TFTC: A Bitcoin Podcast - #552: How Bitcoin Could Predict The Next Global Conflict with James Pierog

Episode Date: November 4, 2024

Marty sits down with James Pierog to discuss Bitcoin Prediction Market. James on Twitter: https://x.com/BillyHongBeats Bitcoin Prediction Market: https://www.bitcoinprediction.info/ 0:00 - Intro 1:38 - Arriving at Bitcoin Prediction Market 12:03 - Comparing to Polymarket and crypto model 16:37 - Unchained & Coinkite 18:31 - Prediction algorithm 21:30 - Predicting and potentially preventing conflicts 30:41 - BOLT12, ecash and DLCs 37:28 - Zaprite and SOTE 39:01 - BPM vs Polymarket UX simplicity 44::36 - Oracle problem and centralization 49:13 - Trust and debt 57:06 - Singapore's authoritarianism unlocked bitcoin for James 1:08:32 - Psychic powers and tools for liberation 1:24:37 - Feather forks and ordinals 1:31:17 - Monetizing art and industry power games 1:38:35 - Adoption inertia and timing 1:43:34 - Native use case and exchange theory of value 1:47:27 - Final thoughts Shoutout to our sponsors: Unchained https://unchained.com/concierge/ Coinkite https://coinkite.com/ Zaprite https://zaprite.com/tftc Salt of the Earth https://drinksote.com/tftc Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

having this prediction market where people can see potential futures that creates this potential for observation and that observation changes reality james pierog co-founder and ceo of bitcoin prediction dot market runs a lightning network powered betting platform today he discusses bitcoin's potential for prediction markets its advantages as a development platform over other cryptocurrencies and its role in reducing governmental control they want everyone to be subservient in some way don't rise up because if you are in competition with them then you're a potential threat singapore where i was it was a complete authoritarian shithole you had literal robot dogs monitoring the migrant workers who are essentially treated as slaves the thing

about bitcoin is that they can't stop you i think prediction markets are kind of that next killer app they can use their money as speech what's going to be the thing that lasts for another 10 years, 15 years, 20 years, 50 years. It seems like no matter who wins the election, there's going to be a dispute. Problems that arises with prediction markets is the Oracle problem. How are you guys approaching the Oracle problem? You've had a dynamic where money's become freer than free. When you talk about a Fed just gone nuts, all the central banks going nuts. so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the

victor i mean that's part of the bull case for bitcoin if you're not paying attention you probably should be probably should be james it's great to see you again sir great to see you again marty We had the pleasure of meeting in person in Riga, Latvia, of all places. Yep. Places in the world that neither of us are from. Yeah. Shout out to that conference. It was completely epic.

The Baltic Honey Badger Conference run by Hodl Hodl and Debify. And we found ourselves talking both days for at least an hour. And we were talking about mining and how to fix the centralization problem within mining within mining via prediction markets, which is what you're working on, bitcoinpredictions.market. But before we get into this, like, I mean, when we met in Riga,

I guess before we get in, we're just going to get into it. We were talking about this mining centralization problem. And that's what you guys were looking to solve specifically. But it seems like you've been traveling the world since then.

And the product has iterated and transformed quite a bit. Yes, yes. So we started out with mining centralization. Well, let me just bring it way back. We were at Wolf, the Wolf Accelerator. And while we were in Wolf, the idea that we got into the accelerator with in the Genesis cohort was lightning node automation. We wanted to solve that because we thought, OK, if more people could run a node, then more people would run nodes.

If it was easier to run nodes, then we would have more proliferation. We quickly found that the market was a bit too nascent and it was really difficult to sell a solution that we could come up with. So week six of the accelerator, which was an eight-week program, we pivoted and we didn't know what we were going to do. And yeah, so one magical weekend I was in Philly and I met a friend and we came up with this new idea called Agora, which was basically a social betting market and people could basically vote with sats on opinions and after a time limit was reached the winners would split the losers money and we thought okay yeah like this would be uh an incentive for people to let's say provide liquidity to our node and then we could still run our node and automate things and you know optimize stuff but now

there's an incentive for people to like make payments uh that received some traction but not enough for us to continue working on it. And then we iterated through many different ideas since then. And basically the central thing that we realized with Agora was that we were building something cool, but we weren't solving a problem. And startups, we should solve a problem. That way we can stay focused on the customer and build something that they want. And that's where we kind of got the whole mining idea from because, you know, mining centralization it's a real issue like if hash rate aggregation is the only way to reduce variance then the hash rate will continue to aggregate right because miners hate variance

pools hate variance that's why there's this whole proxy pooling problem right because like miners they mine in pools to reduce their variance and then pools mine for other pools to reduce their variance and that's not particularly healthy for the bitcoin network so we thought okay yeah if we just allowed betting on like the mining pool block reward game basically this competition then maybe that could solve the variance issue and we could put our infrastructure of like betting with sats to a use that solves a problem now we got a lot of like attention from that like that was really great right like we have you know talked to some pretty big pools who are interested but you know As you said, while we were in Riga, it's a capital issue. It's a liquidity issue, not necessarily a tech issue. And the central issue with our platform is aggregating that liquidity so that, let's say, miners and pools can bet against some counterparty who's willing to bet.

And so we were tackling a lot of, like, the security issues around that with, like, DLCs and optimizing the tech and, like, doing a bunch of research to basically mathematically prove that it would reduce variance and have positive ROI for the capital. But it was kind of like, you know, we're on a fundraising journey right now, and it's a lot easier to explain Trump betting to an investor than it is to do mining centralization and variance reduction and all that. so while we were in amsterdam uh you know i was talking to some really smart people and uh one of whom austin alexander who used to be at kraken and he like his confidence in prediction markets and the future of prediction markets uh came from the his experience working at kraken for like nine years right doing uh exchange and one of the things that struck out to me was uh what he said uh people said that you know you couldn't compete against binance or coinbase right that uh exchange business uh was dead but you look today what's the biggest

business in crypto the killer app from from like a vc perspective like what is the killer app it is buy sell bitcoin exactly exactly so he's like yeah in 10 years prediction markets there's going to be 10 to 20 multi-billion dollar prediction markets and he just kept hammering me like just go to your hotel room start coding like you don't need to do anything at this conference just get this next iteration out with trump betting and so i talked to my co-founder and we were talking about this for a while like okay should we do a regular prediction market like we have the url bitcoin prediction dot market right like we could just do this at any time like all the infrastructure is like set up and ready to go but i was still kind of hesitant because uh we wanted to solve

a problem not just build something cool but hearing from all these people like oh yeah you know you should build a prediction market like everyone that i talked to at bitcoin amsterdam was like build a real prediction market and i was like okay let's do it let's see what happens right at the very least if we fail then we show that we tried right and then we can go back to doing what we were originally doing. And it's been so far like really great. It's the most traction we've ever got in building a product. And I mean, it's nothing compared to Polymarket, right? Who has like hundreds of millions of dollars in liquidity and volume. But, you know, now we have around 10 million stats bet so far from all of our users, which is way more than we got with like the mining

pool betting and way more than we got with the social betting. And what I find really fascinating is it's kind of the kernel of the original vision of this voting with sats on opinions because there's a reason why the election is the thing that's attracting all of the attention and liquidity, right? Because everyone's got an opinion on it, right? It's not just like betting on commodities

or something economic, something financial. It's something that's political that's tied to people's identity. and when people bet trump yes or kamala no right are they necessarily betting what they think will happen or what they want to happen is this just a bet like on a poker table or is it like money a speech and i mean if you've played poker betting chips is like speech right when you're bluffing you're saying something you're saying i have this hand when you're betting on kamala or trump that's saying something right like people are talking about polymarket market manipulation

to like move the market change perception and money talks right like if you're risking a shitload of money to bet on something uh that's talking like that's saying something about your own conviction right and i think that's the powerful thing that's yet to be unlocked that elections are just the beginning of right there's something far more uh i guess primal in using money to communicate something and we've got it like we've kind of been dancing around it as like a bitcoin community right uh value for value right people sending sats because they want to support something but i think prediction markets are kind of that next killer app that could just you know ignite this kind of bitcoin catalyst you know people

flocking to use bitcoin because they can use their money as speech for something well no it's like a derivative of buy sell but like again go back to the killer app first 15 years buy sell bitcoin exchanges obviously there's different archetypes of people leveraging these exchanges your individual is using bitcoin as a savings vehicle dca and just holding for the long term but a lot of liquidity and volatility is driven by traders who are speculating and prediction markets are certainly a derivative of speculation killer app up to this point is speculation on the price of bitcoin uh to a large extent and now you're just basically bottling that product market fit and expanding its branches into two other things that you can speculate on exactly exactly and it's

we're trying to figure out like what's the optimal infrastructure that we can build on right to facilitate this because you know i've looked a lot into polymarket and and their oracle network you know you have like some 30 apy for like staking and like voting and then doing all this dao stuff and governance and whatever all this like a bunch of over engineering noise in my opinion like i used to work in a crypto consultancy doing like token economics consulting and it's like yeah you know this is just a seniorage that's put under this veil of like techno babble jargon that you can uh basically sell to the next chump right like as like a ponzi scheme type thing like if we're going to be creating this uh infrastructure to last right

what's going to be the thing that lasts for another 10 years 15 years 20 years 50 years right into the future is it going to be something that's built on you know unsound very changeable money or is it going to be on bitcoin right yeah well this is a good opportunity to dive into it let's dive deep into the polymarket um sort of stack and how that market actually works yeah sure so basically polymarket uses these gnosis tokens which uh they they use uh lmsr which is the logarithmic market scoring rule to facilitate trades with their automated market maker and that's a pretty cutting-edge infrastructure right like the guy who developed gnosis uh extremely smart dude talking about prediction markets way back in like 2014 2012

at like the San Francisco bit devs. Obviously, he became disenfranchised with Bitcoin because of the kind of lack of development activity, the fact that it was really difficult to build on top of it. So yeah, he naturally moved to do his own thing. And Polymarket built on top of that, as well as this kind of decentralized Oracle network that they're using to facilitate their uh their bets but you know when it comes to using this kind of infrastructure right what's like is every piece built specifically so that it can solve this problem right or is it something where we're trying to build the most uh cool looking thing that we can sell to investors and also to retail and say that we can pump a token and then there's this kind of side

motivation of uh token pumping rather than just the primary motivation of like forecasting right and i think polymarket as far as crypto products are concerned is like the best one right besides like stable coins right but the issue that i have with it is that it's you know it's based on first of all fiat currency it's based on like all this blockchain technology and i'm just really bearish on both of those right like uh if you look at all fiat currencies throughout history they're tanking and they're going to shit right bitcoin is going up and sound money needs sound infrastructure to create sound predictions at the end of the day like if you can just over inflate a token then you can just pump the market right but if you just have bitcoin yeah you can let's say have a shit

load of fiat currency sell that buy bitcoin and then use that to pump the market but you're still using bitcoin right that's something that's finite that's something that's like provably finite and you don't need to uh you know question any of those kinds of uh principles because it's baked into the code right and whereas all of these other uh projects they're always changeable and flexible and under the like the bedrock is is shifting like an earthquake so when you have that shifting then naturally what's built on top of it can also shift yeah i mean we're getting back to like the utility token meme of 2017 and beyond and that i mean i think to put what you just said another way if you're going to build this type of product a protection market you want

to be on sound foundation using a currency that is not fit for purpose for this one thing that can be manipulated because you have a utility token for one application it can be easily manipulated whereas if you're building a prediction market on bitcoin which people are using for thousands of other use cases outside of that it's not focused on the prediction market use case and when you have that narrow, myopic sort of function for a token, it can easily be manipulated. Oh, yeah, for sure. And the fact that we're using Bitcoin, I feel like,

is something that will stand the test of time, right? When we have unsound foundations, we get unsound results. And what we want to do is forecast the future, right? Not just be so concerned with all of this other crap that we need to, you know, sell to, you know, pump a token to just kind of be diverting from the original sole purpose of what we're doing here. And it's like, yeah, like Bitcoin is just so much better. So for this episode of TFTC is brought to you by our good friends at Unchained. Do you have an old IRA or 401k that isn't keeping up with Bitcoin? Rolled over into an unchained Bitcoin IRA and take advantage of Bitcoin's long-term

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tap the card on the back of your phone. You get a address to send to. You send it to that address. It lives on the Sats card. Again, there is no second best when it comes to Bitcoin hardware. The Bitcoin price seems to be going up. You want to take care of your security before Bitcoin goes to six figures. Make sure you get your Bitcoin off exchanges using CoinKite hardware, MK4, coldcardQ. Go to coinkite.com. Use the code TFTC. We have a code now. TFTC for 5% off at checkout. And despite our opinions on the technical flaws that are made on the trade, the technical tradeoffs that the polymarket is making, let's talk about why polymarket is successful. It is inarguably extremely successful right now being talked about in the mainstream news. You have Trump referencing it during some of his stump speeches and historically here in the United States leading up to elections.

People have really depended on polls from different polling operations to try to get a sense of what's going to happen. But it seems like this election, this prediction market is not only being looked at alongside the polls that have been used historically, but many people are preferring the signal being provided by Polymarket to the polls. Yeah, I mean, Polymarket has done just a fantastic job when it comes to being the first to kind of shift the Overton window, right? Prediction markets as a concept have been around for a really long time, right? I think Robin Hanson first published his paper on the logarithmic market scoring rule back in like the 1970s or 80s. I think it was the 70s.

And the LMSR, which is the fundamental thing that's used by all these different prediction markets, is essentially a scoring rule, which gives experts, if experts want to provide a forecast, they provide a probability of something that's going to happen. And then the scoring rule pays them out based on the probability that they give after the event happens. And so it's, since it's a market scoring rule, you can have a whole market of people using this scoring rule and anyone can change the probability that is shown. And it's logarithmic because the world just operates in a logarithmic kind of way. Like it's kind of like a power rule thing.

And it just works a lot better than all these other metrics. And so prediction markets have been around for a really long time. Like Microsoft's implemented a prediction market. There's been like predicted and all these other like academic prediction markets. And a lot of it has centered around elections mainly because, well, it's actually surprisingly difficult to come up with topics for a prediction market. Like when it comes to elections, it's like, yes, this is a one date thing or there's finite many outcomes. It's pretty easy to see that a lot of people would be interested in seeing what the outcomes of an election are and people would be really passionate to be betting on it. So yeah, elections are a main focus, but there's pretty

much anything that you could use. You could bet on anything. It's just what's the thing that's going to attract all of the attention and liquidity. So Polymarket, they have tons of different topics to bet on. But the main one is really the election, right? That's the focus front and center. And yeah, I mean, they've done just an incredible job at basically marketing that and getting through to people how this is a technology that could be used in many different ways. Like when I was looking, I think the most compelling one that I've seen so far is, I think it was last month or so their market will Israel invade Lebanon and I was watching that watching the news you know keeping up every day seeing the odds and then the probabilities move

it was like at 1.30 percent probability and then it shifted up 45 50 and then it went down to like 40 and then soon enough it was at like 70 80 90 and then boom like shit hit the fan and And that's one of those use cases that I think, okay, yeah, if we had more markets like this, where we're talking about shit actually happening, then this could give real insight where before there was not too much insight, right? Like we have AI, which is trained on all of the past data in the world and used to basically have this super intelligence that can also censor and basically just give you whatever the creators of the AI want you to receive. uh you have all of this uh news right mainstream media which is basically propaganda right uh going back to let's say edward bernays you know all of this uh mainstream media is always coated with some level of corporate or state propaganda that colors the message and it changes the way people view about it when you have a prediction market uh you're kind of cutting away a lot of

the bullshit that would be, let's say, placed next to all of these different events that could potentially happen. And it's not past looking, like it's not looking towards the past, it's looking towards the future. And that's the main thing, like what's going to happen. Now, the biggest challenge, right, that I see in my biggest criticism of polymarket is like the actual events that people are betting on. I see they're kind of transitioning to sports now that let's say the elections are going to be over soon. And yeah, everyone wants to bet on sports. Like it's a huge market. You have like FanDuel and DraftKings and Bet365 and all the different casinos and all this kind of like gambling speculation stuff all over the world. Right. But that's a niche

that's really crowded. Right. You have when people are going to switch from one app to another, you need like an order of magnitude improvement in some way right otherwise the network effect will be a great defensibility for those other businesses but when it comes to novel markets what are the most important novel markets that we're going to have with polymarket they've hit the nail on some of them and i am like so pumped to see that but i think we could do even better and and focusing on like what actually are going to be the most important events that shake up the collective consciousness of humanity, that's something that prediction markets can give insight into. And that's something that I feel like isn't as, it's not looked at, right? Because

first of all, it's really tough to even see that in the first place, right? And second of all, predictions are very hard, especially about the future. It's really tough to even just make a, like, okay, will the U.S. go to war with Iran in July, let's say, of next year? Why would you pick that arbitrary date? Why would you pick that arbitrary event? What are the actual outcomes that you want to specify? And what are the rules of that confrontation? You know, the further you look out, the more general you need to be. And then the more likely it's probably going to be like a total yes or a total no. That's what I see with a lot of polymarket stuff. Like it's going to be either a 6% chance or like 97% chance, but barely anything in between. And this is not

necessarily something on the tech side that needs to be improved. It's just something that like, you know, it takes a lot of work to like research and to put in the effort and see exactly what's going to happen. And that's not something that can, you know, it takes a certain worldview to actually see what could happen and then make a market around that and actually provide liquidity and allow people to bet on it. Because if you just list some kind of, if the market that you list is obvious or stupid then you're going to get obvious or stupid answers right it's not going to be that useful but if you list something that actually could happen that might be uh you know in the cards in the near future then that can actually provide value for people outside of just the

gambling and speculation side but like just as a forecasting tool for like future events that could impact a lot of people worldwide yeah impact markets impact quality of life all that and that's As you're explaining that, I'm wondering in my head, could the emergence, proliferation and widespread adoption of these prediction markets prevent what many would deem to be unfavorable events in the future? Like if you see that a prediction market is heavily weighting or saying there's a high probability that the U.S. will go to war with Iran at some point in the future, just using the example that you gave. Could it force people to act today to prevent that from happening in the future? Hopefully. I mean, we would want to avoid all this collateral damage and needless death of civilians and also military personnel. Like, you know, it's I heard this quote from I was watching this YouTube video and there was this little babushka in Ukraine talking about how, you know, when the when the rulers fight, then it's the civilians who suffer. right like if it's possible to forecast these events and possibly prevent some you know violent

uprising or violent kind of like just explosion of genetic conflict yeah conflict then maybe people can sort things out in a more peaceful way and maybe that could lead to just a better future right like that's the kind of transmutation that we're talking about with like okay yeah we have this degenerate gambling going on like it is betting it's trading on events and some of them can be uh rather grotesque right but it is something that could help people right other than a prediction market what has the power to actually forecast the future in like a general way you know you can't use polls to do that polls are not the technology that enables that kind of understanding like we have this uh thing this this platform that has a chance of doing something like

that and so why not just take it to the full level of like what it could possibly do yeah i think to dive deeper into the juxtaposition of polls or as prediction markets i mean prediction markets probably at scale with enough liquidity a more signal because there's actual cost on the line And when people are literally weighing the opportunity cost of, if I make this bet, I'm giving up money, like that makes them think harder and really, one would imagine, say what they truly believe. Where, when it comes to polling, you go and you poll somebody and they can have the social pressure to say one thing, knowing that they don't believe it. But since there's no cost, it's like, yeah, I'll just say. Exactly. Exactly.

Exactly. And there's also the idea of privacy, right? Bitcoin is this, it's pseudonymous, right? So you don't reveal your identity necessarily. And the way our prediction market operates is you only need a lightning address, right? That lightning address is not necessarily correlated with your identity. And there's plenty of platforms that offer it also without KYC. And so you can just get a lightning address. And as long as you have the liquidity to receive your payout, then you can receive a payout. Uh, the important thing for us with privacy is enabling people to be honest, right? I was talking to this one guy yesterday who said that, uh, he almost got fired from his job in 2016 for talking about how Trump was going to win,

just talking about it. Right. And that was in Canada. So, you know what that's like, but when it comes to people being able to reveal their preferences and then using value as this measure of conviction and then being able to obscure the identity so that they won't get harmed for revealing their preferences then you have a tool that is far more powerful than what we've had before right and what is currently available with polymarket you know when you use Ethereum, a lot of your information is connected to a single like public key. And there's people who like use tornado cash and like mix their coins, but then also keep their NFTs on the same profile. And then, you know, all of that's connected to their real world identity through

like all this KYC stuff. With Bitcoin, you can completely obfuscate all of that and maintain your privacy while enabling your, you know, enabling value transfer. And that's something that's really powerful right having the lack of that identity connection so that you can be honest you're allowed to be honest yeah i mean particularly over the lightning network especially something like bolt 12 gets adopted widely like on that net receive like if let's say the bolt 12 spec enables the ability to replace something like l and url um and you can replace your lightning address with a similar construct using bolt 12 like that i would take it to the max and then who knows maybe e-cash can get involved at some point down the line yeah yeah i mean we we've

written up like this spec with e-cash the only thing i have like the issue with it is like i look at some of the libraries and it says like like with cashew for example it's like we are not cryptographers the author is not a cryptographer there's probably a fatal flaw somewhere it's like i wanted to use this but then it's like okay if there's a fatal flaw like how can i trust this right if if we're gonna actually use ecash then we need like some cryptography work to actually be done like some real security proofs like i i did undergraduate math right so i i know the group theory that's necessary to actually uh understand the protocol itself right it's really simple basic stuff you just have uh it basically uh it relies on the complexity of a discrete log

which is, uh, the ability to, uh, find like factor primes, essentially, like these are basically the same issue and yeah, like elliptic curve, Diffie-Hellman, that's pretty basic stuff. So what is, uh, the, the actual security around that and also the implementation of that cryptography, if we can like prove out that like, oh yeah, all these assumptions are like valid and everything is good and it's secure, then, uh, then it's solid. But if we can't, like when we're dealing with cryptography, uh, one of the lines that stood out to me in this book was, uh, you're not just building a safe to keep out your, your family, right. Or your friends, you're building a safe so that when you send the blueprints to every government in the world

and every corporation in the world, and you show them exactly how everything works, and then you give them indefinite time to break that safe, then it still doesn't break. right? That's the power of cryptography. And if we don't have that level of security, then how can we like call this something safe, right? And so what I would urge is like, okay, yeah, everyone who's funding e-cash stuff, it's like, let's fund some cryptographers to like go and do some work here and like prove out and show that, yeah, this is all valid stuff that can be used so that we don't we can remove that line of like this is not a secure thing and there's like a fatal flaw somewhere like let's make it so that we could just use it because like if we just

used e-cash tokens as shares right and then anyone within the prediction market is essentially an e-cash mint that people can purchase shares by like sending payments they get their e-cash tokens and then if they want to sell their tokens right let's say the event hasn't occurred yet but they think the odds are way too high so they can just sell it and then redeem that value at whatever the market price is then you know you don't even need identity at that point you just need to make a payment and then you can just literally download your iou receipt of like whatever you are like owed by the e-cash mint and i think that could be really cool i mean there's there's so many different other uh mechanisms to do this kind of authentication without revealing who you are

and uh as as long as we can use some of them to just put together this system where we can totally preserve privacy then that's the job right like that's now we have a platform where people can honestly reveal the their truths yeah i was gonna say as you were i mean you got to it but like i smell bounty here because that could supercharge it and then correct me if i'm wrong but I believe like it would be preferable to build this within a mint because of the ability to create DLCs within a mint right which is much harder like on chain so we did we did some research into uh DLCs like a LSMR based prediction market with DLCs and the only issue that I have with that is the liquidity requirements and the UX involved simply because uh with a DLC

you have your money that you're putting at stake and then the counterparty needs to put their money at stake right and when you're dealing with a prediction market there's one counterparty which is the automated market maker so that's us so whatever volume of payments we want to satisfy we need as much liquidity to satisfy that right now we use this thing called the paramutual system which is similar to poker or horse racing it's where everyone pools their money and then the winners split the losers money basically i mean with poker you just have uh the winner takes all but then in like horse racing yeah the winners everyone who bet on the correct horse they split the the total pot that of all the bets now that's really great because first of all there's no like

inherent risk for the market maker or at least there's capped risk we have to subsidize every single market that we offer so that it makes it uh basically appealing for people to bet on And so for the election market, for example, we subsidized each option like 500k sats. But with DLCs, we would need to be the counterparty to every single person who bets at every single bet. And that's really challenging. It doesn't seem scalable. Yeah, it doesn't seem scalable. Like DLCs are great for doing like a peer-to-peer bet, right?

Like, okay, 60-40, Trump, Harris, and then like someone puts 0.6 BTC, another person puts 0.4, done, like simple. But when we're doing something as complex as a prediction market where you are creating shares and those shares, like the price of those shares represents the probability of those events and their outcomes, and then you make those shares tradable on like an open market with this, you know, central market maker, then it becomes way more challenging. And it's just a lot easier and a lot quicker to, let's say, get to market if we had this, you know, like secure e-cash that we could just use as tokens to enable people to trade. Then, yeah, like that's way easier and even easier is just custodial lightning, which is what we have right now. And it's probably what we'll continue to use until, let's say, this e-cash stuff kind of, you know, I feel more secure about it.

Like I haven't talked to too many e-cash people, so maybe I'm completely wrong. But if we have like those security guarantees that like, yeah, the cryptography is secure, the software is secure, then it's like that just seems like an optimal method to preserve privacy while maintaining this, all the feature set that we want. This rip was also brought to you by good friends at Zapparite. If you're a Bitcoiner and run a business or an independent contractor, you should be accepting Bitcoin as payment. If not you, then who? If we believe that fiat is systemically fragile and is a risk, the rails that that currency runs on are risk as well. You need to begin accepting Bitcoin as soon as possible. Invest in the future of your business. Create a redundant rail by accepting Bitcoin as payment using ZapRite and reduce risk for your business. I've done this for my business here at

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contact with pink himalayan salt with calcium magnesium potassium sodium no sugar it tastes incredible my favorite is the orange and the pink lemonade go to drink saute.com that's drink sote.com use the code tftc when you make your purchase and you'll get 15 off i'm telling you get on it freaks you're gonna love this stuff i mean going going back to like diving into what the technical architecture is right now and like pulling polymarket back in just comparing bitcoin prediction markets stack to polymarket you know how much more simple or complex is it oh it's like super simple like we're talking we have a node and then a back end and a front end right with polymarket you have uh you have ethereum you have the gnosis tokens you have like this uma

oracle network and then you have their front end right and so when you have yeah like their side chain that's connected to ethereum uh that's like this oracle layer that's offering staking for 30 apy there's so many places where that complexity can lead to some kind of exploit right and i'm not saying that the lightning network is free of exploits right like when we're using a custodial solution that's it's it's tough but when it comes to the simplicity of everything we're just literally bitcoin in channels and then people can just send us bitcoin to place a bet and when it comes to the ux right like as long as you have a lightning wallet boom you can place a bet right and you don't even need to sign up you can just scan the qr code and send the money

with polymarket yeah you need to like authenticate now all of your bets are connected to your identity that you authenticated with which is connected to your kyc stuff that you got from your usdc that you got from your you know crypto exchange and it's all on this like mega centralized l2 of ethereum and you know like uh when it comes to the economics of these l2s i saw recently like i think base is the largest ethereum l2 and they're paying a thousand dollars a day in transaction fees to layer one ethereum with bitcoin lightning it's a lot simpler right you just lock your bitcoin up in channels pay that transaction fee and then boom you can send payments back and forth you want to close the channel okay sure like simple decentralized actually

peer-to-peer as like you know a payments network when it comes to the layer twos on ethereum it's a lot more complex because inherently everything that's on Ethereum is a lot more complex and the incentives are a lot more complex and then the smart contracts are a lot more complex and all that complexity adds up over time right so that when you start out with something that's really complicated maintaining it is going to be complicated and then building on top of it is also going to be complicated right so all we want to do is create something that's simple that does the job and that can be secure enough so that it's it enables this remote like there's this motivation for mass adoption of bitcoin of people if they want to participate in this market then

all they need is bitcoin lightning right and that's something that is i feel like a much better sell than like okay you know you've got the side chain on this other shit coin and then you use you know this stable coin to be able to do like all the different trust assumptions involved there like with this it's just bitcoin yeah right and like how are they i will admit i'm a bit ignorant to this like polymarket have never used it like how are they pricing things are they pricing things in dollars so they're pricing an ether pricing token yeah that's the other thing like just keeping it simple and using bitcoin as the unit of account in the bitcoin prediction markets i think that's another thing that appeals to me is that everything's denominated in sats and you sort of

have this jump to the unit of account within your market exactly yeah and we we just showed like the odds or the probability and that's calculated really simply at the moment we of course want to use the logarithmic market scoring rule in the future and enable all this complicated trading but right now it's really just the amount of sats bet on yes divided by the total amount of sats bet Right. And what's funny is PolyMarket is now trending towards the odds that's Bitcoin prediction market. Like literally today I saw PolyMarket is somewhere like 65 percent Trump. And right now on Bitcoin prediction market, it's like 67 percent. I think the other day yesterday was like 69 percent.

So even though we use this supposedly more primitive market making algorithm and this prediction system, it's still somehow really accurate especially compared to all these prediction markets with like much higher liquidity and one thing that i think that might be the cause of this is people can't sell their shares it's kind of like an auction based thing so people can just buy and once they've paid they've committed their money there right if you want to bet on the other one then now you need to just bet more on the other one so that you can recoup what you've previously bet and so by locking in this kind of bet maybe that kind of changes perception as well like okay now i need to think carefully before i place this bet is it the right time to do so

are these the right odds that i want to go for right and there's the negative externality of yeah you can't sell your shares but if you're this late in the cycle as we are then you've probably made up your mind as to what's going to happen within the next few weeks right the next couple weeks what are we let's say 22nd 23rd we are yeah two less than two weeks away which is crazy to think i can't wait for it to be over oh yeah it's uh it's been exhausting but one of the um tried and true problems that arises with prediction markets is the oracle problem how are you guys approaching the oracle problem so right now we're the oracle super simple right The way that we're trying to resolve all these markets is through overwhelming consensus.

So we have currently election markets, Bitcoin price market, and one market on if the U.S. will leave Lebanon, like the U.S. embassy. When it comes to these markets, we don't want to resolve anything prior to, let's say, major news outlets reporting, the state talking about it. and also other prediction markets, right? Polymarket, Cauchy, these markets with much higher liquidity. Right now, it seems like no matter who wins the election, there's going to be a dispute. And the precedent has already been set with, I think, four years ago, right? There was the storming of the Capitol.

I feel like no matter what, some shit is going to hit the fan. And we might need to wait on releasing the payouts just to be sure that whatever result has happened is the thing that's going to continue to be the truth. In the future, of course, it would be nice to have, let's say, incentivized oracles to report and who are independent. But I was actually talking with a few of the other people interested in building Bitcoin prediction markets. And we were talking about how we could have like a federation of oracles right as like a federation of prediction markets and we all resolve uh in tandem so we uh there's these guys predict x and these other fellows from albie they're interested

in uh creating these prediction markets and quite possibly it could be all these different prediction markets that are themselves oracles and themselves resolving together so that uh there's no kind of, uh, issue when it comes to, uh, let's say an independent resolution and the incentives are in place, right? Like if one prediction market screws up, then why would you use them in the future? Right. If they're dishonestly, you know, uh, being an Oracle, then you can't trust them anymore. And it's that trust that allows the prediction market to continue to operate, uh, in alignment with the values of everyone else, right? Like prediction markets are not peer-to-peer digital cash right satoshi created this system of bitcoin so that

you have uh digital cash without trusted third parties right or you've minimized that trust you still have miners and pools and you still have nodes and individual users as well right and so he was solving a very specific problem when it came to uh building this solution to this digital cash problem. And we've kind of extrapolated these values and placed them in all sorts of different areas in Bitcoin. Some are good, right? And some are also preventing a lot of innovation in Bitcoin, right? Because not everything can be this trustless compute machine that's independent of the interference of other people, right? Like, at the end of the day, we're building a company. We're not building this free and open source protocol. That's just

supposed to run on people's computers and kind of just, uh, exist and help people like, no, we're building a company to make a lot of money and like provide value to our customers or users and anyone else who interfaces with us. And to do that, it requires trust, right? Trust between myself and my co-founder and our team trust between us and our investors trust between us and our customers. And this trust is not a bad thing, right? It's bad if you're trying to create a digital currency because you look at every other digital currency that was created, right? Mojo Nation or eGold or eBullion or Liberty Dollar, all these different projects that either failed or the founders went to jail. There was a real problem with this centralization of authority

and Bitcoin solved that. But now that Bitcoin solved that, let's do stuff with it, right? On top of it and do stuff that requires some level of trust but if you don't have that trust then you can't really get kind of complex with it and do fun things yeah i i completely agree with that and i think that's trying to think of how to phrase i mean i i think within the broader the world of broader crypto they've completely run with this narrative that we need to decentralize all the things and i think objectively that is idiotic and that's being proven out in the market over time but even within bitcoin there is this idea that you have to trust minimize every single application that you interact with throughout your daily life and that's impractical

and trust is not a bad thing yeah trust is not a bad thing it's it's funny when i was reading uh the book debt the first 5 000 years and david graber talks about debt which is usually seen as a kind of uh there's like a negative connotation with it right uh but there was i think this uh christian monk early in the 1500s who wrote and celebrated debt because it was this thing that tied everyone together without debt people would be atomized entities that don't owe each other anything and there's no need to let's say cooperate or do anything together uh with debt though you someone owes you something you owe them something that keeps kind of the relationship going and many different ways and this debt requires trust right in societies where there's minimal trust

throughout history there's been minimal or there's been maximal use of coin right cash why because if you're a conquering army and your soldiers who you know travel to distant lands you plunder a different society you take their treasures and you melt that into coins and you use those coins to pay off your debts. This has happened time and time again. So when you're in a really low trust setting, then cash is really great. If you're in a really high trust setting, then yeah, debt is fine. And debt is the original unit of account, really. It's something primal and innate. You know all the friends that, oh, you would drink because you've been buying their drinks for a really long time, right? You know when someone has, let's say, been getting too many favors and

you're like, Hey, you know, like you got to do something here. Like when I was a kid, it was like, I went over to my friend's house and then he went over to my house, right? Like there's this kind of balancing out of the scales of relationship and Bitcoin being now that we're in like a kind of low trust era in online digital commerce, it's managed to kind of be this thing that people could use without trust. Right. And that's great. But again, building on top of it to provide, let's say goods or services uh products built on bitcoin you need some level of trust right or else there is kind of no way that you can go about creating something that can uh do things that are more complicated yeah no i think one of my favorite anthropological examples

of when shit hits the fan people falling back to trust and particularly these these debt credit relationships is like hurricane sandy in new york particularly in lower manhattan when the power went out and bodegas couldn't access their their card readers and there's many stories that came out of if you've lived in new york and you had your local bodega you inevitably developed some sort of relationship with the man behind the counter that owned the bodega and there are many stories that came out of like during that week-long period where the power was out and they couldn't access to card readers that they literally had pen and paper just like doing a credit system and while the power is out people were still able to get goods to feed themselves and get tobacco

whatever it may be and then when the power came back on they went back and settled their debt yeah exactly exactly and that requires trust right and those that those trust relationships are built with in local communities not within you know let's say the broader online digital ecosystem. Now, if you want to do something in the broader online digital ecosystem, yeah, that trust needs to be there, right? And you see that with some of the largest businesses in crypto and Bitcoin. They're trust-based inherently, right? You look at Binance and Coinbase. For the vast majority of people, they're okay with keeping their coins in the custody of someone else, right? And that's not a good thing, right? Security-wise, you should

own the keys to your coins and keep them in a hardware wallet and you know cold storage that but it just so happens to be a lot of people have that trust and that's just a fact of nature yeah i mean there's a spectrum in all this i mean you can apply it to the broader crypto industry and exchanges where like here in the u.s like our debt situation like i think it's inarguable that the amount of debt that the u.s federal government has racked up is inordinate and not is is a net negative for the society here in the united states in the long run that trust contract is i mean for me personally it's broken like i don't trust the government to issue debt and provide me goods and services that give me confidence that we'll be able to pay that

back in the future and i think many more individuals are um coming to the same conclusion but again going back to your example like the that is not local like the u.s government concentrated in dc is making these decisions for 350 million americans whatever the number is now 330 million um who are dispersed throughout the country and there's this information disconnection between what is actually needed on the local level as opposed to the federal level that has allowed the government to abuse the trust that american citizens have in regards to them issuing debt absolutely all of us absolutely i feel like that's uh the power imbalance of the state has been historically uh abused right like in james c

scott's book seeing like a state it's recorded throughout history how the people who live in the hills they often farm uh like root crops right they're the roots so that you can't pay taxes on them. These people, they don't want, let's say, state interference to define the terms of their land. They often have small communities in which there's high levels of trust and people can just live communally together, right? When the state gets involved, it treats people like cattle. in uh europe for example in uh england during feudal times uh the state's job was to demarcate the land and collect taxes on that when it came to forestry what they would do is uh try to see how many uh logs that they could get out of it how much wood was available in the forest

and quantify that and then extract resources right it's inherently uh parasitic in this kind of way and it's not unique to the u.s government it's just unique to pretty much every government in every state like when you have the people who have decided that the main way they're going to eat food is for other people and saying that okay you will uh pay me taxes and i will enforce the law. And if you screw with me, then I will destroy you. That mode of being has been internalized by all of us, right? Because we can't escape it. There are these extremely powerful people who have that opportunity to do something like that. And so the one thing that we can do is comply. And I feel like the biggest way that it has been exposing itself most recently was with COVID,

right? Without COVID, I wouldn't have been a Bitcoiner because that's when I was really getting into the crypto scene and then also reading Andrew Bailey's papers on money without state and really seeing the power abuse of the state like in Singapore where I was it was a complete authoritarian shithole like you had literal robot dogs monitoring the migrant workers who are essentially treated as slaves outside their migrant worker dormitories and you know there was no freedom, right? Like I lived on a college campus and we had to get our QR code every day so that we could eat food at the dining hall. And if we didn't submit our temperature and show a picture of the temperature checking machine, then yeah, we couldn't get that QR

code to like show the dining hall to get food. Literally my visa in Singapore, I wouldn't have been able to get it to start my business if I didn't get the injection. Right. And so when you have a really small state then you can really uh milk the citizens and highly control them and then any people who live in that country especially in like a digital state era uh it's really like there's the security state who's you know with the elite families the intelligence organizations and then they're pretty much you know living off of the tax yield of the citizens and that's one of the big reasons i was like oh yeah money without state is a good idea we should use bitcoin bitcoin is the future that's pretty great i didn't know that that backstory and it's not only like

the the tax yield that they get it's just like the printing of money too like they can just print debt and use that to garner more power to control citizens and so like what was the exact moment for you were like oh it's bitcoin oh man the exact moment i feel like i was in new york uh i was visiting a friend one of my good friends nick he was my roommate and uh he invited all of us myself my roommates to new york and this was during the omicron you know outbreak or whatever and the variant yeah the variant and all of this like craziness like it was my first time in new York. And that was a pretty crazy time to be in New York. And that's when I was reading all of Andrew Bailey's papers on money without state and a moral monetary design. And that's when I realized

like, oh crap, this is, this is actually what has, this is the signal in all of the crypto noise. Like there was so much crypto stuff that I was looking at because I was working at this consultancy, doing all this research into all these different protocols and finding out, okay, yeah, this is just senior age. This is just senior age. Okay. Everyone's just trying to print money. that's like the main like you know profit mechanism of crypto so then what's the actual signal here like there's so much noise that's going on like when there's smoke there's fire so where's the fire and seeing bitcoin money without state and seeing the just total abuse of state power and seeing how like this was even before i watched the documentaries on like the

federal reserve and like the money printing and even reading david graber's debt but after i understood that Bitcoin was this money without state, then all of these different pieces to the picture came into my view. Like I was reading David Graeber and debt and I realized like, oh crap, you know, money printing, increasing the debts of people. It's like, uh, cause I was in school at the time in university. And I was like, it's like just giving people more assignments when nothing is, you know, they, they have no reason to do more work. But now the reason is that the government wants you to do more work, right? That's how in Singapore, that's how people are controlled. If you talk to any ordinary Singaporean, they're overworked, right? They're

probably working two jobs, right? Maybe doing their, uh, regular salary work, going to an office. And then on the side, they'd be like driving for grab, which is like the Uber of Singapore. And, uh, they never have enough money. Why? Because, uh, basically what the government does is they take some portion of your salary, put it into a retirement fund, but they control how you spend that money right so it's completely permissioned money that you have no access to and it's they're saying oh yeah we'll help you out by uh making you save your money and telling you how to spend it and what people are left with is very minimal cash right and what do they need to do with that cash they need to pay uh for their mortgage they need to pay for their housing right

90 of singapore has publicly controlled housing right and uh why like if you look into the history. It's because when the Lee Kuan Yew and the other fellows came into power, they burned the kampongs, which were the native housing of the people who lived in Singapore. And then they constructed the HDBs. So all of the people who were in the native housing, they had to go live somewhere. And then they now have a place where basically it's completely government controlled and run, state controlled, and the prices could be set, right? So they deliberately set the prices so that it's basically you have barely any money left to do anything else. And so now you have an overworked population with just people who, you know, can't think, right?

Because they're just completely overworked. And that's one, that's a microcosm, like one state doing that. But then every state is doing that in some way, in some respect. The U.S. government does that, but it does it through inflation. It does that through all these other different mechanisms and levers that, you know, are basically price controls and now people, uh, can barely survive because they're controlled with money. And this is what Carol Quigley talked about in tragedy and hope. Uh, when it's like the, the vision of the elites was to create a, uh, rather than have like slave based, uh, control

where people were owned, you would have monetary based control where people could be simply controlled through the levers of the monetary system. And that's basically what's happened till today, right? Like that's one of the things that I saw when, you know, after I learned about Bitcoin. And then another one was on thermoeconomics. Basically this work from Friedrich Sadi, who was a Nobel prize winning chemist. And he basically talked about the dangers of debt and compound interest because thermodynamically speaking, everything is deteriorating, right? Entropy is always increasing. And so things lose value over time. That's just depreciation. Now, if things are always losing value over time, what's the one thing that always gains value over

time? It's debt. It's compound interest. That compound interest is exponentially growing, mathematically decided, and it uses the violence of the state to enforce itself, right? So if you have a world where you allow debt with compound interest then that's an asset that's a thing that always increases over time therefore if you allow it then it will eat up all the value of the rest of the world now he wrote this just after the federal reserve was created i think it was like 1920 or 1921 and his prophecy was that in 100 years there will be no value just debt and it will all be controlled by a few people who control the debts and that's what happened right you're well read sir this is i have to do my research no it's funny i mean one thing i wanted

to point out is particularly your description of singapore it's fascinating to me because the narrative that's fed to westerners particularly people in the tech and finance and investment sector is that singapore is this almost utopian experience in southeast asia that's high trust and highly functioning but it seems like you're saying it's not as it's portrayed if you are one of the privileged few who can be an expat living in singapore working your corporate job or your tech job and you can just go to the office on the mrt and then you can go to the country club in the evening with like your family and you know it's great like i've met people who live like that you know like the upper class in singapore are having a great time it's it's incredible but then when

you look at the vast majority of the people in singapore it's a much different story and i've been fortunate enough to gain exposure to both sides right to the extreme upper echelons where it's like you know you're talking about like donors to like schools and like art collectors and all of that like and then i've also gone to the most you know downtrodden people of society and you can see when it comes to like the upper echelons you're living like anywhere else in the world except uh it's in singapore and the airport is close by and you have all this like nice food that you can get on grab and it's like chill but then if you're in the lower class it's a much different story, right? Like when you're talking, uh, a lot of the things I can't say on camera

because it's, it's people dealing with the stress and trouble of exploitation and effectively slavery, right? Uh, a lot of people in Singapore, especially in the lower classes, they have, uh, a really difficult time, uh, multiple jobs, uh, no sovereignty, no sovereignty of thought, right? Like people are not equipped to think for themselves. They're equipped to obey the state, like the education system. And this goes for pretty much any education system I'd say, uh, is a system of indoctrination. It's telling you what reality box you should, uh, basically format your consciousness in and then how you need to interpret events so that you are satisfied with being where you are in the social system. And

for the vast majority of people, like when I talk to people who are, uh, you know, on that like lower end of the spectrum, they're saying, Oh yeah, no, it's fine that I'm here because all the people who are super successful, they worked for it. How can I, you know, you know, I can't be jealous. Like it's, it's their right to, to be like that. But then oftentimes when you see the story of how a lot of these people became successful, it was stepping on the necks of other people to, to get there. And, you know, it is kind of like a dark reality of the way the world works and it's a different again a different um narrative on on singapore than than i've been fed here in the last i mean all the silicon valley tech bros think it's again this utopia that um

is a model for the world to replicate it's very interesting to get this perspective and i mean bringing it back to bitcoin more broadly and having a tool at our fingertips that we can use to to liberate ourselves from these oppressive measures that are um thrust on us by the state like do you have hope that we can actually do this i feel like it's not about necessarily having hope but giving people the tools and the knowledge to be able to do so and there's this one really powerful concept and idea that uh i read about from ingo swan so ingo swan was basically a uh he co-founded the stanford research institute with russell targan helped put off and they were doing a lot of this remote

viewing work we're gonna get into remote yeah yeah so i read like the declassified files on like project stargate and the other uh you know stuff let's explain remote viewing the people who may be a bit ignorant to the concept yeah so basically it's uh people being able to see into other places psychically doing so basically with telepathy, like clairvoyance. And this kind of ESP phenomenon has been routinely debunked, right?

Like it's people who, let's say if it were possible, would the people in power want you to know it's possible? Definitely not, right? Definitely not. This is something that is like a no-go zone, right? But it's funny because if, and what we've done is we've basically created a reality where people will filter this information out, right?

For the vast majority of your viewers, they're probably laughing, thinking like, oh, yeah, this is so stupid. I'm picking out what you're putting down. Right? Yeah. But when it comes to the kind of labyrinth of powerdom, right, there are no power schools. there are schools, right? But there are no power schools. There are no schools to figure out how you can get more power or empower yourself, right? And there's a deliberate reason for that. It's because if we think of ourselves as creatures of power, like power creatures,

where we have the creative capacity to do incredible things that most of us wouldn't even dream of, then the most powerful thing you can do is harness that for your own utility, right and that's what people have done through all of these different structures like the state like a corporation like the different uh ways that we've entrenched our own uh social systems right and ingo swan talked about how yeah there are no power schools and any sort of direct way to empowerment is usually you uh it's getting diverted you no one will tell you how to do it you got to figure it out yourself right and the same goes with bitcoin as an empowerment technology you need to see through the illusion yourself in order to actually gain empowerment even if you

want to use uh like if you're formatted against your own empowerment then there's no way that you can actually get empowered right and this is not to say anything about like remote viewing or like to get into all of like the whole conspiracy angle like we don't even need to use those uh you don't want to talk about the getty museum in la well what's the getting out that the i mean this is i don't want to interrupt your train of thought but just slight tangent like the getty museum like there's a theory that it is the epicenter of like underground cities that are protected by remote viewers who basically try to see if people are trying to figure out what's going on there yeah i mean i i haven't heard about that but i i know for sure that like yeah you know there's

it's a hot topic that's really controversial and you know i i don't mean to promote any one angle specifically right like if you are interested in learning more than you could read the stargate files or just look into, let's say, all the declassified files that the CIA have released. And, you know, Jimmy Carter talked about it. He talked about how they used remote viewers to find like this missing plane in the middle of the Atlantic Ocean, I believe. And yeah, after he talked about that publicly, they shut down the program and moved it to a different thing. So I'm guessing they're still probably doing it because it's a really powerful thing to be able to do but of course it's only for the initiated it's only for the people that the ones who control

deem worthy of that kind of power uh but as let's say a power species if we were able to empower ourselves would there be widespread knowledge by the powerful to enable people to do that probably not right that's why the npc meme exactly exactly because they want everybody to be a non-player character. Exactly. They want everyone to be subservient in some way or just don't rise up because if you are in competition with them, the ones who have a lot of power, then you're a potential threat, right? And the thing about Bitcoin that doesn't align with the powerful is that they can't stop you, right? If you use the currency, right? It's the negative liberties that are protected of Bitcoin, right?

It's the fact that the cryptography is so secure that nobody can prevent you from spending your coins or receiving your coins, right? Unless you have a quantum computer. If quantum computers become a reality, then we need to fix Bitcoin because, yeah, they can just... We need to fix everything if quantum computers... Yeah, yeah.

It's not like everybody's like, oh, Bitcoin's fucked because of quantum. It's like if quantum comes, everything's fucked. Yeah, pretty much. That's a back-to-the-drawing-board type situation for everything. But running with the assumptions that quantum isn't here and the cryptography is as secure as we know it to be mathematically, you can prove it.

Bitcoin is this empowering tool that allows you to break through the NPC malware that's been downloaded in your brain. Exactly. Yeah. It is, this is the most jacked up I've been during a conversation in quite a while. this is a very unique way to describe bitcoin and i this is what logan episode 560 probably around there 552 552 552 552 551 conversations before this one and you just framed bitcoin in

a way that has not been framed on this conversation so that's uh it's pretty awesome it's really i think the the central thesis that i go with when it comes to bitcoin and also with prediction markets as empowerment tools right uh to be able to see the future is one thing right and to be able to see it in a way where we have a a glimpse at significant events right when it when i mean significant it's it foreshadows something right there's this event is let's say the cause of some effects that will be felt globally right uh prediction markets i feel like would be wasted if it was just on sports, right? Like when it comes to what things matter,

it's like bread and circus, right? I want to look at the bread, like all of the different ways that that could get disrupted or it could be proliferated. The circus, you know, there's always attention on the circus, right? But the fundamental things that make up

the nature of our physical reality, right? Like we look at everything that's in this room, everything that's in any room from people who are watching, all of these things were stuff that used to be a thought in someone's mind. And then they worked with their creative impulse to make it something that's in the physical world in reality, right? And usually that's what happens with pretty much anything, right? Like geopolitically, Bismarck first thought of what he needed to do before he actually actualized that on the

European chessboard, which later manifested in war, right? And tremendous conflict and many people's lives being disrupted or killed or whatever. Most of these decisions are behind closed doors, right? Most of these thoughts are just locked in people's minds and they don't reveal their intention before they act on it, right? But if we can get a sense of what that might be and have a focus on that and then drive let's say betting action towards it and transmute this negative energy of let's say speculation which is deemed to generally be like degenerate activity into something that's a forecasting of a future event which is very significant because it foreshadows many different like effects then that could be an empowerment technology right

Most people can't have that glimpse into the future. Only the, you know, initiated few who've passed the ranks of the secret societies and the intelligence organizations and the... In the war game room. In the war game room, exactly, right? Like, let's bring that into the public eye and let's see, like, okay, if it's actually available for people to see, what might happen then? Yeah. Is it a double-edged sword in your mind? I mean, earlier we discussed the potential positive externalities of seeing the probability of a future event and working to prevent it because it would be a disadvantage to society for it to actually happen.

alternatively conversely like could it be used for bad like people um let's say they have a big bet on a bad outcome coming uh happening and they don't want to lose the money they put on the line so they work to ensure that the bad outcome actually comes to fruition well you know that that could be possible but i feel like observation changes reality right this is a known phenomenon in particle physics, in optics, right? Like if you shine a photon at like some kind of event, then it changes it from a probabilistic thing to an actual thing, right?

And if we think of the world as the kind of manifestations of the collective dreams of humanity, of what people are thinking about doing and actualizing that in the physical world, then having this prediction market where people can see potential futures, uh that creates let's say this potential for observation right and that observation changes reality because that affects people's internal consciousness and yeah some people

could try to use it as like a power play to gain more power and more money by manipulating the market others could uh use that to negate those forces right of course with the prediction market it's a capital market so capital can manipulate right you could also think of that as capital can subsidize anyone who sees through the illusion of someone else trying to prop up some event can make money off of that right and we've seen that with in poly market at least with the israel lebanon uh markets it looked like there was some manipulation going on like some serious bets were like pushing the price down, pushing the probability down, but then they came right back up, right? Rebounded like within a day. And I think that just goes to show the robustness

of such a market, right? Now that's just one small example, but let's say we have many examples of lots of that happening, lots of attention, lots of capital. Then will people simply, you know, when they see certain odds occurring, how will they act? How will that change? I don't know. Right. But if it becomes to be an important thing, then a market is far more difficult to manipulate than a poll, far more difficult to manipulate than a news article or a video. It requires that sacrifice. And when it comes to Bitcoin, it's the ultimate sacrifice of value because it's Bitcoin, right? Finite supply. Yeah. It's going to be the first time I drop this in a while shout out to og freaks at tftc we're getting cosmic here but like continuing

that thread of thought particularly about what i just said i guess with observation affecting consciousness and running with the assumption that we have a bad actor trying to manipulate um maybe not even manipulate the market but manipulate an outcome to reap the benefits of um the bet he made within that market um like is this prevented by most humans like running with the assumption that most humans are good innately at the end of the day and like consciousness of most individuals is such that they would want a positive peaceful outcome yeah i i firmly believe that most people don't strive for more conflict like we need to be programmed in that way to want more conflict right like this is something that's taught to us not necessarily something that uh

isn't it of course there is that component in us right which is this kind of like resistance right like resistance to authority resistance to whatever is something that's imposed on us right and i think that's just another facet of the fact that we're all power beings with the creative capacity to do just about anything and for us to be channeled into doing uh what we do there might be all these different forces that are pushing us right now with prediction markets there always is this possibility of manipulation like if you look at sports betting like how many times a ref makes a call or does something and then they also have money on the line somewhere and they use their power and authority to manipulate the outcome so that they can make more money like this is

something that's very old and happening for a really long time when it comes to prediction markets uh you know something similar could happen right who knows like what the bets are with uh in the presidential race right like the the one thing that i do know is it's always possible to throw the game right if you are uh doing something if you are uh in the midst of making something happen then there's always the possibility that you stop and if you bet that you'll stop or if you bet that something will fail and then you deliberately fail that's something that can be engineered right and it's an inherent risk with uh any of these markets that we would offer there's always the possibility if it gets big enough that the actors involved can just throw

their own game and profit but if they have a vested interest in that outcome then it's more of a competition right because why would the democrats want to throw the election right now when they still could have a chance right yeah that's that's that's what excites me the most is that the emergence of these more robust prediction markets is beginning to happen because i think that's the other thing is we're having a lot of these uh we're having a theoretical hypothetical conversation about what can and may happen but like you said reality um doesn't happen until it's observed and so like as these things become more robust i'm sure we'll learn how people interact with them and what how they actually affect the world external to those markets

exactly exactly and that's just something that we can only speculate on right now uh yeah yeah yeah i'm happy you came to austin i'm happy this is much better in person i can't imagine this conversation over uh over a video call yeah and it's like we're diving deep into this one particular topic but that's why i was pumped to meet you in person ariga because um And I think outside of prediction markets, your views on Bitcoin generally and some of the things going on within Bitcoin are just, again, very unique and you have very, I don't want to say opinionated, but you're very convicted in your views of how Bitcoin should work. And so just like outside of what you're building at Bitcoin prediction market, what else are you paying attention to within Bitcoin outside of the mining stuff? Yeah, I mean, outside of the mining stuff, it does look like there's a whole lot of shitcoinery coming back to Bitcoin, right? Which, I mean, you know, the shitcoiners see the signal. They're like, okay, time to grift again. You know, they can raise more funds and push their propaganda and get people excited about, you know, whatever they're shilling. but fundamentally, I mean, Bitcoin as an empowerment technology, uh, is going to be

under threat for sure. Like, uh, Craig, Craig Wormkey from, uh, the, uh, combo fellas who created a resistance money. They wrote resistance money, shout outs to them. Uh, best book in Bitcoin talking about, uh, you know, just no bullshit when it comes to, if you want to orange pill someone, that's the best book to go for. And, uh, Craig is working on a research paper right now. I maybe shouldn't say, but you know, this is really relevant on how Bitcoin can resist the feather fork, uh, the feather fork. Yeah. A feather fork. So a feather fork is basically how the U S government would, uh, censor Bitcoin. They would do it by making pools mine only on compliant blocks. So not just mining compliant blocks, but on top of compliant blocks. Right.

and that's really dangerous because once you simply allow uh you know bitcoin to be compliance money now you no longer have that like someone can you know it's like it's not the fuck you money anymore right that's the whole point of bitcoin is to be this peer-to-peer digital cash that can't be stopped if someone some actor can stop it then you know you're kind of screwed and right now it doesn't look like uh the chinese mining pools would be interested in complying with that uh they've got their own agenda going right which is largely shit coinery and you know with china i feel like a lot of it is just really about business you know like as the world's factory they kind of just do a whole bunch of stuff but they're not really too opinionated on like what

really happens at this kind of like political level so i feel like it's kind of a hedge against let's say ofac doing a whole bunch of shenanigans uh but you know if they do decide saying that like okay yeah bitcoin needs to now obey u.s sanctions law then the pubcos will absolutely comply the pools who are within the reach of the u.s government will definitely comply and if you get enough hash rate to comply then it becomes unprofitable for the other pools to uh you know not comply for them to resist so they could just adopt a policy like that and that could screw a whole lot of people do you think we need to adopt luke dasher's uh perspective on this i mean you know he's definitely not backing down so it's good that there's like the diversity of view here

i look at ordinals uh pretty frequently because i find it fascinating just seeing another free speech tool kind of pop up right like there's noster and noster is also getting under attack right now by like all these illegal images being popped up uh that's gonna question um you know the censorship resistance of the whole system, like how the relays and the developers deal with that. But when it comes to ordinals, a lot of it is innocuous. Like most of it is just people posting memes or like, you know, art. I think that's cool.

The only thing I'm worried about is the attack vector, right? And you would need to, let's say, build some sophisticated software in order to detect all of that stuff and kind of just not include that. But it would be a rightful use of, let's say, censorship technology. But again, once you enable that for one thing, then you can enable that for a whole bunch of things, right? And I feel like it's one of those use cases of Bitcoin where, okay, the road to hell is made with good intentions. Once you enable real freedom, then you might see what real freedom looks like. And then you're like, oh, fuck, what did we just do? right and i feel like that might be like a moment there for bitcoin itself right like oh what would would it be just enable like yeah there's a whole bunch of you know kind of really innocuous stuff like art and just memes but then there's also you know it could provide some yeah you don't

you don't want the libertarians in charge of um yeah yeah yeah it is fascinating will be interesting to see how all that plays out and intuitively since it launched like the old ordinals

inscription thing is really like I think it's noise from the token perspective I don't see why there'd be any

value in it and then two like the attack vector it opens up not only from the one that you described

but like the chain bloat I'm a big fan of smaller blocks and just build things in layers Yeah, me too. I mean, I just, like, we keep it simple, right?

Simple is best. What does simple look like? It's just things kind of going with, like, we're not trying to do too much. And it's always possible to do too much. And that's what I learned in, you know, the startup journey with myself and my co-founder. Like, at first, our products were really complicated. The vision was really large and super big. but over time after many failures and many iterations we've learned to just kind of

simplify as much as possible and like cut out all of the crap that doesn't need to be there and when we're talking about let's say bitcoin being this thing that replaces all these other blockchains and cryptos it's like well maybe those cryptos solve the problem that the people who use them want right which is maybe to fulfill a dream of some bullshit like get rich quick scheme right or like a freaking NFT platform where you can scam some people into like buying your, you know, digital trading card or whatever. Like I was working on an art marketplace right before the NFTs popped up. Like I was thinking, okay, digital art,

there's like something that needs to be done here. I was previously trying to be a music producer and like making my own beats, putting them online, like marketing them. Yeah, yeah, Billy Hong Beats. Billy Hong Beats, yeah. Yeah. Yeah. And, uh, that was fun, but, uh, it was tough to find unique digital art to kind of brand myself and make myself like unique as like a visual presence, uh, in like the social media landscape. So I thought, okay, yeah. Art licensing would be a way for artists to make some money.

And for me to like get my brand out there and have like high quality visual art. But, uh, yeah, right during that time, like our biggest sales were from people who wanted to take this art and turn it into nfts that's why they're licensing it and buying like exclusive licenses so that they could just kind of pump and dump with someone else and i can see it i mean like artists uh are incredibly uh it's very difficult to make money in art it's a super elitist group where like unless you are the ones favored by the people who buy art to like the whole power structure we're talking about earlier yeah yeah there's there's a whole power structure and if you want to make money otherwise okay yeah nfts sure like just kind of sell it to some fans who want to like collect it

i can see that right like i can see it even more than let's say value for value i mean this is a controversial thing from like in the bitcoin space but it's like you know i pitched a lot of artists like products that you know dealt with like micropayments and the kind of value for value schemes or even like betting like betting on art music kind of combos and a lot of them were like I don't want your pennies first of all like take that shit out like I don't care I want a lot of money and then also if it's if I'm using a product where I make my art you know you have value next to it right in terms of sats or ust or whatever then it's like that's now about the money not about the art right and that's a big criticism of nfts as well like people uh were like okay now

it's not about the art it's just about scamming people right and even ai right like when you uh like my brother uh he makes music and when he put out a lot of music with like ai album art you got a lot of hate because it's like people are like hey use real art like this ai stuff is not art which you know uh i feel like at this point in time we can pretty much tell what looks like an ai prompt generated art i feel like it's a lot more difficult if you like combine multiple images with like mid journey. Like I've done some like mid journey art myself and I really like it, but, uh, I'm not going to, you know, just like try to pump it as like an NFT. This is just for my own like decoration at home, let's say. Right. And there's like the, the, the possibility of

uniting Bitcoin with music, with art, it's a really challenging puzzle. And I was thinking about it for a while just because of my own experience in like art and music and, uh, my own knowledge of like bitcoin and like financial technology and it's like first of all to make it as an artist is really tough but to make an art music business that's even more difficult right because you're trying to actually create something for a whole bunch of people who mostly don't have money anyways and who are mostly trying to like get fans or get listeners or uh yeah blow up get more engagement etc and when it comes to the traditional music industry there is such an entrenched power structure there that is so difficult to overcome right that for for me it

looks like a near impossible task to attack that right like when we're talking from your free music to get from your like daw your computer all the way to uh the spotify and let's say if you have like a label if you have all these different you know there's so many different rights organizations and legal entities that take a cut here or there just because you know a hundred years ago like publishing companies would be the ones that collect royalties on the books that you published for like, you know, music, like the way that a lot of pianists made money back in the day was they would publish a book on all of their songs and then that book would get like publishing royalties. And then now, you know, artists today still collect publishing royalties,

but it's not because they're publishing books. It's their music on Spotify, for example. And, you know, it's like the, the, the label construct as like this investment arm that like allocates capital to artists and like the financing deals that are there and like the equity arrangements, and it's all completely screwed. Right. And if you want, let's say a legacy artist to adopt a very new technology, and then you think you can just cut out all of the crap, that's the monster that's next to it. You know, I feel like it's, it's an, it's an oversimplification that you can't ignore. Like there's all of that, like the monstrous beast, that's the music industry is there kind of for a reason and that's because it's really difficult

to make money in music right and it's really difficult to become famous and to like produce things that people actually want to see and then the capital concentration is in such a way where there's a few people at the top who kind of make all the decisions and those decisions get kind of let's say encoded in the artists through like their A&Rs, right? Like the representatives from like the labels kind of guiding the artists into what themes they want to have in their music

or to what like things they need to include. And then that power structure is there and it's going to stay there. And that's just there because of the whole Fiat money, you know, crap that like, you know. We'll see how this Diddy case goes. Maybe it blows the whole, maybe it blows it all up.

Yeah, that could be crazy. We're joking, but like that is part of this power structure that you're describing. Absolutely. I mean, like, you know, when you have so much already, how else can someone have power over you, right? It's like blackmail material, right? You put yourself in a compromised position, and that compromised position is generally your own fear or desire, right? It's generally fear or desire. Those are the two things that get you caught in these traps.

and then once you've been caught it's like okay now you the puppet master can do do with you as they wish right and how are you gonna onboard someone to like a value for value thing and and also how you're gonna onboard the fans right like music is such a commodity today where for me i listen to like youtube music and that's really great because i can just you know get all the recommendations i have from youtube and then download them like pretty instantly and now i have like all this music like and i pay youtube right but i don't know where that money goes it's like a total black hole and having like a new system where like the network effect isn't there like you're competing against multiple different like goliaths that have real weight right yeah

i mean i think this gets back to what we started the conversation with is i think at scale maybe not value for value but like this ability and mechanism for artists to monetize in a more efficient and um favorable way towards the artists is a timing thing when we're talking about like bitcoin businesses and timing like bitcoin prediction markets timing makes a lot of sense for me again speculation killer app uh for the first 15 years and prediction markets are just derivative of speculation extending it beyond the simple price of bitcoin or hash rate difficulty whatever people speculated on up until this point but when it comes to that like you need the network effect of people actually having bitcoin and be able being able to reduce the switching costs

to a point where it's like okay now i can do this um in stream sets as i listen directly to the artists the network effect simply isn't there that there yet on the amount of people actually holding bitcoin and then holding it in wallets and applications that make something like this possible there needs to be some level of order of magnitude improvement on the current paradigm for someone to like adopt a new technology right like inertia is something that's more than just a physical thing it's a mental thing as well right like i'm not going to change my behavior unless i'm motivated to do so right there's some kind of cause that's making me change my behavior and right like that's the whole reason why uh in let's say building a business you want to go for a blue

ocean kind of opportunity not so much something that is already totally occupied with you know a bunch of competitors who are you know already entrenched in the market and network effects are something that like basically uh make it just so much more difficult to compete in like the digital world in you know with products and services that uh already are entrenched in markets right and uh i feel like with speculation bitcoin already has product market fit like the first time i ever bought bitcoin was in 2017 i believe 2017 or 2018 2017 i think and that was because i wanted to play poker on poker stars and i was in korea so i couldn't actually use poker stars so i got a vpn got coinbase bought bitcoin then uh moved bitcoin to zelle zelle to uh some other wallet wallet to

like coinbase i'm not a wallet to poker stars and then i lost all my money uh playing poker on poker stars but like the original reason why i bought bitcoin was so that i could do something else right and bitcoin like served that value proposition for me because no other currency was unstoppable in that way right bitcoin is unstoppable so long as it doesn't get attacked by these state entities that want to destroy it and censor it but uh currently bitcoin is unstoppable right and it looks like it will continue to be unstoppable and basically now you can do things with like if we enable speculation directly with bitcoin now i don't need to go through that like convoluted you know multiple different wallets and fintech services

so that i can like deposit my bitcoin into like poker stars and lose it now it can just be with bitcoin and you know that's a lot better in my opinion when it comes to like a user experience perspective yeah completely agree timing is very important in this market absolutely yeah and i mean you mentioned it to like the iterate iteration of your business getting to bitcoin prediction market um maybe not good timing to make it easy for individuals to run lightning notes certainly good timing for people to speculate on events using bitcoin exactly and i think it's like one of those things where if people really want to speculate on certain events, then they might just do it with their own lightning node, right? Like if they want to do something with

the Bitcoin, then they'll adopt the other technologies that make that happen. And then we could onboard them to like a self-custodial standard, right? Like just get everyone using AlbiHub and then just have like a really simple tutorial on like how to just like get onboarded with that and then you know where to buy bitcoin where to how to like do everything it's just simple steps at the end of the day but it's finding that use case that people want to use bitcoin for that they'll buy it and then you use it actually as this peer-to-peer digital cash rather than just this buy and hod hodl you know like crap like that's just uh you know before hodl meant not trading not day trading with bitcoin and speculating on price now it just

means never selling yeah that's like as as good as ossification can get people just don't even want to use bitcoin and that's like you know that kind of defeats the purpose of of a lot of this freedom tech yeah and it's if you're listening to this right before you walked into the commons we actually just published an episode with parker outside here that dies right into this like he He wrote his piece on Bitcoin's exchange theory of value. And people have somewhat misconstrued Bitcoin is only a store of value asset. I think that's driven by some large holders that are marketing as such. But values only realize when it's exchanged.

And so you need this medium of exchange to happen. Actually, it's like Schrodinger's box where you can hodl Bitcoin. It can have a number on a screen, but that value isn't actually realized until you exchange it for something else. Exactly. Exactly. That's, you know, you need to have this flow of Bitcoin in order for the network to grow. Right. Accepting Bitcoin as payment or making Bitcoin payments is a real big challenge. Right. Like I know the fellows in Chiang Mai who are like doing a lot of circular economy stuff. and it's really difficult it's really difficult to change people and and move their inertia from

the fiat payments that are super easy simple and entrenched in society and now are digital and you just qr code contactless apple pay whatever like it's super simple changing that to a bitcoin standard and onboarding people to all of this difficult tech to like get them there Like it's a great effort, right? A hundred percent. It's worthwhile. It's worthwhile, but it's really difficult. It's really difficult to get people to change.

And what I wonder is, okay, maybe there needs to be other use cases that are internet native, that are Bitcoin native, that can incentivize people to adopt and actually spend, right? Because it's not going to, we're not going to reach terminal velocity just through hodling, right? just dealing with exchanges then it's compliance money right because of all exchanges are kyc'd yeah no and i think i mean just looking to compare on polymarket again going back to what we said earlier has product market fit that's talked about it's mainstream in that and bringing that to bitcoin that's like funny like everybody's talking about like oh let's bring nfts and icos to bitcoin

via runes whatever it may be it's like no like as you mentioned like stable coins and prediction markets seem to be the killer app over in crypto yeah when it comes to porting um the killer crypto apps to bitcoin i think prediction markets is the the right one absolutely because it's not token based right you don't need to have whatever seniorage crap that is in a lot of the crypto protocols and products you know it doesn't rely on subverting people's understanding with like a pump and dump nft kind of scam it's sure there's this kind of you know admittedly uh degenerate component of like gambling yes that's absolutely there uh undeniable however it's not there just to be there like all these other products and platforms there's this kind of transmutation of

negative energy that occurs with a prediction market in aggregating all of these opinions through capital, we can gain an understanding of the future, right? And that's a net benefit to everybody. Even if you're not betting, you're not speculating, you can still peer into the crystal ball of the prediction market and see into the future and see like, okay, this looks like it's probable and it might happen. So let me make a decision that will, you know, in accordance to that, right? And that can be a positive net value to everybody, right? Rather than just speculation for speculation's sake speculation for the sake of the future yeah i feel like that's a lot more compelling i like that i like that pitch james we got cosmic here i'm very happy

i'm excited that you're building bitcoin prediction market and that you're in bitcoin and that you came on the show i think it's going to be a fan favorite we touched on a lot we got into remote viewing, which I wasn't expecting. Yeah, yeah. But any parting thoughts, final thoughts, controversial opinions

that you have? Just bet on Bitcoin Prediction Market. That's, it's the future. BitcoinPrediction.Market. Go check it out. Peace and love, freaks.

The key! Thank you.