TFTC: A Bitcoin Podcast - Tales from the Crypt #116: Trace Mayer

Episode Date: November 15, 2019

Join Marty as he sits down with Trace Mayer to discuss: - Wyoming blockchain legislation - The institution of the nuclear family - Bitcoin + freedom - An update on Bitcoin's 7 network effects - much more Follow Trace on Twitter: https://twitter.com/TraceMayer Shoutout to this week's sponsors. Cash App. Head over to the App Store or Google Play Store, download cash.app and start #stackingsats today. Use the promo code: "stackingsats" to receive $10 and contribute $10 to OWLS Lacrosse you download the app. Casa. Use promo code “TFTC” to get up to $250 off your Casa membership … or hit their team up [e-mail] for a free demo, or to put them to the test with your hardest OpSec questions! Subscribe to our YouTube channel: tftc.tv Contribute to the show: https://tftc.io/contribute/

Well hey there freaks, it's your boy Marty Ben here to introduce this week's episode of Tales from the Crypt with Trace Mayer, an incredible Bitcoiner, had an incredible time, met him in Soho, we sat down, talked about what's going on in Wyoming and the laws being made there, gave a little update on the seven network effects of Bitcoin, we also talked about the importance of bitcoin's assurances particularly when it comes to freedom speech and the power to empower individuals this episode of tales from the crypt is brought to you by our friends at casa freaks how confident are you in your key security does your key setup have a single point of failure how protected are your seed phrases how protected are your keys from

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uh i think you guys are gonna like it what is up freaks welcome back to tales from the crypt it's your boy marty bent here in a very foreign studio, somewhere in New York, an undisclosed location, sitting down with a man who needs no introduction. This is a long time coming. I'd like to introduce you, Freaks, to Trace Mayer. Trace, welcome to the podcast. Oh, thanks so much for having me. Well, thanks for coming, man. It's incredible to see how open you are, how quickly you were able to throw this interview together on quick notice, and how hospitable you are. Thank

you for having me. well you you made the effort uh coming over here short notice but yeah get it done i mean it's it's very important what we do in the this battlefield of the marketplace of ideas and you know it's very important for us to help perpetuate the the ethos of sovereign money monetary sovereignty so thanks for everything you do with that oh well uh it's humbling coming from you thank you for everything you've done if you freaks haven't checked it out yet go check out the Bitcoin Knowledge Podcast, one of the greatest resources in the space and helped me out a lot as I was getting my bearings in this space. And we have a lot to catch up on. We're just going,

not to catch up on a talk about, we were just going through the topics that we could talk about. You were at a conference this week. There's a lot going on in Wyoming. We have a proof of keys initiative in the works right now. Let's start with proof of keys. And I think that was an important pre-interview note that you mentioned that it's not, it's not, it's more about the individual right and it's about taking control of your human capital as you said yeah you know we so many people get get distracted and focus on things that are outside of them and outside of their control i mean think about it some people think that they can control the weather on this planet i mean how diluted is that they can't even control their own mind like and they think they're

going to control like the weather and like save the planet or whatever i mean sure we can make a difference and you shouldn't abuse nature because you're going to pay the price if you do but like control yourself you know first and you know so we look at the bitcoin ecosystem we look at the crypto ecosystem we have bad players mount gox uh last year quadriga cx got decapitated by proof of keys um last week einstein was it yeah einstein a canadian another canadian player um have 13 million dollars or 60 million dollars or whatever um you know everybody like trust but verify and proof of keys you know this is a this is a way that we can just individually develop our own human capital participate in the ethos of bitcoin monetary sovereignty uh running a full

node holding your own private keys withdrawing all of your bitcoins yourself i mean satoshi gave us a great gift you know and the technology got it out there you know on january 3rd 2009 for monetary sovereignty everybody being able to run a full node verifying all the transactions immutability provable scarcity holding your own private keys uh being able to transfer value over communications channel that's a great gift you know the technology got it out there but political will is what keeps it there and in order for the political will to be there you gotta you gotta like flex those muscles sometimes and so why don't we as a community just celebrate the gift that we have and flex the muscles and withdraw all of our crypto bitcoin lite coins whatever whatever thing

you got withdraw it all to a wallet where you control it and run your own full node i mean it's really simple it doesn't cost anything uh maybe a couple bucks right and yet you can learn so much from the exercise you learn how to run your own nodes you learn how to secure your own keys you learn how to do transactions i mean there are a lot of new people in the space like how many transactions have they sent you ever sent a transaction where you've run your own full node you ever received a transaction where you've run your own full node to validate that you know so it's a learning experience and in that process you develop human capital you get more comfortable with the asset class you have more confidence in it you have more confidence in yourself and

your ability to interact with it like where's the downside you know and if we are all doing it on january 3rd we get to talk about it we get to help new people we get to point them to resources like glacier protocol or smart smart custody.com you know i have a i have a lot of these things on proofofkeys.com you know to help people kind of know what they need to do and how to do it and be safe and secure and all this stuff but you know it's an internal thing like you think you're a bitcoiner like you know a real bitcoiner has run his own full node and holds their own private keys otherwise that's how you're a first class citizen in bitcoin nation you start moving out of that you're you can get taken for a ride you know you can totally get

taken for a ride because somebody else is running the node someone else was holding the keys trace you're demanding extreme ownership well can that exist in today's day and age so the concept of human capital let's dive more into that like what's behind it how should people benchmark against it and work towards an ideal yeah i mean we we live in a phenomenal day and age you can literally do or be anything you want to do or be and it doesn't matter what your skin color is or your gender doesn't really even matter where you were born because you know the internet and and the ability to travel and all of this stuff like you you get to choose you know so so what you're gonna do you're gonna choose happiness you're gonna just be miserable like you get to

choose your thoughts you get to choose what you do you get to choose all of this stuff you know so many people they whine and complain drudgery going to work stuck in traffic they don't like what they're doing when when when when when like you chose it you chose it you know every everybody like we we've never like in all of human history we've never really had this type of just freedom what do we do with it you know and if you choose to not be running your own full node and not be holding your own private keys you're choosing to not be monetarily sovereign right like you're choosing to be a slave you know because like a master slave relationship you're relying on someone else's full node relying on you're letting someone else hold

private keys like it's a master slave relationship like that's how we describe it in terms of computers and servers and stuff right like so i mean you can choose to be a slave or you can choose to be a first class monetary sovereignty bitcoin citizen or second class or third class you know we have different gradations and you get to choose which one you want to be so you know this is very much an internal uh form of human action and and what you're choosing you know what you think about what you have strong feelings about you know your actions your choices these all have consequences having freedom is a consequence right of action taken correct yeah you got to take action yeah you know and you we have all the opportunity to do it

you know happiness is also a consequence you know you want a flower you are in control of your own happiness that's one of my favorite quotes my dad's told me in my life yeah i mean for real like you know people want to i'm unhappy because of and it's always something outside of them and i mean if you want flowers it's about soil and manure and fertilizer and shovels and stuff and the consequence is a flower i was actually talking about this with dan tapiero yesterday it's interesting how a lot of people in the u.s in particular view bitcoin considering i would consider it uh the white paper in the source code implementation on par with the declaration of independence like bitcoin as a technology is something that is american at its

essence it's freedom liberty and yet there's a lot of pushback here which is interesting yeah i was talking with uh with some people a couple days ago on this very topic uh you know and i mean they're they're immigrants to america their parents literally like fled with the shirt on their back uh you know when they were little kids came over like boat people right and uh you know and now they're you know they've they've really claimed a lot of that monetary sovereignty they're multi-millionaires um you know we're we're talking about this and just you know we're taking america into cypher space like that's what we're doing right like the idea of america the idea of the declaration of independence the idea the implementation through the constitution

and some of your most important clauses in the constitution are the monetary clauses because gold and silver they're not just barbarous relics but they're essential checks and balances in the political machinery they belong in the same class as constitutions and bills of right as mises says because they protect against despotic inroads on the part of governments they protect you from having your wealth siphoned off through inflation which is a form of taxation without representation or due process of law when when unelected bureaucrats monetary elites at the federal reserve are able to confiscate wealth that way they circumvent the the checks and balances of how congress who has power over the purse is supposed to be able to get these

revenues so i mean all like this is such an american idea you know people it's freedom of speech you know cryptography of speech as the u.s supreme court has held um freedom of association freedom of contract uh private keys you know criminal procedure no no you know i mean fourth fifth and sixth amendments rights against seizures encryption i mean all of this stuff like is just so american you know and so like what what you gonna do you know are you gonna are you gonna are you gonna like claim your monetary sovereignty hold your own private keys run your own full node that's how you fight the war today you don't have you don't like you got all these people running around like picking up tear gas stuff in hong kong or venezuela or like all of

these political protests across the planet and yet they don't protest with the thing that has the most power to protest with it wasn't the marches that changed the civil rights for black people in america it was the protests with people like rosa parks that's how martin luther king primarily strategized was the protest the bus protests you know like why are you feeding your oppressor like take those resources in and starve them to death you have the ability to like you have the ability to do that for real like you know so you're gonna whine and complain about the political process but you're not gonna you're not gonna vote with your money like wow well can you blame people too do you think they've been lulled into a false sense of security uh

and i think there may be a conservative effort not to educate people about how the monetary system works and maybe don't even know how they can fix their problem or oh that's that's that's definitely a problem and why you know when i'm saying like you're stepping onto the battlefield of ideas and it's important like there's only one profession that is protected in the u.s constitution the freedom of the press because ideas can only be overcome by other ideas power and force are impotent against the power of ideas so i mean of course like you know that's always been the totalitarian's resort silence the truth teller you know stick galileo on house arrest i mean but you know you build you build this tube with some glass in it and you're like

hey look in here whoa what's up there i mean like bitcoin is that you know you like we now like this is science and this is math like applied cryptography applied financial cryptography that's what we're doing here and it what it yields for us is it yields a tool that is just so powerful and so force multi like it's such a force multiplier um and it like it's so important to it like so this morning in marty's ben i wrote about the effects of inflationary policy on family formation and stuff like that so not only should we be fighting this for freedom but like literally the the fabric of society depends on the ability to accumulate and save capital over time and we've seen over the last five decades uh single worker homes go to double worker homes that go to one

go to both parents working two jobs uh not everywhere but again birth rates are going down people are delaying family formation and a lot of people would point at debt accumulation and the incentives that our system uh currently incentivizes yeah there was recently an article on mises on the same topic right and you know the truth of matter is is like individuals communities and nations that attack or otherwise set up incentives that attack the institution of the family they will pay the price because the family is the natural order of things and that's how i mean you know a lot of the a lot a lot of women think like oh like i want to go become a whatever at a wherever you know managing director at goldman sachs they think that's

important like some title something outside of themselves i mean the hand that rocks the cradle it's the hand that rules the world like there is no more important and fundamentally rewarding uh activity that one can be engaged in than you know motherhood and fatherhood and which is why we're all here i mean that's how we got here right yeah like eight billion of seven billion of us or eight billion of us and you know fiat money fiat families sound money sound families and like the disintegration of the family worldwide across socioeconomic classes as well like we're like how happy are you guys like right i mean for real like you know it doesn't matter how much money you have if you're not happy like you know and more money more problems

and so you know fiat like safety and rights and the bitcoin standard you got fiat money you get fiat food you get fiat art you get you get all of these negative consequences to society because at the end of the day you're not respecting property rights which is uh how we accuse it's the fruits of our labor from what we chose in the past you know which you know you you need to have agency in the present so no habeas you know habeas corpus is uh protects that shouldn't be murdering people you know that's right to life that's our agency in the future and you know Mises talks about the creative genius where you're doing the work because it's intrinsically fulfilling not necessarily to like make some money out of it right and you know what what other

occupation or activity can you be engaged in where you're going to be able to be doing this creative genius type of work that is just intrinsically fulfilling than the institution of the family. And, and so, yeah, I mean, people just, they just get so distracted and confused. They think that like their little dog is their kid for real. I actually had a conversation about this yesterday. It's the exact topic. A friend of mine was walking down the street and then a woman was walking two dogs and one of them was taking up most of the sidewalk and uh a man in front of her him asked her if she could move the dog and she immediately freaked out like he was attacking the dog got triggered yeah or whatever her quote

unquote kids yeah no those are dogs those aren't humans humans have the capacity for emotion and feeling and they have the capacity for thought and reason and that's what distinguishes a human or a human type of mind from an animal. Well, this is, I mean, this is probably the third episode in a row I brought up Kanye, but it's funny, his latest... I don't know, I haven't followed his latest album.

Well, he's sort of turning his back on the culture, and it's funny, we talk about these family values and what does the culture... It brings up the question, what is the culture and what values is culture expounding on society today? And if you look at music and pop culture in particular, They're people my age and below, and you're incentivized to go fuck as many bitches as possible,

hit Tinder as hard as possible, and all the music's about perks and stuff like that. You really think that's going to bring you happiness? I don't, certainly not. No, I mean, even, it's a rhetorical question of the person on the other side of the interview, right, that's, like, listening to that. Like, what do you think's really going to bring happiness?

You know, and happiness, you want the flower? you got to it's about soil it's about manure it's about like weed in the garden like the consequence is the flower right and uh you're the the the way the human mind is structured like the highest form of that intrinsic reward for the creative genius is going to be in that institution between a male and a female that's just the that's how the the physics of the human mind are structured uh and you know you can you can have a black lab and like paint it white doesn't make it a dalmatian for real like you're just gonna wreck yourself and uh and so you know I think a lot of people just get themselves very confused. Uh, they're, they're making choices

that make them miserable. Misery loves company. So they all get together, have their own echo chamber. You'll notice that, you know, when you start to change your life and live a better life, you will, you will no longer, uh, be associating with people that were living a previous type of life have you experienced this yourself yeah a little bit i suppose you know i mean just as you go through life and you you have different friends come into your life and different friends kind of fade away um you know we gravitate naturally towards people who have things in common with us where we where we love the same thing um you know we just naturally segregate ourselves you know go look at meetup you got meetup groups for people with boston terriers and german shepherds and cats

and parrots and like everybody's got different things that they love and that's how you you end up segregating yourself and so um as you begin to try and change those things that you love and value and how you're allocating your time and your attention and your emotional energy you're going to naturally start changing the communities of people that you're interacting with yeah no it's it's powerful and you're somebody who's actively trying to change our reality via bitcoin you're hard at work in wyoming in particular i think this is a great segue to what you guys are doing in wyoming you have to uh put yourself forward and act and it seems like wyoming is uh the ground zero for bitcoin action in american law right now oh yeah i mean what we

were doing in wyoming is a huge deal i mean this is a special purpose depository bank so what does it's a bank like that's a big deal regulated by the banking commissioner well first we started with a massive jurisdictional land grab uh with property rights defining property rights for digital assets you know so that sets up potential constitutional challenges that the feds try to like do something different because states are in charge of property rights not the fed they can deal with copyrights and patents but not with not with this stuff and uh yeah so we we you know we started there we've uh we got a bank to like custody this type of property so special purpose repository depository depository repository yeah depository yeah it's not a github repo no

it's a depository so what does that mean is it special uh so they hold they they can take deposits but they can't lend okay so it's 100 percent bailment you know they'll custody the digital assets and then once you know once there once we have custodianship like this built on a solid legal protocol solid legal foundation uh then you know we're able to have like pension money come into the space you know we're able to have funds and big institutions so you know this is all prerequisite for that type of uh for that type of activity and yeah and being a full-fledged bank i mean that comes with all the rights and benefits that attach to being a bank and so when you're trying to get the this legal structure set in order this base set in order um how are you are

you trying to make the attack surface as small as possible how are you thinking about the precedent that you guys are setting with these laws yeah so i mean we one of the bills actually sets up a chancery court for uh digital asset disputes you know so we'll be you know in terms of precedent like you know just like delaware has a lot of precedent for corporate law we'd have the same type of thing going on in wyoming with blockchain law right um yeah the the bills all really dovetail in on each other we passed five last year eight this year another five just passed committee and hopefully it'll get passed in uh the next legislative session early 2020 so that'll be 18 laws total that are now that that are all working in harmony with each other and there's

like a like a innovation sandbox you know so that you can do a startup without having to worry about filling out a 3500 page bit license application uh one of them is going to be code is speech and so no criminal prosecution for writing code that's huge i mean that's going to be a nice safe haven uh which you know that's one of the things i really wanted because one of my friends who's bitcoin core developer you know back when bitcoin back in like early 2011 he put five hundred thousand dollars into a client trust account with an attorney so that just in case like you were to get prosecuted for contributing to bitcoin uh bitcoin core bitcoin qt at the time right so So there's a lot of opportunity costs there for him.

What precedent does the 90s PGP war precedent have? Yeah, I mean, that helps a ton too because it establishes cryptography as freedom of speech. And so, you know, that's very helpful. Protected by First Amendment. Used to be illegal to export cryptography under the Munitions Act. um you know imagine if we imagine if github had to take down the repo you know or or things like this they're starting to do that for certain for certain countries yeah which you know maybe we

need to be moving things to something a little bit more reliable i think people are talking about that yeah git lab or something you know various things but um yeah the another another one of the laws so we're gonna be basically repealing a bunch of money transmission laws not all of them we wanted to do all of them but you know take as much territory as you can reasonably be taking right another one's a digital asset amendment so it's gonna it's basically a cleanup bill for the previous bills that we've passed you know because you get the stuff passed but maybe they're it doesn't work exactly as intended and you had more eyes looking at it and seeing how it would work so yeah let's like clean it up a little bit right the law is kind of like writing code it's just

legal code right um there's a another one of the the bills would be a spdi amendment for retail so that would be good um we talked about no no criminal prosecution just for writing code And then another one that I really wanted is no compelled disclosure of private keys in a civil, administrative, or legislative proceeding. And we wanted to have even judicial, but one of the senators made us kind of carve out criminal prosecutions could require the compelling of a private key. But that's kind of the only exception area. So if we can get that passed, I think that would be really good because with hierarchical deterministic wallets, if you have a if you have a child private key in a in a parent public key, you can derive like parent private keys. Right. So, I mean, that could just create a huge disaster for custodians that they're having to disclose private keys. That's not to say that a court couldn't order you to transfer the Bitcoin.

they just couldn't require you to disclose a private key it's probably good for civil asset forfeiture too i would imagine uh yeah i mean as a protection against yeah it helps helps as a protection and i you don't necessarily want to get in a situation where you're like well i lost it in a boating accident you know because the judge doesn't believe you you might have a problem on your hands um but yeah especially under like 526 of the bankruptcy code you know that that could be a real problem why is that well you could be held in civil contempt okay so he could throw you in the pokey indefinitely not able to challenge your detention if he thinks you have the keys um yeah so like craig wright for example i mean there's a judgment against him

and he represented that he had the funds so they entered into settlement negotiations and then he comes and says oh i lost him in a boating accident like if the judge like if he tries to declare bankruptcy can hold him in contempt or yeah the judge might because the judge might be like you know what you you said you had these keys you represented yourself as satoshi and that you represented yourself as having these keys you entered into settlement negotiations and now you're saying you don't have them well i don't believe you so i'm going to hold you in contempt of court put you in jail until you move the bitcoin so craig wright may possibly sit in jail forever yeah i mean we have precedent for this with the there the the real dangerous nexus

here are the offshore asset protection trust cases and so like there was one case uh where the person created an offshore trust and wired the money into it to get away from a creditor a fraudulent conveyance and the judge was like we'll tell the trustee to wire the money back and he was like well i don't have any powers over the trustee and the and the judge was like well i don't believe you so he held him in civil contempt put him in jail and eventually a new judge got assigned to the case and let him out of jail 14 years later oh my gosh so he didn't give in he didn't move the money over 14 years maybe maybe he really didn't have the power to or maybe he just really didn't like the ex-wife or whoever the other side of the the case was but uh you know

that's kind of scary scary um so are you looking at this wyoming legal framework as something that can be form fit across states across the country well are you going to get the political will in all of these states to pass bills like this i mean some states have already copied and passed a bill here or bill there but none of like past the comprehensive set and and it's really it's going to take a lot to get some of these states there it was hard to get wyoming there and wyoming really wants this type of stuff you know the the banking lobby is very strong in a lot of these states the uniform uh law commission the uniform commercial code because we're dealing with like right property rights and definitions of that and like all types of stuff so um

you know finding that political will might be difficult let alone like it's already passed in wyoming why don't you just go set up shop there yeah so i mean you're a bank you're a bank and you like banks can do interstate banking so how do you how do you envision uh if these laws are passed wyoming a bitcoin blockchain world uh blossoming in wyoming yeah that's the that's the hope you know uh caitlin was at the football game and saw the governor a couple days ago and he was like where are my applications you know so the governor's like i i want you know i want the the kraken the mighty krakens of the world and the coin bases and the you know the the other companies to be filing these applications for speedy banks uh he wants them you know and the

banking commissioner wants them and the legislature wants them like they want jobs to come to wyoming with these things what kind of advantage could this afford wyoming if they're the first to do it oh i mean you're you're on the forefront of this just global changing technology uh, you know, Wyoming already wants to compete with, uh, LLCs and corporate formations and trusts and stuff like that. So, you know, being able to weave all of this stuff in with the secretary of state and business entities, you know, they're, they're competing with Delaware and, uh, in Nevada. Right. And so, you know, having this type of legal, uh, landscape in place just helps them be a much more competitive jurisdiction in a lot of those regards.

And costs are going to be tremendously lower for institutions that come to Wyoming. In a lot of cases, like Delaware or California, you're paying income tax. You're paying franchise taxes. If you're a crypto exchange, you might be paying taxes on the total amount of customer assets you're holding. And Wyoming is going to be drastically, drastically lower in terms of overall tax burden. um you know for for companies to move over there and yet with commerce clause under the u.s constitution and some of the acts that congress has passed uh you'll still be able to service customers outside of wyoming so uh you know if you're doing it all right and correct so

so people are going to be uh dismayed that they've gone all the way through the bit license process only to find that uh they should have domiciled in wyoming well in their defense it wyoming didn't exist yeah when they like the bit license came out but it's like it's kind of just a hodgepodge like duct tape together right like this is this is statute that's been enacted by a legislature and signed by a governor it's not just like administrative rules or something it's not the department of finance just yeah the dfs yeah um i mean this is like this is signed by the governor into law after being passed by both houses in wyoming 18 you know 13 bills so far another five coming up they all dovetail together you know and the governor is the commander-in-chief

of wyoming like he's wyoming is a sovereign entity just like the u.s government is or just like california is or just like germany is so i mean this is this is serious like legislation would you ever imagine this happening this fast five years ago no um no not really i mean the speed at which this industry is moving is just unbelievable yeah that's why i think it's a good time to segue into the update on the uh seven network effects and oh yeah i i know a thing or too about that yeah well like so what do you like we've we still have been like in a bear market if you will we're still haven't reached last all-time highs for a while but it seems like we have four year cycles right yeah plan b's how is this cycle compared to the last one uh bear market of 2018

2019 to 2015 20 2014 2016 yeah i mean the the previous one was just brutal um um like at kraken you know we i uh hummingbird and i led that round in early 2014 we lay jesse had to lay off like 65 of the staff so he was down to like 10 or 12 employees or something like that and then hummingbird and i didn't did and some other investors like funded a an extension round they kept cracking alive thank god they're thriving right now it seems what's that so they're thriving right now it's a mighty cracking yeah i mean got like 800 employees or something like that uh and have a pot and and even in the bear market they've had a a significant operating margin you know making

money cash flow positive in the bear market like totally different um the infrastructure companies you know the industry as a whole the strength the cash that's flowing the gdp of the uh crypto economy uh just the amount of wealth that's in it the security of the network uh look at the hash rate like i mean we're just way way way far ahead you were mentioning at the conference that you went to yesterday they were saying a hundred hundred billion notional no no this was uh this was a capstone they they did a conference for a bunch of like macro people in new york so like goldman and morgan and uh a bunch of funds and stuff were there but they were someone was taught gave a presentation on the derivatives market and there was a there's about a billion dollars a

month of notional uh happening in the derivatives markets so the puts and calls not necessarily swaps like bitmax but like puts and calls and so yeah i mean it's all getting built out you know like we have we have bit licenses we have speedy banks we have you know they're going to start getting approved and licenses we've got yeah so if we want to go down the network effects you know first network effect of speculation you need you need uh the ability to custody bitcoins you know previously that that's why i funded armory right i mean now we've got we've got speedy banks like like fidelity can custody like legally with a with a an erisa fiduciary can custody with with one of these speedy banks um you know that's huge just such a huge difference you know it puts

the asset class in play uh after you custodian like we need exchanges you know used to be mount gox and then you know kraken almost died in the last bear market what exchanges do we have now the mighty kraken's like crushing it coinbase is crushing it uh we got hundreds of exchanges that do a billion a month of volume or more uh whether they're all coin exchanges or just across the board we have we have all these different exchanges that cater to to different markets like btc turk and turkey or australia or wherever we've got otc is huge um you know kraken's otc desk is one of the largest that they they seem to be out competing like you know the cumberlands or the circles or whatever taking business from them so that's getting highly

competitive uh the the otc desk we we have market makers and algorithmic trading and arbitraging that's happening across the industry we have volumes happening on lots and lots of different exchanges it's not like we just have one exchange you know we got lots of them uh and then we got derivatives exchanges we've got backed and we've got bitmex and we've got ledger x and we've got eris exchange and like you know there's just so much more infrastructure built you know and so this is all first network effect stuff yeah we're gonna have that's what i'm interested to see next bull run are we gonna have uh coinbase not being functional when people are trying to buy like i think i can see there being so many on and off ramps now that that might be mitigated yeah what

difference is it gonna make like you got square app right in square apps i mean square apps taking down 11 of the bitcoin the bitcoin block rewards every quarter every quarter i mean that's how much they're selling yeah right i mean like this is this and then we're gonna cut that in half like what the happening and yeah i mean we've got we've got major players in there now like square and everything so yeah i mean previously you know you get you get a crazy you get crazy market momentum and coinbase and cracking go down you know because you just can't handle it well guess what they've all built their systems in the last couple years they're ready for a big influx you know they can probably handle 20 20x more than what they were able to handle the last cycle

plus we've got a lot of other providers out there too so the overall capacity of the ecosystem is greatly increased in my opinion do you ever worry that the infrastructure is outpacing the uh the protocol or second layers on top of it um i not really i mean that's fifth network effect right um so we'll get there eventually or second network effect uh we saw that in the previous run you know transaction fees got pretty expensive maybe there was some self-dealing with with bitmain or or other favorite actors in the space right um but look at lightning network it's going on down the road uh i think it's getting a lot more usage the usage is happening where we can't necessarily observe it because you know we have onion routing built in and we have different types of nodes and

creative use cases are emerging like whatsapp did you see that last week yeah whatsapp i i mean that's really cool imagine if we could have like a decentralized censorship resistant twitter or type function take it even further alipay wechat like you can yeah right you can do everything in a censorship resistant fashion with satellites right all satellites are so cool um yeah so i mean that's second and third network effects of merchants and consumers uh you know backed is going to be launching a retail app app that uh starting off with starbucks uh microsoft maybe they'll weave it into fortnight or something well they have a competitor now with a late night yeah yeah you got all you got like these uh these games being built on lightning network and uh

so i mean that's second third network effects fourth network effect of the miners um i think we're you know so there's three billion dollars a year of revenue for miners and so you know that's a highly competitive industry and what have they been doing they've been uh rushing to the physical limits on asics and then uh that gets commoditized out horizontally across lots of different players so they then the game becomes like the lowest operating costs and there actually are a ton of steel power coal power plants in wyoming that miners are looking at you know because because they want to shut these uh coal power plants down but the legislators don't want to lose all those jobs and the miners are like whoa we got cheap electricity like i can use that stuff

um you know and then there's like off flaring uh that could be done or like something i'm actually looking at you would literally have uh i mean we could like one of the things i'm looking at we'll be able to deploy millions and millions of asics and have no operational expenses how's this well i'm not gonna say but um but no i mean we won't we won't have rent we won't have electricity costs nothing so interesting um yeah so you know that that'll be really interesting when you know when they're when we're able to be you know because i think this next phase the the last last winter you know with the mining it was it was rushing to the physical limits of the asics now that we're kind of there this next phase of mining we're rushing to get the lowest

operational costs but you know we're going to be finding creative ways to have zero operational costs or maybe even negative operational costs and so then that's going to introduce a an entirely different dynamic into the mining industry oh go ahead how does that change the dynamic the what how would that change the dynamic in your opinion well now we have to figure out how to you know if it's not like if if you're operating like if right now it's all about cost per kilowatt right but what happens when like it's not a factor it's zero like your kilowatts are zero and you don't have any rent expense or facility expense or insurance expense or whatever like no operational expenses so then it's just a matter of how many asic chips can you ship out

you know so and so that's just a different you know that changes and and then i'm very intrigued right now what's that very intrigued right now yeah yeah talking about trade seekers on a podcast that's a great idea right um cut this out if you want no no no i think it's uh you know it's a good tease i think i think jihan and mickry are having a lot of fun together well That's what I was going to say. And maybe I'm just rattling their cage. What is going on there? I have no idea.

Jihan went into the company and turned it upside down when McCree was out of town. I have no idea. There's drama in Texas right now. So much drama. It's a confusing ongoing saga. Isn't it great that the Bitcoin network just doesn't care? Yeah. I've labeled Bitmain the Icarus of early Bitcoin.

Too close to the sun. no that's ross albert but you think so he's never getting out you don't think so he lost his appeal yeah the only way he'll get out is a presidential pardon good luck with that we need to get a bitcoin or an office good luck with that maybe it might happen someday you know well um do you do you subscribe to the sovereign individual thesis that uh will break up into smaller nation states and this uh that sure is what it's looking like right now you know like independence movement in catalan uh you know tim draper wants to break california up it's all fun and games while you can print

money you know but when money gets much harder and sounder and funding all this stuff gets more difficult you know that's when politics like really like gets supercharged and like last night i was at an event with mike novogratz and he was talking about you know he was at goldman in the late 90s and the 2000s and like globalism's just full steam ahead and like all this stuff and then you know the financial crisis happens and like nationalism flares up and then like trump punches you in the larynx you know and xi jinping and i mean so you know it's all fun and games until the the money gets tight you know and stuff stops working for people and globalism hasn't really worked for the american people very well

it sure worked well for china you know but like you know trump's kind of putting an end to that and bringing the money home and i've been reading a book on bureaucracy by mises and the the big problem that bureaucracies have is the ability to perform economic calculation to allocate resources it's the economic calculation problem and america better than other places is able to do economic calculation uh and so you know bitcoin is going to as as we as we make money much harder and scarcer and that causes realignments in all types of human action behavior america will just like flare up uh in its dominance because it's going to be able to be doing economic calculation in this process whereas other places are not going to be able to do that as well interesting so we're

more agile in your mind way more agile do you think it's just because it's american values and the idea behind entrepreneurship and stuff yeah i mean like my friend that i talked about his parents like were boat people and refugees like everyone in america came here seeking something better you know whereas all the other parts of the world like you know people have been there thousands and thousands of years right uh and they have particular cultures and ways of thinking and everything but americans it's the only country that's like cohesive around an idea you know the declaration and the constitution um and you make money a lot harder and tighter and that's gonna just get like taken up a notch right and it'll actually be interesting i think is again analogizing

the the source code and white paper to the declaration of independence the the founding fathers fucked up the money not too long after the revolution right and now we could have this revolution with a good money coinciding with well yeah you had the continental dollar um you had the continental dollar that collapsed uh but that's why they put these clauses into the articles of confederation and then into the constitution you know and that's what made america great was the sound money and so if you really are going to make america great again you're going to have to use sound money to do that yeah um be respectful of your time we're 50 minutes in so i guess we got like 20 minutes or whatever left oh yeah um it's an incredible i'm having a lot of fun yeah we are

having fun aren't we free ranging should we get back to the network effects or you want to harp on america a little bit oh yeah yeah yeah well this is you know we're talking about um we did we finished fourth network effects of mining and security and fifth network effect is, you know, developers. And I would add accountants, attorneys, legislators, regulators, you know, professionals really. And that's what we're talking about. Like Wyoming, look at, look at what we're getting done there. You know, look at bit license and CFTC like the U S is,

is really, you know, kind of on the forefront of laying the legislative foundation that allows this type of industry to be built on top of it. Plus we have freedom of speech and stuff like that in America. Like how, how are you going to be able to peer review code in China? Sounds like a great idea to me, right?

The great way to end up in the, in the gulag. Yeah. The BCEP is going to be completely open source. Don't worry. their new uh staple coin but that is interesting right like so um with america being in this position like do you find this bitcoin in particular as like a national security um issue moving forward it's okay yeah i mean it's critical for national security because

this is the most potent this is the strongest monetary tool that the human race has ever come up with well we haven't convinced enough people of that yet have we trace uh it's you know we got probably 400 000 hodlers of last resort you know so that's a good solid critical mass and like in the bitcoin standard if you're the last to adopt whoever whoever's first to adopt the superior monetary tool has a huge competitive advantage over others so you know there we go um so this is an issue of national security oh definitely yeah i mean it's it's definitely an issue of national security alan greenspan testified twice before congress that central banks

plural stand ready to lease gold in increasing quantities should the price rise so manipulating the the currencies has always been a major modus operandi of the nation state and the u.s government's been engaged in this uh gold price suppression scheme for decades you know if you own a lot of something why run a cartel to keep its price down and it's because their power to issue what we use as currency is infinitely more valuable than the price of a portfolio asset and the rising price of gold shows problems just like a fever shows that there are problems with the body and so you know why do

they engage in the the gold price suppression scheme to suppress the evidence that something's wrong and now we got negative interest rates well that globally and even more acutely like the fed is supposed to be a private entity uh apolitical and separate from the government yet you have donald trump tweeting directly at the fed head to uh lower interest rates and almost dictate policy via twitter oh yeah i mean it's uh the money is getting politicized and you know bitcoin man it just got thrown right into the politicization of money with wiki leaks in its infancy and somehow survived right so i mean that's wild that's actually another question i asked dan yesterday i'd be interested to hear hear your thoughts like how much of bitcoin is

a black swan on the monetary or global monetary stage right like how do you think it's all i mean countries like russia and china have been stockpiling gold for the last two decades do You think they had certain plans in place and Bitcoin came to be and might throw a wrench in that plan? Oh yeah, Bitcoin throws a massive wrench because the physical gold bullion is the Achilles heel

of the gold price suppression scheme. And, you know, okay, so you suppress the price of gold, but there's still a monetary premium embedded in the gold price. And once the Chinese and Russians like figure out the game, of course they're going to start

stockpiling the physical gold as a geopolitical tool or weapon and you have this monetary premium that's in there too but you know they have they can they can be milking the system while we're going along but yeah then bitcoin comes out they might get they might be the one stuck holding the bags right because if the value transit if if going forward it's bitcoin is the world reserve settlement currency and we finish the fifth network effects right six network effects or financialization backed well ledger x got approved back uh is is approved in trading heiress exchange uh to trade derivatives on this stuff you know seven network effects world reserve settlement currency so i mean we've got we've got

serious players on all the network effects now like how long is it going to take to to change stuff the gentleman from crypto voices put together their uh third quarter monetary base uh review and launched it earlier this week i believe i believe bitcoin is the 11th biggest base money in the world right now yeah give it about 18 months based on highly correlated co-integrated data that predicts uh it's going to hit 100 000 by december 2021 where that invalidates the model right like that's crazy i mean now we're we'd be talking you know a top five yeah right could you imagine oh my gosh i mean well i like to daydream about that but yeah well let's jump this is you're alluding to that stock to flow model yeah plan

b stock to flow model i because i and i put a tweet out a few days ago um where i had a screen capture of a 2015 tweet where i was talking about how you can't price in the happening because of transactional demand and stock to flow you know so i mean i've been talking about stock to flow for years and then safedine you know adds a lot of academic rigor with his book you know probably the book i should have wrote but just too lazy to do it you know and safedine's better at it than me anyways so like i mean it's just a phenomenal book to kind of outline where we came from where we're probably going and why you know so okay we have good intellectual foundation and theory and stuff there we have theory and logic but man you plan b brings the data so if theory

logic and data 99.5 correlated and co-integrated the this bitcoin price uh scarcity uh model for pricing you're saying you saw someone speak who confirmed this data too yesterday correct well they yeah i mean they just replicated the they just replicated it he he is a serious econometrician that presented at this macro conference and he had he had uh you know replicated the the process that plan b went through so plan b hat hasn't fudged his math according to these guys and other people have replicated plan b's math on it too um so the math is good now the implications of that are really kind of scary because i mean but is it any scarier than like ten dollar bitcoin to thirteen hundred dollar bitcoin or from two hundred dollar bitcoin to twenty thousand dollar

bitcoin no not really i guess like i think it's it could just really blow people's hair back like i mean because you're calling the shot in such a precise way you know because i mean yeah i i had stock to flow and this stuff and i mean our previous our previous bear it hit around 200 you know and then we were at a similar time as now and it's 600 and i started making the interview circuit saying the next bull bitcoin bull run has started it's going to go to 3 000 bucks uh and the previous all-time high was 1300 you know go read the comments on some of those interviews like with jeff berwick and future money trends and some of the other shows that i went and did that with you know go find them on youtube like search trace mayor 3 000 bucks go read those

comments and then compare those comments with the comments that people are saying about like plan b stuff and you know a hundred thousand dollar bitcoin in this fourth bitcoin bull run well this next one that we're gonna have and yeah i mean it's just i understated it at three thousand bucks and why'd i understate it by six x seven x yeah Why did I understate it? I understated it because I didn't bring the type of rigor with the data that Plan B has brought. Well, that's why. What would you say to somebody who can make a harder digital currency with a better stock to flow than Bitcoin?

And this model is sort of backward looking and can be applied to it. doesn't work on other quote-unquote scares cryptocurrency well it doesn't work on the other altcoins and like i think i think that's where myself and safe adine we're right you know my seven network effect thesis you've got because mises mises says that you can't know anything new from mathematics you can only know stuff that you already know and so my seven network effect thesis like why people hire bitcoin safedine's book the bitcoin standard that provides the fundamental analysis and then we have historical pricing data that's taking into account billions of transactions by millions of individuals so it's teasing out knowledge from the marketplace which

is what prices do and helps us understand like very large scale action patterns of action you know because i do think we can get a lot of value from statistics and statistical probabilities and stuff like that but i don't think that we can draw the conclusion that really high stock to flow is the cause of agent like that's not all we're all we're able to see is that the this this stock the stock to flow is showing us there there is a relationship between price and stock to flow but we don't necessarily know why that is the the math just shows us that that is the case and it's not the case with necessarily every other asset you know it's not the case with litecoin it's not the case with dogecoin so yesterday was stellar they cut their supply

in half and then yeah i mean like you know so so it the stock to flow is not the causative agent necessarily i mean i'm not going to rule out that it isn't but just because there is the math shows us this it doesn't it doesn't divine for us what people's subjective value uh and comparative goods uh actions are revealing in that price data right but i but i do find it so insightful to show us what people in a large amount are are voting with their money so that's how i kind of find it helpful i agree i think i think the stock to flow works only if the seven network effects effects are in place that you're describing right you have to have the network effect around the network to push it into place almost well the the seven network effects help us understand

why people subjectively value bitcoin uh it i i think we have an error in our reasoning that that like the stock to flow is what's driving the bitcoin price or even the seven network effects are what's driving the stock to flow you know that i i don't know that we can necessarily make those conclusions but we can make the conclusion that based on billions of of price data points coming from millions of people and a lot of human action this is how people are valuing stuff you know it's like when you go to go to value real estate you don't know why people paid the price they paid for for the particular building but you just know that based on all the comparables like you can you can hone in on what a value is for a particular piece of real estate

you know like and we and we have real estate like appraisers and they and they have standards that they follow and and all that stuff now could somebody come in and value things completely differently yeah look at what mark zuckerberg did in his little neighborhood right like he bought up all five of the houses or whatever and and the last one he bought up he paid like 14 million dollars for like a 700 000 house because the people were holding out i saw him walking down the street oh yeah i'm gouging this motherfucker yeah exactly you know because of the elasticity of demand and and actually i like probably don't have time to get into it but i've been uh talking with plan b about how it's impossible to price in the transactional demand

component of bitcoin that is a result of the supply shock from the halvings and you know prices are set at the margins so when you have that supply shock it takes a few months for the market to readjust to the new equilibria of transactional supply of bitcoin and and i think that's part of what causes these large uh you know different cycles with bitcoin yeah and i think satoshi did it intentionally too yeah you better get some just in case it catches on yeah exactly right it boy is it caught it's the dog that caught the car isn't it so if it is the boy that caught the we'll end it on this if it is uh the dog that caught the car yeah the dog that cut the car it's like bit onto the bumper and car's going like a million miles an hour now if this is the case

what should we be focused on moving forward where our proof of keys obviously yeah i mean i think proof of keys just slices through so much of what people should be concerned about like a hot knife through butter you need to develop the human capital to claim your monetary sovereignty like that simple as that it's that simple and you know you need to be concerned about return of capital not necessarily return on capital right you want to make sure that you got the the asset you hold it it's a bearer asset right yeah i mean any assets you got dole food shares you know like the dole foods case where we have 36 million authorized and 48 million facially valid on brokerage statements like you think

you own something like you know this isn't just the gold price suppression scheme and its collapse isn't just a garden rate exchange rate adjustment this is the collapse of a worldwide monetary system and there's going to be a lot up for grabs all at once and so much of it's going to be what you actually have possession of and bitcoin it's easy to possess you know and you don't have to manage it very much so like figure out how to do that in a safe secure way and flex your muscles you know and and make sure that you've claimed your monetary sovereignty because the value that's in a Chicago apartment might evaporate pretty quick. Salt deduction, huge contingent liabilities and pension liabilities, raising property taxes, driving business out. We're in a time of a lot

of change and it's very, very perilous for holders of capital. And so figuring out how to hold your own private keys and claim your own monetary sovereignty and run your own full node i mean there might be tungsten in your gold bars you know china's flooding the market with fake gold and silver you know how much does it cost to run a gold full node way more than bitcoin quite a bit you know so being able to verify the quantity and the quality of the asset and take possession of it and then you know when when those costs are very low then the transactional costs of moving around that asset are much lower also you know you you make it you make it very difficult to run a gold full node it makes it so that the transaction costs of gold increase significantly

yeah and the tools at which you can make this happen exist today and they're only getting better by the day and there's more and more tools being on top uh being built on top of space layer as well yeah and and you know gold gold's a bunch of atoms but bitcoin that's software cold that's software code that is extensible and you can build on top of it with things like lightning network etc you know open dimes how cool are those frankly cool even things like kraken i would argue is yeah kraken uh open dimes uh you know lightning network chameon uh type applications state chains state change uh you know i one thing i think bitcoin's gonna kind of perhaps have a little bit of competition from will be mimble wimble you know because

Mimblewimble's scalable, private, and increased fungibility. And currently it would have to be a hard fork to get it implemented into Bitcoin. So that opens up the opportunity for a Mimblewimble-type solution. Because Bitcoin, we're going to have to figure out how to fix the fungibility issue. And then on top of that, like what is enough fungibility?

What is their absolute fungibility at the base layer? What if you can't audit the supply though? Yeah, that is one of the problems, right? Like Zcash or whatever, but Mimblewimble, right? So yeah, and you also have to make sure it's able to be secure because we don't have a formal proof that we need. So we kind of have to choose between fungibility and limited in amountness. uh in terms of the fundamental proofs so you know but but mimble wimble you know i think we

there that that that could be a potential challenge to bitcoin you know or or things like that but then we've got snore signatures tap root graph root uh a lot of you know lightning helps with privacy as well fungibility um yeah lightning but i mean look at litecoin they they They think they want to implement Mimble Wimble, right? But, like, it's got to be at the base layer. Like, it's not good if it's optional. Like, because guess what? New York DFS is going to require, like, deposits to come in not blinded, right?

Zcash has proven this. Yeah, exactly. So it's going to have to be in the base layer or you're not really going to have it. and even if it's in the base layer like the exchange might not be able to list it so then so then what happens we'll build atomic swaps into the clients that way you're running your own full node holding your own private keys and you're able to do atomic swaps with other cryptocurrencies you know which could help cut audit trails on bitcoins or whatever right yeah yeah i'm actually very optimistic about the fungibility and privacy issue moving forward i

I think Bitcoiners have proven to be very creative and resourceful up to this point. And I do think things like PDEP pay to endpoint, I know there's some drawbacks with having to be online. But if you're able to make every transaction a coin join and stuff like that, I think that will certainly help. It's certainly not perfect or anywhere near perfect right now. Trace, it's been an immense pleasure. It's been a long time coming. I really appreciate you taking an hour and 15 out of your day to sit down. I think the freaks are going to love this one

yeah well glad to be here glad to do it it's been a lot of fun where do you want to point us after this episode yeah there's Bitcoin Knowledge Podcast so www.bitcoin.kn and on Twitter Trace Mayer

kind of have fun there occasionally I enjoy watching you have fun there occasionally that's all we got for this week freaks peace and love