TFTC: A Bitcoin Podcast - Tales from the Crypt #22: Tom Garrambone Pt. II

Episode Date: April 12, 2018

In the second half of their conversation, Marty and Tom dive into leadership centralization, easy money, traditional financial markets, and the ongoing brain drain into crypto.

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like you could be smart and not have wisdom and it's like it like making decisions for like governance like takes wisdom and so it's like we had like the founding fathers of the u.s which i hate going into like this type of analogy but it's like what made it work was wisdom like george washington and benjamin franklin realizing that they needed to step back right and they're like Satoshi realizing he needs to step back that's why I'm saying it I think he did it for more than that reason but I think that was definitely part of it

but yeah like if you want something to be like decentralized if that's actual like the priority if you want this like ecosystem like you have to like bite your tongue and that's not a direct comment to him but it's just like a broader comment of like

how do you achieve that it's like you can't have people who have undue influence and like it's a central point of failure that a lot of people like when people always produce these models of like oh what protocol is most decentralized like they're always leaving that part out

it's like how like are there several people who are like the main part of this it's like that's always left out yeah the founder centralization and again going back to the multiple aspects of this space like technical, economic, and then psychological

which probably encapsulates everything to an extent it's probably a part of everything to an extent but again i missed that so putting together like the technical the economics and then the psychological is is like like more than anything i'm beginning to believe is that this is a psychological phenomenon yeah no it's is like this is like the area that i've been obsessed with so uh like behavioral finance right and so like I went through like a heavy poker phase where it's like it which is like kind of encapsulates that of like you know you need to understand the math of it but like human psychology is even more important and like I think the misconception about poker you're trying

to read people it's like no you're taking just like samples of like human behavior over these situations and you could extrapolate from that like people like no virtually no good poker player like tries reading reading people at the table like they like go off of instincts but it's more of like their mental model of like human psychology and like that more than anything um but yeah like the um yeah like it's there's so many complicated parts of making all this work that like one one or two people as being a core part of it in my mind is a massive like point of failure and like a prohibitor to it becoming successful i agree i think there are other reasons why i don't think ethereum will is a great store of value outside of that but that's one that's like maybe like

point number like nine on my list let's get into that you said that you were initially excited by ethereum burden got you excited in the idea but have since this is this is an unpopular or this is an opinion i haven't heard other people say but um i think it's true i think a lot of now this recent bitcoin success has been because of ethereum like i think a lot of ethereum has brought a lot of attention in the space and has been like a slow trickle of people into bitcoin so in a lot of ways bitcoiners have ethereum to thank for that so like ethereum so i think i i i like i really like ethereum i like the ethereum community i i what i don't like is the current market perception of what it is and i think it's very rational like what ethereum people are trying to

do is like fantastic and like you should be doing that and they're super ambitious and overall like very like good nice people what i don't like is like market rationality and then they're making like bad arguments and so like you hear bitcoin cash people doing this as well like we're like really the only times i've ever even i'm like i'm not vocal at all but like when we're all engaged and somebody would be, like, in, like, almost, like, Ashley-ish tone, it would be, like, your argument construction is terrible. Like, if you're leaning on ad hominem or, like, emotional arguments, then it's, like, you kind of can't engage with that.

And so, like, you're, like, bad. You're just, like, a bad – you're bad for everything. You're bad for this community. And so I think Ethereum has leaned on this, like, appeal to emotion and, like, proof of stake for, like, electricity. And I think Bitcoin Cash is leaning now on this, like, emotional appeal of, like, it's for everybody and cheap and whatever. And, like, there's a really good quote. I'm going to mess up who it was, but, like, I've used this a lot lately.

It's, like, tyranny is the deliberate removal of nuance. And, like, I think a lot of that's happening. Like, it's, like, you're a bad person if you're not recognizing this is an extremely complicated thing. and like that's kind of like honestly like that's kind of like will like get me to be more vocal and that's that's how it's happening right now yeah and that's and that's it's weird to see it's like the world we're living in where it's a lot of virtue signaling i think the the word you were looking for in that in that explanation was virtue signaling i don't know if you want to i but i tend to avoid to try i think i try to avoid overly used phrases because like it starts

building like connotation like virtue signal is now built a certain it's just me being weird but like virtue signal has built like a certain connotation of what it is so like when you say it people will shut down and be like if you're virtue signaling to somebody they'll just shut down and be like oh like you're using like a out of the pocket thing to like that's not like a vanilla like um comeback so like it's like i just try and avoid that avoid that smart probably smart um i should probably try to avoid that too actually don't say that too often but i couldn't think the virtue signaling is a perfect way of putting it yeah there's just too much connotation attributed to that yeah and the nuances and that's that's what baffles my mind about the

space right now is it's so nuanced and to sort of sort of try and like put things in these very concise boxes like this is the way it needs to be this is the way it needs to be like it just doesn't make any sense to me and there's especially if you can't like take the other side of the argument and almost make it better then like you don't have a right to like to debate the topic well this is well it's like it's like the straw man like straw man's also exactly so the it's just there's just so much of that happening right now and like i've like i like i've honestly just wanted to stay out of it but i think it's almost becoming detrimental to like all of like the whole ecosystem and like the future i got i kind of i

kind of believe in this like factor of like murphy's law where like anything that that can happen it can go wrong will happen so weak things will eventually shake out i'm just a little concerned that rationality can cause have like residual spillover that'll just bad negatively affects everything and so i don't know i go back and forth in my head of like i'm never going to become a medium posting person for a lot of reasons but it's like how public do you like do you want to be right and like most people that obviously respect are public but it's like we're like how do you remain in like a good spot um so i don't know that's the tangent no no and i i think that's something that you should think hard and long about because once you throw yourself into

the ether no pun intended it it's hard to get out of it and you don't want to get dragged and so i'm our my value to this space is a shit poster i'll say it i'm a shit poster and that's My value to the space. I think it's an artistic thing. I appreciate it, and I like to say I'm like a 5 out of 10 and getting better, but it's an artistic endeavor. I wouldn't wish it on anybody. Eh, I would. It's fun.

But going back to arguments that some of these projects lean on that aren't nuanced at all my favorite is proof of work is an energy waste we need to go to proof of stake to save the world and that's like a six hour conversation but that's the like so i'm not going to name names but there's some crypto vc funds out there that have been saying we're only going to invest in proof of stake protocols and proof of stake projects and projects working on top of proof of stake networks because we want to save the world and it's like that's the least nuanced bullshit argument i've ever heard in my life because if you actually dive into the electric electricity consumption uh case study of proof of work blockchains versus proof of stake

there's a good argument to be made that we could the proof of work could actually be a positive incentive to find cleaner energy and more efficient energy. Like, what's ultimately going to happen? I mean,

there are about like a bajillion different tangents we can take off this. Take us down the tangent you want to. What was I going to say? Get your face closer to the mic, please.

Am I, is this good? Yes. Eat the mic. Oh, man. What was I going to say? And you need to catch up with me on the wine.

I feel like a degen right now. No, like, what was i about to say we're getting into proof of work versus proof of stake electricity tangents one that you want to go down because we could spend six hours on this um i just start like something that i haven't um disclaimed is that like i believe in a lot of these projects i think just the perception of value is wrong so like i think like this multi token world like makes sense in a lot of ways i think we're many years away from that um i don't

think anything competes with bitcoin on being a store of value though and so like if that's what a maximalist is then i guess i'm that i think that we would have a very complicated like digital asset space though the so like so like i'm not labeled a that i think we're we are just a ways away from like this world working and i think bitcoin scaling in value and um like increasing scope is a really important part for everything's health so like people who are saying like or like have a like a scarcity approach like this needs to fail so we like are this project succeeds i think it's just extremely misguided and it's it's like it's bad for everybody so like there's something i never understand but like i do like there are a lot of things that'll make sense out

of this it's like what's kind of needed now for overall ecosystem health and for the world or if want to get all whatever like we need like bitcoin is extremely important to that and to to make like weird arguments about this does this better whatever they it doesn't compete on the store value front thank you like this is what i've been trying to get at is we need to establish the first use case and get it down pat before you move on to other things yeah i've been writing about this a lot and again it's a heuristic like if we're going to make all this work this new technology we have to make sure the first application works not perfectly but works and is usable in a way yeah that it's marketed as so i don't focus on the token stuff at all because i'm like

we need to figure out the money aspect of this first which is the first application yeah and then we move from there hasn't like quote unquote succeeded yet so exactly and like and people just i just in life in general just take a scarcity approach of like i need to rip this town to be it's like just leave it like it's bad for it for everybody like and this is a massive problem in the space right now but like i i like i do like i think ethereum is like really interesting like i think there are like a handful of really cool smart contract platforms like how that works in terms of value is unclear yet so like definity is like the new one is super cool um is like how do people interact with the value though it's like it could you just if you can like

hold bitcoin transfer into it or how like even whether it's through like exchange decentralized exchange atomic swap whatever why why would you set up like why do you need to hold any of these things it's like you if you're in the business of executing smart contracts or like in this dab ecosystem you kind of have to hold a certain percentage um again that's like working cap so that's not something like what i guess what's even better is like like what's useful for listeners to to go into is like what is store of value because i think that's probably lost on people and so store of value is just like what you are comfortable putting and just leaving away and that's like when you accrue more value than you are using day-to-day basis like that's like

your bank account and so like that's your savings account really that's put away for i'm not touching this right so you have your checkings and savings account checkings account is more like your working capital or that's something that you you hit every now and then savings account is an example of a store of value the best store of value that's ever existed is real estate though so like in this realm real estate savings accounts so that's a currency that's you're being confident that that country's current that country that runs the currency isn't implode do something really weird um they've like blue chip stocks like things that aren't you know aren't going to change a lot and it's like like a longer term horizon of being being comfortable

with it and so i think that concept is lost on a lot of people and let's get heady here do you think that's because of like the society we grew up in i would say this is like western society the last 40 to 50 years with fiat currency and this this push for conspicuous consumption and let's get to like the psychology of like we live i would people don't like when i say this but we live in a fucked up society that's driven by um well i think there's a happy medium the like you don't want to be like saving and then saving and and if you're like if the world is perpetually saving that's not a good thing you don't be hoarding forever yeah it's like like everybody's like i'll save for my kids if you take that model out to to the nth degree it's like well then what

happened it's like that's not a it's not an effective way this is why economies uh like central banks like like a certain amount of inflation it's like you want you don't want everybody to be saving everything because that's just not good for an economy the same time there it is good for the high velocity like this is the argument for like a basic basic fundamental income like putting hands into like lower income classes is high velocity like they'll take it and spend it like that is like a very good near-term way to boost an economy but if if everybody's spending it there that kind of collapses in on itself and so like there is a happy medium i don't think anybody's people so much smarter than me like her probably have a

better clue of what that is but yeah like we have a weird i think getting ahead of your little like we have a weird dichotomy of like the generate like the baby boomer generation above is obsessed with saving and our generation is not at all and so i don't know how like i don't know the full implications of what's going to happen with that but that's a really weird interesting thing that's happening yeah and it's and so the point i'm trying to make here is like is that uh a product of the monetary policy so cypher dean amuse is coming out with the bitcoin standard if you got your hands on a copy of that before before it uh went live this month or went live or it came up into the public this month he really in one part of the book he touches on like how

easy monetary policy has led to macro decisions that have trickled down to the micro economies that have lasting effects so one example being the production of of sub corn subsidies leading the the production of high fructose corn syrup leading to shittier food leading to higher heart disease leading to higher deaths uh you can even you can even get into to to this stuff like leading to opioid addiction and shit like that and it's like a vapid i think i think it's a variable i don't like like i was saying before it's like i think everything's more complicated than what everybody thinks yeah i think would maybe even be more part of it is um is just like we're like there's the common saying um like the first generation grows it the second generation

the first generation starts the second generation grows the third generation blows it and we kind of have like a third generation effect we're kind of hitting there's a lot of things happening at the same time um there's kind of that ish like we the the great generation of the united states was like our grandparents who were like they came out of world war one world war two world war two more likely they produced the baby boomers who like grew this fantastic economy and we're kind of now with what's left like and like what do we do from here like everybody has like this generations ahead of us that have done like really fantastic things and like the lost generation is like overused as a thing but it's like we definitely are um like nobody has any like

and this like this is now getting more broader abstract but it's like this is like that's why there's just so many weird causes that are people care so much about because like there's not a central motivation for anybody to do anything right now like everything's pretty good and so um like it like getting back into abstracting myself from this it's like this is part of like my overall like bitcoin thesis why i got interested 2012 2014 like in college at that time was a pretty good like foreshadow was like what was going to come and so like duke from that time period like changed a lot and like the like what's happening overall and like this is post lacrosse scandal this is years after like duke is like year after like every year there's a scandal

but like from when i came in as a freshman to when i left it was like a completely dramatic like cultural shift of like i mean like some of it very very good some of it really weird and so you could kind of see like this is kind of goes with like ray dalio's theory of like we're into this like long-term debt cycle um a good like a symptom and a flag of that is just societal like unrest and so it's like that's kind of what's happening now so there's just so many things happening but like we're kind of like hitting them all at the same time and like all of them probably have a part of this but it was like it's kind of kind of tying back into the original story it's like i you kind of see this if you're in college from like 2010 to 2000 so i was in college in

2011 2015 was like that's really when most like colleges started going through this weird shifty shit like um yeah weird shift no i was like some of it obviously very good um and just some of it not no i was at college at the same time and things things definitely got weird i mean i came from a jesuit high school where they were like question everything question everything yeah then i went on to college to study economics and luckily i went to school in chicago was able to work and like talk with people that are actually like in the industry about the the topics i was studying in economics and i found like they they were really really really trying to indoctrinate us with like keynesian as a mindset like basically like basing everything off of inflation really

focusing on stuff like the laugher curve and stuff like that and there really wasn't any any controversial thought within the economics program that i i went through i don't know maybe different for you but i know i i mine was more behavioral finance folks well i ended up picking classes that went there but i didn't i bet how how does this all tie to like bitcoin crypto right now um yeah it's i i think more so than anything it's the vc culture that that is like a large part of like this new wave so it's like new really dumb retail money who's just kind of like momentum trading like good latch on anything that happens in any market but i think this this like theory of like any inch thing that's interesting has value and like let's just it's just like the

keynesian beauty contest like the titans like it's not doing anything now but let's just throw all these features into it and it'll just attract a lot of like attention um so like that that's really that that kind of that works in really early stages of investing but doesn't like after a certain point because you're taking like really the sunk cost is getting bigger and bigger and bigger after a certain point it's just there needs to be a model towards like actual reality and so what happens with these types of tokens or anything that says we're going to do all of these things and so that's a really good way of attracting investors there's this natural they'll just naturally realize that they can't do some of them and so as soon as they can't do one of them

and they announce that you're isolating a group of investors that came in for that reason and so it's just a natural like leakage of people who find this valuable so also like all these assets who are trying to do all these things they won't at least be able to do some of them let's be real like won't be able to do most of them and so it's just like a not it's a a perfect recipe for like this natural like sell-off slash disaster and is that why you think ethereum is good for bitcoin because you think a lot of people that were called to ethereum because it's going to be the world's computer sort of realizing the inherent um uh limits that that ecosystem has and falling back onto the a priori like let's figure out money first and then move from there

type mentality that bitcoin has yeah i mean it's kind of you can kind of see that happening in real time um like i've seen a handful of developers who started with ethereum and are now a lot more interested in bitcoin and that's like not a process that happens vocally like like in like the bitcoin community is like generally pretty private and it's like i don't i'm not gonna write a medium post about this yeah so like that's happening in real time now and like i'm you're seeing like a wave of bitcoin developers and like getting obsessed about it and like they all like they'll have stories like i started in this area and it's like now i kind of see this and so like that's not going to be reported anywhere but that's definitely happening and so like yeah so

to answer that yes definitely it's going to be reported on tales from the crypt you heard it here first yeah no and like they're now like like growing infrastructure pieces of like getting these things funded now and so they're a lot more like you have the original like ogs that like that are helping fund a lot of things and then like the smart money who's still yet to come in is kind of realizing this as well and like i've talked to several people who are interested in just like how can they help with the bitcoin community so like where is their they're involved individually they're not as like their fund or family office or whatever yet like that's been actually the most surprising thing to me in the last few months is like smart money is actually smart

yeah yeah it's like um they're like i don't know if like like peter till and jack dorsey like like they've said this it's like that like that i mean maybe it was part of that that like leaked into that arena but a lot of people will say yeah i think bitcoin is interesting i'm not sure about everything else now that's kind of the general tone of like the quote-unquote smart money yeah deal said i'm not interested in any other blockchain it's just like there's just there like and if they are if they are interested they're they very well know that what they're doing is gambling yeah so like they know that they they wouldn't if they're doing it individually they'd be like ah like whatever um but as like a fund with like like real fiduciary duty and

you have to think things like and like there are a lot of conversations happening with like just Bitcoin core engineers to these guys to like the Bitcoin just people within Bitcoin that are happening that isn't like public posted about that's happening right now. Yeah and that's the way it should be. Shout out Jack. Shout out

Peter Thiel. Hopefully Miles Suter from Cash App I made a wrong reference on the last podcast. It's not Square Cash it's Cash App. Hopefully Miles at Wahoo Wah on Twitter W-A-H W-H-O

w-a-h hopefully he can get jack in the studio at some point in may really fingers crossed not gonna hold my breath i've been pressures on miles i bet you like to i doubt jack comes in here but if you want to jack hey barstool's a big fan of twitter we can talk to freaks i know you like miss cal i'll have the finest miss cal that new york city has to offer i hear what's done with yours i gotta catch up you do have to catch up um i'm sorry for that little tangent there but so let's bring this back to like you were just describing like it's smart money smart and finding the actual value in these things it takes time and that's that's the beauty what i also didn't talk about was store of value which is what i think like recent conversations

i've had and like analogies that i like to use about like store of value is that a store of value should be easy to understand and so like what what i've said is like there needs to be like really easy social consensus of like what it is so like bitcoin's only trying to do one thing right now exactly and so something so going back into like you know keynesian beauty contest whatever but like the properties of a good store of value have like social consensus of like of what it is and aren't like all those like real estate blue chip stocks like all that like you have confidence that what you're buying isn't going to completely change tomorrow and like you don't really have that with anything else like you can think like and like you may be right that

the technology is more interesting and superior but in terms of like what like what is value yeah like that's that's what markets revolve around a certainty and uncertainty and if you have that certainty that the protocol is not going to change you're not going to try and do a million things that increase its attack surface then you have a sounder investment thesis so i just had this revelation in the last 35 seconds 35 not 35 all right now it's at 15 seconds but it's about certainty and uncertainty that's what markets that's how like arbitrage works in markets is is playing like playing the r between certainty and uncertainty we're going to be honest like bitcoin is the only thing that's doing what it's like you could everything could shut down

today and like you just run software it's doing what it's supposed to be doing right now right and so there are like a lot of other cool things that could be happening but what it is already is completely useful so like i mean that's like it's like the but the the personality of the marketplace like being inherently speculators so like let's call one bucket i would say vc speculators the same thing right now but speculators who are just like riding waves and then vcs i think the vc is perpetually interested in the next new thing so bitcoin's way old news ethereum's almost old news at this point i want to drop a name right now but i really don't want to well i won't i won't i won't i'm not gonna do it bitcoin's boring bitcoin core's

vision is boring i mean i hear that all the time it's it's it's like that person's that probably doesn't have an economics background right it's what's funny is that and like i'm not trying to and this is like this is obviously sound like i'm but the like it's like it's funny just how this worked out is that like people who would say like bitcoin's like probably going to be the only like substantial store of value either have like deep engineering backgrounds or like they're like economics finance backgrounds and so where you have people in the middle of not in the middle people who fall into everything else are like entrepreneur type people like it's just it's a different personality and so it's like if you start deconstructing that it makes a whole lot

of sense it does it does and so like why i would say like bitcoin looks pretty fantastic now is because this next wave of like capital to come in institutional money are all like economic type finance people and this was saying is like that the reason why they could see that clear is because they have that framework and so it's all about having the correct framework of like how does this all work and so like me as like investor trader or whatever like i do i'll hold hold things with different like time horizons i'll think about holding for things different time horizons but like ultimately you need the correct framework of like what is like real to in order to do that correctly because if you have a bad framework and you take a short-term position

like that's when you get destroyed because that's like a your model is wrong then a variable that you hadn't accounted for is going to impact you in a way that you just could never never seen like that's they'll destroy you yeah you need that a priori framework and those a priori principles from which to move from and i would argue that a lot of the spray and pray type investors in this space don't have don't have that their a priori is the way you make money is you you allocate risk you disperse risk across across the that's what it's worked for like last 15 years it has worked but it's not going to work forever especially nothing and that's why like it can work forever in certain areas and certain arenas but not in this arena i don't think and especially

we're trying to change money and again i harp on this for a lot on this podcast but i would say even investing in fintech companies takes a specific expertise yeah um for like a vc and so like they're a great like it's they're just like and again i'm not saying this about i think they're like the top 5% of VCs are like killers and super smart, but just like vanilla VC is just like completely tracking what everything else is. And so it's, it's all like,

I got into this deal because this person or this person's in this deal. So I want to get in this deal. Yes. I saw a tweet about that today as well. Um, I think you may have seen it too, but it's, So it's going to be fascinating to watch this play out.

So let's talk timeline here. You're talking about time horizons. How long do you think it takes for the masses at large to sort of come to grips with Bitcoin and come to grips with what money is in general? So that's one thing I've been finding as I've been trying to educate people about this space is that people don't understand money at its core, let alone Bitcoin, and how that changes money and the money that we interact with today on a daily basis. so i think i've been saying it's gonna take a generation or two to completely

sort of wipe the slate clean of what money is i would say we've been engineered to believe it is something that it it shouldn't be we've just existed in a very specific period of time like me and you where like inflation really hasn't existed at all so that's just something in like our model of how the world works is has never been questioned so like the next the generation above us weirdly like understands like currency fragility because they've gone through periods of time like there was 15 inflation or more yeah um but i'd kind of push back on that that it's going to take long for like generations it's like i mean we grew up through it like the internet actually becoming a thing that's true which is crazy it's crazy to think about like cell phones

as well like i remember like like i remember seeing like my parents old like very very young seeing my my parents old like mobile cell phone um and like not being able to get like not you couldn't account for everybody having a cell phone no and so it's like how like you need to think about that or like that that was like not too long too long ago so i think like things have happened so weirdly like that i think people like in the like our like last 20 years or so that people are kind of used to changing behavior and we already deal with like digital cash to begin with um so like even just credit cards being now what mostly everybody like people like cash was so much more heavily used 10 years ago than today and so like that transition of like i'd

only use credit card and like some stores only accepting credit cards like that's like a fairly new phenomenon like like people would be shocked about that 10 years ago so like maybe it's like 10 years to do that but like it's fully it's fully possible that that happens in 10 years low-key your boy marty bentz never had a credit card in his life really never i don't want it i don't cash what do you do cash i can't really i can't be trusted with credit i can't i can't trust myself i i can't really wow that's shocking i can't i i mean my wife has a credit card i mean it's our credit card now i'd never use it but you may be the first person that has ever said that to me i i am afraid of credit i don't want to go on the debt that's a good mentality to have

to that extent like and does that make me stupid maybe i just don't want it i don't want it i don't want it i don't want that there's like i think people have it this is this is not advice to people but i think people do have like irrational fears of like weird things of like credit one of them and two like taxes so like people like people would be like taxes is like the weird one where like people would like i've talked to a lot of people like over the years people like oh how is this like how do i pay taxes on this like you pay taxes what do you mean it's like anything else it's like people aren't used to like and like having to actually track their own cost basis for us it's like a weird um like interaction like i've been telling that now it's like the

infrastructure is getting better but people like i just don't want to want to deal with the taxes of it so i'm not going to do this hey i know somebody that can help us out coin taxes.com slash crypt but i um like i there is a some irrationality and just how people don't want to interact with like friction of like a system taxes being one of them credit as well or and i do like some people have people think i'm weird because i've never had a credit card people some people are like overly hoarding on like savings and don't ever ever have any plans to do that like i'd also say that's irrational as well i'm not i'm not that irrational yeah where it's like what are you like what are you saving for specifically if you're like i'm people of

our generation 100 start saving when you get to like a certain level it's like you're sitting on just stupid amount of cash it's like like what what's what's the point like you're just planning on like like dying and then passing that off or what but so yeah like people like have money is just a weird thing for most people psychologically yeah and and it's something that hasn't been question and this is why this is all interesting it's something that hasn't been questioned and it's like fundamental root yet exactly and that's what i'm trying to get to i tend to try and stay away from this conversation because for like most if it's an introductionary conversation like let's dive into it for like if i'm talking to somebody who's interested in investing in the space it

becomes a political conversation very quickly and like i does i like to like stay away from that yeah um and i think there are other other better arguments to like to convince people um why has it become political in your view like i think a lot of people get hung up at it's like the like the fed will never allow this or like you need like a central authority like this is how it's always worked right it's not how it's always worked though in like like the last couple hundred years ish a hundred issues 1913 105 yeah um the but the like people tend like people don't like being lectured on like something that they've never questioned they've never questioned if they're coming to hear it's a different story but like if some if we're talking about like

investment thesis and i'm like let's just talk about money they're like we know how money money works but they don't they don't most people don't i like so that is whenever when anybody ever comes out to me which is happening more often than than i'd like now really and they're like not that i like i love talking about bitcoin but it's getting to the point where it's like damn i'm that bitcoin kid and yes i gotta talk about everybody about this but people come out to me be like why should i buy bitcoin like what is bitcoin why is it valuable and the first i don't to entertain those questions anymore well i'm still entertaining them and the way i entertaining them is starting out with a question and be like what is money yeah they're like what what is money

what are you talking about like u.s dollar what does the u.s dollar represent like oh yeah have you seen the john oliver episode with explaining blockchain yeah it was like it was like three weeks ago or so yeah he's like what is money man yeah that's my fear of sounding like that all the time but i mean yeah is it like sounding like that or is it or you like i do sound like like how i explain it in a more mackle level is but let me get to my point here so the point is my point is very specific type of person generally like and i like most of my friends know like we just don't talk about this oh yes my close friends like we agree to never bring it up like yeah we'll get too into it and it's never healthy at the end of the day but

i will entertain when like so my wife's like oh my god like marty's like a big bitcoin guy fuck you but um like so she'll tell her friends they'll come out to me and be like oh i hear you're into bitcoin i'm like all right i'll entertain this and well this is this is why it's my favorite first question because it makes people think right away yeah i'm like what is what is your dollar represent or like well it's nine times out of ten i shit you not i don't know if this is this is a commentary on the people i associate myself with but it's oh my god yeah it's backed by gold it's like no it's not like yeah i mean a crazy amount of people still still believe yeah which is which is like yeah right yeah most people believe that money is backed by

gold that i've encountered there's a recent uh um questionnaire that like that was like above 50 percent or like some crazy amount so yeah like statistically speaking i'm correct most people think that money is backed by gold yeah don't realize it's not yeah so that's my a priori is like all right you don't understand what the money you're using is try to figure that out and then we can like work from there what bitcoin is and it is a complete reversion to a sound money which most people expect that we're on but don't realize we're not yeah i mean it's so like the type of person that like i'll generally talk to first of all is generally like at least like knee deep in understanding the space because it's just too

difficult to like i don't have enough time to start with square one with people but um like the type of person that i'll generally talk about has like a pretty good understanding for has a good understanding for like macroeconomics and like understand that so so um like the best way to frame it for that type of person is more of like no like the u.s doesn't really need this at all like right now but the rest of the world does right and so this is like and i seem to love has like the hedge on tyranny type quote which which i think is a really good way of framing it that you know like you need this at like type of asset and like it's this assets value will always kind of it will always have inherent value as this hedge of like like bad governments can't

touch this yeah so that's a double-edged sword in a lot of ways because like good it'll mess up with some good governments but like in the total global economy it's a good it's a net good thing yeah it's it gives you it gives the leverage it gives you some form of leverage in a uh in a scenario where a despot government or something like that tries to to blow you out of the water or something like that you have this fallback where hey if i have to jump the country i can put millions of dollars in my brain with a brain wallet and jump the border and start a new life somewhere else if need be yeah and it's like okay i try to stay away from like ideological statements but it's something i believe to be true is that like we're probably gonna look back like 20 20

years from now it's like it was such an archaic system of having like governments having a monopoly over like like this kind of like money right i mean i would argue that people from the past would look to the future and say like what the fuck's going on here for like i mean many many things the yeah we're we're living in a weird time on in so many different levels but yeah the i and getting into how i think this like scales or like this this is kind of an unpopular opinion or something that i don't hear anybody talking about it's like i actually don't think the financial system changes a whole lot in terms of like how it looks like you have like clearing houses you have like institutional brand name and like i look to if you look up like

bullion banks this is kind of like what i think is going to evolve with bitcoin and like you can get into whether or not this is a good or bad thing but i think it's kind of inevitable um it's like you're going to have a like a like a system like a closed system where like you have counterparties that you trust it's a kyc or whatever and like you kind of like marked bitcoins that are like these i know where this came from wherever right and so like this is like how like institutions probably aren't gonna get comfortable like really dealing in this until that works but what's really powerful about bitcoin versus like having like us dollar or whatever structure is that you at the end of the day like kind of can go rogue and opt out of the

system it's just like you do that knowing that you can't go back into that situate that ecosystem so that's just that's powerful and it removes like a pretty huge moat and how like just how the financial infrastructure works and so it's like you're kind of locked in like hands tied behind your back with you just there's just no alternative like always having the ability to opt out is what's what's really powerful yeah the uh the opportunity to exit as naval would say yeah which is which is interesting and again going back to the weird times that we live in i've harped on this a lot in this podcast podcast podcast on this podcast i need to catch up is that uh one thing i harp on is that we were born at an inflection point me and you in particular

at our age um that the world is sort of getting like so turned on its head there's so many paradigm shifts going on at once where like whether you're talking about the freedom of information with the internet the freedom of money now with bitcoin uh the freedom of of flight with modern technology and transportation technology like we're we're hitting this inflection point where so many different areas are sort of colliding with each other that it's fucking with with the way we perceive the world number one number two the pace of change is such that like at a biological chemistry level like we as a species are having a hard time sort of adapting to it like we are the most adaptable adaptable species on earth there's no doubt about it

but i would argue that the pace of change in recent decades is becoming so that there's so much confusion out there that it's hard for everybody to find their bearings and yeah and that is why i've sort of clung to clung to bitcoin is because that is something like you said earlier we were harping on earlier if it does what it purports to do is to be a censorship resistant peer-to-peer distributed store of value and that helps us sort of anchor into a a stable thing that we can sort of rely on and then make decisions from there and sort of help figure out the confusion of being born in this inflection point and being caught up in this this pace of change um yeah if you want to get heady let's get heady let's get heady yeah so yeah it's i mean

Yeah, I mean going to your point of like all this is so difficult to wrap your head around, like I've said a lot of unpopular opinions. I'll go with another one now. Like a lot of people think this is like net great for like the lower class, right? It's like this makes everybody wealthy, which it does. I think any efficiency improvement kind of – it's a rising tide, lifts all shifts. But I think what ultimately comes out of this is probably like a massive, even larger wealth gap, right? If you're purely pricing – if this creates a more meritocratic system, like a more fluid economy, the value is going to float to what's more meritocratic.

And it's like prices are – it's like prices are – Jordan Peterson talks about this a lot. It's like an extreme minority of any system produces all the value. And it's like it is like an exponential where it's like in one in 10 does like two in 100 and like continues. So it's like as the system gets larger, the percentage of the system that actually creates the most value is like a smaller. So I think that's I think that's an inevitable outcome. And I would I don't even say it's inevitable. I would say it's already here. You have things like Instagram.

It was four people sold for four billion dollars or something like that. What's that same thing? And on the tech side, that's that's become painfully obvious, especially with software where to bootstrap a system, you just need to know how to write code. And if you can write the best code that offers the most utility to the most people, you're going to you're going to take a lot of that value immediately. Yeah. And like the question of like, is this good or bad is kind of irrelevant because it's going to it's going to happen. It's like, what is the best for the system? so like it's people who make a lot of ideological claims on blockchain i don't think have thought through most things like in a lot of ways all this stuff is inevitable and it's really great

in a lot of ways there are negative implications of everything and so like what's bad like wealth gap is like natural and then it becomes bad for a system at some point yeah because it's like happiness is a very relative framework and so like the least happy places in the world are always the ones that are closest to the wealthy like that are relatively poorest to another place that's very close by um so i don't know we'll see how all this this shakes out but it's like that's something that's like back in my mind it's like that's kind of an inevitable out like all these things like i wouldn't say what i'm doing like i don't make any decisions on like oh like this is like i think people are like i'm doing this to save the world in a lot of ways like i'm

personally like i think that's a great thing i like i do believe like all this stuff is fantastic but i think personally people are more motivated by negative emotions and i'm just like i feel like that i feel pain when i'm not just doing this stuff it's more of like a masochistic obsession so like my view is like all this stuff's inevitable and like we're kind of riding the wave yeah but like a lot of people make ideological claims i don't think i've thought through a lot of this stuff yeah no and that's that's the one thing that i tarp on i've got a couple of ethereum developer friends and they're like they're the kumbaya like we're gonna we're gonna bring the third world up and save the world and the one thing i tell them is like if you've

realized like if this shit becomes successful it means something has gone terribly wrong in our traditional world like this is a hedge against things going to shit and if this stuff becomes successful it's because our traditional world has gone to shit an extent i think i i so i don't think bitcoin for bitcoin to succeed it needs like the federal bank to collapse which i think uh i would say close to maybe half to maybe more of half of like hardcore hardcore bitcoiners i kind of think that i think i don't think it needs to collapse but i think i don't think it needs i would i would not i would i'll put this out there i'd be somewhat okay if we if we got our fiat currency system on a somewhat stable ground and just rode that out into perpetuity but i acknowledge

it's probably not going to happen i think i think there's going to be the same thing with like a ethereum say like i can say the same thing with theorem and through a different lens there's just going to be a transition with the legacy infrastructure into this stuff yeah so like like i think central banks are going to incorporate um like some crypto and whatever they're doing in a way that'll work and so like i i don't like this view of like a total like burn the world down and this will rise i think is a bad mentality number one to have but i also just don't think it's true and it's gonna happen like i think it burning down would probably lead to it happening but i don't think it's the optimal outcome i don't either but i think

i don't want to get morbid here but i think that's most likely outcome things are like look let's look at the world right now we got donald trump as president listen i called donald trump being president two years out we talked about i did yeah i did not vote for him i don't vote i've never voted i never will vote what go out and vote no i'll never like we've discussed this before i'm not gonna vote but i called donald trump two years out my sister-in-law hated it hated me for it like thinking i'm a trump supporter i'm not a trump supporter i just like was able to see the writing on the wall and then you look at so this is one thing i thought So I had a similar story with – it was actually the – my boss who helped see the fund.

It was just like he – it was widely known that like about a year and a half out that it was like Trump is going to win. And so he came. He was like, I hear you're like a big Trump supporter. I was like saying somebody is going to win and being a supporter are two completely different things. Right. I was like let me explain why he's going to win. um and so he brought that up like like a little while ago but um yeah i thought it's like going back to like i think if you went through college a certain time period you could see i think

colleges and you like the american universities are a good a good like gauge yeah well they like lead rest of like a lot of people have made this comes isn't the novel statement that like it leads like rest of society by like five years or so and so you're kind of seeing the same thing that happened like that i saw it happen at duke that happened now and it's like it's i don't see like like it was like an inevitable thing so i it was so obvious like if you're like mapping out taking like a poker type approach of like okay like these are like a bracket type approach like this is what needs to happen like people were just i don't think people people just had this view of like trump is this crazy character never gonna win if you actually looked at okay

these are the scenarios that could play out it was just so obvious that he was at least being massively underpriced right yeah and and it surprised a lot of people but if you look back like it wasn't surprising like and that goes back to the point i was trying to make originally which She's like, the world goes to shit. Bitcoin becoming successful means the world goes to shit. Trump got elected because the world, for a lot of people, went to shit. And people saw him as- Every action has an equal and opposite reaction.

And so, yeah, that's kind of what- The pendulum swings, and it swings more dramatically. I mean, I'm pretty unplugged from politics now. there's just not enough time in the day but yeah i mean it's i don't have an answer for how like what's gonna happen no and i'm not saying i have an answer or anything but i'm saying like looking at these trends and i think you would agree with this like things are headed a certain way where like this week last week china now off china china china china is now offering um oil futures contracts based on yuan that's that ruffles feathers now we got a trade war

that just came out today i did pay attention to politics on my tweet deck today a little bit because their trump just came out with some tariffs against china i don't know if it was a reaction to this oil futures contract uh emergence i don't think anybody knows what what anything he's saying is all about what do you mean so do we say he tweeted something out he didn't tweet anything no he he wrote like a piece of legislation that said hey we're going to start um we're going to start putting tariffs on these certain goods coming from china so it was like i don't know if it was a reaction to the oils contracts or what it was but regardless it is a a friction between relations of relations between china and the u.s with that

going on top of that you look at the middle east you'll get syria right now it's still shit afghanistan still still reeling from the war iraq same situation then you have saudi arabia and iran start getting after and getting after each other recently um actually it might not be those two countries so i'm not going to speak on that but things are flaring up i would say to an extent i'm not trying to fear monger here i'm not going alex jones on all you i'm trying to be pragmatic though it's just like this is like i'm not saying anything new because is like ray dalio's like overall thesis which i kind of bought into like i'd say like 2013 2014 like it's just dead cycles and so like it could have popped a lot like everybody wants to look

at like a micro situation of like this happening because of that it's generally like weird things happen because of broader macro influences and so like we're kind of hitting this long-term cycle like globally potentially and like haven't really but we haven't seen like globally as like a convergence of like cycles before like and hit throughout history we've had that's i think that's the underlying theme i was trying to get at is the convergence of these cycles hitting at the same time like anytime there's been like it's a financial turmoil like in any part of the world there's there's been a place that has has been able to like grow everybody out of it like china was like a big part of that and so like the financial crisis right now um like like emerging

markets as a whole like really where is there an emerging market right now so i mean like it's like what what can change like because everything is just so locked tied together and integrated and like these cycles are like converging like everywhere so it's yeah i mean this is kind of part of the reason why i got out of equity and like i've been bearish for like three years in macro and that hasn't been a great bet to make um so yeah last two weeks it has but um yeah you mean you can't is betting against things is a foolish foolish endeavor yeah canes was right about anything it was the markets can stay illogical far longer than you can stay solvent let's not end this on a depressing note though let's talk about what excites you most in

this space um what what are you most excited about right now what am i most excited about and i can go a lot of directions with this the i think this what i'm most excited about like as a hole for crypto is the amount of talent that's coming in um and that just not leaving so it's really captivated a lot of people's imagination and attention and like we've had like this bubble happened whatever but a massive inflate of talent has come in and it's not leaving it's so that's like what's going to come out of that like i think what an overused buzz uh word meme has been like bubbles are good and whatever but it's like what has actually come out of this late this latest bubble has been like we have this massive inflow of new talent and like they're

not leaving everybody's obsessed about this stuff like this is all gonna go and like it can go in a million different directions yeah so yeah the i mean i'm a person who loves debate and loves engaging like this is kind of what i gave was my perspective of things now it's it's it's a good change like like there's always the percentage chance of things changing in a dramatic way and so like i'm like both of you and me are like plugged into like the crypto news cycle like obsessively it's more of like it's a masochistic endeavor it really is but so yeah it's like you just can't take your eyes off it because like it's everything's happening so fast and it's like like so we like really got started like last it's been a year

which is crazy it feels like like 45 right now right yeah um does your fun have 12 months of performance on earth belt right we start in september okay so yeah september feels like a very very long time away um but yeah it's like you just can't you can't take like i don't have any plans of like taking vacation like i haven't and like it was like i've moved like when i left like i last time i took vacation like really like plugged out was like in 20 16 15 16 and so like i'm like i'm fully energized like it's just like there's so many things happening that it's like you can't take your eyes off of it yeah i mean it's enthralling and i think what makes it so enthralling is is the possibility that we're changing the world

to an extent that that will be written about in history like hey we were born at this inflection point we're born at the emergence of this technology and the fact that we're here now and able to contribute i think that's what draws most people in like you're saying most people are not leaving because it's like holy shit if we get this right we're going to change the world and we're going to change the way humans think we're going to change the way humans interact with money we're going to change the way they interact with each other and how they view trust and how they you money and how it's how it's uh held who who has custody of it and these are very fundamental human interactions that are that are being changed in real time i would say and yeah i i don't like

we were saying i agree with all that i i don't have a lot of time to like step away and like appreciate all but it's all so crazy what's happening it's like um like the reason why i don't is like going back to like everything's masochistic is like i know i'm when i'm making the right decisions when i just don't feel like anything about it and so it's like i'm like jumping back and forth for like this is like the right decision like we're like i'm like appropriately positioned for this but like i like yeah like when you do step back it's this is all like crazy stuff this is all like mad science and and we're here for it all and you freaks are too and i hope you're enjoying this journey i don't know if i'm i'm spewing stupid things into your

ears i love how it gradually this is with the it correlates to the one it's gradually trended towards just heady stuff heady stuff yeah that's what we start out technical and we get heady as hell dude like the world's fucking weird we talked about bitcoin versus bitcoin what did we talk about like head-on like good head-on first we talked about your journey from discovering bitcoin to a head fund manager then we jumped into bitcoin cash versus bitcoin and the store value versus medium of exchange debate and then we jumped into we talked about like inflation hyperinflation inflation hyperinflation got a lot of economic uh uh lessons on the podcast right i'd love for more economists to get involved in crypto and did not be creating stable coins all right fuck you

we could go down like a two-hour stable coin discussion stable coins are stupid all right they're susceptible to black swans they're only stable until they're not well this is what i'll they're only stable until they're not and that's all you have to say this stable coin as a store of value doesn't make sense like there is a total going there's a total addressable market for stable coins and like tether has kind of proved that so like what is that is the question but tether is only stable until it's not but so like you don't need to be concerned if you're just using a stable coin for specific purposes you don't need like you could have confidence for staying stable for so long right so it's like i like i wouldn't recommend using a stable coin

as a store of value because like they're ultimately like what finance has proven time and time again is anything that is a complicated instrument is going to blow up in a completely dramatic way yeah and so like it is not a it's not a good store of value but there is a total addressable market for like that at like a open system stable coin is what we're talking about closed system stable coins make sense almost all the time for specific purposes we can get into that if we want to but next episode the stable coin like an open system stable coin is is like its total addressable market is like gambling on crypto so like take going on margin like you need something stable to peg to kind of um and settle into and then potentially people who just can't

like right now until bitcoin becomes stable like people who who just are can't get banked yeah like like i would say because i'm not recommending this but like people who've raised like icos um like with ethereum ethereum is far too volatile to make any to do any business planning like and i so we can get into like why somebody has been doing that but like if you want clarity into like you just raised money with ethereum you should for for you projecting out your business you need a stable capital base and so if they can't find a bank which is a whole other problem then like that could be the best thing that they could do like bitcoin's a little too volatile for that now like i i think like the best way to bitcoin is a investment into emerging

market real estate and so it is mostly speculation but there is the stable value to be had eventually emerging internet market real estate you're in heady here as we end this podcast freaks thank you for joining us tonight tom did not drink nearly as much wine as i did i'm gonna chug right now you don't chug i'm not i'm not an advocate of binge drinking tom we do not advocate binge drinking on this podcast i'm finishing it before i just have a degenerate level of tolerance and maybe a problem i might have a problem this podcast might be enabling my problem this problem's good because it leads us to heady conversations but tom where can we find out more about you don't all right we're not going to find out more about tom thank you guys for joining us

this week uh peace and love cheers two hours