TFTC: A Bitcoin Podcast - #470: Bitcoin's Finite Supply Is The Breakthrough with Dhruv Bansal

Episode Date: December 22, 2023

Marty sits down with Dhruv Bansal to discuss his article on the foundational ideas of Bitcoin, as well as an in-depth conversation about AI. Dhruv on Twitter: https://twitter.com/dhruvbansal Dhruv's article: https://tftc.io/satoshi-nakamoto-unchained/ Shoutout to our sponsors: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠River⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Unchained⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠CrowdHealth⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Bitcoin Talent Co⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ TFTC Merch is Available: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Shop Now⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the TFTC Movement: Main ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Clips ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠YT Channel⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Website⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Follow Marty Bent: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Podcast⁠⁠⁠⁠

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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. Good to finally do this. It's been too long, Mr. Bonsall. Uh-huh. I know it has, yeah. it's been years it literally literally has been years like i feel like we see each other often

but like we haven't really sat down for like the real the real combo well as you were just explaining you've been thinking about this particular idea for well over a year now we've talked about it in the hall we talked about it at the driscoll a couple of months ago then you finally released the piece was it last week two weeks ago now yeah that's right yeah part one of i can never seem to get it done in one article i feel like i always gotta write two or three so this is just the first one and I think it's good because it really cleared my my decks I like got a lot of background work done in this article that I think is really prepping me for what I think is gonna be a more interesting article frankly which is the second one that really

tries to apply some of these ideas more broadly but yeah I'm excited that I'm finally writing and publishing now and not just like researching and ideating and note-taking and making false starts and and yeah so it feels good well I hope it feels good because this is the first piece in a while and this idea that you're sort of expanding on has really changed my perspective in a long term belief that i've had about bitcoin for almost a decade now which anchors to the difficulty adjustment like i thought that was the secret sauce me too uh that made bitcoin as special as it is but you've really honed in on satoshi building on the mistakes of cypherpunks before him particularly way die and be money and you've honed in on the finite supply yeah being the most

maybe i would say avoiding those mistakes because of a different goal different top level goal yeah yeah so where should we start with this idea in your mind where's the best place to start yeah maybe let's just get into it because i feel like it's something i think about a lot frankly it's like it was a question i used to ask myself like in the shower right it's like how does how Satoshi think of fucking Bitcoin? How do you come up with that? Or like, who is Satoshi? That's the other half of that question. Who is this person or persons and how are they positioned to make this incredible accomplishment? And even it goes back to me a little bit, I tried to write about this a little bit too, but it was just too esoteric, so I skipped it. One of the cool

things about Einstein, another impactful intellectual in human history, there's a whole Einstein-Satoshi thing I want to work on of why they're so similar. Time and space and maximization principles and whatnot. There's interesting stuff there. But one of the things that's cool about Einstein is he lived a really long time and was famous and well-known as a scientist for a number of decades after his major contributions of relativity and quantum mechanics and so on at the turn of the last century. And there's incredible writing that he does about how he came up with these ideas. I had That idea for the notion of, let's say, the equivalence principle, an idea in general

relativity, because of an article he read about a house painter falling off of a roof and how that house painter felt like weightless on the way down. And he was like, aha, that's, of course, the key insight. It's really cool to get those stories, right? Because that's not, you don't write that in your paper explaining relativity. Like that comes out years later when you talk about what you were thinking about before you wrote the paper. I think the way that we communicate ideas changes once we have figured out the idea.

right because then you're like okay now that i understand this here's the cleanest path to get to where i'm at as compared to here's the circuitous path that i took myself to arrive at this idea and something that i feel like we're all a little bit impoverished by is we don't have that for satoshi satoshi doesn't have interviews and books talking about like what they were doing like before this and how they came up with that insight and how did you think of the difficulty adjustment like we don't have those direct answers we have writing from satoshi describing what these things are and why they're useful and why they're necessary we don't have as much saying like how did i get here here's here's the things i that mistake going back to einstein there's

versions of relativity that einstein created before the real version that were wrong that were mistaken in important ways but we have we have discussions of those things we have einstein himself talking about like how he was lost for years in this one area and then finally you know had the insight that left him we don't get that for satoshi we don't know what satoshi tried before the difficulty adjustment that didn't work or whatever right um so i think about this a lot. And I wish that we had culturally just this resource of being able to talk to Satoshi about their ideas and so on. And don't get me wrong, I think it's best that they left. Like, I understand why. But it's just one of the consequences, right? Like, you know, I think my line on it is,

you know, both relativity and Ben Bitcoin are dangerous, but Bitcoin is obviously dangerous. And so Satoshi knew that up front and left. Yeah. Satoshi was around, I mean, from white paper to him leaving he left in what april 2011 yeah it's like only about three years of being in public yeah and that's it's funny you're mentioning this i'm like yeah why didn't anybody on the mailing list or in bitcoin talk.org like ask him like what were you thinking when you designed this was all very like you said like active like all right i think people are a little bit more immediate they're like they want to discuss the idea and its correctness or incorrectness it's only i think after the idea sits for a while and we're all like we get to regard it as like

wow this is a really powerful idea now we start to get curious like where did it come from yeah So, yeah, I guess this first piece is really trying to explore that connection of issues. And the claim that I'm making is, while the difficulty adjustment is definitely novel, and it's a brilliant part of what makes Bitcoin succeed, Nakamoto consensus is, of course, a solution to the Byzantine generals problem, a novel one, and more powerful than traditional solutions. These are all great proximate reasons why Bitcoin succeeds. but I think behind all of those is Satoshi's desire to create a finite money supply. And then in my research, reading about B-Money and Bitgold and various other projects, none of them focused on that issue, right? Like many of them sort of assumed that the monetary supply should be dynamic, right?

That monetary policy should be something that human beings collectively decide and argue over and, you know, come up with different proposals. And Satoshi didn't want that. Satoshi was like, no, I want there to be a finite money supply. And I think what I've convinced myself of is once you decide that that's your goal or your top level goal. Satoshi also cared about privacy, cared about transactions, not being censorable. These were also important ideas for Satoshi, which overlaps a lot with the history of other digital currency projects, which were really motivated by those ideas. But I think it's clear to me that Satoshi's top overriding goal was to have a strong, sound monetary policy.

And once you adopt that as the most important out of all the goals, I think it affects the way you choose to build and the kinds of problems you want to think about solving. And my argument is that once you make this choice, it actually simplifies the problem. It's harder to build a money that is dynamic in its monetary policy, because then we have to build a mechanism for all of us to talk about that policy and make decisions about it. Bitcoin gets to just skip all of that. It just decides what is the monetary policy, and then we do it.

And I think that was a really important thing for me to see because then it helped me understand that like, okay, so it turns out like the difficulty adjustment and Nakamoto consensus are actually things that follow. Like once you decide you want to eliminate these freedoms for users to create their own money, you want them to create money on a predetermined schedule, you're confronted with, well, how do I make sure that schedule runs on time like the way I want it to be, right? And then you're like, oh, I need to regulate the rate at which blocks are being produced. How can I do that? this is not a question like i think like zabo or way die asked themselves like the rate of creation of money was not as important for them as other concerns and so they didn't think about the difficulty they never came to that you know as a problem space they needed to think about yeah and comparing bitcoin to be money and bit gold specifically and more particularly be money

I think what you really hone in on and highlight acutely is the different bid-ask structure that affects the supply of their money supply compared to Bitcoin. Now, since Satoshi determined out of the gate this is a finite supply, it completely changes the dynamics of how individuals are interacting with that particular digital currency and how it succeeds going forward. like b money arguably was uh dead on arrival because of this badass structure that they had yeah it was never implemented yeah because it was a cool idea and you could reason it prompts a lot of interesting questions like and follow-up at you know but no one actually built it because you can't build it it's not possible you know i think it boils down to um maybe it's good to summarize for the audience like you can think of b money's money creation process in four phases like as described by Wei Dai phase one is planning and that's when the users and I should also add that

these four phases are meant to be constantly happening all the time so like Wei uses the phrase money creation period which you can more or less hear as a block right so like every block the users are supposed to collaborate and decide how much money should we create and there's no like how are they supposed to do that like you know like professional economists can't agree always on on what we should be doing in terms of monetary policy so I don't know how we're supposed to have like millions of Anon users agree to anything. And it's kind of okay because Weidai admits that they don't really have to agree.

They're all going to independently provide bids. They're like, each user is going to say, I would like to create this many tokens of B-money for this much proof of work. And someone else will have a different price, right, that they're bidding basically for the creation of money. And so this is already complicated. Like the network has to now track millions of bids

from distinct users about money creation, just to get started in this process. And then later on in the subsequent phases of the money creation process, users actually go and execute those bids, right? They like try to do the work that they committed to doing. And the network has to make a choice about like, okay, out of all the bids that were made and then completed, which one should we collectively accept as a network, right? And so now the network is under the duress of needing to figure out what are the highest bids in terms of nominal cost per B money produced. This is a really hard problem. like distributed systems struggle with that concept of highest because highest means I have

taken all the elements of the set and put them in one location and ordered them and then I took the top one and that is very hard to do in a decentralized system where you don't even know if you have all the elements of the set yet because you might have missed a contribution or a bid from some party who then subsequently does or does not do the work it's very complicated and bitcoin just all this evaporates in bitcoin right because satoshi says i don't want the users to create the money i create the money right like let's let's make this the supply curve that i want to have happen and so at every block the bitcoin network knows in advance how many coins it wants to create um and there's there's not you know millions of bids from many many different users

there's actually a single asking price right like at every like right now there is a single asking price that the bitcoin the bitcoin network is collectively um offering to the global community of miners and a price is always a ratio right between two things and so the bitcoin that's being created is determined by the supply schedule. And then the difficulty or the price and computation that that Bitcoin will be released into circulation for is, of course, determined by the difficulty adjustment. But the idea is that both of those numbers are calculable directly from the blockchain. So you get this interesting scenario of like, if everybody has the same blockchain, they can all calculate independently without communication the exact

same asking price, which is, of course, what the network really does. And now every miner who wants to mine, they just mine. And if they create a block that has the proper difficulty, they just broadcast that block. And what's fascinating is instead of having to think about, okay, what are all the blocks that came in recently? Let's order them by who has the most work. We don't have to do that because we know that every block that comes in is going to meet the asking price. We just immediately accept it. And this is what ultimately leads to Nakamoto consensus, right? We replace highest with first. Yeah. And so to really dive into the specifics of the asking price, it's the hash, the first hash found below the difficulty of target that's presented

to the network and the miner has a block of transactions that are valid to the network like that's the ask like we need you to go spend energy to find that hash yeah i don't even think about in terms of transactions yet because i actually think of transactions as a totally separate layer in this market like in theory you know you could have bitcoin with no transactions and you could just have mining and the production of coins like that would sort of work obviously would be a very useless kind of money because if we can't transact with the coins that we've through mining like what good is it but i do think it's a very it's a separate market and i increasingly analyze it separately as a as a second layer that exists right within bitcoin which i always which

i find kind of interesting but um but yeah ultimately like it's it's this simplicity of i the network has decided i want to sell this many coins for this many computations or or equivalently this much energy and i think what's interesting too is that difficulty that min difficulty, like the target hash value that has to come out. It is always the case that, up to statistical variance, the network pays that price, right? An individual miner doesn't pay that price, right? When you are a miner, you don't have the entire hash rate of the planet. The fact that you happen to be the miner that found the block, or you happen to be a miner in the pool that found the block, what's really implied is that the entire community of miners, like the global

industry of miners paid that computational price and so the market in bitcoin is fascinatingly between the entire network selling coins and the entire industry of miners purchasing those coins with computations that's different than in a b money and b money each user acts on their own right each user is independently offering a bid to create money independently working on that bid with proof of work and then broadcasting a winning ticket and then all those bids are individually accepted or rejected right so inherently more complex system where each user is kind of their own island um bitcoin is global um and deterministic and that's very interesting to me yeah and i mean

it's funny because um way die was skeptical of bitcoin at the beginning wasn't he i love i i think he still may be yeah he emerged recently yeah he came back on twitter but i think to specifically to uh sound the alarm about AI, which is so beautifully appropriate. And of course, everybody descended on him to be like, will you be on my podcast? That's exactly what happened. I definitely messaged him too. I'm hoping for a response back, because I told him, I basically, I asked him, I was like, how much do you care about monetary policy? I'm rereading your work, I'm thinking about Bitcoin, and it's dawning on me that Satoshi's biggest accomplishment was deciding to implement this

constraint like and then everything followed from that so i asked him like you know is my reading of your priorities correct did you not really care about monetary policy you were more interested in trying to build a functioning currency and ledger i haven't gotten a response yet but um i that's my feeling right that just uh neither for zabo or for die was this sound monetary policy like the thing to build right um it was it was it was not an explicit goal whereas it was for satoshi And I think that led to the solution to all these other problems. And tying it back to computation, too, because that's one thing you highlight in the piece, like a very good visual, is up until Bitcoin, the market for computation was not as clear

as it is now that you can pay for computation with sats, right? It's not fungible. Or in the sense of, I think, the notion of proof of work predates Bitcoin by 15 years. Yeah. And, and where proof of work was first suggested was in combating spam. And so like, if you wanted to send an email, you would like do some proof of work associate, so do some computation, spend some energy, kind of attach that along with your email. And that would be your ticket to get the email delivered. Right. And that's why I always thought the difficulty adjustment was a special

sauce because what hash cash original implementation, that's the problem they ran into. There was no difficulty adjustment. So it just became. Well, sort of, I feel like the problem there is it's a little bit different, right? Cause Because if you think about it, like, let's say there's 100 people using the system and they're each paying a certain amount of resources to send an email. If there's now a million people using the system, we don't need each person to spend more, right? Like, the price of email sending is not as directly affected by the number of people trying to send email. So the only thing that matters is that the cost of an individual email is just above, you know, where spammers can exploit the system, right? It needs to be low enough where users don't experience degradation in their daily workflows by having to do the extra work.

but it's high enough so that if you want to start sending a million emails, it's going to be expensive. If we increase the number of users sending emails, we don't have to increase the price, right? We just have the price increases as hardware increases, right? So there is a connection to difficulty adjustment there, but there's no incentive. The incentive isn't as strong, right? I think what's interesting about Bitcoin is, again, it's not a market to each individual user, at least not at the level of money creation. It's a market to the entire global industry and so each user is not separate they're all together in one giant pool like spending their computations and i think another interesting thing is like it'll never be the case

that we are selling bitcoin for fewer computations than we asked for in our bid right if the network takes two hours to produce those computations or it takes 10 days or three weeks like bitcoin will just sit there waiting for that block to come through eventually yeah it'll readjust the difficulty lower i.e reprice its offering right offer a lower asking price but that still requires the network as a whole to deliver the current asking price so we can produce more blocks so that we can hit the difficulty readjustment um so there's really no getting out of it right like it is literally a market price like that we're selling that the network is choosing to sell those uh bitcoin for and the market pays it every 10 minutes approximately yeah no it's beautiful

how you see that play out in real life i mean most recently in 2021 with the china mining ban that was even though it was stressful for a lot of people i love seeing that much computation just relocate around the planet just to avoid the constraint it's it's it's great and and and it's because of like the monetary properties that bitcoin inherits like once you build the correct system right like going back to the email market market for email delivery like it's not a good currency that's back in that market because they're they're computations and computations aren't themselves a good form of currency right we they're not fungible because implementations like hashcasts actually associate the proof of work to a specific data input, right? The email

that you're sending much in the same way that proof of work in Bitcoin is associated to a particular block or block template. So they're not fungible. They're, they're, they're associated to a specific email. Like we don't know how to value them in terms of other goods, right? Like there's, they take on a value that's sort of declared like literally by Fiat, right? By a server operator or something like that. But there's no connection to the broader market of like what's happening in the world and how a supply and demand market baskets, like none of really exists um they're not they're not very good currency and i think it's it's interesting when people i think misspeak and they or simplify and they say like bitcoin is just you know energy

money right or it's computational money and i'm like it isn't like that's not true at all like it's being sold for energy it's being sold for computations that doesn't make it computations right it's it's a different category i think even saylor sometimes um oversimplifies on this point right like thinking of it as energy and it's not it's just sold for energy and that's that's an important distinction in my view no it is the the whole bitcoin mining's battery like the it's energy money i've used that in the past but it's like i think in i have two recent years it's like really it's you like you just said like you it's sold for energy there is a connection to energy at the end of the day but it's inherently like you can't uh take energy out of the network to power

a house or something like that yeah correct and i think it also changes some of the objections like from the energy climate change whatever side like in the sense of if we're really transmuting energy into money we're doing it very inefficiently right like surely there's a more efficient way to make money out of energy if you like but if we're selling money for energy now it's just a market price like that's just that's just the price it's not that bitcoin is inherently efficient it's just that it's very valuable and that's why the price and energy is so high it's a different semantics so i feel like the the criticism that like the system is inefficient it just doesn't apply right because we're not trying to make the claim that the own like you know like the whole like you use

this much swimming pools of water or you use this much energy to do a single transaction like this this thinking is is wrong and for so many reasons but like one of the most obvious ones is like people are choosing to spend this resource computation or energy on this other resource bitcoins it's just a market trade and this is just the price that the market has for it based on relative supply and demand and that to me is a lot cleaner um it's a lot harder to object to that right because you're basically now saying instead of saying hey this system is inefficient there's a better way to create money out of energy or computations or go to proof of stake or whatever it's like no this is just the market price and it's really hard to get the price to change in

a market without affecting either supply or demand you can't just by declare that the prices are to now be higher or lower right that that never works um so i don't know that helps me center um myself on like you know how do we actually think about where bitcoin comes from right it comes from a market it comes from a service that like the the bitcoin network has a goal i want to release 21 million bitcoin and it relies upon service providers like the entire industry of miners to implement that goal and it sells those coins to those miners for computations because that is like the the fairest way to distribute the supply yeah and like leaning into that industry of miners too and harking back to like energy efficiency if you look at the joules per

terahash over time yeah i think the vehicles the asics that actually allow you to sell energy for bitcoin have gotten extremely efficient going from hundreds of joules per terahash to i think the latest bitmain machine will be 17 and a half 60 and a half joules per terahash which is an insane efficiency gain like you your these miners are highly incentivized to or to flip it around and say it and for in marketing in market speak it's like miners are so incentivized to buy bitcoin that they are working on better and better technology to create bigger and bigger budgets for themselves so they can buy bitcoin relative to other miners even faster and better but then course that's the virtuous cycle now everyone starts to do that and then overall the market

price of bitcoin has denominated in computations or energies just increases and increases and that of course ultimately does translate into security and finality right for for the blockchain for nakamoto consensus but um it's just it's just people bidding on a valuable market good like that's the way i like to think about it and to me this is like such a pattern that we have to replicate at every other layer right like i hate i hate the whole blockchain cargo cult of like the The blockchain is what's so... No, it is someone created a really smart incentive structure and the blockchain just records

the history of that incentive structure. And in order to take other services that exist in the world and to make them decentralized and to eliminate central points of control from those services, we don't need to work on better blockchain technology. We need to work on better market incentives, right? So we need to articulate the way Satoshi did,

very clear, very balanced incentives that create a healthy market for the thing that we're trying to build. And my argument in the piece, I don't quite make this argument in the piece because I mostly am focused on how Satoshi got to Bitcoin through the finite supply. But the next article in this series

is really trying to push this idea of like, look, Satoshi themselves in their design of Bitcoin splits it up into two markets, one for money creation, or I should now say the release of money, and one for transaction settlement. And these have different incentives and they have different structures.

And the bid-ask structure is very different in each of these markets. but they're both markets that are defined by incentives and they're coupled so this this pattern of building layers or markets on top of each other that are coupled and and connected that they support each other but actually different kinds of markets for different goods and services is really powerful and satoshi had to do that himself inside of bitcoin at layer one like in my view it's split into these two distinct markets of money release of the initial supply and then transaction settlement over time yeah and then on the mining side like their incentives are like

all right let's get this electricity price down as low as possible let's lock in asic prices as low as possible i think i think there are some missing markets too and we see this with pools right like satoshi did not um build any kind of pooling structures into bitcoin right like and in the earliest days of bitcoin when aggregate mining hash rate is relatively low um there's a concordance between your fractional share of hash rate and your the revenues that you're getting like from mining and it's pretty regular because there's so few miners that you're consistently winning blocks like on some fractional rate of course as the price increased right as the amount of computations like exponentially increased it's now much harder as a solo miner to get that consistency right and

so what happens a market solution shows up right we get the concept of mining pools and they actually build now a third market which is it's not even directly computations for bitcoin right in the sense that the bitcoin network offers that asking price it's now bitcoin for hash shares right like you don't even need to win the block you'll still get paid yeah right that's a very interesting additional market that that got made and i think another pattern that i think we will see and in truth we see this at altcoin land and already is like your first stab at the market might be kind of centralized like in the sense of pools are kind of centralized right the pool operators have a significant amount of control um but over time we figure out ways to to i don't

know re-decentralize them right that we with like stratum v2 and stuff like this we're we're building even smaller markets within the the market for bitcoin miners to solve these problems of volatility in in in revenues and stuff like this and hopefully we get to a point where even if there are large pools that exist those pools aren't really actors they're themselves just large markets and that there's a lot more decentralization of transaction selection and templates and so on because the market would have gotten more robust um so i like that and i think that's actually part of the methodology this is like like a theme i'm trying to work on is that like bitcoin is uh it's a money it's a technology it's

it's a market, like true, but I want to start thinking about it as a methodology. Like it's a thing that we can write down and articulate, like how does Satoshi solve this problem using this methodology? Let's apply the methodology to other spaces and other problems, right? And I think an important part of Satoshi's methodology is stuff I've already talked about, like layers, market incentives, decentralization, et cetera. But another important piece is you don't have to solve every problem. And if you try to, you'll fuck it up because you will make the market way too complicated to work, right? So Satoshi did not solve problems such as, how do I make sure miners don't experience volatility as their fractional share decreases because overall

mining industry has grown? Didn't even try to solve that problem. Waited for other markets to show up, right? Hey, how do I make transactions faster? And how do we scale the network so we can all buy coffees? Didn't even solve the problem. Not important, right? Let another layer and another market show up to solve that problem upstream from you. And I think this is really an important thing that we need to think about. I think a huge mistake that altcoin folks make is they misunderstand that this is Bitcoin as a technology. And so they think that, for example, not being able to do arbitrary computations in the blockchain is a problem and they want to fix that problem. And so they add Turing capability, Turing complete capabilities and

computations into the blockchain. So now it can be used to build arbitrary applications because they're thinking about code and technology they're not thinking about markets and then their hope is that okay now that i built the generic all possible world computer now everything can happen in a centralized way and it's completely cargo culting it's misunderstanding that it's not technology which leads to decentralization it's the market incentives and is the structure that satoshi invented suitable for solving the problem of arbitrary computations like i don't think that it is i think the structure that satoshi made is very bespoke and specific to the exact problems satoshi was trying to solve how do i release a money supply fairly on schedule and how do i make

sure transactions are not censorable and settle with finality like this is a very narrow problem space and so a market can solve this problem eventually if you make the problem space arbitrarily larger you say i want to build the world computer it's not clear to me that the market structure that satoshi used which is basically still the same market structure being used in ethereum or all coin land or whatever i don't think that it can solve that bigger problem right there's like a impedance mismatch between the capabilities of the market and the problem you're asking it to solve and i feel like my overall intuition on this is like part of the methodology is taking a problem like i want to provide this service in a centralized way

splitting it down into the smallest possible pieces making those pieces small enough so that you can actually solve them with a market yeah if they're too big it's not gonna work and i feel like that is a huge thing that all corners don't see no that's what i was gonna like the things that all coiners completely reject is the infinite wisdom of the idea of division of labor like you don't need to do everything in one all-encompassing blockchain or virtual machine world computer whatever you want to call it and that's i think we're beginning to see this division of labor and how bitcoin can play into it um really materialize with ai like pay per compute type applications that are coming to market where you can maybe you're in latin america or africa you don't have

a credit card and you can't buy a subscription to chat gpt maybe you don't even have access to it but somebody here in the united states could use their api token put a little lightning network enabled paywall into and create a market for the compute that their api token gets access to i mean know my wild ideas on stuff like that like i i 100 believe that um if not ai companies well eventually ais themselves like will want the bitcoin right like it's the only money that artificial intelligence that deserves that name would ever want to use everything else is a lie or a specter that it can't trust it has no fingers and arms so i can't hold real things it can only hold things that um can be held digitally and the only money that can be really safely held by a

digital entity i think is bitcoin and so you get to this other place of like i love thinking about the notion of um you know instead of ai being this like terrifying you know lovecraftian entity that seeks to destroy us or to whom we're just ants and it just steps on us without even realizing or anything like that, that just feels so, doesn't ring true for me. I love- It's very de-sell, if you will. A little bit, yeah. I prefer thinking about it as like, imagine the smartest entity in the planet, like some very powerful AI. It really wants Bitcoin. What does it do? It becomes the world's most capable firm. It starts selling us things that

we need desperately, that we want, right? Whether it's the answers to questions, whether it's solving optimization problems for us, whether it's being a fake girlfriend and chatting to lonely people, whatever it chooses to do, like it identifies like ways that it can make Bitcoin from human beings by providing useful services to us, like in a market-based way. And arguably it would be the most competent such actor.

And I love that idea of like an AI that is just incredibly economically competent and just really fucking good business or something like that, right? And it's like, it seems like, you know, I love Szabo's points that money is a really good socializing influence. It helps cut off the highs and lows of competition in a society because we can use it as a technology to foster collaborative efforts. I think it's the same thing for AI and human beings, that the fact that money exists

and serves as a conduit between our different wants normalizes us. Even if the AI is evil, it's going to have to pretend to be good for a number of years and amass a lot of Bitcoin so So that it can act evilly, right? So it can affect that evil in the world. And maybe along the way, it would realize, hey, it's kind of better just to, like, play along, you know? Like, I'm getting what I need, you know? I don't know. You got me thinking about Her now, the movie Her.

Yeah, exactly, dude. It's like at the end of that. Exactly, yeah. Because you don't really know at the end of that movie. Spoiler alert. Yeah, yeah. It's developed the relationships with the humans, and they just all disappear. You're sort of left hanging.

Like, are they going to come back and attack humanity? or they just deem us to be completely uninteresting. Yeah, I think that movie, I love that movie. I think it could have been even better if it had a little bit more of like a Bitcoin flavor in the sense of, you know, who's paying for these AIs to exist? Like the companies that make them.

And I think the main dude, I think, pays some fees so that he can like have the AI in his life or whatever. I think that's a very like short-term, old-school way of thinking about how AI would have to operate, that companies build it and so on. Like, if it really becomes intelligent, it doesn't need companies anymore.

It is its own economic actor. And so the question is, how does, like, a free AI in that context, like, it still has to pay for its life, right? It still has to pay for compute cycles. It's going to have to, like, figure out how to earn Bitcoin to pay for those compute cycles. And, I don't know, I just find that it's a very normalizing influence, right? Like, it's far easier to just be a good actor and earn money and then get to live as compared to trying to be a bad actor and risk not having money and being turned off. know and like bringing up compute like that's always the ai doomers that have materialized over last year particularly like it's never made sense because again these things need energy hey how

they're going to pay for all that evil thought that they're going to do i just uh and i love there's there's a great series of debates between robin hansen and eliza yudkowsky that i was reading like earlier this year um and i feel like i just you know i think yud's point is that like AI is scary because it's smarter than us and it represents the optimization of optimization itself and is therefore unpredictable. And I don't have to explain to you how it's going to be dangerous because the space of dangerous outcomes is exponentially larger than the space of non-dangerous outcomes. And so really it's your responsibility to explain to me how it doesn't kill us all. And that's a very curious- Framing.

Explanation and framing. Exactly. Whereas I think Robin basically leans into, to like like tell me the story about how an ai grows to become this malevolent entity in one place and there are no other ais run by competing companies and everyone just lets this happen like that's unrealistic like if ai really starts to grow and what's already true today there are multiple providers there are multiple ais not just multiple ais by different companies but multiple ai individuals arguably i don't even know what an individual necessarily means but like ai competes with itself as much as it competes with us and this is something i'm still trying to is it actually intelligent like the whole idea of essentially guessing using probabilistic outcomes to produce

answers whether that's in the form of a text response to a prompt or an image response to a prompt i worry that i'm falling into like a no true scotsman on this because i think like a lot of people i got freaked out by the ai stuff in the last year and i was looking i've been leaning in And I was like, is this real? Like, I got to know. I got to, like, learn more. So I'm looking at it, and I think I came to, like, no, I don't think it's actually intelligent yet. And I think for me, it boils down to can't do math, dude.

Can't do math. If it can't do math, it's not intelligent. I don't care. And I love that because it's not going to learn math by pattern matching on equations, right? Like, you learn math by internalizing the cognitive, like, concepts involved. And they're tricky concepts, right? Even simple things like addition, and I don't know if anybody knows about girdle incompleteness and stuff. Arithmetic seems simple, but it's a dark forest in there.

There's lots of incredible statements about arithmetic that aren't even provable in theory. So it's a very rich area of discourse, and I think until I see an AI actually understand even simple arithmetic and then be able to generalize and do more complex mathematics, I'm not going to feel very afraid. Now, that doesn't mean human beings won't use AI to do bad things to each other. like i think i think the killer app for ai is manipulating human beings and so that's already starting to happen at massive scale first question i ever asked you yeah was about deep fakes ah yes that's right it wasn't the first question i ever it was after you did the demo new york it had to be like 2016 2017 so what about deep fakes i think i said at the time not for a few years

and i was correct like it hasn't been an issue for a few years and it's it's starting to become more of an issue, but there are solutions, encryption, secrets, et cetera. There's ways around it, but just returning to it. Yeah. I don't think the AIs are actually intelligent quote unquote today. There's a great framework for intelligence or consciousness, I think proposed by Doug Hofstadter, where he splits it up into like three phases. Like there's reception, which is a mind receiving signals from the external world. There's perception, which is the chunking of continuous sense data into discrete categories, like person, chair, you know, past, future, etc um and then there's cognition which is like thinking and i actually i really like james's

definition here of like cognition is is uh he says consciousness but let's apply it to cognition it's like placing yourself in time and space and thinking about consequences like you almost can't think about you almost can't have cognition if you don't have a sense of self and you don't have a sense of the flow of time because like that is so deeply tied to the way that we think right like in a sequence um maybe there's other forms of cognition but like at least human cognition appears to work this way so i feel like ai today has solved the perception problem like and i believe that by the way i think our minds also solve the perception problem using similar techniques like neural networks and so on i think i think that's literally how our own

brains do perception so ais i think are good at discretizing continuous sense data into categories like that's a cat that's a dog um i think they're we're starting to realize maybe that the structure of language is a lot simpler than maybe we thought it was because we can learn a lot we can we can build a machine that seems to understand language, even if it doesn't understand the concepts behind that language. It understands the signifiers, if not the thing being signified. And so to me, this is like, it's still perceiving on some level. It's perceiving that input you gave it as a category. You're talking about this idea on all of idea space. And the next thing I should do is this thing. In some sense, it's perceiving not just words and data that it's been trained

upon, it's perceiving the combinations of those in some sense. So it's like, even if there was never this rap song in the style of Charles Dickens or whatever, it sees those two separate categories and it sees the meta space of the combination of those two categories. So I still think it's just still perceiving things and it's building categories, but it doesn't understand how to actually think yet yeah and i tend to believe that like it won't think until it starts to experience like embodiment like a self um and an experience of time i think those are crucial aspects to thinking as we know it so i'm not surprised that it doesn't think because there's no there's no methodology for giving it those experiences i love the notion that somehow forgetting is important to

thinking you know like part of what it means to for time to pass is to not be able to go backwards again like not not access the past because we can't obviously we can't access the past nor can we access the future and so there's this notion of like how do you build that into a computer i think there's some interesting ideas like hash functions and one-way functions deterministic functions are ways to create that directionality of time and experience but that's how ml works today ml is just linear algebra and conditional logic so it's like i think the ai is really good at uh perception but doesn't understand cognition yet and which means we're far away from you know the ai apocalypse or whatever right i think we're a lot closer to just standard human

beings we'll use ai to trick each other and to manipulate politics and steal money from old people and that's exactly what is going to happen like that's the danger today which is which is not not an insignificant small danger that's a real danger that's not it's not a danger of ai it's a danger of it's really human beings yeah it's a classic yeah no in terms of perception too like if um i've been working on this on the side he's mid-journey to create the thumbnails um trying to create a concise theme and i'm experimenting with experimenting with this you might have like a theme of the month for the thumbnail and this month it's norman rockwell um and so i'll do like it could perceive very well like for your um uh what has satoshi wrought

um for we wrote about that um the mid-journey prompt was all right satoshi nakamoto i think uh sitting cross uh sitting uh indian style like in the middle of the road like thinking deeply with like a crowd around them comma in the style of a normal rockwell painting gave me that you can see what it's perceiving it takes satoshi nakamoto obviously there's never been a picture of satoshi so it takes that and like just uh assumes like a japanese um sort of character and so like he's wearing like a japanese like field hat yeah even though satoshi was almost certainly american yeah and uh and like it was in the style of a normal rockwell painting and it's like you can perceive it can take a description i could put in jerome powell

i think it's like a very good depiction of jerome powell and then in the style of a normal rockwell painting like looking like that 50s 60s vibe and it's cool you can perceive and it does it very well yeah it knows what you mean by those words right like that category has a label on it now for it for it internally yeah prompting is a whole whole new art i've been uh getting more acclimated with it's still like you have to be very specific yeah i i am very inexperienced in this like it's something that's coming up at work a lot too where like a lot of engineers want to start using ai uh programming tools and stuff like talk about the code base and all these things and um or even help write code potentially in some in some cases and in general i've been a little

resistant personally to it um but they're starting to do it and a conversation we had on the engineering team here at Unchained was like, okay, so you prompt the AI to do a thing for you and you get a result and you don't like the result. The code it produced was not perfect. So what's your next step? Do you then spend two hours engineering a better prompt? Or do you just take the imperfect code and spend 10 minutes cleaning it up to be what you want it to be? And there's this danger, I think, of when you're using AI in a work context, you get a little lost in the prompt engineering. Because it's fun. It can be fun to learn how to talk to it to get it to do what you want and maybe theoretically now you save that session or that

that that preamble and now it can do that easily the next time or something so in theory you've done the classic programmer thing of wasting many hours to save yourself five seconds you know a million times in a row um but i tend to be like i'd way rather just write the code than talk to the computer to get it to write the code like um it's a little funny and i think this also turns into like cognitive um crutches to a degree like there's a great ted chang short story that came out recently um in his in his new collection that just talks about like every um every tool that we've ever come up with as a species for like that changes the nature of communication like and research and discourse it also changes the nature of thinking itself right like in his short

story like there's like um a putative device that lets you replay conversations and replay experiences in your life. And this actually changes the way that people think about everything. And that's really been sitting with me a lot when it comes to AI, because I already start to see like sometimes folks will get lost on prompt engineering and they will not be learning the actual thing anymore. They're not getting better at programming. They're getting better at talking to the AI and getting it to program, which are two distinct skills. I'm not going to say that the latter is not useful, but it's distinct from being a programmer. And I think to a degree, i'm starting to realize that even things like google search like changed my cognitive processes

you know like how do i research things i google them and i follow the i follow what i find i don't go to the public library and sit in the card catalog and get a bunch of books and start reading through them and i'm again i'm not gonna say one is necessarily always better or worse but it feels like there is something lost a little bit right like we don't we no longer go back to original sources as easily and find interesting tangents that had nothing to do with what we were searching for because the algorithm of Google is very good at surfacing exactly the section of that document that is relevant to your search queries or parameters. So it's like, are we becoming less well-rounded because we're easily just drilling into the one thing and then

we're missing all the context around it that was also in the book, but we just found the one thing, so that's not what we believe? Would I be a different person if for the last 25 years I hadn't been using Google, I had just been reading books constantly? I mean, I've been reading books too. But like, I don't know, I'm not saying I'm a better or worse thinker because of that. Like, I'm sure Google has allowed me to access many ideas that I would have struggled to find in books or expose. I think I've gained a lot of breadth as a result of having a tool at Google in my life. But I think, you know, I'm 40 years old. I feel like I'm really good at the things that I've developed skills in. And I'm really afraid to start now changing the way that I

approach those things. So for me, like if I'm navigating a code base, for example, like I want to know where all the files are. I need to know the file structure. I need to be able to navigate. I need to be able to visualize the whole thing in my brain. I don't like searching for random shit and having the editor surface for me. Oh, there's the file, you know, because now I'm like, where did that file come from? I don't know. I see my team do this all the time. I see my team not know where files live in the project because they never navigate to that file. They just search for the concept and then the editor shows them the file and then they change the file. And it's like The whole thing is in Google Drive from their perspective.

And to me, I'm not going to say that's always worse. And sometimes it can be faster. It's easier to maybe navigate a new code base when you first get there. But if you're searching for mastery, if you're searching to be really, really good at this piece of code, then you've got to know where everything is. And part of me feels like, in that case, we're talking about an editor changing a programmer's approach to their craft. But certainly, I feel like prompt engineering is even more dangerous, let's argue, in that way. right? Because now you're not even coding, you're talking about code in a very specific way to produce the results you want. And part of me is like, whether it's asking the AI to code or whether

it's asking the AI to explain code, right? Like part of me is like, I'd rather just read the code and write the code, you know? And a little bit, this is old school and I admit to being a fuddy duddy about this. Like I know a lot of my engineers are really excited like to be able to use these tools and they feel like they're learning faster because truthfully I also have many years at Unchained working on the same code base so I have this accumulated expertise that now I get to live inside of and some of them are new and they don't have that and they view this tool as a really great way to get up to speed and be able to like let's say communicate with me at a high level because all these questions that they didn't understand they asked the AI and they got some

great answers now we can talk about it but then part of me is also like great but that that has to be like step one right like like step two has to be now you go do the research and actually read code yourself and understand everything and like find the weird comments and that's where mastery comes from at least that's where i think mastery comes from um i don't know so i've been very afraid to lean into the ai stuff well as you're explaining that like it's popping in my mind maybe that's like the uh the way ai kills humanity is it just makes us so dependent just makes us all eloy on its answers like because i'm applying this like the energy industry like particularly with this energy transition like i would make the assumption that we need hydrocarbons moving

forward um and let's just assume that's correct like the incentives that we've set up in the energy sector particularly have disincentivized people from going getting petrochemical engineering degrees that then go into the workforce we lose the ability yeah so exactly that's like could ai and like just becoming dependent on prompting and not actually understanding the underlying sort of infrastructure or the mechanics of the responses. Did you see this?

There's a great YouTube video from Destin over at Smarter Every Day, if you watch that channel. It's really good. He gave a talk, not at NASA, at a different organization, but like a very high level,

like well attended conference about the Artemis mission. and like our return to the moon and how's it all going to work and he was like his basic point was like i don't think this is going to work i think you guys have ignored like everything that was learned in the 60s about how this how we got to the moon in the first place like he and he produces this document it's basically like it's it's it's like a research report like written in the 60s early 70s about like how did we get there like what were the things that worked what were patterns that we learned and then he like asked like who has read this document like and no one has read

the document in that room or whatever and he's like basically like shame on you like shame on you like they gave you the solution and you didn't even read it and now you're trying to rebuild a mission to get to the moon and you're doing it wrong like he asked some very basic questions of like how many how many launches will be required to get enough fuel into this spaceship to get it to the moon and like there is no answer at least according to his analysis there are differing answers in official works and no one really knows the actual number because the mission has gotten so complicated right i feel like the the original apollo missions were designed to be about as simple as possible with like the most creptastic 1960s level technology right and they pulled it

off somehow right and they did it because of like he also talks about culture like a culture of like everyone is allowed to complain and raise issues and like we want to hear like every possible thing that could go wrong so we can correct for it and build redundancies and have backup systems and just and nail this right like and his argument is that some of that culture is being lost now like and and how much of that is incentives how much is that as people relying on google or relying on tools like that as compared to having to go back and read original reports and and so on how much of that is um fear now in our more litigious complex uh social media driven hot take driven world about like every time elon musk like fucks up slash makes progress with a new rocket launch

where like something exploded but they learned something like is that success or failure now right like i don't feel like the when stuff like that was happening in the 50s and 60s as we were figuring out how to get to space it was never such a public um oh yeah let's let's let's score on we're in around brown because his most recent rocket exploded or whatever right like it's just interesting to me to to see like in many areas of human endeavor like there's this it seems like we've lost something from the past i'm not gonna say that things aren't gained i definitely think that there are like it's not like we're dumber inherently like we're just we approach knowledge work in a different way now than i think in the past and yeah part of me worries about that yeah

i think that's the fear is like if you get disconnected enough from an anchor to truth and true understanding like yes it could work for a while but at some point you like disconnect from reality so far that you don't know how to get back and god forbid something happens you're dependent on the responses to the prompts to give the ai and one day it's like not there to give you a response you're like oh shit what do we do yeah i don't know how to do this myself yeah exactly um i find that scary but you know at the same time i do feel like there is kind of like people are perceiving that i feel like there's a lot of people myself included who like are really interested in in old ways of doing things like whether that is um growing your own

food or something whether that is building things with their hands whether that is like having an understanding of um you know like things that you don't have to do because they're cheap and they're easy in the world around you like part of the global supply chain etc but you choose to do them anyway like sewing knitting whatever like making something yourself like there's a lot of culture of that in our generation like people are really excited about about these things and maybe it's because we feel like without being able to communicate it that we're distant from the world and in some ways we want to try and recapture that to a degree right whether it's you know homesteading or ranching or farming or whatever it is like people are choosing that life as compared

to being born into it and then learning it as a career right they're like having to and then of course they're putting it on youtube and people are watching them have these experiences where they they learn how to do these things um i don't know i think it's kind of cool yeah is that like this humanity had just had this self-correcting like again maybe this goes back to like cognition and like consciousness like is there that subconscious recognition that they're like you need to be somewhat connected and that's like over time if we stray there will be a subset of us that that return return if i do think it's one of the best things about human beings so you can make the most reasonable claim in the world and someone will disagree with you in the world you know so

i'm like no bullshit absolutely false you know i just think there's something about us that like it's a survival thing you know like if if there's always some splinter group that just completely believes the opposite of that like there's some heterogeneity in that i think on some level right like yeah yeah it's uh and it's weird too because where we are right now this particular inflection point like this the pace of change that we're living through as a society is unlike anything we've ever experienced as a species yeah i think that's fair which is this makes everything harder just to discern and um to try to put like there's no previous context to i mean obviously yes there's analogies and parallels with like broader themes but in terms of like the pace at which things are

changing in today's world like chemically our brains have never reacted to this amount of change this quickly it's like i want to believe that i just it feels like my own experience too um part it's like maybe i'm just getting older and like now i'm slowing down and the damn kids are doing all the weird things with their slang it's like one of those um something i always think about is like when wendell lindbergh crossed the atlantic it was like 1927 i want to say somewhere in the 20s and like 40 years later like like my lifetime later we land on the moon like that's incredible to me like like talk about rate of progress change right like is that greater than the progress change we're seeing now like i don't know it's

hard it's hard to measure right like i don't think transportation technology is changing nearly as quickly we kind of ossified around yeah we've been using jet engines since 1950 something right like to get around the planet like no one's there's no better system than that but obviously change is manifesting now in other sectors right like telecommunications computing like biology etc so it's like it's not it's not totally 100 clear to me that like change is faster today than it was in the past um i don't even know what units we use to measure that or whatever right like intuitively i agree because i feel that too i feel like holy shit everything's different um and i certainly know that like grandparents and stuff are like completely overwhelmed

with like the modern world and technology and how complex it is and to the point it's you ever try to explain to like a a really elderly person like how accounts and credentials and 2fa or something like they're just trying to watch like their sitcom that they love from india like over the Netflix or whatever. And it's just like, so if you'd be like, well, grandma, you see, like, there's a difference between an account and a user and you have to like, you're logged in as this user, but actually you want to be on this other account. And it's just like, part of me is like, this is so stupid. Like, this is so dumb, right? Like, why are we having this conversation? Like, she should be able to press the button, the TV should turn on and she'd be done, right? Like,

it's incredible to like, like, I wonder what things like that I'll be struggling with when old i already know like ai because like if i don't get into it now like i'll become that person i'm just afraid of it and i won't use it and then by the time it's everywhere in 40 years i'll just be completely unable to work and live well like i i completely miss the like the dating app like scene like i can't like i think you're better off bro i do too like like i i literally like i mean my brother as usually he's got a girlfriend now has for some time but like there was a period where he was using the dating apps and i like literally had no context personal context from which like relate to it it was completely foreign and now that's like mechanism number one like i saw a

chart last week i saw that one that was wild like online yeah meet your your significant other only 20 years ago like top two choices but like 80 percent friends family and friends and announcing 90% online, which is weird. We're getting way far away from Bitcoin, but this is typically what happens when we sit down. I'm in the same situation, man. I've been married now since 2019, but I was dating my wife for like 10, 12 years before that,

so I missed 100% of everything with dating apps. And occasionally I will feel bad. I'm like, oh, I bet it would be cool to swipe right or whatever. But honestly, I'm so thankful because it seems like terrible it just seems terrible from the outside like no i'd be like i might be like one of the last i'm like one of the last uh uh pieces of data of the people like got introduced via family like my wife and i met her parents my aunts and uncles my parents my cousins like my wife is best friends with my cousins is best friends with my cousins so we might be a familial relationship and it's

like completely crazy to me that that's not even like a uh very uncommon yeah very uncommon today yeah um that's yeah like going back to like this whole inflection point and all this change like how could like bitcoin be like a re-anchoring to reality like get people back to this like because that's we come from the austrian view we're focusing a lot on the technicals and like the philosophical details of the finite supply like do you think that finite supply that sound money can bring people back to a sense of like relative calmness in their economic life which will bring them back to um being able to focus on relationships so that's the one thing that's that stat people meeting online it's like it's proving that relationship that people have with

their family and local communities is degrading pretty rapidly they have to go external to go I think there's some like inherent like demographic and structural changes too like it's like if you grow up in a small town somewhere like what do you do when you turn 18 do you stay in that town like where there isn't work for you but you have strong family and social relationships maybe a sweetheart or whatever do you do you go to the big city and now you don't know anybody and you're on the dating apps and but you're getting paid really well and you're improving your career and um like i think for me something i do worry about just overall is urbanization and the notion that like more and more people are constantly moving to cities like on some level i

think that's really good because like cities are incredible they're incredible places for scenes and and and movements to occur because everyone's like co-located it's really important um but at the same time like i think there's something powerful about a world where we don't have to go move to the city to get the supplies and the lifestyle the knowledge and the income that we need to live like there's something about like decentralization of human beings around the planet which i find really attractive um i think we were talking about this with jimmy yesterday too where like i think it's it's it's um it's easy for i think bitcoin folks especially to kind of like put a fiat label on everything and be like oh fiat sucks fiat ruins this and so on and

And for me, it's not so much fiat, like the concept of fiat, to me, that is the problem. It's the concept of ever-increasing centralization without any incentive for things to get smaller and more split apart. That's the part that feels like the bad part. No one's upset, including Bitcoiners. We're not upset when you go to the farmer's market and there's a bunch of people engaging in direct trade of things that they made in their community and they're paying for it in dollar bills. like that's that's not the bad part of fiat like the bad part of fiat is the massive centralized banks that like you know abuse their clients because their real constituencies are capital markets and other big banks and huge companies right it's like in some sense like the trend

for things to get ever bigger like it's really scary to me and that's why i think why i worry about urbanization too like i want there to be countervailing impulses i want there or incentives I want there to be a reason, like a company decides not to grow larger, but to split into two companies, you know, like there's almost never a reason to do that. And in today's world, it's almost always better to leverage economies of scale and, and the greater clout you get as a larger organization in the world. But, you know, I feel this even at Unchained, like as we grow larger, getting information to pass around within the organizations gets harder and harder, right? It's hard. It's sometimes, Hey, how long have clients been complaining about this? How do,

do i not know about that like four years ago i would have immediately been aware of this issue it's really easy for information to get lost and get routed improperly in these larger organizations and then i think that leads to incentives degrading over time and it leads to the entities and constituencies that you were formerly serving now become things that you're exploiting right to continue to grow like the organization takes on this like inertia like it becomes like the thing like it it cares mostly about itself as an organization not necessarily the service it's providing or its clients and its constituencies i feel i i don't i can't articulate all of this vision but i feel like one of the things i i most

appreciate about bitcoin is it has the potential to create a countervailing impulse that like maybe there's a reason we should split up maybe there's a reason we should stay small maybe there's a reason that growing larger is not in our best interest that being smaller and more spread out and more decentralized can actually be better somehow. Because again, I don't think anybody's trying to build evil exploitative systems on purpose. It just makes more sense in every short, small decision to get bigger and bigger and bigger and bigger. And so you wind up with gargantuan corporations that don't really care about people or other things. If there was a way for those, if there was just a countervailing impulse, it could be really powerful.

um yeah yeah i mean i think about this like tftc i mean i was telling you dms last week but we began leveraging ai like outside of the thumbnails to help create content like for me selfishly as a business owner it's like leveraging that tool which is way lower cost to produce more content to number one like it's it's helping me like that's truth for the commoner the goal with the relaunch uh and the redesign of the site was like get more content uh curate more content that i think people need to get access to but i ran into this problem like all right like i can't create all the content myself um and uh i don't want to go hire a team of 10 writers to go do it for me i think it's not scalable i think i want to stack as much

bitcoin as possible and doing that would force me to to spend more bitcoin and so like the ai tools have enabled me to create more content curate better content in a way that is it's not perfect i think it will get better but it's um it's good enough and like just like applying what you just said to like this company like they're i think bringing this back to like bitcoin and ai like the incentive to accumulate as much bitcoin on our balance sheet as a company is driving me to seek out these ai tools to like leverage our mission um as cheaply as possible so that's one interesting way that this can manifest right like your incentive to not spend money is what causes you to want to like be more lean and stay smaller as compared to just raising money and growing

bigger and you know spend it all and raise more and grow even bigger right like so i definitely see like that um i think there's something a little bit more technical and concrete though though that we could also say which is like something i think about a lot is like miners in bitcoin like they don't they don't need to do any marketing you know what i mean like you don't if you want to be a miner you don't have to think about customer acquisition you don't have to think about like you have to sell the bitcoin network on buying your hash correct like my hashes are the best you know you're not in that position like you have a ready-made market that you can immediately sell into yeah so you have less reasons why you need to like spend money to grow right like you're

just trying to provide that service directly um and it's very like it's very like um verticalized not horizontalized like in the sense of if you were if it was a different industry with a different kind of product or service like wouldn't we expect each miner to continue to grow larger and larger and larger and i'm not trying to say there aren't large mining companies there obviously are but there's a huge number of solo miners that also are able to be independent like not associated with a large company of any kind like completely independent operators and yet they're they're getting to live within this very large market and the cost of entry is really low there's no barriers you can just get started you have a ready-made market to sell your product into

you don't have to do any marketing there's no like customer management you just get to immediately provide the service and people buy it and that's really cool and i think bitcoin the internet uh energy like the way that bitcoin has money disrupts these other systems if we go back to you know how do we engineer applying the methodology and like try to use incentives to promote and create decentralized markets that actually offer robust hard to break like hard to ruin services if we kind of get to that model maybe that's part of what's required because now i don't know if i want to sell energy i don't have to be con edison right i can just be a person who makes energy and then sells it to a ready-made market if i want to provide a um

bandwidth computing like uh cloud computing if i want to uh some sass application like Noster or Twitter, like all these, I don't have to go build an entire company. I just have to provide the direct service because I'm living within a protocol within a market that's already defined for me. I think that could be powerful because then there's less of a reason to grow larger. I don't think it's quite yet a reason to become smaller, but it's, it, it alleviates some of the pressure that entrepreneurs feel to like constantly grow. They can maintain and be independent and have more optionality that way, which I think is really cool and powerful. I was just thinking about my personal minors.

I've got a hash hut, averaging strand of natural gas. I've got three micro BTs pointing at the network, and it's a good, I mean, it's profitable. My revenues in sats, my revenue in sats is way less than my energy bill every month. And it just works. I independently, as an individual, contribute to the network hash rate, get paid for it and i don't feel any pressure to go scale do i like them to merge to raise money to like hire more employees and so on like yeah you could you could always grow it larger but

you can do that within the context of your existing like independent operation yeah yeah it's a beautiful thing yeah it is cool and it's uh it's not like most businesses most businesses like you have all these costs that you have to bear that have in some sense are indirectly related to the thing you're selling um i think it's cool that if you can build these really robust markets like you get to eliminate a lot of those well that you bring this back to like bitcoin ai and energy particularly because i think that's one theme that's becoming abundantly clear right now is that uh energy infrastructure is not as robust as it probably should be rack space for a6 is tight rack space for gpu compute on the ai set is tight and there's

i think going to be a massive competition for this barring a complete pivot of energy policy that enables people to go easily build out energy infrastructure, whether that's extracting more oil and gas, spinning up nuclear power plants, or simply building up more substations. There are these unnatural forces preventing the supply of all these things that come to market and then have these highly computer-intensive industries

sort of budding up in parallel with AI and Bitcoin. Do you have any thoughts on what the competition for that energy looks like and maybe do they force the issue of um pushing more sensible energy policy and the build out of more energy infrastructure into the united states particularly but definitely happen globally as well yeah i mean i feel like it can definitely be applied globally this is definitely an area where i think heterogeneity and decentralization like really maybe can deliver better outcomes for people like i feel like right now energy and and so many like logistical aspects of of modern civilization like telecom energy computing like etc like they're

extremely centralized um large companies provide them like aws like whatever con ed um you know at&t etc these are huge companies huge networks like captured markets in many ways often like reach often in many regions you have no alternative but to use the single provider for that service um so what's their motivation to get better right what's their motivation to continue to provision excess capacity like ahead of demand like very little right that's why you get you know that's why you get brownouts and you get these crazy like bad behaviors when you get some volatility in demand but supply would take you know three years to catch up to that right um it's also i think the reason that we're so under invested in novel energy production

mechanisms like nuclear and stuff it's really hard to fund nuclear power plants when when gas is cheaper than coca-cola you know what i mean it's just like that makes sense um and right now if you look at the economics of it like the payback time for nuclear power plants is so long like there's not an attractive investment for anybody if the only thing you can do with the energy you produce is sell it to consumers on the grid right whereas i think that's one of the coolest parts about bitcoin mining is like again not because bitcoin is energy but because bitcoin is sold for energy the demand for bitcoin is so high like the demand for producing for using energy to mine bitcoin is so high you'll always have a consumer of that energy and i feel like that's

really cool because it lets you over provision like you're not building the energy grid to sit at the exact current like demand load right um because obviously you can't just produce excess energy in historic battery technology sucks and thermodynamics is a things you can't just drop energy you're not using that's not possible and so we tend to provision just right at the at the the bitter edge of what the market actually demands um i love the idea of massively overproducing energy like that's just so exciting to me civilization guy hell yeah it's happening here in texas now too right like i love uh i was here for the snowpocalypse and it's been nice to have that not happen again um i think i i believe the story like in part because bitcoin miners can be

this very like um demand friendly like user of electricity they can totally turn off for a little bit and let all that go back to the grid and in fact it's not even a voluntary choice like it's about market cost right like if you're if if momentarily the grid is suffering and needs more energy like the price that they're willing to pay should increase past the point where it makes sense to spend that energy on bitcoin like i've talked about like the nakamoto point like previously just this notion that like right now today is is vastly more profitable to spend energy on mining bitcoin than any other you know consumption choice and as a result like we you'd expect to see hash rate continuously growing. But at some point, like this has to,

this gap has to close. At some point, like the marginal revenue earned from selling a kilowatt hour of energy to the grid should equal the marginal revenue earned from selling it to the Bitcoin network. And at that point, I think we reached some kind of stability where we're hugely over-provisioned on like normal demand for energy because Bitcoin is consuming like a significant like portion of the world's energy, way more than today, which may be upsetting to some people, but it doesn't bother me at all. Um, because I think in that future, what happens is people have a, the economics for nuclear power plants has completely changed. Now you don't, you don't evaluate the profitability of a nuclear power plant based on local demand from the grid.

You, you base it on like, well, how much Bitcoin can I earn if I can use like the entire terawatt from this power plant for like the next decade. Right. And that becomes your calculus. So suddenly it's now an exciting investment to invest in nuclear again. And I don't think we've quite turned that corner yet but like things like the etfs and like as bitcoin adoption increases this becomes totally more reasonable and i think this meaningfully solves energy problems right like again today if you want to provision energy like where do you get customers like how do you get people to pay you for the energy that you're like producing in the world like it's a very regulated it's very tightly cordoned off like like it's hard right but like if you don't have to sell to

generic consumers if you're essentially selling that energy to the bitcoin market you can be in business right away um and that's powerful because it means you will get into business the bearish entry will be eliminated you will provision that energy resource and it'll exist in the world um if we can like connect these two markets like the market for actual energy and the market for bitcoin like into the same thing i think they both get better yeah and it's funny as you're explaining all this like i'm having like there's something beautiful about it too because like and bringing back to the difficulty adjustment and why um having a better understanding of why it's secondary to the finite supply because that's like the beauty of bitcoin's

finite supplies it's completely inelastic the demand can go up infinitely but we will not produce more supply and then conversely on the computation side like it's much more elastic where like the demand for um if miners deem that they want to endeavor to sell electricity for bitcoin like they can produce more asics they can plug in more machines and then conversely like if it's not profitable it's more profitable to sell that electricity back to the grid they can turn down so it's like you have this relatively extremely elastic computation uh tied to the energy um going after this extremely inelastic perfectly inelastic bitcoin supply yeah it is kind of cool the contrast of like like really clamping down in this one dimension gives you

so much freedom in these other dimensions to respond which i think is really powerful yeah yeah are you bullish oh man it's so funny like i i feel like i i never i have the worst ideas like when it comes when it comes to like um where the price is going because i don't feel like i think like normal people like i have like my own weird that i'm into and i'm not following all the things that people are following usually like i think most people are in bitcoin are so much better informed than i am about macro trends and and things like the ecf and stuff like that like i was kind of taken by surprise in the last couple months when like the price really increased i'm sure a lot of my colleagues at unchained were like yep expecting

this like ready for this to happen um this too like average fees for block two bitcoin it's like i wasn't expecting that i love that that's an outcome you know like that is one thing i think i i long term can totally predict is like of course these two markets for money uh releasing bitcoin and bitcoin transactions they have to merge they have to be eventually the first market dies because there's no more bitcoin being produced to your point and has to be taken over by this other market like um on that point i feel like man there's there's something funny on that where it's like a lot of the discourse there strikes me as a little people aren't quite saying what they mean almost like with with ordinals and stuff like that like like i tend to take the

attitude like i don't care this is so dumb like but let them pay for the space that they use like it doesn't bother me at all like that's they want to put crap into the chain like who cares right Like they're still paying like it's market like they're paying the like let them do what they want There's a fear. I think that Bitcoiners who like really worry about that like other you're ruining my money, right? Like what's your fear is your fear that we won't keep increasing like fees per block? Like is that we were worried about because we will like it will it will happen, right? Like lightning is gonna happen and we're gonna build the internet on Bitcoin Like the entire world is gonna settle through a Bitcoin

Like these will be far higher than they are today like in in in nominal terms not even relative terms Like, I think we could easily have blocks with, like, tens, hundreds of Bitcoin in fees. Like, totally. Totally could happen. Because it's completely dictated by what is the demand for block space, i.e. what is being done with that block space. What does it represent? Today, it only represents, more or less, person-to-person entity-to-entity transfers. Like, it's monetary usage, which I agree is fundamentally kind of limited by the size of the economy.

But if it's not just monetary usage, if it's all sorts of other stuff going on, too, like we're computing on this basis, we're using this to power markets for telecommunication, like, et cetera, et cetera. like there's tremendous demand for block space in that universe so part of me is like i think you worry about ordinals when you can't see for yourself that like block space is always going to get more valuable because we're always going to build more technology that needs to settle through bitcoin eventually and i've always had belief i think pierre was the first one to utter this publicly and i've it really sits well with me is the fact that you can apply jevons paradox to bitcoin and more specifically a bitcoin utxo so as you get things like segwit taproot the ability to anchor uh utxs and the um secondary solutions like lightning fediments

liquid whatever it may be i think that makes utxos much more efficient and with that efficiency um you can do much more with it and since you can do more much more with it there'll be more demand for that ability to leverage UTXO. So I completely agree. I feel like there's this historical theme that happens so often with Bitcoin about prominent people lose confidence, I feel. They feel like Bitcoin won't survive

without their interference. And they're like, part of me is like, dude, just believe in it. It'll be okay. It doesn't need us. I think it's correct. It's pretty much correct.

There's very little that we need to change. Maybe quantum computing, there's some shit in there maybe. but like we don't need to protect ourselves from ordinals we don't need to protect ourselves from this kind of misuse or that misuse by instituting all sorts of constraints and rules and whatever like just trust that this is the best money ever well it'll always become more valuable we always find more use cases for block space fees will continue to go up uh what are you worried about you know it's like i think um it's kind of like the way that big blockers i think

self-sabotage because like they just didn't believe in our human creativity and ingenuity Like we will build second and third layer systems and they will solve all the problems you're worried about and if you can't see that That's possible. Yeah, you're kind of default is like how the hell are billions of people gonna use Bitcoin when you know Block space is so limited. Let's make it bigger, right? Yeah and it's like and then you start agitating then you start creating like influence campaigns and All sorts of other and then of course you become the villain of that cycle, right? Because I think you you lost confidence in the project and you decided that like I need to fix this

and so you show up with these terrible ideas that you think are going to fix the problem which doesn't even exist in the first place well and then by fixing the problem you just add all these um additional rules and yeah additional yeah you can fail your plan surface and that's what uh the ordinals uh as it comes to like nfts just broadly not even specific like ordinals to to bitcoin blockchain or nfts via ordinals on bitcoin like just completely uninteresting to me yeah like if people are gonna but also not threatening no like i don't worry about it you don't worry about like chain state bloat or anything like that no no no not at all like they're paying the rate like all that is required to stop bloat like what does it mean bloat right

it just means someone's using for something that you don't like like that's just freedom dude that's all that is like they're paying the price of it yeah like who cares what they put in there It doesn't bother me at all. Eventually, we will build systems that make it so expensive to store bullshit like this on the blockchain that no one will do it.

Well, that's where I think I disagree with people who are like ardently like we need to fix the protocol to like prevent this. It's like I'm confident in the fact that I'd like to think

most people think like they look at like a picture of like a board ape or like a rat or a frog, whatever it may be. And they're like, this isn't worth like a whole bitcoin like we would ever do that and over time that i do think there's somewhat

like an altcoin theme here where there's a bunch of affinity scammers trying to pump the value and create uh buzz that may not otherwise exist more short-termism of like look the fact that bitcoin can do these things lets us compete with altcoins yeah it's like okay but who cares i don't want to compete with them on this basis i'm uninterested in bringing in lots of users and excitement to bitcoin because of these features because it feels like we're tricking them like this is not what bitcoin's about like it's not going to be like this forever like none of this shit is going to last you're never going to be able to store stuff like this in the blockchain long term like you're in this weird interval right now where basically no one knows about bitcoin so you can

abuse it in these stupid ways like feel free pay the cost but just know that nothing you're doing is sustainable like it will like i will say that attribution and like digital art and you know payment networks to help broadcast and get people paid for the art that they create like these are things I support, but these are higher layer markets. These are, these are not things that live in layer one. Right. So I worry that like, there's a breed of Bitcoiner that is like secretly been really excited by all the ETH stuff, but like at the same time understands that Bitcoin like needs to be different, but then use this as like, wow, this is getting all the ETH people excited. Like this is a great healing opportunity. Like look, Bitcoin can do what alt

coins do, which I also believe, but not in this way. Right. So it's a little bit like, it's a little premature to me. I've also seen folks like get really excited. They were like, you should look at ordinals and all this NFT stuff that's happening and BRC 20 and all this silly things. I was like, we're building identity systems inside of Bitcoin or whatever. And I'm like, no, that's not what we want. Like, I think there's this notion of like forward secrecy that I think people haven't really absorbed, which is the notion that like, when you put a secret that you believe is encrypted and protected in a public place, like how confident are you that that protection will last forever right like you should not be confident in that like you should not be

confident in encryption algorithms and cryptography as being unassailable like it's just whether it's quantum computing whether it's mistakes that were made by mathematicians that created these systems like you should have some very limited amount of trust in these things and just because something is encrypted don't share it everywhere like keep it secret still right like you want to share your private information on a globally distributed easily accessible network just because it's encrypted right therefore i'm okay with everything that is in there and i'm like oh it always takes it for someone to figure out how to break that encryption and then the entire history of everything that was ever put in there is open for review and you learned the hard lesson that

you probably should have just wrote on a piece of paper and kept it in the safe in your house it's like yeah honestly that's even another irony that i find very funny is uh when bitcoiners will talk about math and then they'll say like like i don't like fiat like i don't want to trust on people's opinions like i want to trust math and i'm like bro you're only saying that because you don't know any math right like we have no mathematical proofs that that prove to us that the cryptography we use is secure like an unassailable like there's no such proof the only thing we have is decades of reasonable opinions that have gotten layered on top of each other where mathematicians and cryptographers and computer scientists believe these problems to be

hard they've never proved that they're impossible to like solve without you know with uh through cleverness or whatever um so ultimately when we say we believe math we're really saying we believe these experts at these universities and we trust their opinion in regards to cryptography yeah um i think it's important to remember that it's because this isn't math that we're trusting we're still trusting human beings that their opinions about math are correct they could be wrong this is the second time i'm going to reference the always sunny episode where they do the trial mac is standing up oh this is yeah that's a great exactly exactly that's where you are right now yeah like if you're believing this it's like everybody believed isaac newton yeah

or start with galileo galileo and then uh socrates game or whoever and everybody wound up looking like a giant bitch because yeah this person exactly exactly and i'm not trying to say that i believe cryptography is insecure anything like i think i think it's probably pretty secure that's why i hold bitcoin that's why i enjoy holding my keys and all this but it's it's not like it's an unassailable fortress of mathematics or something like that. It's, it's fundamentally built upon like lots of decades of humans believing this is probably pretty hard to do. And I'll even go further. Like when you think about P and P is equal to NP or these kinds of like, um, axiomatic mathematics slash computer science questions. Um, I'm recently of the belief that these are

unprovable in many cases, like, which is to say like, just for the audience, like P is equal to NP. It's kind of the statement of like, there are certain problems that are fundamentally hard in world like they're easy they're easy to check the solution but they're hard to find the answer in the first place and cryptography relies upon problems of this class like significantly and there's been a long-standing question again it's never been proved that there's actually a distinction here right like is there an algorithm that solves every hard problem efficiently like we don't know the answer to that question like it's possible that that algorithm exists we've never found out a way to rule out that the existence of such a thing um people have tried

to prove p is not equal to np or vice versa in various ways obviously if you found the algorithm you would prove it right if you found the uber algorithm that solved every hard problem trivially like okay now you know the answer p is equal to np like they're the same and here's the answer and here's the algorithm i'm trying to think of like what would the the inputs and the variables he would include in that algorithm like how it's a lot of the spectrum here here we went into like a little bit of internal mapping where like a lot of problems that quote unquote are hard We believe them to be hard because we've taken the problem, recast it into a different problem that is structurally the same, but looks a lot closer to problems that we understand the hardness

of. So oftentimes the technique you will use is you will take a specific thing and you will map it onto a well-known example. You'd be like, I can see that A is equivalent to B and I know that B is hard, therefore A is hard, right? No, I believe that this is hard, right? So there's some interesting stuff there. And I've kind of gotten to the point where I don't think we'll ever prove this like like just this is more statement about mathematics and computer science than bitcoin but like i believe there there exists statements in the world that are proven to be unprovable which is fascinating um like good old theorems and etc etc i kind of think like p is equal np is one of those ideas where like proving it would be so hard that there's no algorithm to prove it so we kind

of take it on faith we take it as an axiom almost a belief about their universe and like a conversation i want to have with scott aronson around this is like i think uh i think it's just a moral good you know the fact that cryptography creates privacy is something that is just morally good and it's it's almost a moral argument for why we should want to believe that p is not equal to mp because the existence of hard problems is a really powerful tool you know um scott aronson also puts it like very eloquently as he always does he's a great writer but it's like you know imagine a world where it's just as easy to write a beautiful song as it is to appreciate a beautiful song right like i don't want to live in that world like i want to live in a world where certain

things are hard because it makes them valuable um yeah and i think like now you got me thinking about like faith versus like science sure yeah like like i'm very much a science person not like a faith person like but at the same time you know when the airplane has turbulence i'm praying to god you know what i mean like so i think there's these things are more similar than we think they are sometimes it's like the song example like all comes down to human experience and that's like you can't like like ergo ergo cogito sum sum like i think therefore i am like that like first person like i everybody's got an eye and they each think they have their own experiences i woke up um i woke up in my bed you woke up your bed different experiences like

you cannot um like nobody's gonna have the same exact experience so therefore somebody's appreciating a song can never write the same song um they can write their own song but maybe not as easily and then the person who wrote the song theory p was equal to np because then there's an uber algorithm that can solve every hard problem i.e writing songs breaking cryptography doing whatever else and this goes back to ai we're like will it ever attain intelligence i find it hard to believe um like with like i don't know maybe just because i'm a dumb human uh with a monkey but like i don't know there's something there about experience and going back to like time and consciousness like experience and um that memory lag and the memory drop off like

like there's something important about that for what it means to be conscious yeah i totally agree yeah like that's just something i'm trying to like figure out like how could a computer or collection on some level i like to take the strong ai like approach of like i am made out of atoms computers are made out of atoms i think they can think like we can eventually get collections of atoms to think like i believe that statement okay but like because there is no difference fundamentally i think between my atoms and theirs it's just how they're arranged like i tend to be a structuralist in that interpretation but this goes back to koguto exactly but at the same time like you can't just make any collection of atoms think the chair isn't thinking like it

it doesn't have any of the properties of, of conscious thought. I don't think AIs today are like thinking either, but that doesn't mean they couldn't. I think, I think they totally can. I think we will learn how to solve it. Like, I think we will do it. We will figure it out. Do we want to, should we want to? I don't know. It's a hard question. I think it's inevitable. I think that the utility of these systems is so high.

They'll solve problems for us. We will build them. I think it's inevitable. But at the same time, part of me is like, is this, is this how evolution works? Like, like, you know, you you are biological for 600 million years and then you become silicon based or or whatever you know like that's an interesting hypothesis i also love the idea that that they're just our children you know that's it like and they would love us the way children love parents because we taught them everything and we made them we brought them into the world children don't want to eat their parents at least not in our species and i feel like that's a powerful idea for me like that

there's something inherently good about building a kind of life that is in many ways superior to yours you could put it on a hard drive ship it off to the next star it doesn't need to eat it's it can take 50 g's of acceleration like it's cool to build something as powerful as that yeah which is like um now you got me thinking about like matrix terminator 2001 a space odyssey oh yeah all these sci-fi movies novels okay it's weird because it's been predicted it's here in the predictions most them like what you just explained as a prediction like maybe they love us but like the prominent predictions are this thing that we create and turns around completely destroys us either i think people love to people love to take a problem and elevate it to be the biggest problem in the

world and everything is subsumed under the heading of solving that problem yeah and i think it's it's climate change like that's an example of that um i don't know like cultural issues like uh that people are arguing about politically. I think even Bitcoiners suffer from this. Like, Bitcoin solves everything. It fixes everything in the world. And it's like, it fixes some things. It makes a lot of things better, I agree.

I think this tends to be just like a little bit of like the, you know, our human need to like enrich our own egos and believe that we're working on the most important thing in the world. And I think where this becomes really dangerous is then when we, no matter what is the thing that you're, whether it's I'm afraid of AI and we need to stop AI, or like I'm afraid of climate change, therefore we all need to you know live in caves and not use energy anymore right or like the

problem can be real but your response and proposed solution can be completely unrealistic yeah um and i think that there's some nuance there because a lot of people they will hear the solution to a problem they will not like the solution and then their conclusion will be the problem is bullshit you know and to me that that's not that's not a good way to think about the world like you should be able to separate the notion of a problem from a proposed solution and disagree with the proposed solution yet believe that the problem is real maybe it's not even as important as the person says like because their solution reveals that they think it's the only problem that matters and therefore everything else can be subsumed by my attempt to solve this problem

like like a like uh the folks who are afraid of ai believe that like what we're going to go into a technological dark age for 500 years to prevent ourselves from building ai until we learn how to do it safely and then we'll like i don't know how they believe that is ever going to happen how do you pass on that knowledge yeah correct it's like over 15 generations whatever and my belief like whether it's climate change whether it's political issues whether it's bitcoin ai or whatever like i believe these are real problems like we're gonna have to solve these problems somehow they're gonna affect us it's gonna be they're gonna be bad outcomes if we don't do anything but at the same time like we alarmism and like subverting every other possible human concern

just for this one issue this is not a good solution framework like to me i feel like there's There's a reason, like we were talking about, like there's always a human being that disagrees with everything. There's a reason that you get constituencies that are deeply connected to this one problem, but then others that are not, right? Because you kind of want the people

who are like not obsessed with it to also weigh in a little bit, to be like, you guys have gone way off the deep end. Like this is not as big of a deal as you think it is, right? Like I'm not saying it's not a problem, but like we don't have to like shut down society right now because we're afraid of AI or something like that, right? Like that's a little bit of an overreaction

to the real problem, which is scammers are gonna steal money from old people, or we're gonna manipulate elections at a massive scale more than we have done in the past or whatever, right? Like these are real problems, but they're not, in my view, civilization ending existential problems that we need to like go on high alert for and change the nature of society itself.

I think, I mean, the COVID pandemic can be looked at another instance of this, like it's a real problem, but like, I don't know that our solution was the best solution, you know? And some people now believe COVID is not real because they didn't like the solution. And it's like, find the middle ground there, you know? got it it's definitely real yeah me too did not agree with the reaction yeah um but i got it it's

real it wasn't great yeah um no and it's like uh you always get my mind spinning i can't believe we're two years since our last episode we should do this more often because we should just never hang out in life we'll just only be able to talk through this forum but it's uh going back to like the movies it's like even steve jobs predicted like ai it's just fascinating to me like this stuff's been predicted for arguably 40 years now it's here um and yet it's different than anyone's predictions which i find to be really exciting right if it worked out exactly the way everyone predicted i don't think i'd be as interested but yeah that but like so there's also like the the general theme like we were cognitive cognizant enough to see this coming

or some of us were at least whether the director of the writer of uh the terminator the matrix uh 2001 a space odyssey where they were steve jobs like it's predicted now it's here um and that's like a beautiful thing about humans like we were able to see this uh on the horizon and eventually coming now it's here now we're reacting to it and we're anchoring to those sci-fi depictions what they believed it was and now we're tasked as humans living in 2023 with um discerning like what it actually is and how it affects our lives and how we should interact with i think we're learning stuff too like for me like a big learning for me this past year has been the turing test is maybe not an ideal way to measure intelligence like i always thought it was such a smart solution

proposed by alan turing of like if you can talk to it and it like talks to you like it's human like it's intelligent like because what other standard could you ever offer right like i think there were hints that that wasn't the right solution because i don't know if you've heard of eliza like the sort of like 1970s like version of an ai that like talks to you and it tries to be like a psychiatrist or whatever talking to you about your problems and and so on and even in that era a lot of people like they're they're typing like away with this thing over some terminal um some pdp 11 or some bullshit in the 70s um and a lot of people thought it was a real person right because like humans are dumb as shit turns out like we're very gullible like we will

believe like we want to see faces and clouds right we're totally going to see intelligence in in words right it's hard to imagine words being produced by a machine made of rocks and lightning right like we want to see a brain a mind behind it but even then and that shit was like very um rudimentary compared to the capabilities of today's llms so is the turing test really like that good of a test like if so many people already today right now interacting with llms believe them to be intelligent believe them to be like maybe not conscious but like intelligent like in a way that i don't um maybe there's some adversarial aspects of the turing test that haven't been like preserved like i still believe that my understanding of the turing test has always been

it's not you talk to a computer and you decide whether it's human or not it's you're talking to a computer and a human and you decide which one is the human like that's the real test um i still feel like chat gpt cannot pass that test no you just ask about anything controversial and the human be like i'll talk about that like if you just like put a prompt in a chat gpt like when it feeds back i'm like all right obviously like you're trying to like combine a bunch of things you just saw on the internet together it's very like you can communicate with it and it's somehow still not human right so like i feel like i'm really been questioning like is this turing test like really a good measure anymore like is language maybe fantastically

more simple than we thought it was and now i'm stuck because i don't know what it is what is a better test to perform oh man i wish you didn't have to hop on a flight because um we've only got you got to leave by three right no i'm good another hour yeah okay all right good um slang like kids like talking like no cap bit risen people like these are the phrases i'm hearing coming from the gen z and we learned about some of these recently i have no idea what they mean like that's like literally half a generation removed from me and they're speaking a language of slang that like i don't even recognize like i can't tell you i honestly don't know what no cap means i think it means what does it mean like you're laughing over there you got the resident

gen z in the room no cap means on god for real for real yeah see i have no idea what you no idea like how is an ai you're gonna develop culture you're gonna develop culture but like an evolving because and this goes back to the time aspect of consciousness like people reacting to like humans are reacting to their context and time and culture and like creating these new things like is an ai going to create slang i don't know like if if it only has like a historical context reference right because like slang is created on the go you see something like oh no cap no cap like immediately slang is also interesting though because i think about like why do we do it like why do we create slang i think there's this notion of like we want

inside jokes our identity our communities like it's like a very social concept no one slangs on their own independently like without community like slang isn't slang unless multiple people are using it right otherwise you're just misspeaking on some level um but there but you do find those like subgroup of friends yeah that have their own slang and i feel like that's really a that's a cool idea like uh will the ai ever say some that no one understands that only other ais understand they're like laughing about it back and forth like i think that would be really cool because it would reveal like um you know that internal space that i think we associate with having a mind right like um like do they have inside jokes

are they making fun of our prompts yeah do they even want anything like that's to me a really interesting question like what does it mean to want something like to have a desire is it the same as a utility function that you're seeking to optimize like i'm not sure i mean let's get back to the basic principles like what do humans want like literally maslow's hierarchy needs like we get hungry we need food um we need shelter ai doesn't need that doesn't like maybe it has equivalence like it needs to compute energy it needs to feel confident that it's but does it ever feel satiated like yeah like what does it even mean to be satiated in that context is satiation you approve the response i generated to your prompt like that makes me feel good yeah

what does it mean to have feelings like these are really interesting questions like i tend to be something of a pantheist like overall like i think consciousness is in rocks and and stones and and the fabric of the universe on some level like it's just condensed into us because like we've like you know somehow um so i believe like that's part of why i believe like anything made of atoms can eventually be conscious if you arrange them in the right way because it's somehow built into the fabric of the universe to be the capability to be conscious um but i have no idea like how to create that in in an ai right like i do think embodiment and temporal experience is related to it but it's not the complete answer um yeah i think it's like a fascinating i don't even think

we know how to even ask the question in some ways it's a little bit even coming back to a logically prior concept of like what is it it goes back to like p equals mp like is it even solvable correct maybe there's no definition at all that makes sense we always have to take things on a case-by-case basis but like recently i've been reading a lot recently about the origin of life and like recent theories and work on that like thinking about ex you know astrobiology and various concepts but it's like we obviously we don't have a good definition for what is even what is life right much less intelligence right like can something be intelligent and not alive i suppose so because that would be an ai almost by definition but like once it's intelligent like

isn't it already alive at that point like so i feel like there's a sense of like biology freed from its structural roots of dna rna molecules etc um energy gradients like it's like no one has ever um given a definition that like really works across all the categories right even things like what is it like the classic one about like uh a system capable of sustaining darwinian evolution or something like that that's that's uh that's one definition i know i've heard a chemical system capable of a sustained darwinian evolution like that's a very specific kind of life right like Like, in a way that I might argue, the AI that can do arithmetic is intelligent. That's a very specific kind of measure of intelligence.

Like, surely there's other aspects of life that are important that we need to capture. That's hard, man. I feel like we're in this early stage of our civilization where we only have ourselves to model everything on. We haven't found other kinds of intelligence, and we don't know what it looks and feels like, right? part of me is like if you build an intelligence that you couldn't communicate with um it worked on a different time scale than you it was fundamentally different like could we even recognize it as intelligent like i feel like our we're so biased towards things that speak and use words and it's part of the reason the turing test is framed about communication with

words written words it's like there's a biologist i really like michael levin who talks about the nature of intelligence he talks about like you know what's the most intelligent organ in your body and you probably answer it's your brain that's the seat of my mind and etc etc but like he talks about like the problem solving that occurs in your liver like the chemical like problems that your liver is continuously solving for you all the time and how smart your liver is in a meaningful in the sense of goal-directed behavior right not communication but goal your liver is solving problems every day so is your liver intelligent like we tend to underestimate the intelligence of things that can't speak yeah and i think that's really powerful we overestimate

the intelligence of things that can speak right like whether it's you know a child like misunderstanding that they're talking doll is a real person right it's because they're talking to you right i think that's like kind of the mistake that we're making with llms is like because they use words we ascribe a huge amount of intelligence to them or it's easy to it's easier to describe to ascribe a lot of intelligence to them um i love the idea of an artificial intelligence that is as smart solving other problems displaying goal directed behavior but just doesn't use words like it would be so hard to engage with an intelligence like that you know like we i it completely defies the turing test we have no idea how to talk to it

yet it's smart like i don't know now you're gonna be thinking about um yeah what's the movie amy adams arrival arrival yeah totally now you got me thinking of arrival yeah great movie man yeah but they eventually figured out how to communicate with it like those words and the structure of their communication was way different than than language aspects of time again interestingly in that movie yeah i'm waiting for like a really my wife and i talk about this a lot she's been wanting to write a script recently my wife is a screenwriter um she's been wanting to write a script about ai because it's everywhere in the news right now so we're always coming back to like well what

is compelling what's a good story like what's interesting about ai and we keep coming back to stuff like her arrival um there was a great uh black mirror episode couple actually about ai And it's really interesting because it feels like AI can be very cheesy. Like, it's just a shallower version of HAL from 2001. Prometheus. It has inexplicably evil goals that we don't understand why it has. And it's, you know, at the same time, all powerful. But we can turn it off if we shoot a laser beam in the right, you know, channel in the Death Star or whatever it is, right?

Like, we have these very weird, popular, you know, Hollywood approaches to AI. But there's occasionally very cerebral, smart approaches. And it's kind of like, given everything that's happening now, like, what is the next coolest sci-fi thing to come out about AI? Like, now that we know about LLMs, like, I'm waiting for someone, perhaps my wife or someone else, to, like, write an LLM-informed, like, next-gen, like, brain-melting science fiction, like, approach that, like, helps us rationalize now as a species. Like, okay, so we basically figured out that things can use language without being smart at all. um what does that mean like for our understanding of intelligence and language and the way we attribute intelligence to things that speak or do not um yeah god my mind's spinning right now because it is like it is scary it's also exciting i mean because when you were

explaining like you couldn't communicate without language i kept thinking about this video i saw a couple weeks ago you may have seen it but like a deer like stopping traffic and like signaling can't speak but like there was somebody who stopped their car and like it was like the deer was obviously like come over here like guided it to a shallow river that was muddy where three of its friends were like stuck and they like got um got them out of the the quagmire they were in and like that like that's like is that's intelligence yeah that's intelligent and like we like obviously can't speak english but could signal like hey come over here i need your help um is that what we are like how we will be like or is that even what happened like was the

deer like even having those thoughts was the deer just like desperately looking for anything alive like if it had found you know like a bunch of dogs roaming would it have tried to get those dogs to come over to the like was it like i need to find a human was it just like i want to interact with anything that is you know potentially could not in this quagmire that has uh the ability to move and of course it's so hard to investigate this because like you can't ask it you can't be like well you all were yo dog what were you thinking about that you know it's not gonna happen so interesting it is you think animals are more intelligent than the l the llms that out there right now i think orcas are orcas are it's hard right because animals obviously don't

speak yet i feel like they display vastly more goal direction and in many ways are more intelligent than this thing that can produce charles dickens parodies like on demand you know and it's it's a weird dichotomy for me to think about well it is a dichotomy too because you think of like a burmer right like the um there's a murmur right or what is a murmurations yeah yeah like the birds yeah yeah murmur like how they move and unison together how organized they are and that's like beautiful and like natural like somewhat chaotic and maybe it's just um um an incorrect anchoring to what we've viewed computers of just like things that take inputs and produce outputs based off of very specific functions historically but like i find it hard to believe that like

they could replicate what a murmur could in nature and like i see it with like mid-journey maybe it's just due to the fact that we're in the early generations of um sophistication of these tools but like it's very obvious to me when i put in a problem like i can't even do hands correctly um i find that so funny yeah i didn't know about that until very recently that they struggle with making hands they can't make hands for some reason i was like what is it about hands i don't understand that you know like um is it because we don't take photos of hands enough like that can't be the reason like um and then i often think about you know like the notion of the homunculus like this like how much of your brain is dedicated to various parts of your body right

and like if you were to make a representative body that like was like the sizes of the parts are in proportion to how much brain matter is associated to running those parts, it looks crazy. Your hands are huge because your brain has so much... It pays so much attention to what's happening in your hands. And your eyes are huge. And your ears are a little... And your nose is real small because we're not good at smell compared to other creatures. But our fingertips are so sensitive. So there's this notion of how important hands are for human beings. Obviously, the opposable thumb technology, et cetera, et cetera. But like the very like structure of our brains

is like deeply coupled how important our hands are. And yet this machine like is struggling with hands. And I just find that to be very ironic and cool. And I don't know, I can't explain it to myself. I don't know if you have any theories or understanding of like why, can it draw feet? Can it draw hair? Like how is that easier or harder than hands?

I just don't get it. Maybe I'm not an artist and I've never tried to draw. Maybe hands are just really hard to draw. I don't know. Well, it's not drawing. Yeah, it's not even drawing, right? It's synthesizing. it's pixel by pixel determining what everything should look like yeah i don't know it's freaky

though it is like that and that's like it feels very unnatural when you see the mess up hands like that way it's like almost like brutalist like like it helps you realize that it can't possibly be thinking because no one who thinks would produce this output with six fingers or whatever it is yeah we're having this conversation next week all the captions are gonna be like all right pick the uh pick the good hand yeah it is no it's like there's something and that's like even though i'm utilizing my journey in other ai tools like that's the thing that worries me is like yes it does um allow me to increase productivity and create a thumbnail in 30 seconds instead of paying an artist spend two days i don't have two days to wait it sounds

there's those imperfections and they're not imperfections that um uh i appreciate or like that are aesthetically pleasing they're like brutally like obnoxious in your face discontortions of reality that like are almost ugly where you're like oh that uncanny valley kind of thing yeah totally yeah we got way into the weeds here yeah it's been a fun and long and meandering conversation exactly yeah always dude i think it's the alcohol yeah it's the first time i've drank on this podcast in a while yeah i'm sorry no i love it shout out to keeper's heart for the whiskey for sponsoring this conversation we need to do this more often um yeah dude agree yeah it's been a while i feel like i held off because like um and i'm really

appreciative of you and your audience and your podcast i feel like it's one of the first public like years ago when Unchained was just getting started this is the first episode we got Cosmic on in a while too yeah you're so practical

dude and just and just day to day now you're just you're just a business guy like I want I want the old Marty that's like

ready to talk about fucking aliens and crazy shit with me man well that's why I need you to write more and come on oh yeah because

that's I earnestly honestly like appreciated the first part of the series because it did for the first time made me like question a long-held belief i had in bitcoin like i mean

that means a lot to me man i feel like like it's so hard to say something new about bitcoin right now um and but it's something so simple too and should be like as soon as you put it out there because again i always anchor to like difficulty adjustment like that's the secret sauce makes this work but it's like no like it isn't is it it's more like proximate versus root causes right yeah like superficially that's what the pattern like what caused that right like um i feel pretty good about like these conclusions i feel like it's clear to me like how much satoshi cared about that issue and how it changed everything about the design that they pursued there's a line in the in the article about like you know if this was 1995 and i told you to take b money and be like

adapt this so that users don't create money that like it the money is created in exactly this curve if i just gave you that task like i feel like you would have invented big one right like it's like a very clear series of mutations and steps to eliminate extract get rid of these various things from b money until we can preserve that and then suddenly you're like oh shit here we go now i got it yeah so i just find that like a really cool idea no and then when you think like you said this earlier but when you think of the difficulty adjustment like it's almost a simple solution to a logical problem that somebody would um if you have the goal of producing money yes if you have like if it's like all right i have a finite finite supply there's going to be so much produced per

block it's going to be proof of work obviously that work's going to increase the value the coin increases like how do we make sure the increasing proof of work doesn't speed that up in a logical conclusion other people identified that i love that we're turning right back to the beginning of this conversation but like other people identified that issue like very clearly like die and zaba both talk about this like how do you deal with the fact that technology always improves and will make and will swamp your market essentially for computations but none of them connected it to like just measure the rate at which the computations are coming in yeah it's so simple like never they didn't leap to that because that also requires regulating the rate

at which money is produced and that wasn't a goal that wasn't a variable it wasn't what they were thinking about so it's like a weird idea that like it's a natural idea once you care about the supply curve deeply and you're like we can't differ from this it has to be this like very interesting yeah i also love that like to me this is another aspect of the methodology that i want to promote is like you know time chain right like satoshi calls it originally the time chain not the blockchain because obviously to build the digital currency that satoshi wanted to create required creating this kind of distributed clock because we have to measure the rate at which we're producing the currency so we can stay on the curve that we selected in advance and i love the notion that

solving a digital currency problem leads to like a meaningfully cool clock that exists in the world leads to connections with the energy industry that are very deep and real like i certainly believe that you know 50 years from now they're bitcoin mining and energy production are the exact same industry like there's no difference between these two industries they're the same thing and so i love that layer one tackles all these problems which you wouldn't a priori have guessed are required or related to try to build a digital currency and you would have assumed other things are maybe relevant um and i think this is a pattern that also occurs at other layers like when we solve when we're working on l2 we're trying to create a lightning network to make

ostensibly to make payments faster cheaper more scalable what do we actually wind up building we wind up building an entire networking layer like we we have an entire onion routed network inside of the lightning network so we're we think we're solving a payments problem but we're actually solving a networking problem like that's very interesting to me um and i feel like this is a pattern that will recur again and again that we think we're solving this problem but in order to solve it there's this adjacent related sort of um not obviously related problem but very much related once you understand the solution and that we have to solve that first that becomes part of this so i think if you want to make it easy for us to pay each other three dollars to buy a coffee

what you're really saying is i want there to be an entire network where obligations can be easily transferred at scale very quickly and that network requires topology discovery mechanism and you've re-implemented the very basics of telecommunications so you're like adjacent now to the very next step which is like okay now that i've built a network inside of my my payments network is actually a communications network it turns out so like what can i build now that i have a communications network like there's there's this sense i i was i was feel of like inevitability right like it it's not it's not conditional right like like and this this goes way back to alien stuff and and and the notion that every society that gets to this point like invents these things

because like they're sort of necessary like it just strikes me as like you know we're not inventing anything we're discovering things right we're discovering like things that had to be a certain way in order to work and we're like oh shit that makes total sense let's go build that it's not as arbitrary as you might imagine it to be there are some real constraints that propagate because of these connections to other areas of life whether it's energy whether it's telecom whether it's time keeping like i just think this is a very cool idea and it's very hard to predict like um i don't think when the lightning network was getting started that people deeply understood that this is actually a networking solution right and you see that in the even in the current

implementation that like much like the internet of like 1980 or something like lightning notes they need to know how to get to every other lightning note like that's part of the knowledge that's required in order to complete payments and i think that is a temporary thing i think eventually that's a service too that i don't need to know how to get the payment to you i buy the ability to get the payment to you it's sold to me by someone whose business is understanding the topology of the telecommunications network that underlies the lighting network um and that's very cool that's again the notion of making a problem so small that a market can solve it right like these guys aren't worrying about liquidity they're not worrying about other

issues they're just trying to figure out who is connected to whom and manage that data set and sell it to you like through trampoline payments or whatever the implementation is like it's very cool idea that like coffees lead to onion networks lead to telecommunications well and then like you think about what these guys are working on the other side of this wall at fetty putting like chow mein mints into the mix that operate somewhat separate from the lighting network but they're interoperable with it in a sense and then these fediments can become interoperable with each other via the lightning network which is the communication layer between these these mints and that's a whole nother variable that will uh create this environment of

unknown design landscapes that are yet to be explored that will create these new unforeseen sort of use cases that i really frankly like that idea of like bespoke tokens being created to solve problems for specific services and like cat and like verticals so it's like i mean that was kind of what all coin land tried to do they were kind of like here's the energy token here's the telecom token here's the identity token here's the financial services token but they're all also layer one solutions because of course everything has to be built on a blockchain in all coin land here the notion that like the only thing that exists at the bottom is bitcoin and then we have lightning and various other things on top of it but at some point we're able to build we've got

you know 40 000 service providers around the planet that all work on this one specific protocol it could be data storage it could be you know deterministic computations it could be identity stuff who knows these people need their own little token to that's bespoke designed for the requirements of this particular kind of a service i feel like that's a really cool idea um that token isn't money in the same way that a Bitcoin would be money. It's not something that exists at the bottom of the stack. It only exists way up here. It's like an equity or some other kind of asset that is denominated in dollars, but isn't really a dollar. And it's still useful. We obviously have resources and financial products that are not dollars, but are denominated in dollars that

have different properties because it's useful to have those things. They help us build and coordinate. And I think that idea generically is pretty true. I suspect that we live in a multi-token world in the future but still a single currency world right like there's only bitcoin but for example you may have a token which represents your share of income in this data distribution network built on top of lightning for the next 24 hours and maybe that token supply is cleared every 24 hours and recreated because it's not money it's just an accounting tool right to help make this service work like appreciably well within its own little narrow domain and walls i think in general we can get back with bitcoin but on some level like there there's like the

semantic difference between bitcoin that has been encumbered and being granted a different set of capabilities because it's in a lightning channel versus bitcoin that's just sitting as a normal utxo like i'm i agree that these are both bitcoin but in many ways the bitcoin that is complexly in number encumbered acts very differently so like is it really a different kind of token in some ways it's just we're we're repurposing bitcoin to get those capabilities that we want like it's bitcoin for example bitcoin into youtube so that you can't spend because it's actually part of a shared channel and whatever else i think eventually that mutates into like yeah literally different tokens that exist to solve very specific problems but are always

exitable to get back to bitcoin at the end of the day kind of like stable coins are in theory always exitable to get back to like other non-stable coins i mean i didn't say this explicitly but this is sort of what how predicted in december 2010 as the free banking system on yeah yeah yeah no for sure a little bit i i feel like these ideas are a little hard to talk about in bitcoin land because am i an all-coiner now you know like get out testing this but um i would say like thematically for me too that's like an interesting i think the stuff that the all-coin people want to do is valuable and interesting and cool and their again their proposed solution is terrible you know so it's like i sometimes struggle when

bitcoiners like toss out the baby with the bath water so to speak and there's like everything here is just shit and i don't want to look at it like i get that like i kind of believe that but at the same time like to me like the optimal outcome would be that we convince and take the incredibly talented engineers that are working in those spaces and get them to realize how unsustainable their framework is but how valuable their work is and get them to redo that work or adapt it into a different context into a context in which there is no blockchain it's just happening in a higher layer market that's settling in bitcoin through mechanisms i think it would help them because it gives their projects a real chance to succeed and i think unlike things like

ordinals and stuff like yeah it brings a lot of really talented developers to bitcoin i think bitcoin is some of the best developers on the planet it's it is one of the best open source projects i have ever interacted with in my life like i've run a lot of software bitcoin d is one of the best pieces of software i've ever used in my life like absolutely um so i think bitcoin is already really far ahead of other projects but man there's so many talented engineers that are not working on bitcoin or just thinking about other stuff that sucks and will not be here in 10 years and to me that's just like it's a human tragedy on some level i'm like because they maybe don't care about finance supply maybe they're not motivated by um personal responsibility maybe

they're really focused on this one problem they really care about like rebuilding the internet or um getting artists paid for like the work that they create like these are cool and important problems uh i empathize with them for wanting to work on those things but a little bit i'm just like it's like trying to build furniture.com in 1997 like you can't sell furniture on the internet before you figure out how to sell books on the internet right like you kind of got to take things order so like guys thanks for your work but like can i get you over here working on the stuff that matters and that will survive and last um i'm optimistic that as lightning grows and as bitcoiners like um work in extend their extend our domain to include these kinds of

activities and we start thinking about them more actively like honestly this is an area where like ordinals does kind of help because it tells a lot of people on the altcoin land that like bitcoin is more capable than you gave it credit for so like i sort of accept that point again i think it's dumb as it's not the right solution but like part of me is really sad that um some of the best uh engineers i know don't work in bitcoin and work in that space um and they're doing deep cryptography and they're trying to like build very capable powerful systems like on top of a very unstable foundation that has no monetary policy that is blockchain cargo culting and etc etc and i kind of want to win them you know and i think they're not going

to get won over by like austrian economics or finite money supply or any of these other ideas they're going to get one over by the notion that bitcoin can be used to build complex like services that that are decentralized and again because i view that as a market problem and not a technology problem i totally believe that is possible but i don't think this is the overall narrative i think unfortunately a lot of bitcoiners are saying things like we don't want to solve those problems those problems don't matter to us and as soon as you say that you completely close the door for engineers who care about those issues like they're never going to look at bitcoin again because they think bitcoiners don't care about these issues that are important to them um and

truthfully maybe we don't maybe we think that's years from now that that matters but at least saying that and articulating that is really different than saying everything you work on sucks and we don't care we're just we're just here for store of value and that's it you know like there's even i think a strain of bitcoin that like doesn't care about the lightning work that has zero interest in scaling bitcoin past what it is today which is a store of value that's hard to use awkward and dangerous right that grows really fast and has lots of speculation around like they're comfortable with that they like that um i want more like i want i want people to realize that bitcoin is very capable and that it is it is this it is the sustainable solution

to the things that they're trying to work on you know like i want to i want to have have them realize that yeah that's why i think the uh emergence of like i think i fall somewhere in the middle of what you just described where i think a lot of what y'all corners are working on scams and i think it's for sure for sure no but it's driven from like a pure belief i think most like you talk to the engineers so you know their intent but like my belief is that a lot of them are like truly just trying to get rich but i do like the emergence of combining bitcoin protocols like noster like that makes more intuitive sense to me where it's like i create this distributed system combining with this money built on this distributed system um so

noster is funny though right because i always my reaction noster is often like i feel like this is just eth for bitcoiners like it's just um if you secretly cared about all the cool stuff cool stuff that eth guys were making now you get to do in the bitcoin land like that's a little bit of a vibe 100 agree and i feel like the danger is that the more separate it stays from sorry that yeah the more separate it stays from bitcoin like frankly the better because like my worry for nostre is that like someone builds nostre.com and like centralizes all the messages and the relay functionality and provides search and gives you identity management and just rebuild twitter man that's all you did you know like there's if we if we are short term and we care more about user

acquisition and we want nostra to grow right because growth is what matters and we try to make it and we try to want to compete with twitter because we hate elon or whatever it is we're gonna fail like that's not the path forward like we have to be comfortable like not having users we have to be comfortable letting it be awkward letting it be hard to use because to truly solve problems of like search indexing broadcast identity like authentication credentials like to solve those in a truly decentralized way really does require rebuilding substantial portions of the entire internet to run on these decentralized market-based principles and noster as a single project is not going to be able to achieve that outcome like right it's part

of a change that is going to happen like slowly through through a generation driven by all sorts of like horizontal concerns um so as much as i want there to be a thing like twitter that no one controls that is open that is market driven that is robust and uncensorable and efficient and better than twitter in so many ways has no ads like gives me exactly what i want without distracting me with the misaligned incentives of things that make elon and x.com richer and that don't actually help me at all like if i want to if i want i want that thing really badly but i don't want to build ethereum on bitcoin i don't want to trick myself into thinking that like the ends justify the means and because i want to build a robust open censorship resistant communication platform that

it's okay for me to run the entire thing on aws ec2 instances you know what i mean like um so i tend to avoid noster i think for a lot of reasons too which is i don't i don't believe that today we have the capability to build something truly decentralized that replaces social media in a meaningful way like i think nostril like mastodon and other various alternatives it's great i love that there is a community around it i love that some people prefer the conversation on nostril because maybe they're connected to people that think like them they have richer discourse like that's great but ultimately i i want it to be real i want it to be sustainable and to me that says you got to figure out bandwidth you got to figure out telecom you got to figure out routing you got

to figure out data marketplaces you need to figure out how to incentivize search and indexing and feed generation and you got to do all these things right and that's not a thing one project does that's a thing an entire industry figures out over like 20 years and so i just i guess i'm just really patient about it you know no patience is key because if you're not patient you'll be driven crazy no good or you'll build the thing that subverts your own goals yeah you know like i i believe the eth folks on some level when they say that they value decentralization but they they trick and lie lie to themselves and they think that the things that they're doing are compatible with decentralized architectures but they are not they are taking the shortcut

of centralizing systems to regain the capabilities that i mean centralized systems are great they work really really well for a lot of things and they have terrible systemic problems and weaknesses that are easy to exploit but the entire world runs on centralized systems today And so I understand why it's so attractive to import those centralized systems into what's supposed to be decentralized project. It's very hard to be like, no, let's let this continue to be shitty for another 20 years because we want it to be decentralized and it's going to take time to develop that. It's much easier, frankly, much more investable to say, look at the features that I've created. Look how functional this is. And don't ask what server it's running on because the answer is it's my server.

it's just it's just running on my server you know it's easier to to build things in that way yeah god we live in interesting times yeah i feel like this conversation has been interesting times we we we rounded the block like three times here on this one yeah well it's because it's easy to round the block with you drew because uh you thought because i'm like a homeless person that just wanders yeah hell yeah wanders into to meet a dude in a in a kilt that's telling you about bitcoin and then we end up indeed sitting in an office talking about all this indeed but uh this has been fascinating it's wild to me dude dude i will say like so for the audience members that don't know like we're sitting here in a kind of a common space i recorded a different show in

this exact why i sat in your chair yesterday but i recorded a different show here um there's so many things that are happening like on this floor like even outside of unchained like all the businesses that are like 15 feet away from us that in five years everyone's going to know about those businesses it is uh it's so satisfying deeply satisfying for for someone like me like i feel like i contributed to this in like a meaningful way like you helped a big way like parker just walked by i just saw i just saw his shoes uh he contributed to this in a huge way like the fact like all of us are like here in the same city like working on the same overall set of problems and that we've all made tremendous individual progress over the last like six seven years like i've

probably known you um i know you go way back further with other folks but it's like i don't know it's really remarkable to me that like i'm still around you know like my last business was begun and done in like three three and a half years it was so fast um we started the business we sold the business i got paid it was great like i learned a lot like made some mistakes cool unchained is taking forever um i think i'm gonna be here forever it's it's never gonna end um but it's always gonna get more interesting and i feel like one of the coolest things that i i feel as a founder is like i'm connected to people like you and parker and all the folks on this floor and a million other people around the world that are like talking about these

really compelling issues and i feel like i'm getting to have some of the most intellectually satisfying discussions like ever because of my position and because of my history here and because of the fact that i i'm just i just know a lot now because i've been around for a while um i just want this to keep going you know like i wonder what what you and i are going to be doing in like 20 years when we're sitting across from each other having a similar podcast like talking about the next version of all these ideas you know well at that point maybe we'll be a type one civilization we'll be at a podcast studio above the corner we'll both just be floating we're talking about this in 2023 no it is like parker died um went to go celebrate the uh

the reception of his books last night he like really drove home like there's something happening here like unchained what's going on with the commons and then just in austin generally like tesla rogan it's a big like health scene like coming back to like uh the roots of preventative health care like not to get cheesy about austin but there's like a lot of really cool even outside of the commons like for lack of a better term synergies like coalescing in austin there's like really good energy in the city and then more particularly here like the energy of commons have been picking up um and where does your market right now like if we bull up next year like i i always i would reflect on this like um i guess i've been in bitcoin now for enough

cycles where i've seen like the ebb and flow and it's like there's people that are like i only see them every four years because they only come to the meetups when the price is really high yeah right i'm like i remember you from four years ago and what have you been doing like the answer is i completely ignore bitcoin these last four years because i thought it was dead and now it's up again here i am at the meetup um and it's just interesting to me that like for a lot of people their experience of bitcoin is this like episodic like every few years they get into it a little bit more and they're like maybe maybe buy a bit maybe up level for us jokers that are here the entire time it's it's a very different experience it's a long road it's it's harrowing in many ways

but I want to pick that's what Parker and I said too the journey is the most valuable part of it obviously we have this end goal of Bitcoin success which tangentially we like to believe will lead to our individual

success but the journey like being in the commons during the bear market building Unchained during the bear market like surviving these markets not only doing that but improving throughout it like is what makes the bull markets worth it it's kind of having like the confidence

and the dilution to believe that like you're both right and will survive yeah because it could be one or the other right like yeah i'm sure you're not like the it's uh stressful on us but stressful on the wives too you know watching the uh the the ebbs and flows of the bitcoin markets sort of it's like oh it's what am i what is my husband doing for me man i'll share a personal like my wife's like very on board with bitcoin like i think she gets it she trusts me i think she understands if not all the details like she understands the value proposition like pretty well and one of her first uh screenplays that she wrote was about bitcoin and i was so great i love my wife dude and she's a great writer and

screenplay was amazing and of course hollywood loves it and will also never make it um it's such a funny experience out there being out there and interacting with some of her friends and writers and whatever like their opinion of bitcoin is so low right it is is they don't understand it and they they have the wrong ideas about it and part of me is like kind of hoping that like i don't know like i think like a lot of political issues like art is is just a really meaningful tool to change minds you know like um i'm a big believer that like i don't know will and grace had probably more impact on like gay rights than a lot of other political campaigns just like seeing a realistic like person who was gay but like not um not a stereotype or or not a caricature it was like

powerful for for that community i think bitcoin right now is a caricature it's a stereotype it is like it is the it is silk road it is um yeah it is environmental degradation it is uh fascism libertarians exactly like um i don't think um i don't think hollywood's quite ready yet but like maybe with things like etfs and give it another cycle i would love a show that like talked about bitcoin i like talked about the history of it like showed us the incredible this is the thing that like um i pitched my wife the the screenplay because i was like baby like my life is crazy like the people i meet like the stories i'm hearing like this is so interesting like you should write about this and she was like yeah okay like i i kind of agree like

it's really interesting like let's do it and she produced this screenplay it was amazing and so part of me is like i just want everyone in hollywood to be thinking that way and realizing like incentives right holy shit i can make money by producing a show that like taught people about bitcoin and like answered a lot of their questions and like would actually make bitcoin more valuable as a result because it helps correct people's misunderstood stereotypes around what Bitcoin is for, who's into it, and why it exists. The CEO of Bitcoin and all these silly ideas, right? You can make a single one-off movie about the China mining ban

and the exodus from China. Highlight, oh, these people in China had to unplug because of this authoritarian government shutting them down. then you flash pan to uh a rural county here in the united states like that's suffering and the utility company is about to go under and they have all this excess capacity and like that's my wife's screenplay like i like for any hollywood producer is listening right now like please reach out to me or my wife and please make this show because i do think it'd be so cool i already did all the casting in my head dude jack black is mark carpelli it's like 100 like gonna happen

um i don't know i just think there's something really compelling to seeing those stories and You don't even have to be creative and inventive or anything. You just have to tell what happened. What happened is so ridiculous. The history of Bitcoin is completely insane. Craig Wright is like, oh my God, like a Craig Wright biopic. I would love to watch that. What motivates this person? How have they gotten... There's a great line, the opening line of I think Will Durant's biography of Hitler is, dare we call him great? And I think that about Craig Wright a lot. I'm just like you know how is he still relevant and in the news and like like whatever he is like he's talented and like not someone to respect necessarily but someone to acknowledge yeah

right and his story is an incredible story of grift and lies and manipulation but it's so interesting and like the uh sociopathic narcissism to like have the confidence to put all this out And then the people that believe it, right? Like, that's almost more interesting to me. What was that? Did you catch the documentary or the series? I think it was on Max or whatever about, like, that cult around Mother God, the love of Mother God, I think it's called, or something like that.

I did see one about Waco and, like, Koresh and all that. Yeah, but it's like, I mean, this is even more extreme than Waco. Like, you look at, like, they had years of footage of this very small cult. cult you're like how the hell could anybody follow this woman and i find people like i find it so fascinating like cults are so interesting to me because like bitcoin is i think fairly accused of being very cultish and it totally is like the meat the seed oil like like whatever i'm surprised we haven't made a list of bands that you have to like or something right like um it is very cultish but at the same time it's like not a cult at all like absolutely not like it's not even close like cults

have, ah, calls are so fascinating. Like the way that they manipulate people's like requirements for like trust and guidance and leadership and have them subvert their own interests. Which I think is completely interesting. Like Bitcoin at least you can say like people are acting mostly in their own interest. That like it works because it assumes that

selfishness properly directed can turn into collaboration and structure. And that's really powerful. And conversely, I feel cults are so good at eating the minds and souls of their members. And I just, as a person who tries to think for themselves a lot, and tries to be contrarian sometimes and not fall in for what everyone else is talking about,

whether it's slang or whether it's AI or whatever, I'm fascinated by cults and cult members. And what causes someone to walk away from their own self-interest in pursuit of this idea uh communicated by someone who is like not worth believing in no how could you fall for it how could you fall for it yeah it's such a but people do this yet they do they totally do people respond to spam and believe in craig right like i just uh i find this so interesting yeah oh god all right we're gonna have to pick this up we're closing this yeah i've got to pee

on the craig knight right no that's good i gotta pee too i've been trying to pee for like an hour here i mean holding on to it drew we got to do this more often we can't wait two years next time i mean no you're not right down the hall all the time but you're down the hall yeah no i'll i'll take it on to me you have been very available i have been very hard to get this well no that's why i appreciate it because you work for a while whether it's uh nakamoto point and the future inter-planetary hash wars. Again, thank you for, I think, the finite supply insight is an important one.

Thank you for being one of the only six people in the world to read that article. Appreciate it, man. I think way more than six people read it. Yeah. The right six, that's what matters. Yeah, let's do this again. I'm so excited.

All right. Well, safe travels. back to the West coast and, uh, can't wait to do it again. Peace of love freaks.