TFTC: A Bitcoin Podcast - #188: Chris Bendiksen

Episode Date: August 26, 2020

Join Marty as he sits down with Chris Bendiksen, Head of Research at Coinshares, to discuss: - Consciousness - Time - Mining - Hashrate derivatives - Asynchronous time + Proof of Work - TOOL - Free will - Education - Bitcoin's benefits to a portfolio - Energy consumption - much more Follow Chris on Twitter 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 when you download the app.

What's up freaks, it's your boy Marty here to introduce this episode of Tales from the Crypt. Got very cosmic with Chris Bendixson from Coinshares. That's all I'll say. You guys will hear the rest as you get past this introduction. This episode is brought to you by our good friends at the motherfucking Cash App! Easiest place to stack sats. And they're making sats as standard. you can stack sats send sats receive sats sell sats if you so please and again we're not buying fractions of a bitcoin we're buying whole sats you can set sats as your standard within the app

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Woo! Woo! How do you like that, Dragonfly? Is it true that Dragonfly has only lived for a couple days? Use the code SACKYSASS to download the Cash app. And I hope you thoroughly enjoy this episode with Chris. We got into a lot. Heady, heady, heady conversation that dives into the why we Bitcoin,

which I think is very important to be reminded of every now and then. Drop your purist test. the purity tests are getting a little old listen to this episode you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all 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

computer slow we are recording what is up freaks welcome back to tales from the crypt it's your boy marty very excited for this conversation sitting down with somebody who fascinates the hell out of me. I'd like to introduce you freaks to Crispin Dixon from CoinShares. What's going on? Not much. Chilling in my hammock. I know, you're always chilling in your hammock. It's life. When did we first meet? On the mining calls? Yeah, maybe. I think so. I don't remember, actually. Yeah, I think our paths only cross this year or like a little before this year, which is interesting. And just hearing your thoughts on these calls every week is, again, you're a very fascinating person in my book.

We've talked about GAM, too, officially on a call. But you were just describing what you were doing before Bitcoin, trying to find the essence of consciousness. Why can't we do that? we can um we i mean it's been done just not really in in the west it i i think a part of it is a definition issue we're not very good at um putting the correct words at what we believe consciousness is in the west and therefore we we mingle it with things that i don't think are actually part of the concept like advanced thinking and memory and the things that we at least in the west tend to associate with consciousness which is it's just a

little muddled whereas if you if you flip over to the eastern way of thinking about this then consciousness is much better defined um it is the essence of experience and it doesn't require things like memory or planning or these types of things that we we we always tend to like get into that concept uh when we think about it from a western standpoint it's not so i mean i i was going to say it's not as it's not as simple as cogito ergo sum um i mean it it it actually kind of is because the the the act of thinking does prove that you exist but it doesn't i i think it's I think it is sufficient I mean it's not

necessary to know how to think I think to be conscious I think consciousness shines through everything that has any type of senses or computation attached to it which has some pretty interesting potential consequences

for like computing and whether we think like machines that have active senses like it's actually conscious like some machines with sensors that that can read temperature react accordingly like a miner if you will yeah maybe i mean so long as it's like an ongoing operation like you could argue that the miner is conscious of like certain things like its own temperature or like the amount of hash that it's producing yeah wait so how how do you think

the east has done this better at explore has explained consciousness better and how would you they came from it how would you know that they explained it better if you can't describe it in western terms uh well first of all they built a whole language around it so they they like constructed the language of sanskrit to effectively describe mainly like spiritual and and religious topics um they also came at it from the completely opposite way so like in in western tradition of discovery like we tend to come at things from the outside in um you know we like empiricism we like we like objectivity in our um in our journey of discovery whereas consciousness just might be outside of that realm so it might just not be

it might just not be appropriate to attack it from an objective point of view because it is inherently subjective in itself and so maybe phenomenology is the better way to come at it And that is, like, what the East has done. So they come at the question of consciousness from the inner self, and they equate it with the self. And, well, they, quote unquote, yeah, like, just hoarding huge parts of, like, culture on under one. But at least I find that approach to at least thinking about this seems to me to be more fruitful and looks to give more satisfactory and profound answers to what this even is. like what is all this what what the hell are we doing here is this what tool tries to get at too and their music we were talking about tool before we hit record too um i didn't realize i mean that i didn't i didn't realize tool was so introspective i just thought it was like a heavy metal band i never really dove into the tool discography oh dude you gotta get into tool tool is where it's

that um their their discography is fantastic i mean their latest album is a masterpiece in my opinion um and it tool is exactly that it is a tool just like you know money is a tool you know we we do we do tend i think in this space to get a little bit a little bit caught up with the tools of life you know money is a tool it's not the goal it's a tool uh it's a great tool but a tool i agree all right and i've said that many times bitcoin is merely a tool but i think people become so fascinated so focused on bitcoin the tool and making it successful because they believe if it is successful the tool will just allow people to live life easier and the work and the work isn't done yet so we have to get the tool perfected absolutely tools are capital

and we need more so what what drove you to bitcoin you were saying you studied neuroscience you did some shipping before bitcoin sme um you worked for an sme fund like how did you get well it's a financing boutique um but yeah then i did energy shipping uh which has actually served me really well uh in understanding like the mining space because we um as a company we dealt with the like i specialized in uh natural gas and natural gas uh you know to a much higher degree than the other uh energy containing liquids you can you know transport over the seas they're much more closely related to um domestic energy and electricity grids and um you know that whole that whole

like bag of craziness so coming from that um background has helped me actually a lot and getting more of an intuitive sense for how this all is strung together from a bit of a higher level. Where were you dealing with the shipping of natural gas? You were like Russia to Europe, Qatar, potentially Europe. Natural gas starts proxy wars, right? Would you argue that Syria was a proxy war

for that natural gas pipeline? Probably. Probably. Yeah. I mean, natural gas is big business and it's political now. And it has interesting effects, you know, especially as it pertains to like how Europe deals with Russia and, you know, its own inability to cover its own energy needs. so i mean the the u.s has done interesting things there over the last decade uh now there's a there's a credible and um and large enough potential supply of lng from the gulf coast to to feed most of european needs but you know that there's more to it than that like you can't just i mean you got to build these like ridiculous um reception facilities that are like wildly

expensive and um more are needed for uh for a higher degree of independence from russian gas but but yeah that that stuff is um it's the driver of a lot of the geopolitical like larger themes that you see in europe especially in eastern europe where you have a lot of the the junctions of uh the huge natural gas pipelines that comes in from siberia yeah That was the big thing in Ukraine, right? That's a lot of cause for tension there was who controlled the natural gas pipelines. And you have America getting involved too.

Oh, yeah. Of course. Like people, potential presidential candidates, family members on boards. Children. Yeah. Yeah. I heard he's speaking at the...

Or did you speak at the DNC? You were supposed to? Hunter, I don't know. I didn't tune in to either of those conventions. It's such a shit show over here, dude. I don't know. It's going to be an interesting election. I don't think it's going to happen.

I don't think there's going to be a clear winner. You don't think? Whitney Webb sort of convinced me of that. Well, that'll be it. I mean, that'll be a fun. it'll be a super fun outcome I mean if federal elections are not able to be held then

there'll be some interesting shifts in the composition of well actually no there won't because even if someone's senatorial term runs out then I'm pretty

sure the governors can appoint emergency representatives. So that would probably mean a Republican president. No, I think come January 21st, if it's not clear who the winner is, the Speaker of the House takes over. Nancy Pelosi.

Yeah, but Pelosi's term is running out. Can you imagine if she was president? Oh my god. Oh, could you imagine? You could say, could you imagine if trump was president i mean 10 years ago yeah i was gonna say like like can you imagine that boris is prime minister

all these people all these people are i i wrote like an alternative uh essay on this in university in a history class it is one of these like revisionist history type of prompts like uh you know why hasn't there been a world war three do you think there will be one you know most people are like no definitely not like things are totally different now we'll never see that again pox americana blah blah blah i was like well get the right you know slash wrong people all in power all at the same time like that's normally fucking how it goes and we're pretty close to that point right now we got some we got some some loose cannons some very

strong personalities leading the world uh quote unquote leading leading yes leading uh is this the end of the nation state as as it has been for the last few hundred years i saw you were uh you tweeted a founding father quote out yesterday thomas jefferson we've gotten pretty far from what he believed yeah yeah we have yeah we have the constitution still holds though it's been bastardized to an extent though it has executive i mean i mean executive order is completely completely overwrite the constitution and it's been happening since obama now there's been some interesting um shall we call it interpretations by the traditional branch as

well which i mean unavoidable under the the setup that it that it creates but yeah yeah i don't know is it the end of the nation state hopefully it's the end of like the super state i guess I mean it's becoming glaringly obvious here that different parts of the country think very differently I'm becoming more and more of a fan

of the idea of breaking the US up to smaller jurisdictions I mean the shit that's going down right now in Wisconsin is like holy fuck it seems like the beginnings of a civil war here like is it necessary to break up the whole country

like what i i don't know that well that's what like the u.s u.s military is too good of a tool that's what we mentioned this on monday to like imagine if we could get back to a republic where states had independent rights and and they were respected and we only banded together just share that military exactly just reduce the size of the federal government like why does the federal government have to be so big like that that money can be channeled back to the states and then they can figure their own stuff out in accordance with their own population.

Like, why do you have to have this, like, super agreement between 330 million people instead of just, like, smaller pockets of agreement with innovation and governments and legal approaches? Instead, like, everything has to fit under one, like, mega system. It's just weird. I don't like it. But you've got to keep the military, though, because you know china yeah totally but then you get at the nature of

is there any other direction a federal government could go in other than getting bigger i think is is there just a natural entropy that exists that has existed since the signing of the constitution that is inevitable just because of human greed and individuals lust for power particularly sociopathic politicians yeah which the fucking system selects for it's a little fucked up yeah it's very fucked up that's why that's why truly i say i'm not political a lot like and i say that in the sense that i'm not like red team versus blue team i don't i don't like any of them but i do like the fuck the teams teams are stupid like in this context like teams just create division i mean it's glaringly obvious right now like you can't even have a conversation at a dinner table

without without uh proclaiming what team you're you're rooting for before you get in engaged in the conversation and if you don't pick the right team you can you can get yelled at at least in some conversation yeah then just wholesale denouncing everyone who's like not on board with your team this is why i focus on bitcoin i said this the other week i think bitcoin is the the greatest extension of and protection of natural rights and the embodiment of natural law theory since the constitution and bitcoin is much harder to change than the constitution i would argue yeah yeah i mean can't be evil is a much better moniker than like don't be evil you know yeah like let's just build a system such that they can't be

messed with do you think bitcoin can be messed with to a certain extent but i mean you can't have it so unchanging that it's completely inflexible because it's not like time stands still you know yeah that's one thing you said you were studying time uh recently and we got into the conversation of eth 2.0's testnet going down because of a CloudFlare time issue. NTP, I believe, was the issue. Yeah, I mean, I don't want to sound like I'm an expert on Ethereum 2 here,

but the way I understand it, and somebody please come and set me straight if I got this wrong, but the way I understand it is that the way that time ordering works in that system is just querying a pretty small set of network time servers which uh that's a little uh it's not i mean it sounds like how is that not a central point it's a critical dependency i think i i and i mean again like isn't this isn't this a huge part of the

the reason why we use proof of work in the first place like like it's a time ordering thing like we need to know which transactions came before others if not the ledger is meaningless and how how do we agree on what the time is while we use a proof of work clock you know like it's not it shouldn't even be called a blockchain should be called a time chain satoshi actually referred to it as time sharing in the code didn't he I mean in the in the white paper if you want to look at foundational documents here like I mean it's not like he uses the word blockchain at all he talks about a distributed time stamping server and to do that we have to employ proof of work like it it just to me sounds like the critical

problem to be solved here is a problem of canonical time ordering not a problem of like stringing blocks together now let's dive into this more because there's a lot of nuance here so bitcoin's time stamping proof of work mechanism can be described as asynchronous consensus correct yeah so i i mean i lean very heavily here i i never even grasped this until i i read that paper by uh what's he called gregory trebetskoy or something like that let me find let me find that right now i want to cite that correctly because i i want people to like actually go yeah gregory trebetskoy he wrote this back in like early 2018 uh and the paper is called a blockchain proof of

work is a decentralized clock like if people haven't read this like go read it it's mind-blowing um i mean before that like i i thought i understood proof of work but i clearly didn't get every nuance like i i hadn't even actually like thought about it in those terms but yeah if if you think about it like one of the huge problems with having a shared ledger is that everybody has to agree on what time it is uh because if we don't agree on what time it is then we don't agree which transactions fit where in the ledger and we can't be guaranteed to arrive it a shared consensus of what the state of the ledger is um and so so that took me on this like whole like delve into like you know what is time what is like what is time and how like how how do

we like normally agree on what time it is and um i mean you know people probably have like a bit of sense for this but i mean there's a time first of all is entirely abstract it is just it doesn't have an independent existence outside of human minds i mean it's it's it's a concept that we come up with to try and measure the progression of events as we perceive them uh and you know normally throughout history we've done that by like measuring astronomical cycles be it the the spinning of the earth or you know the the period of the uh elliptic around the sun or you know whatever you have it and up until like shockingly recently like that was how we coordinated time i i think it was like in the 60s at the latest we were coordinating time based on

uh astronomical observations now uh you know in our exalted um modernity uh we use atomic clocks and these these clocks are synchronized across the world and then they essentially feed these like time oracles and uh they're used you know amongst other things to to sync um network time which is part of the internet protocol and you you essentially query a timestamp server like what time is it and it returns you a time but that comes with like a whole bunch of problems the biggest one probably being that like you don't have any guarantees of knowing that the signal that was just sent to you was propagated you know correctly and quickly and without much delay so when you query a time stamping server like you have to kind of keep doing it over time

to see if like you can get rid of like latency and inefficiencies like the transmission not to mention the fact that time is like totally relative and my time and your time need not necessarily be the same dependent on our relative momentum our frame of reference like our distance to gravitational sources like the whole thing is is just a it's just a whole like stack of problems for how do we all like come to some like consensus on this and this is where proof of work with the hash chain is such an incredible and awesome invention because work implies time you know the the physics concept of work is you know force multiplied by time so if work has provably been done then time has provably passed so when you tie blocks together

with a hash chain and proof of work you're not only like the the finding of a new block is like the tick of the proof of work clock and the hash chain makes sure that you know that the current tick of the clock like provably came after the previous tick of the clock and it's verifiable as we all know by anyone like it's really easy to verify a proof of work so this way like we can actually all come to consensus at which blocks came before the others and after and this is the whole reason why we arrive at consensus at the current state of the UTXO database so I mean if if if one hasn't thought about this you know kind of huge thing that proof of work does then I think you're like missing out on on a big part of the of the consensus algorithm

mind space if you will because it's not only about like you know proof of work fulfills a lot of roles but it has to fulfill all of them not just some of them so you can't just like pick

pieces out of it and expect it to do the same thing. What are these roles? Well that's economic settlement assurance. So it has a cost which is a pretty cool side effect. It's not necessary for the time

function. But the cost is a cool side effect. It gives you economic settlement assurance. So you know, it's a complex thing. Isn't there some nuance with this too? Couldn't you technically have

a block at a higher block height have a time stamp a unix time stamp that's uh back in time like before you can't afford it yeah you you can but but that's that's like that's normal time that's not block time it's it's the it's the block number that is the the canonical time um the the time stamp is is just to calculate the difficulty periods yeah

so it doesn't actually it doesn't like if you have a block that is higher in block number but that has a time that's before a previous block yeah that doesn't actually play into how you calculate who owns what

no it's a very important distinction to make that sort of just clicked in my head you have to separate the block height from the timestamp yeah well there's block time and then there's human time or other time let's just call it other time

because I guess they're both technically human time I don't know but one of them is independent that's if you assume Satoshi is a human yeah big assumption do you want to know like who it is do you want to know no yeah yes of course everybody wants to know do i do i want it to be but do you want everyone to know um i don't know i think it was how funny

um yeah that's my guess do you have thoughts on who it was yeah no not really i had some thoughts on who it wasn't I think we all know. Yeah, I don't know. Could I? Yeah. Hal seemed to have gotten it way too quickly, but that would also be a tell that it isn't Satoshi,

because if the real Satoshi would probably lay in the brush and act stupid. His wife would know, though, wouldn't she? How would she? Hal's wife? How would she have known? She must have known. He could have just been in his office working away.

Don't you think it, like, pops up at dinner? Right? Hey, honey, I'm about to launch the most revolutionary technology that's hit the Earth in quite some time. Yeah. I mean, I've invented, you know, I've used Adam Back's hash-cash to invent a system of intergalactic asynchronous timekeeping

and be well let's get back to this gnocchi is fantastic let's get back to this async asynchronous timekeeping like how how important is difficulty adjustment in all this um well i mean the the difficulty adjustment is important in that it keeps the block time in synchrony with you know human time such that the blocks are more or less

the same frequency over time at least see like see how language plays into this you know you say things like over time it's like which time which time yeah

see I've heard I've heard the production of blocks described as a metronome which has a time aspect to it i would yeah yeah metronome does like the the swinging of the pendulum um well represents work also well at least would represent release of the work that you put in when you like pulled it off yeah well then this gets because this has always fascinated me the concept of of meeting in the at a future block height instead of instead of meeting at 12 o'clock next wednesday meeting at block 600 where are we at right now we're block 645 451 if we were to say let's meet a block 650 000 um yeah it would be

much harder to plan long term at least right and and short term um than like normal atomic clocks well then like but that gets but can markets meet at that block like that's another thing like talking about derivatives products particularly like hash rate derivatives do you settle them like everybody like the cme close is coming up this week like would that go away i feel like have to i i feel like you'd have to settle it in block time um i again like you know what what's the oracle that you're gonna choose are you gonna choose the you know we we've had this like discussion a little bit back and forth in that um in the the hash rate derivatives group it's like what do you use do you use to use hash rate

or do you use difficulty? And when do you settle? Do you settle in people time or do you settle in block time? I think you have to use difficulty, right? Because it's more set in stone. Difficulty at the time of an adjustment, right? Yeah, I mean, that's where I lean to.

I guess it's a bit of block time cleanliness, if you will. To me, it seems messy to settle things outside of the internal clock of a system when what you're settling is something that the system is giving you at a time of its own determination, you know? Yeah, and the fact that between adjustments, you're completely guessing at the hash rate. It's an estimate at best. Yeah, right. Yeah, no, absolutely. Absolutely. And I guess if you're doing it by the hash rate, then aren't you just, at the end of the day, using the same exact calculation of the hash rate as the protocol is, which is blocks found over a certain amount of human time, and then compare that to, like, was this two weeks or not? yeah no it kind of is the same calculation yeah just with some other parameters maybe but why even choose other parameters and like the blockchain is such a good oracle too it's the best oracle everybody's got everybody's got access to it right right you can verify it

yeah yeah but then again like i'm you know i don't run derivatives exchanges like i don't know what kind of like real world um issues you run into you know outside of our like uh block block bitcoin blockchain purism here well this sort of digs at the question like is bitcoin fundamentally going to change financial markets like i was trying to allude to earlier you're gonna have these cme closes these three months one month yearly contracts or there's a whole new derivative structure going to be built around block height and difficulty which i i want that to happen it makes a lot of sense to me intuitively um i can't yeah i mean it should it should be good for the programmability of these types of

like derivatives yeah and then like uh there's so many layers and go this like i mean can people even question the efficacy of these potential markets like can they be manipulated too much by the supply chain of hash rate i guess but like you know touching on an interesting and important concept here like what even is manipulation it's such a fuzzy concept um like i mean every every interaction you have with with the with the pricing system it can be counted as manipulation if there's like a certain intent behind it you know it's like the bitcoin market gets uh called out a lot for for being heavily manipulated right like how do

you manipulate it well you by buying and selling okay which is the same thing that everybody else does in the market so the only difference then is that somebody was buying and selling with an intention that someone has to dig out of them essentially and on top of that and i'm not talking about spoofing right now although you know even spoofing like if if you're putting if you're putting like real orders in the order book you are taking on a risk that like someone's going to buy or sell into them unless you have some like unfair um latency advantage right where you're able to like pull your bids before they get executed which you know and that actually sketchy on the part of the exchange

and that gets into an interesting topic that Pierre Richard talks about a lot is like the order book that you don't see like the order book in people's minds they haven't moved their bitcoin to an exchange haven't put a bid or an ask but they have that price in their mind where

they would move their coins to an exchange and sell or so the order book is much bigger when you factor in the intent of people to sell at a future price that haven't moved any of their Bitcoin to an exchange

yeah I think we're touching on a really important and big problem when when you're trying to like put the devaluation question in Bitcoin comes up like quite a lot and it's something

that we're like grinding our heads at in the ad coinshow's research and And I think you kind of run into this same exact issue in all assets that have a really high stock and a really tight band of liquidity relative, like ongoing liquidity relative to the stock. You know, I think we see this in gold, like James Butterfield, one of our research strategists. he he's done a lot of work on uh on valuing gold uh in some of his previous uh gigs and you know he always says like supply and demand doesn't seem to have any interesting bearing on the price of gold and one wonders if it's because so much of it is sitting in these stocks in the

in the sort of um idea world order book right the one that isn't physically manifested but is there nevertheless um and the fact that so much gold or bitcoin can come on to the market at a pretty short notice right based on on this internal idea world order book just complicates the matter like tremendously because how are you gonna possibly ever measure every single participant you know much less the sum of every participant's own idea of how they value that asset versus everything else it just becomes like such a difficult calculation problem yeah and then it and then it comes back to the manipulation thing too like even if you had an attempt to manipulate those external factors like it's like the mike tyson quote

everybody has a plan until you get punched in the face like yeah um yeah you can go out with that intent but you have no idea what others people you don't know who on that same asset are going to do with it at any given point in time and that's what really that's what really being in mining particularly that's that always like the whole mining fud and manipulation like i don't think the incentives will ever line up or miners would attack the network just because individual miners have no idea where another miner on any part of the world is at their in their journey to set up their machines or turn them on or turn them off like you could attempt to manipulate it not knowing that somebody bought thousands of machines is

going to turn them on at once at any given point in time yeah yeah the game theory just doesn't seem to line up in terms of miners attacking the network um i mean when when and um and uh james press switch and um he was the third guy i forget and then what's his last name i don't remember when they like formalized their uh that equation for the attack cost which included um which included the reduction in the future value of uh your mining earnings as like the single largest component um of a potential minor attack on the network like that that realization which i think a lot of people had intuitively uh but when they like actually put that onto paper like it it became like really clear to me that the the the stock

of capital like the the miners this themselves and again back to the language thing like what is a miner like is it the is it the box is it the operation is it the person who owns the operation like we need to we we need to do a big job on um terminology actually in this space we we need to agree on a bunch of things that we don't agree on like full node versus validating validating node versus like auditing node versus like fast you know it's just like i i see so many conversations in the space like go right past each other because we're actually not talking about the same thing and therefore we cannot possibly come to agreement um but you know in any case back to what we were saying like the the devaluation of the prepaid bitcoin which you know

the the capital expenditure of buying mining equipment actually is the devaluation of that gear being the biggest cost in a potential mining scenario attack it's pretty profound um profound realization and so long as there isn't and a liquid market for renting hash power with the capability on the renter also to do whatever you want with that hash power as long as that doesn't exist yeah I don't think And why would anyone be incentivized to rent out their hash power if this is a possible thing that the renter can do with it? It just doesn't make sense.

So I'm with you on this. I at least personally don't see how these incentives will ever line up. And also, don't you think it would have happened by now? Yeah, wouldn't it be more likely when the hash rate is lower and the network's arguably more susceptible to an attack like that. Yeah, I mean... And just keep it simple, stupid.

Why would anybody ever kill the golden goose? And the argument you'll get is, well, they could make a bigger profit shorting it in the short term. It's like, eh, I don't know if that short-term profit's worth it, especially if you're truly a Bitcoiner and you believe that the currency

that those profits are denominated in is doomed to fail in the long run. Like, why would you even do that? Right, and like, think think about who the miners are like the miners are probably like the most raging bitcoin bulls that ever existed like the fact that you're not only like bullish on bitcoin to the point where you're like oh yeah i'm gonna buy some uh you're like yeah okay i'm gonna go invest a hundred million dollars in like thousands of like machines from china and then i'm gonna set up this giant

warehouse and take out like a like mega like megawatt size like long-term power contract and just i'm gonna mind the shit like oh and then i'm gonna make my money back over like the next two years like you get you get locked into low time preference so again the upfront capital alone makes it too much of a risk again going back to the fact that you never have any idea what other miners around the world are doing like that the risk reward doesn't make any sense to me and then this is something i we're exploring at gam too i can't get too far into it yet but we'll talk about it more in the future but there i there may be a security budget outside of the block reward that's all i'll say um via what you can do with some of the types of energy that are being consumed

via miners well yeah i mean uh i i i guess it it amounts to it amounts to um getting more hash for your cost so which is the you know the the long-term like goal if you will of the uncoordinated like mining network it's like getting more it's more sats for your hash outside of the block reward right right it's like the more hashes like the more hashes you can like put in for your reward feeds like in my opinion directly into the value proposition of the whole thing um and especially like the cheaper energy you have like the more secure the thing gets over time yeah it's like if you're attacking it you per definition don't have that cheapest source and if you did why aren't you just mining you know yeah yeah simple simple question like

What's the easier path? What's the path to least resistance? That attack or simply mining? It seems like a lot of effort to try to attack the network. Right. Do you think fusions are going to be a thing? I think so. I mean, why wouldn't it be?

Why wouldn't we expect it to be if you're looking at the arc of human progress over time? i mean some things are just practically not possible you know so i don't know enough about that to to like opine on you know it's kind of like quantum computing like is that like really gonna be a thing or is it like fusion that it's like oh it's always 50 years away yeah you know perpetually no i really like bob mackler's take on on uh on quantum computing that was sort of an eye-opener that's something that's always lingered in the back of my mind is something to be worried about but he has a good case that we probably shouldn't be

worried about it yeah yeah we we did a follow-up call actually with him because like he should he he needs to write that paper right it's one of the biggest causes of fud and bitcoin i know i know it's but it's such a complex issue it's like you know we we get that objection like quite a lot and um we get it from like potential institutional clients too you know like it's it is a serious concern on on parts of many and you know i want to tackle it like myself but at the same time i'm like fuck like i gotta know my own limitations you know like i can't like write on literally fucking everything well let's jump into this like how does your research team how do you

how do you lead this research team how do you decide what to focus on i think i'm really thankful and happy that you guys put out that piece last year about the energy consumption and the energy sources for bitcoin mining i think that's a huge huge arrow in the quiver to shoot back at people who screech about bitcoin's energy consumption um how yeah we we we might come back with that um they're on those those papers are on pause right now while we concentrate on on some other stuff like you know the the way we effectively choose like what we concentrate on right now is so we we had a pretty big internal restructuring happening this winter we brought on uh a lot of new guys in the sales and distribution team and like we consolidated research more

closely into the distribution team so now you know we're fully focused on institutional sales And so a lot of what we've concentrated on research-wise this year is specific objections or questions that we get fielded a lot that tends to hamper the, you know, progression of prospective investors from, you know, like we quantified in levels. So, you know, level zero, like you're hearing about this for the first time, you know, level one, you're like, oh, this is interesting, you know, so forth, so on with like level four representing investment directly in one of our exchange traded products. So like taking investors through this journey requires that you like deal with a bunch of concepts. So this actually ties into like why I ended up on this like time rabbit hole, which is that, you know, this is part of like Bitcoin, not blockchain series, which just looks to clarify, you know, for an intelligent, educated, informed audience of, you know, investment managers. like what problems do blockchains actually solve which should very easily lead you into like okay well which problems do they not solve right and then whether or not you are then interested in you know oh like blockchain technology has like an it cost reduction potential across like

whatever industries it is that you think it's going to affect right if you have that thesis um and you come to like a real actual understanding of like what blockchains the data structure achieve and at what cost it achieves it i think that's going to help people quite you know far along in figuring out like what is their own thesis how does it fit into this space you know there's there's like you said that there's a lot of um i wouldn't call this fud or just call it like uh semi-disinterested misinformation you know not necessarily like um it's not like evil or you know on purpose or whatever it's just like people haven't considered this important enough to like put enough of their mental capacity on it to do

like a proper deep dive partly because you know information in the space is very difficult to access there's also quite a lot of at least possibly unnecessary ideological uh mingling of concepts so what we've been trying to do now is first of all we try to curate uh which is probably like one of the biggest values we can add is that like me in particular like i've been in the space long enough like i have a really good view on who writes the good stuff where it is how you access it and you know how you should interpret it um in the context of everything else that's been written in the space uh i think if you're like a normal investor guy you know in your uh in your office in like the

city of london or you know manhattan or wherever it is that you are i think the space feels like pretty impenetrable research wise there aren't that many well-known solid actors like there are a bunch of solid actors there's aren't are well known so basically what we've been working on this year is like listing out the most common objections that we get or the most common questions that need answered and then we're just going to go at them one after the other right and uh you know some of the some of the probably the most interesting stuff we've done this year is actually done by uh james butterfield one of our research strategists he he wrote um he wrote a paper like a few weeks back uh called a little bitcoin goes

a long way where we where we go a little bit deeper into like bitcoin's role in a portfolio and again highly recommended read um in general if this is something that interests you like we we basically took it a little further than what we've seen done previously um you know and we analyze uh in some depth the the the benefits that you get from from a very small allocation of bitcoin right so for example if you take a normal 60 40 portfolio you allocate four percent bitcoin to it that's only a 100 basis point increase in your risk budget right so your volatility only increases by one percent um but for that you get a massive increase is that four percent weighted evenly between the 60 40 okay split evenly uh so you know you you get a one percent increase in

your volatility but you get a massive increase in your sharp ratio you get a massive decrease in your correlation so which is you know beneficial uh for for those listening you don't get that intuitively you want a lower correlation among assets in your portfolio you want that high sharp ratio as well yes right so not only do you get like you know massively increased pure returns but you get uh solidly increased risk weighted returns too in your sharp ratio then you get a decreased correlation and what we also show is that bitcoin is a much better diversifier than a lot of other um diversifying assets that that could be used instead like so we use for example gold and we use the the social media index

um socl and for example uh to get i i'm taking this off memory so you know don't kill me if i get this slightly wrong but i believe for you to get a for example a 30 reduction in correlation no sorry 20 reduction in correlation uh you only need like five percent uh bitcoin but you need like how like four times the amount of gold for example in your portfolio to achieve the same diversification benefits alone that's not even you know thinking about uh increased uh returns or sharper issues so you know we we get this like issue a lot it's like how does bitcoin fit in a portfolio um well actually it fits really well especially if you want a good diversifier and uh um and uh return driver and you know this this diversification benefits and the increases in

sharp ratio so long as you rebalance right and you you have an active risk mitigation strategy like that so long as you rebalance this holds even if you back test um this data back to the worst possible time in terms of bitcoin price like at the peak of 2017 uh 2017 yeah so you know that's that's been one of the focuses that we have um you know an another one has been uh it's been this like um you know what about blockchain right so it's part of my next big focus then we we we see the the esg thing you know it's always at the horizon uh we want to do something there too uh Those reports that we put out were extremely labor-intensive, so we can't prioritize them now. We also had some reshufflings.

I lost the primary mining analyst that I had on the desk before, who did a lot of the knuckle work on this, which is a lot of just ongoing monitoring of everything. You all know how hard it is to keep up on the mining space. It's famously opaque. and full of half-truths and bragging and you know so we're hoping that we can do something in that space going forward uh hopefully we can we can sort of stand on the shoulders of some some other giants in the space i'm really bullish on what apolline is doing over at cambridge if she can get that sorted like be such a massive feather in her hat and also such a huge like value add for that like argument section of bitcoin if if they can get ongoing like geo data from the

pools to the point where we can pinpoint like the geographical regions where the mining takes place like using i in here i think our methodology our model is better than any other model that i've seen out there because you know we look at this from a regional uh point of view in the large countries right so you know you can't just take the renewables penetration of the u.s and then find the hash rate of the u.s like the u.s is 50 different countries um each one of them i mean there are some other some states have their own grids like i mean as we're as we're on this journey a great american my egg where you were there's so much nuance state to state like you talk to somebody wyoming you talk to somebody north dakota you talk to something in texas

there are three completely different situations absolutely and then you know you have this like burgeoning uh flare gas industry happening right now and uh if if you're gonna go the you know we we never attempted to for example calculate uh things like um like carbon footprint just because it's like a bit out of my wheelhouse like i know how hairy those calculations are for my previous job and i just didn't want to get into it um it's too difficult um so but there are other teams out there that have much better competence for this like for example the those researchers out of germany um i forget what their names are but uh they have a much better better methodology for calculating carbon footprint but have a much worse methodology for pinpointing

what the carbon footprint should be on a country level because they they do country level right so that completely misses the point that you know mining isn't done equally across china or the us or canada or russia it it flocks to where the energy is cheap and the energy tends to be cheap where there is abundant access either hydro or you know in the case of north america in particular it's like extremely rich and low cost gas fields so not to mention wind uh you know particularly in texas so it just misses out on very in my opinion important granularity and i would love to find some way to like combine all these methodologies like i want to mix like our regional calculation methodology for renewables penetration with a type of more higher resolution

geo data like from for example cambridge if we can do that then i think the esg at least from the e side of esg uh should be from there on out just a simple question of value judgments you know let's just get the numbers and then we'll take the the moral or the value judgment debate afterwards but you know let's not start with disagreeing on the numbers it just makes everything annoying yeah no it's it's tiresome too it's uh well even like so just like my mind's running right now like if you're using like ip especially here in the states in north dakota in the balkan or the permian especially in texas where it's like dense like some of these oil fields are are next to grids but you could be

mining off grid and so you have to weigh the opportunity cost if you flared that gas versus turning into bitcoin you have to make the argument that the sets are more productive than burning that gas which is i think a pretty easy argument to make um then you get into like yeah yeah like what fucking value do you get out of burning it like i mean you're you're just ridding yourself of a liability well i guess the argument would be but you're doing that in either case yeah but the argument would be that like bitcoin as a whole the fact that you're doing it with that gas that would have been wasted contributing to this network that's consuming all this energy beyond that

gas so what otherwise my way is like incentivizing uh production outside or consumption excuse me outside of that flare right you get what i'm saying are are you though like wouldn't you say that you know because this is an argument that we get a lot from like the the the crowd who's like oh bitcoin runs on renewables yeah well you know when bitcoin uses those renewables it's just displacing other people who wanted those renewables and they now have to use fossil fuels right and i mean first of all that doesn't make sense but you know secondly this to me this kind of sounds like that argument in in reverse in that like when you are using that energy that would otherwise be wasted and putting it towards

the bitcoin mining network then you are bumping out a bunch of more expensive energy that otherwise would have been used to mine bitcoin right so i agree i'm right and i'm uh yeah i was playing devil's advocate trying to put that argument forward i think i think it's a no-brainer dude and i mean someone at some point i really hope uh are gonna make the the the sort of it's like you you have this like calculation that we always try to do we're trying to measure like uh like the carbon output or whatnot of everything that we do but with flare mining like you have to actually do that whole thing in reverse right because all of a sudden like bitcoin becomes like a net like a net carbon positive um or maybe not net but you know it becomes like at least part of

it becomes like a carbon positive um calculation that you have to make force how much yeah it's like you know when you're taking that otherwise wasted energy and putting it to good use you are then allowing energy at the opposite end of the cost spectrum for mining to be you know used for something else if there's even a demand for it right um and then you then need to subtract that saved energy at the other end from the carbon budget, if you will, of Bitcoin. That's a calculation that I don't

think anyone's even thought of. Well, then it gets compounded. I mean, people must have... It gets compounded, too, to a degree, because let's say we get to a Bitcoin standard, then you get to

the reduction and misallocation of capital, and how much does that affect the carbon footprint so there's like a compounding effect with the monetary policy yeah no absolutely absolutely and i mean the the the other thing that you're doing is that you're you're uh you're lowering you're lowering the cost of energy in in other places of the earth where there is more of a competition right so say that i'm say that i'm sitting here in london you know strictly hypothetically and i'm mining on you know whatever grid there is here with whatever power production

sources that exist here you know i am actively competing for that energy i'm i'm paying a certain price right then you come in on some gas field in north america you use gas that cannot possibly reach me economically it's impossible you cannot get it here at a price that is lower than what i'm already paying so now you take over the role as a miner you bump me off of the network and then the energy that i am now not using here which is of higher value because i'm paying more for it now gets allocated to something more useful pretty much by definition and that is going to be a super powerful thing as well because bitcoin mining does that it takes energy from where it's the least wanted um and it transports it back into like markets where it is

more wanted although you know you could argue that us eating it up in the first place is uh is already uh a bad thing a net negative yeah is it though i don't buy neither do i no of course not i don't buy that at all like um uh i mean simply from the fact that people are willing to pay for it uh that's enough for me like if you're if you're willing to pay for the the current mining cost which we bear mainly through uh inflation right if you were willing to bear that as a bitcoin holder then that's already that's all i need to know that means you have made that choice as a consumer and that is your free will like there's nothing i can say about that in terms of what should or should not happen there's none of my business

what is your business yeah i completely agree it's people are so emotional about the energy consumption though outside of bitcoin it's it's crazy did you hear uh uh have you seen like the world economic forum and the world health organization pivoting and saying that uh covet 19 is now climate it's uh highlighting how bad the climate crisis is sorry what COVID-19 is what doing it's highlight it's highlighting the fact

that the climate crisis is as pressing as ever the fact that we need to unite as a global community to fight back against these these hidden forces is this part of their like whole

great reset yes yes like who died and made the world economic forum the conductor of the world do you guys go to Davos have you ever been there I haven't no I don't know what the hell I would do there I would get all freaked out I wouldn't be able to contain myself I feel like you have to wear a suit there definitely though hey you're a headshot you look good in a suit outside of that picture i can't imagine you in one though

i i'm actually not gonna shit on suits like suits are pretty great like they're like i mean if you have a good suit it's like wearing like i agree i know uh and i like when i look good in a good suit it's a good feeling yeah it's a good confidence booster yeah it also changes like your entire uh like physical behavior in my opinion it's like you can't like slop around like when you're wearing a suit you know you gotta act sharp as well it's like you don't want to fuck your suit up right very uh very calculated movements yeah which is i think that's good like calculated movement is uh it's a good thing for people to to be into you know like i you know in a distant future uh me and uh me and at least one of my

brothers hoping to get the other one in on this too but we have like uh kind of like uh distant business dream of creating like kind of like uh a school like the schools were back in the day like the school of athens you know the academy it's much more of a holistic thing like it can be outside of like the it's like we're gonna we would have to do this in norway where we're from right where there's you know private schools it's like not really a thing um so it have to be like an extracurricular thing but you know in norway kids are done at um 2 30 school and yeah and you don't do like after school sports or anything like that like sports is a private matter that you do mainly like after dinner which is at you know 4 30 because people

done at work at like 3.30 in Norway I didn't realize that start at 7 or 8 done at like 3 or 4 what would the curriculum be like

well it would be holistically oriented right so it would have to be a little bit of everything so we have a lot of work to do there but I feel like there is

There's, it would basically be like plugging the holes of the, of the, you know, state sponsored education as we see it, which those, the biggest gaping holes are, in my opinion, philosophical, ethics, moral, metaphysics, you know, a person's place in the world. what is the point of living what are you going to do in your life and why I was going to say I think you trying to instill a bit of a purpose and that's why I'm

very happy my parents sent me to a high school where it was mandatory to learn and to learn Latin and then translate old texts because I think you killed two birds with one stone there I would add to that curriculum

like etymology like how did language come to be and how has it evolved over time I think learning Latin I never got into Greek I was too big of a pussy I wish I would have

taken Greek classes but Latin learning the structure of language and where it evolved from I think is important and the fact that words

have very have definitions some very specific definitions yeah agreed agreed some Greeks and Latins Some Sanskrit.

Everybody should translate the Catalan conspiracy just to learn about logic and rhetoric. I like that. I mean, I've never gotten into those languages myself, but I always kind of wanted to. But yeah, I mean, I feel like epistemology is super important. Back in the day, at least when you went to university, It was mandatory to go through classes on like the history of thought, history of at least Western, how do you even call it in English, like idea, idea science, you know, like how, how do we arrive at like truth, what is truth.

I think you might have covered your mic or something. Oh, yeah. I don't even know where I was. Your sound just died. You're coming in very low. Did your headphones die by chance? No. I can hear you.

Yeah, something's going on with your sound. That's where my mic is. Is it on still? It's, like, very faint. I can barely hear you. Maybe it's mine. there's all there is to it yeah i don't even know where i cut off i i think i was complaining about uh like the philosophy of uh of knowledge just isn't really taught anymore and uh i i think it

gives a lot of people issues in uh in day-to-day life in that if you don't if you don't think about like what truth is then it's very hard to have like um a well-developed relationship to it and um i don't know i've been thinking a little bit lately about you know at least i find that the focus these days is uh is very much on everybody trying to push their own beliefs on others as a way of making the world better and there is not enough focus on you know why don't start with yourself and try to make sure that you at least embody the values that you want to see in the world and you know you act in a way that exemplifies the type of behavior that you want to see um and i've been like thinking about this concept of like you know being a human full node

like actually verify like you know if you take your current state of your current state of all your sums of what you believe and what you believe you know to be like the UTXO database by analogy then have like to which extent have you verified your own UTXO database of your mind like to which extent have you actually gone through and verified the beliefs you hold from first principles like from genesis um and i've been at least like wanting to first of all like be better at doing that myself and then this would be part of like what i would love to have in in like an extracurricular like program like that it's just like and it all feeds into like certainty about your own beliefs and where you stand and i think that helps people in life in

general to have a purpose and to have confidence in what they're doing being the things that they want to do and the things that they should do so you know striving to be a human full node are you saying i need to be able to read and understand the bitcoin core code repository if i want to be a bitcoiner i allocate a lot of that that knowledge to people i believe know more than i do i don't know that they do yeah i mean i think it's like a it's an aspiration rather than a physical possibility um but at the very least people should do it with respect to their own ethics

um because i think that that is like upstream from so much of everyone's behavior and everyone's general interaction with life that at least finding like your moral bedrock and the foundations of your own ethics and being comfortable with what it is and what that means in terms of deductions and where it would take you in terms of avoiding contradiction with what you espouse and what you support and ultimately feeding into politics. i think i also think that's like a it's a necessity it's a necessity of a democracy right a democracy rests on having an informed body of voters

i worry about that yeah this summer in the united states has proven that there aren't very well-informed voters i mean the hypocrisy of of the whole quote-unquote equality movement uh that's that's that's been unraveled this summer really highlights the fact that people don't even understand what they're trying to do yeah and and also back to like the meaning of words right i've heard this like slowly switching over the last couple of months you know it was equality first and now it's turning into equity and I'm like

okay now we're talking about two completely fucking different things and you can't just like make a switch like that and you know they sound the same so you know you should be but people equate them with each other yeah they do

they do people equate equality in equity yeah I know fuck is it it's one of the it's either like

it's one of the big Austrians that have an excellent quote on this which basically just demonstrates that you cannot at the same time optimize the society for equity and equality you can only do one this is proven out in individuals

this is Thomas Sokolov oh yeah yeah that guy's fucking you don't even have equity within your own family unknown hidden badass between your brothers and sisters no

I mean you don't even have like equity in your own life between different times like that's how uncertain the world is you don't fucking know what's gonna happen but people need to also like relinquish this illusion of control you know there is no control yeah no i mean

you know not to get caught up in like the the deeper question there of like is there even free will but i do think that even if you do have like individual agency over yourself and like the choices that you make in your life the vast majority of everything that ever happens to you is completely out of your control has nothing to do with anything that you've ever done or could do or whatever but and and and that in that in itself is enough to show that like we cannot like optimized for everything having everyone having like the same outcome in life how on earth would we do that i mean anybody with an iq above 80 should be able to tell it's like literally impossible and so they can go back to free will i guess you only have free will in the sense that

you can react to the things that you can't control the only free will you have is the way you react to certain things yeah i mean but you can even argue that like a lot of reactions i mean a lot of reactions are purely mechanical you know like yeah well yeah it's another like the fear reaction of the media narratives that we're seeing it play out now but this gets back to the whole first principles understanding truth like if you are equipped with the ability to think from first principles and know how to be a truth seeker i guess you would have more free will than others potentially yeah maybe maybe i mean you know doing full circle here like this is part of like what i was trying to like get towards like getting into neurophysics i was trying to like

figure out you know like what is the neural basis of all of this like where does where does consciousness like fit into this and where does like free will if that even is a thing like where does that even come into this because the nervous system at least like the way we understand it is it's purely mechanical um everything is governed by the same exact like physical laws of everything else at least as far as like i could get to it i mean there are there are some there are some proponents of there being like some sort of like quantum interactions in there um i can't remember who it was that said you know okay so so now you're like sprinkling randomness into determinism i mean that's fucking worse like i'd rather have

determinism where would the uh where would the quantumness be between endpoints of synapses at the endpoints of synapses yeah yeah it it would it would have to be it would have to be baked into like yeah i just don't see it i don't see that either i mean i i'm because the microtransmitters have to transmit something across yeah it's not it's not at both sides at the same time the way i understand and i've only taken a few biology of the brain classes yeah no exactly like neurotransmitters need to bind uh i guess the question is like does binding fall under uh just but you know taking a step back like the whole way you

approach uh physics at this normally at at this level the nano level is through statistics uh because of like the uncertainty principle and the fact that like you cannot say anything interesting about single atoms or you know not really even about single molecules unless they're very very big so i guess i guess it's like a question of you know do you consider like how do you know if a single neurotransmitter has bound um is there some form of like quantum uncertainty in there like could could you consider could you consider like one receptor to be like a bit of a skirtinger's cat type of thing it's like it has a neurotransmitter there that's both bound and not bound at the same time until like you

actually observe it through an action potential you know and like low out little out of uh my my quantum depth here quantum physics was never really my thing but even so like it just exchanges determinism for randomness which i don't think it's like a net benefit in the debate on free will it's like what what would you rather have you want fate or do you want like coin toss right like you don't want any of those no you want agency no it's a scary thought to think about the potential to not have agency over your own life it is

i mean i like to believe i have agency and that we do it certainly feels like it doesn't it it does but how many like i've i've i i'm increasingly conscious of how many times i do an action and then i rationalize it afterwards that oh yeah i meant to do that yeah i planned that and i catch myself having premonitions of future behavior like i i can hear my mind going you are about to say or do this right and i i like i'm aware of it and then you know i do it and then the question is like okay who who was that who was that you what yeah are you getting the concept of deja vu here or i mean did i choose to do that or was that choice made by my body and again super full circle back

to you know what is consciousness in in eastern thought uh particularly the type that i subscribe to like consciousness like it is the experience it is and it is will and an agency and all of these things at the same time um and they don't even like there's no like neuroscientific basis of any of that it is literal phenomenological self observation by many people that have observed the same thing and come to the same conclusion

and my god would it be interesting to figure out what the relation here is between the pure existence consciousness that is apparently the same in everyone and our bodies

which is different in everyone yeah no and this is just making me think of the times i've taken acid and shrooms and it's changed the way you perceive reality and a different type of consciousness and right like have you felt the one i feel like i have yeah shrooms particularly not so much acid and like that that is that is the that is the proof um that they keep like pointing out they're like this is maybe not provable in in uh an objective way but it is provable in a subjective way like anyone can verify it for themselves through experience normally the way you would have to do it is learning painstakingly how to make it how to meditate to get to a state where you can

remove the input of your senses and you know what is left after you take the senses away is consciousness and i i think that what you're describing is a potential shortcut to get there yeah yeah it just acutely highlights the fact that like tuned if you think like a radio or ham radio tuning our body in a steady state just the way it is naturally is tuned to perceive the world in a certain way and then you add in the psychedelic that changes your tune a little bit and you perceive the world completely differently

and consciousness differently. It's pretty interesting. There's a particular school of non-dualistic Hinduism that proposes that there are four states of consciousness. One of them is the waking state, which is the state that everyone shares and experiences together. Then the next state is the state of dreaming sleep, where you're conscious, you are experiencing that sleep, right?

Then there is the state of dreamless sleep, which you still experience, even though you don't remember any of it. But, you know, you still wake up and you're like, wow, I slept so deeply, you know, I feel so great. and then there is the fourth level which is neither waking nor sleep it is pure observation pure consciousness the point that they're making is that between these like different states of consciousness you are the thing that is common between all of them which is you the observer you are the observer of your waking state right now you are the observer of your sleeping state some other time you're you know you're the observer of the dream you're the observer of your dream deep dreamless sleep like the thing that the thing that is constantly present throughout

this is you you know you the observer and that is the essence of existence and consciousness in that way of thinking about it which i think is a pretty incredibly profound way of thinking about what consciousness is it is the state of existence itself which is pretty cool and you In Western tradition, the closest that I've found to traditional accounts of this is the Stoics come very close to this way of thinking about things. And then there are some pretty interesting modern researchers too. Douglas Hoffman, for example, is a really interesting guy. And I think this is a case of convergent evolution.

it's like people like coming to the same truth from different angles um randomly or or just because that truth exists there so inevitably like people are going to come at it but from different angles and from different backgrounds and experiences yeah this is the most cosmic we've gotten on this podcast in a while i love it really yeah no i agree i fucking love this i'll try this i'll tie this back to tool though so like in their in their latest album they have um they have one song that like deals with this in depth and um i tweeted this the other day i still hold that it's my most profound tweet and i only got one like um and the the track is called numa and numa is the the old stoic uh concept of spirit

uh it means breath in greek and uh in in that in that song they they basically lay out um same type of metaphysics that is laid out in the shortest of all upanishads which is the mandukya upanishad who certain traditions of hinduism hold is is alone sufficient for enlightenment this like single upanishad it's the shortest one uh and it's the one that lays out those like four states of consciousness and um who you are in it and and what your relation is with uh with the one uh and in their latest album like tool essentially lays out the same metaphysical cosmology like in one track so you know i tweeted that numa is the mandukia upanishad of music and uh yeah no response

i just like that tweet for you you got two likes now thank you it's a we're like what are the lyrics like what are some of the i'm not gonna have you sing the song yeah no it's just pointing out that you know we are spirit uh like that is the essence the flesh is not the essence the essence is spirit uh and you know we we go around essentially with a shroud like a delusion uh in front of us in front of us which is the the waking state it's not real but we all think it's real because like we share that reality but we're all essentially bound to reach beyond it and and realize again like what it is that we really are which is is not this you know like we aren't like our bodies

and and you know that also ties back to like enlightenment first and everything else is a tool to get there and money is a big fucking tool there

and if the money is fucked it is one of the most important tools if that is fucked it just ruins people's general prospects of enlightenment like how do we get as many people towards enlightenment as possible well material security is a huge part of that how do we get material security for as many people as possible well we have to have proper

economic calculation that necessitates good money bitcoin follows directly from the search for enlightenment for as many people as possible sort of like enlightenment utilitarian or not like utilitarianism like the utility is boundless of enlightenment literally frees you from everything right i mean just look around say the culture today pop culture main culture whatever you want to refer to it's demonic almost it's people are lost it is and you know what is the devil like the devil is the senses you know and the pleasure pleasure of the senses that's very hedonistic yeah the devil is the deceiver right and the deceiver is the senses the senses deceive us they're the ones that

make us believe that what we are is this this world but when i'm getting closer to enlightenment uh sort of set off some senses like this conversation like i'm getting like butterflies in my head it feels good feeling being intellectually stimulated senses will be stimulated that's the word i would look for it's recognizing i guess yeah yeah i mean i it is definitely like pleasurable to to think about and like search for i wouldn't say that i i don't feel enlightened but i'd really like to be like no i don't feel like i feel like you know i'm on to something but i need that i need that like observation

you know i need that the proof an individual proof i think it's going to take me a really long time to get there there's a lot of training you need to do is that why a lot of eastern cultures do monastic meditation um that's the word i'm looking for where you just live by yourself seclusion if you will shake your computer again i lost you are you serious oh now you're back yeah you're like laying your hand on your but i mean okay it just went out again i don't know what's going on there you go is it better wait like now it's better yeah now it's better i swear to god yeah we gotta call peter ship for tech support

how do i turn this off he'll send us a bitcoin password yeah yeah but what if my computer loses it it should be in your head peter it should be in your head yeah man that individual proof yeah but it's interesting like the societies in the east are you know not all of them but a lot of them are like built around it's like like you said this monastic culture where you choose to become a monk like the rest of society will will like make sure that you have subsistence and you know the minimum of material security that you need and then the like the philosophical um the philosophical setup that they use is such that you know the monks realize that they need to lay demand on as little as possible from society right so you know

you have like one and then this comes back to like non-attachment as well which i think a lot of us could do really well to practice like did not get attached to everything attachment literally just causes problems it really does and it's it's almost ironic no we're talking about this in a bitcoin context too because the purity test and the attachment to um bitcoin ever everything that's like this week particularly is really highlighting it with the whole fucking inx thing like whatever it happened dude get over it it's like what whatever whatever it's like fucking whatever and you know um this is you know we talked about like bitcoin's immune system um we got to be a little careful uh if your immune system is a little too

riled up like you end up with allergies and you end up with auto kleidoklismics kleidoklismic shock as well as possible we don't we don't we don't want that like yeah no i mean yes i yeah it is weird but but it's like you know we had this we had this like heavy disease almost right like the ico boom it was such like uh it was such a tough experience for the for the community as a whole that i feel like we've developed this extremely strong like immune system if you will and it's almost it's almost a little too strong like we you know but i do think it comes from a place of

like genuinely wanting to protect people from themselves which you know you can you can do that but you can't make them no and that's i was part of that overreactive immune system at one point too with that exact intention like i don't want anybody to get burned but you just it's it's inevitable some people are going to get burned and at the end of the day if you have again going back to understanding things from first principles and truth if you understand bitcoin its incentive system and the flywheel that's been initiated you should just be confident that it's going to succeed no matter what any of these alternative projects do like i i'm a true believer that bitcoin's inception cannot be replicated and never will be replicated in any launch after bitcoin is

bastardized from the start um i mean i lean towards that too yeah and that gives me enough confidence to to not worry about them even though just some habit and the fact that the the project frustrates me beyond no end because there's no consistency i do shit on ethereum quite a lot Yeah, I mean, like, I'm all for, like, holding people accountable, but when you go down these, like, routes of, like, instituting morality on others, like, you really have to, you really have to be free of sin if you want to cast the first stone. So, or cast any stones. i'm i'm much more of a proponent of like get your own house in order before shitting on others point out the real technical issues and you know don't get so fucking caught up in like being moralistic

the best way to teach ethics and morality is to embody it not to proselytize yeah and hey it's probably inevitable i'm gonna get i'm gonna get uh people may say i'm enabling a shit coiner here because coin shares has funds outside of bitcoin funds um sure sure but at the end of the day you know like what what is our role in the market our role is to let consumers express their beliefs we are not a gatekeeper of what people should or should not invest their own money in. Now, you can take a look at what, for example, the research desk will recommend, if you will, or not recommend, or just not say anything about other than the pure technicals. I mean, if you, like, let me put it this way,

like, I personally wouldn't, but it's like, you know, your research desk at any asset manager like it's not an asset manager's role to curate which stocks from the stock exchange like you you offer to the clients like the clients are the ones that should have choice the research desk exists to inform the clients on the information that they need to make their respective choices that is what we do right and if you look at what information we put out like it it doesn't say you know oh xrp is gonna fucking change the world like you all need to buy it like to the extent that we talk about for example xrp at all it's just to explain like what is it um how would this like fit within your thesis or not you know it doesn't take

a view one way or the other like you know the the old adage of like don't tell me what you think like show me your portfolio well you know if if people have asked i mean obviously like conscious is a diverse group of people with different views and different understandings of the world and different predictions for how things are going to pan out but you know ask ask individuals about their portfolio and you know you'll you'll get a much better view of like what it is that they're actually into themselves um but again like my views aren't necessarily views that i'm trying to push to our investors like and i don't need to i think that our investors are highly educated highly intelligent people for the most part and all i have to do to make them

arrive at you know what i believe to be the the optimal set of conclusions is to just show them just the same information that led me to those conclusions that's how i approach it all we have to do is show the real information and investors will come to their own decisions so i agree i think i haven't looked at the aum of your of your different funds recently but i think it shows there it's a bit of a Pareto distribution like i think we have 75 percent of our event in bitcoin product 23 in the ethereum product and like one it's not even one percent actually i think in uh each of the litecoin and xrp products respectively i think it's less so yeah it's not something that we're focusing on i mean they're there if investors want to express those views

like we don't you know we don't busy ourselves with that but there's exactly zero institutional interest for it and in our distribution team like what our focus is is institutional clients and i can tell you that i haven't mentioned xrp once to an institutional client because like they're not interested i'm sorry but there is no interest for it uh there is the occasional interest in ethereum but from like all the interactions that i've had with institutional clients this includes like trillion dollar asset managers like it's bitcoin that they want um they know about ethereum they're they're curious about it other alt coins it's just i mean they probably know about them and maybe they're too embarrassed to ask like i don't know but it's it never comes up yeah no i mean

i i'm not gonna hold any of that shit against you it's just like again going back to like the purity test people are obsessed it's like some people feel the need to project in a certain way um it's virtue signaling though yeah it is it's our own hype it's our own super fucking hypocritical version of virtue signaling yeah i need to i need to do less of it yeah we all do towards ethereum because i'm confident they're never going to transition to 2.0 um and i mean even if they did like is that a net detriment like is it i just feel like i i don't i don't think bitcoin and ethereum are trying to achieve the

same things and again like how do you put like goals on a protocol um you know what is the goals the protocol i guess like the collective uh the collective will of all of its users and developers can't even measure that um yeah do i think ether will ever be money probably not could it be some some form of like digital fuel maybe maybe how much use is there for um censorship resistant computation maybe a bunch maybe a bunch um is censorship resistant computation necessary for a lot of the things that ethereum is currently used for fuck no like absolutely right um no one's going to censor your crypto kitties like it's not going to happen

um a lot of those are more proofs of concept like but things like you know prediction markets that's like a it's a profoundly cool idea a prediction market and it is something you can easily see like authorities like going after um anything having to do with morals right like online gambling uh like smart contract gambling i feel like that could be a use case i mean everybody loves gambling uh and it just happens to be like pretty harshly like just prevented by a lot of governments uh especially the ones that believe that it is their job to to instill their morals on on the the population you know but then there's the question of like okay um how like does the execution here like really need to be like decentralized you

know it and i honestly don't know the the answers to these questions like i my like my individual uh my individual sort of attitude to ethereum is that it it i'm not sure it's gonna work uh i'm pretty skeptical to proof of stake proof of stake definitely doesn't do everything that proof of work does like that is a provable fact so you know it's it's just all trade-offs right like what are you going to trade off what are you gonna train off i don't know like if if you really have to query like network time servers then sorry you got a central point of failure um if if the only way to protect yourself against like long-range attack is checkpoints then okay you've changed the trust

model like is that necessarily like bad for what they're trying to achieve like i don't know i don't know i think so long as like money is literally verifiable from genesis if decentralized computation isn't necessarily like verifiable from genesis like oh does it have to be like how important is this calculation like what are we calculating that needs to be like this secure and censorship resistant and decentralized i don't know the answer to those questions so i try not to try not to project my views on everybody else there i just don't feel like my views are particularly interesting for other people to hear on this yeah i'm interested in that computational whip there do you need it back to genesis yeah like

a computation right you only need it to work when you need it to work and is it dependent on the computations that came before it and uh i think it shouldn't be right it should be a formula right i mean if you're going from one state to another like yeah i don't know it's smarter people than me and need to figure this out and i feel like it will be figured out and i feel like the market is just gonna deal with it and i don't really have anything to say about it other than like where i put my own money uh and that's how i express my view primarily other than just trying to learn literally the facts about how these systems work and how the functioning of those systems relate to um what it is that is being

espoused in terms of like future achievement but but again like here is where like aetherium has a bit of like an issue in that it is such a wide and big thing and and it is big community now to you know Bitcoin just tries to be money and that's all it does the Bitcoin does but aetherium is they're doing so many things um and that inevitably turns into changing narratives and then it's like who is it that chooses these narratives it's like developers and then they have like a foundation you know it just complicates things it makes but it just makes them so fundamentally different that like i question like the point of even like trying to compare them like one for one like that like

are we just wasting our time like should we be like trying to that's get enlightened instead yes we probably should no that's why i'm so happy i've completely dove headfirst into the mining rabbit hole because there's enough to think about and discuss and proof of work and mining and the incentive system alone you get distracted from all that yeah you have to go down that rabbit hole though because like without mining there is no bitcoin and without proof of work there is no fucking mining i mean i think i don't know if you'd be surprised but i don't think a lot of people have gone as far down the rabbit hole as they probably should be going down i know and like even like you know when i read that article by gregory trabetsky

like i thought i was like down the mining rabbit hole but i was just scratching the fucking surface right i haven't even dug a hole it's i mean the hole takes you down the time question you know which which takes you down a bunch of other questions of like relativity and like what consciousness yeah right like what even is time and what is consciousness and all this right how does it relate to time well that gets to full circle like i think you're alluding to it in the beginning of this conversation like the singularity is bitcoin a vehicle through which we get to the singularity in a certain way

or another do you believe in the singularity the computational singularity the merging of humans and machines well in terms of like the merging of like artificial intelligence and humans

yeah well I think that begs the question of you know because what the the presupposition in that statement back to you know words and language like in the western tradition of what we mean when we say ai in that full sense is artificial consciousness right but we tend to mix up consciousness and intelligence in the west we like we blur them like and they probably shouldn't be together like intelligence is one thing consciousness is another thing right it's back to equity equality it's very similar yeah and and you know

if you don't split them apart like you confusion follows right like you can't you can't like clearly reason about them so so back to like will we see a merging of like human and artificial consciousness i think that begs the question of were they ever separate and i think the answer to that is no they were always the same um and if there is a merge of any kind it is the it would have to be the the dual realization on both ends that no we're actually the same um so but i think first we need to work on the realization just between humans that we are the same yeah we have different bodies yeah and we need tools to help us be able to focus on enlightenment right we need tools bitcoin is such a tool tool is another tool right

but bitcoin would be if it's like if it hits mass adoption it is successful and we figure out so that's one uh one piece of homework i would like to give your research department is putting the uh the fee market fud to to rest could you please do that um uh we're gonna try our our best stab at it too it's it's on my list it's on my list i mean i again i think this is one of those things that um has been intuitively understood by a lot of people um but we're missing that like last formalization if you will i think the people closest to the truth here is like nick carter and a lot of the work that he's done um i think hasu has a lot of very interesting thoughts on this too

i think hasu is interesting to us but i think he we talk hasu and i talk about this a lot i think i think trying to extrapolate future fee markets based on usage up to this particular point in time is uh is not a productive basis from which to make the the argument that it may not develop yeah i i agree um i i think the fundamental question here which has been raised many times is you know how much is enough and that's why i think a formalization of the relative ratios between transaction size fees paid not only for you individually but for the block as a whole and confirmation times

until we can formalize that relationship i don't think we're gonna get more or less anywhere on this question because we don't know how to formulate what it is that we're asking like we we know the answer that we want to get but that answer is it's weird right like what is the question we're asking we're asking like will fees be enough to pay for security and and then we're looking for a yes or no right and think about like how how vague that question is right because we haven't defined like what is enough and until we define what is enough we can't ask that question it's a nonsensical question that doesn't have an answer and then you also factor and like again what is the security budget denominated in now which is dollars capital

used to acquire the machines to create the hash what will it be denominated in the future and i believe it will be denominated in satoshi's yes but but but so now like that is a unit of account question but i don't think unit of account is the right way to think about it either i think a unit of account helps you measure something right but what are you measuring you're measuring purchasing power you're you're measuring exchange value so what what you what you're asking is like what will be the exchange value of you know whatever fees it is that miners will get and you know is this going to be enough to pay for again security right security here is poorly defined as well like what is it that we mean with security i feel like we're

talking about economic finality uh and that comes back to the question of like relative transaction size versus confirmations versus total fees in the block and that's where we need to come at this right we we need to like set some measure of like if i want to move 10 million dollars you know what what fee level per block do I need to feel confident that that transaction has settled in X amount of block time and we need to formalize that before we can get anywhere like this because that is the way we need to think about it because like any amount of security is enough if if you can wait an unlimited amount of blocks but like we need to put the practicality into this like

what kind of settlement time is desirable you know well let's get to another part of our conversation that we're looping back on it's all relative right like is there an order book for security of individual like one individual's perception of security is different than and others how do you factor that yeah and you know one person's need for a rapid settlement is different from another's right which is why like if we can't enumerate this somehow then it's totally pointless endeavor to like even go down asking the question of like will the fee market be enough to pay security the total nonsensical question unenumerated so it can't be approached lots of work to do lots of work to do how early are we how long do you think

bitcoin will survive if it is successful longer than you and me thank god assuming you know there isn't some crazy breakthroughs in like human longevity not that i think that people actually want to live forever like in their current body some people do yeah but they do now when they can't when they first of all can't have it don't know what it entails and haven't made all the realizations that you probably would over an eternity of you know getting fucking bored and having to like learn every piece of everything that has ever existed yeah and this goes back to like mythology it seemed like there's a theme or humanity throughout time has tried to get the point that you probably don't want to

like vampires vampires live a very tortured life uh yeah the the bicentennial was it the bicentennial in the movie with robin williams where he's like the robot that never dies yeah um yeah i mean uh lord of the rings goes pretty heftily into this too yeah with their uh they're like uh the dual um the dual love tragedy you know first the one between like uh baron and luthien back in the silmarillion and then you know the the mirror of that in like the the actual trilogy between like arwen and aragorn where you know she is mortal and will certainly outlive him um and that is just a tragic fate that she like literally sacrifices for you know arwen's got a high time preference

right it's been a great conversation I hate that I have to wrap it up it's all good we can do this again I think we should we can do it at a later time with some scotch as well yes yes the five hour

difference is we'll have to start like an hour from now I think that's when it's acceptable for me to start drinking here the earliest acceptable time for me yeah i don't i don't subscribe to acceptable times of intoxicants like sorry it's my life i've got uh that'll change actually i don't know do you have any kids no i don't but i know you do so you know yeah yeah it can't be blackout putting a kid to bed it's a bad look

means you're a good dad yeah I hope so we'll find out time will tell yeah yeah it's another crazy thing that's really hit home the last six months since I've become a father

is a you have like a very big impression on another human being yeah right have a very very uh important variable in the uh the trajectory of their their life it's your big chance man to make uh an impact that will outlast yourself right yeah and that's what yeah i mean i mean i've been working on bitcoin not working on bitcoin or focused on bitcoin longer than he's been alive but it really drives him the fact why i'm interested in this stuff yeah um is there any other interesting thoughts on the top of your mind that you want to get off your mind before we leave here i mean we went we didn't really go where uh where i thought this would go but i'm pretty happy where'd you where'd you think

was going to go dude i had all sorts of potential like topics and stuff but i'm i'm glad it went this way instead um yeah at some point you know you kind of have to do these types of pods too it's uh i mean it's it's good for the company and everything like if i come on these and I could talk about coin shares and I do think like the European exchange trader product market doesn't get enough attention I think it's way ahead for example of the US side of things like everybody is like going on about like a US ETF and meanwhile like it exists in Europe already like the products are there um you know the u.s is being really slow but then again like it's uh it's like genuinely

interesting and rewarding to have these like talks that take us completely off that path and onto like arguably more important stuff right yeah well the more importance of the why we're even doing this we could talk about what we're doing all the time but why the fuck are we doing it exactly like what is what is the goal what is the goal it's clean as a tool it's not a goal tool is a tool listen to tool tool is a tool all right listen to tool get your geometry get your your spirituality up and going yeah i never i just thought they were a heavy metal band never realized they were sacred geometry man sacred geometry that is drumming like drumming should be

yeah um all right let's end it there listen to tool definitely this has been incredible conversation um we'll definitely have to do it again maybe we'll talk about topics that you had on the top of your mind before we start this conversation We'll see. We'll see. If there's scotch involved, we might not. Yeah, there will be. All right.

Until next time, we're going to bring scotch. Hey. No, I told you, honestly. I'm very happy our paths crossed this year. I can tell you think deeply about this stuff, which is evident in this conversation. And we need more deep thinkers like you in this space. Appreciate that. All right.

All right, freaks. I hope you enjoyed it. Peace and love. Peek-a-boo!