that's dangerous for increased control

and reduced liberties. No, I agree. And I think that's why it's important. And I really appreciate your pretension to define Bitcoin because that's a problem we have here in the States across regulatory agencies. It's defined differently. It's either a commodity, a currency, but really it should be speech at the end of the day, right?

It's all software. Software or speech. That's it. Yeah. It's a database. Yeah. This is something BeautyOn really pushes on, and I sort of kick myself when I call it money, even though it can be used as money and leveraged as money. At the end of the day, it is simply a messaging protocol with scarce information space.

yeah and i think uh beauty on's work uh has been instrumental to my understanding and i go back and reading what he wrote like stuff he wrote before i was even aware that bitcoin existed and then it's i think his perspective is uh extremely valuable yes he's harsh and he should be like he should be okay so totally calls us out like i not that i must admit it we don't like nobody likes to be beaten up but they wouldn't deserve it's it's a i'm grateful that he does that no i am too and i think i think coronavirus is finally going to force me to interview him uh remotely i've i've had many conversations with beauty on in the past and i always thought we were going to meet up for beers in brooklyn and talk in person but i i don't see that happening

anytime soon so i'm gonna have to reach out to him again and get him on here to get his view because again it is he is he is very harsh he is very hard on people but the stakes are so high that i don't think i don't i don't blame him for being harsh he's harsh but he's right he may be a pain but he's right and that's the best compliment you can get you're a pain but you're right that's it no it's uh yeah no and it's it's uh no we're lucky to have him but yeah and that's the other weird thing about today you're talking about virtue signaling a lot of people

don't like to hear the hard truths that the beauty odds of the world put out there it hurts their feelings which is something we need to get away from as well well that's something you will need to deal with individually if you cannot

take criticism and you cannot self reflect then that's your individual problem work on it yeah yeah yeah my uh i i wish i i wish i had nailed everything and knew everything and wouldn't commit a mistake of course not of course not you know say i will i will do mistakes i just want to do no arm and i hope to minimize the the amount of mistakes and minimize the amount of uh of of magnitude uh but i think it's important to just continue reading studying enriching ourselves and someone calling you out

is actually a compliment because the person cares. Yeah. They view it as a compliment. Yeah, and to use a cheesy analogy, you're only as strong as your weakest link in this blockchain world. So being harsh and critical on each other

is important to make us as strong as possible at the end of the day. But it doesn't fit well with people with the corporate culture of we need to be nice and all in agreement and i'm this cohesive view of this beautiful world like it's uh and when i worked on the trading desk right back in the early 2000s there is swap desk bond desk is a no country club right it's it's harsh it's harsh it's what have you done for me lately it's a cut the crap it's it's cutthroat it's really cutthroat and then finance has become this beautiful more common pool everybody's nice we need to have those common

values i don't know what that would happen but if you suck you go down and you and you fold you're not being picked up in this common pool like you fold that's it tough luck woke capital has made it to the investment banking world goldman sachs is not going to ipo companies that don't have a diverse enough boardroom what a bullshit thing that was okay and and i covered that in my newsletter and someone wrote to me and he said well what about a gay white man who doesn't want to make it come out coming out are you going to force me to make it coming out so i can ipo because you need that virtue signaling and and i i once said this is this is so wrong it's like saying we look like the ymca so we are diverse and we are worthy

of doing that well i don't think is um i'm very happy not to be in the corporate world anymore i just couldn't stand it i would be it would eject me so fast like i just i just couldn't stand it i'm sorry i'm i'm unemployable at this at this point too it's an attack on meritocracy at the other day and ideas totally totally i i spoke with a financial executive recently i i no matter doesn't matter where but he said oh yeah no right now it's more a bonus pool um it's more uh hold on sorry my mother my mother texting me i thought of it um he said that it's now a part of a pool okay and people who don't portray the desired behaviors will be negatively impacted okay so who is hungry if you're not hungry how will you nail it how will you progress how will

you be super super good how will you go out and hunt when you have this regime of behavioral all how you're seen and then that's why you see the the linkedin walls with all um i'm i'm i support women i support transgender i support whatever can you just support talent and shut up and move on like it's just i find that absurd yeah i had to delete my linkedin i couldn't take it anymore and again i'm unemployable so it was worthless to me at this point i am amazed at the amount of unemployable talented people that end up in bitcoin i'm amazed at that and that's that that that makes me that makes me hopeful like no it really does and it's that's another thing that makes me hopeful and long-term bullish is

the the uh intellectual capital that is working on this in all realms from the protocol level the people writing the code and the cryptography that make it work people building on second layers whether it be lightning network liquid whatever that may be and then uh individual content creators like yourself who are helping to educate people um who who are looking into this bitcoin world like what the hell's going on in there uh it seems like and that's the beauty of the system too it's completely decentralized in all facets nobody hired hired you to write this stuff you said hey uh if not me then who somebody needs to to articulate this yeah and it's um it's beautiful and i think uh we can wrap this up with maybe your thoughts on

on what you're looking forward to uh within the bitcoin world in the next six months to a year um is there anything you're excited for anything you're working on particularly that you're excited about well anything that can output beacon in the in the hand of people like the the onboarding helping helping people making the the everything easier to easier to use making the the nodes easier making the automatic contribution easier making privacy easier like all the development and also that's happening with the having we'll see what would be having how it how it unfolds but it's it's it's amazing that it's happening at the same

time that we're dealing with a global pandemic and reaching the end of the central banking ammunition at the same time that Bitcoin is going into is this third the having period I I find it I find it pretty amazing be empathetic but open to people who want to learn because never forget that not everybody is computer super computer savvy and Bitcoin can be intimidating

because it feels technical. Imagine that you always send stamps on a letter and now you're supposed to use this electronic mail. Well, it can be as intimidating. So I think taking the time to share the passion and to

So do an end-all-end-all at a different level will be beneficial to most. But again, that's a voluntary initiative. Yes. And thank you for taking the initiative onto yourself and volunteering to help bring Bitcoin to the masses. Elizabeth, this has been a massive pleasure. I really appreciate you taking some time to sit down. where can we find out more about you um your writings uh and and um just anything you may be working on uh octonomics.com so that's o-c-t-o-n-o-m-i-c-s.com i have a weekly newsletter

where i curate content i do little rants and just uh i have a habit of producing uh content on the saturday morning or sunday morning that's that's the best way to uh to to follow my work awesome And then what your Twitter handle is a pre-fall EP pre-fall. Okay. I will share that. Yeah, I will share that in the show notes. Elizabeth again.

Thank you. Really appreciate it. Thanks for what you're doing. I think the freaks are going to love this episode. Peace and love.