The Breakdown - Crypto and the Global Competition for Talent, With CityCoins Contributor Patrick Stanley

Episode Date: February 5, 2022

This episode is sponsored by Nexo, Arculus and FTX US.   Patrick Stanley is the former Head of Growth at Stacks, the founder at Freehold and a contributor at CityCoins. In this conversation, he and NLW discuss one of the biggest trends for the coming decade – the geopolitical competition for talent and resources and how crypto is shaping that battle.    Find our guest on Twitter @PatrickWStanley   - Nexo is a powerful, all-in-one crypto platform where you can securely store your crypto. Invest, borrow, exchange and earn up to 18% APR on Bitcoin and 20+ other top coins. Insured for $375M. Audited in real-time by Armanino. Rated excellent on Trustpilot. Get started today at nexo.io. - Arculus™ is the next-gen cold storage wallet for your crypto. The sleek, metal Arculus Key™ Card authenticates with the Arculus Wallet™ App, providing a simpler, safer, and more secure solution to store, send, receive, buy, and swap your crypto. Buy now at getarculus.com. - FTX US is the safe, regulated way to buy bitcoin, ETH, SOL and other digital assets. Trade crypto with up to 85% lower fees than top competitors and trade ETH and SOL NFTs with no gas fees and subsidized gas on withdrawals. Sign up at FTX.US today. - Enjoying this content?   SUBSCRIBE to the Podcast Apple:  https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M=   Join the discussion: https://discord.gg/VrKRrfKCz8   Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW   _ “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell, research by Scott Hill and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Time” by OBOY. Image credit: Danny Lehman/The Image Bank/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.

When I first saw Bitcoin, I was like, great, the meme is don't mess with our money. Otherwise, we have this release valve that essentially breaks your MMT model. And that's pretty dope. And we shall love that. And we shall all try to get as much Bitcoin as possible and never sell. The Citicoins is very different. It's like, now that we've done that, let's build crypto civilization as opposed to just crypto-anarchy.

Welcome back to the breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexo.io, Arculus, and FTX, and produced and distributed by CoinDesk. What's going on, guys? It is Friday, February 4th, and today I am joined by my guest Patrick Stanley. Before we get to that, however, if you are enjoying the breakdown,

please go subscribe, rate review, and join the Discord. You can find a link to the Breakers Discord in the show notes, or you can go to bit.ly. Breakdown Pod. Now, Patrick Stanley is a super interesting dude, as you'll find out. He's the former head of growth at Stacks, formerly Blockstack. He's a founder at Freehold, and he's one of the core contributors to Citiccoins, which is going to be a big part of the conversation today. In that conversation, we talk about stacks and how it doubled down on Bitcoin. We talk about city coins in geographic competition for talent. And finally, we zoom out and talk a little bit about what the next

few years might hold as it relates to Bitcoin, the dollar, and more. Without any further ado, let's dive in. All right, Patrick, welcome to the breakdown. How are you, sir? Good. How are you? Good. I'm super excited for this. You know, we were just talking about this, but, you know, we kind of had this back and forth, you know, wanted to do this for a while. And this week, there was a, you know, a random news story that caused us to reconnect and talk a little bit around Citiccoins. And I thought to hell with it. Let's do the conversation now. Let's talk about all sorts of different things going on and the geographic competition for talent and what it means for crypto and all that. And we can cover some of the news too. But let's start, I guess, with your story a little bit. We met when you were

working on stacks, which I guess it was probably an earlier name at that point. But give a little bit of background in crypto and talk a little bit, I guess, about kind of the work that you were doing with stacks. Yeah, so very briefly, stacks used to be called block stack before it was sort of smart contracts in Bitcoin. It was decentralized naming on Bitcoin with a user-owned encrypted storage. So, you know, they're more focused on the data layer and the sort of naming layer than they were the smart contract sort of aspect of a building on Bitcoin. So right now, you know, Stacks can do those things, but Stacks powers smart contracts in Bitcoin. Our view is that, you know, Bitcoin is the category winner, crypto. The contrarian, the obvious thing to do is actually just build on it.

And so I was the head of growth at Stax. And I joined when it was like a, $500,000 seed company called PlotSack with Mnibnib and Rhine. And then fast forwarded to today. It's roughly like $2 to $3 billion protocol. And I spent out to start my own entity and recently been very involved in the CitiCoin's project. That's my like abbreviated background. And I've been in startups for over a decade now and been through that. So that's like my background.

It's like startup finance kind of stuff. Awesome. So I do want to get into the newer stuff in CitiCoyans. But first, I guess just for, you know, I think that the way that you phrased it, you know, kind of contrarian, but also almost obvious in a way, just building on Bitcoin. Let's talk about that sort of, it's not really a transition, but just sort of maturation of what Stacks was trying to do. Were you around as kind of part of those conversations?

How did that happen to just really kind of double down on Bitcoin and make that kind of big play? You know, what was that process like? Yeah, it was interesting. So, like, there's this really good blog post by Nick Grossman from Union Square Ventures. they're an investor in stacks. I think it's called like open finance, then open data or something like that. And essentially gives like a timeline of like how people are going to adopt their private

keys and adopt crypto. And basically his argument was like data is not really high on people's totem pole. Like in reality, like preferred preference versus revealed preference. The revealed preferences, people really don't care that much yet about securing their data and owning their data if there's any bit of friction. And the reality is until people can actually manage their private keys in a way that's like easy and frictionless and there's a high incentive to use those private keys over and over again, the data side is like kind of like a little bit further into the future than we'd like to think. Like for example, you're not logging into Facebook with your crypto keys, right? But you would want to go through the friction of holding your private keys to hold your wealth because your wealth is really high in your totem pole.

And so things like defy, things like just like essentially holding your digital assets, whether NFTs or coins or whatever, is high on people's totem poles. And essentially like, you know, Meneve and the gang, you know, like saw this vision and they agreed, but this is like a direction we should go into. And, you know, Stux 2.0 was activated only, only like a year ago, which is like pretty insane. And Stax has just seen like a pretty good year of growth in this past year. because of that. Part of the reason that they've seen a lot of growth is, yes, we activated smart contracts in Bitcoin, but also stacks now yields Bitcoin natively. So if you hold stacks and you

temporarily lock them in this function called stacking, you earn Bitcoin yield. And the reason that that is the case is because you now mine stacks with Bitcoin. You send Bitcoin into a mining contract to compete to see who gets to earn stacks and also write the next block. that's like a fundamental breakthrough. Essentially, like, that kind of used Bitcoin as this, like, high torque gear that, like, no other gears are really, like, plugging into as far as we can see meaningfully. And so what we did was be, like, plugged into that gear, and it turns the stacks gear, essentially, for lack of a better phrasing.

What has been your perception of the Bitcoin communities or other crypto communities receptivity to using Bitcoin in this way? Because, you know, I think for some folks, it feels completely obvious. and like a thing that's going to happen a lot. For others, there's been consternation. Anytime you introduce any token other than Bitcoin, there's some controversy. But, you know, is it been more or less what you would have expected? Has it been more receptive, less receptive?

More receptive. More receptive. Because I think there are a lot of optimists. And there's a lot of like, there's a lot of Bitcoin centrists out there, like a lot. And these people are pro-Bitcoin in the sense that they want to have more Bitcoin than you. They want to get as much Bitcoin as they possibly can. But they also, they also sort of like understand that you can build on it in this way. And it's a very reasonable way to build.

I think, I think generally speaking, like, well, the fact is, Stax doesn't change Bitcoin. It doesn't do anything to change Bitcoin. It doesn't try to change Bitcoin. It acknowledges as like, it's like Stax acknowledges Bitcoin as the king. It's like, yeah, kneel to the king. That's the king. We're not going to change it. we're going to build on it. We're going to anchor into it. And we're going to benefit from being built

on it. Bitcoin's open source. Like anyone can build on to it. And I think like that's really the essence of this whole movement. Like if you if you look back and look at like Satoshi's writings, Satoshi was contributing ideas to name coin. Satoshi was like close friends with Zucco. You know, like maximalism I think is honestly like I like the fact that it exists in a sense because like if they have like their small blast zone where like, you know, they keep Bitcoin from changing to some degree, and that's like a helpful thing. But there's a pretty thick layer of maximus that have just replaced religion for this. And that's like, you know, they have a religion size whole and they want to replace that. And that's fine too. But generally speaking, if you learn

lessons from history, you can safely ignore people that are unreceptive and you can just focus on building. There's literally nothing stopping you from building. So that's what we're doing. I think this description of actually there being multiple layers where you have this smaller blast radius that actually does insulate the protocol in a valuable way, but then there's another layer of centrist that, I mean, even the way that you just described yourself, can appreciate the need for that, but also are kind of unwilling to be, you know,

entirely constrained by it is a pretty good description of certainly what I've observed well as well around the Bitcoin protocol. Okay, so let's take it into, so you are ready to move on from stacks and just think about other things. So one, what were you excited to go think about and kind of focus on in the space. And then two, this was right as the pandemic began. And so what did you start to observe that, I mean, I guess kind of informed or shaped some of what you're working on. And of course, I'm kind of teasing out where we'll get to with city. Yeah, of course.

Let's do that that middle period, I guess. Yeah, well, it's hard to not recognize that 2020 is like kind of the year that the internet started in a way. Like, we all went remote. We're all on Zooms all day. We're not in offices together. And there's a few sort of a few also obvious sort of second order effects from the pandemic. One is people could start choosing where they live. If you want to live in Montana with good Wi-Fi, you can move to Montana. If you want to live in Miami, you can live in Miami. If you're fed up with one city for not taking care of like crime or homelessness and being too ideological in the wrong direction, you can vote with your feet. And it was the perfect excuse to do that. And I think the reality is, you know,

pandemic also accelerated a lot of other things like money printing, you know, creating more, more, you know, more debt, essentially for the federal government. And these are all things that were supposed to happen like, you know, five, 10 years from now. But it's just like, we just press fast forward on like a whole decade, essentially. And so I think what the dynamics that that started to emerge where you started seeing these mayors from these different cities, specifically Suarez first. I think he was like he broke the mold. Not everyone's going to have Suarez's personality, of course, but people are going to have to copy his playbook now for sure. Because what he was doing was he was acting like as a CEO of a city and he was recruiting talent

and capital making out group arguments instead of making in-group arguments just to his citizens. He's trying to recruit, he's speaking on Twitter, constantly trying to pull new talent and capital and because there is a true competition between municipalities now to attract citizens and to attract talent and capital. That game began in 2020. And still, there are some mayors that don't understand that they need to be doing this, but many are starting to wise up. And so that got my wheels turning.

And I've been thinking about Bitcoin and its effect on nation states. I've been thinking about cities and how cities are like immortal beings. Like cities, nations change, but cities remain. Like cities don't change very often. and how cities are going to be more important this decade. So these are all things, thoughts that are like swirling in my head in 2020, beginning of the pandemic.

You know, I was on a, I was on like a Twitter, spaces call and we were actually just talking about how Stax's mind, who are like, oh, this proof of transfer mechanism is cool because you could, you know,

when you forward in Bitcoin, uh, to earn stacks, that Bitcoin gets forwarded in like a pro route away directly to, uh, stacks holders. But the question was like, you know,

what if you had like a little dev fund? like 30% went to a dev fund and I was on that call. I was like, what if that dev phone was just a government? And then I started thinking, oh, you don't even need permission to do this. You could just do this. And that dev fund, the government fund would presumably grow so large that the game theory is such that any given government would have no choice but to claim it. It'd be like a fiduciarian moral duty to do so.

So this is one of the more permissionless aspects of crypto that hasn't been done before, which is like create a city coin that's a. associated to a city and has a direct market function that the city is now attached to it all times. So like the market can, and the market essentially is like a voting booth now for cities. And you can, you know, you can build, you can build on Citigoin just like you can build on Ethereum. And it kind of like blossomed into this new thing where we think protocols are going to fuse with cities and, you know, having an open source protocol as a city is going to be a huge advantage to mayors that want to compete like Mayor Suarez or Eric Adams in New York.

Okay, this is super fascinating. What was the process of moving from idea to implementation with Citicoin? Who got involved? How long did it take? What was that like? Yes, interestingly, this has been a community process from day one. You know, there are no ICOs or pre-mines with Citiccoins. They're activated more closely to how Bitcoin was sort of activated than anything else.

in that it's a mining only activation. There's no primary issuer. The protocol generates the funds. And it takes 20 wallets to sign a transaction that signals that they would like to essentially begin the protocol. So you can push the code, 20 wallet sign. Then a day later, mining actually begins for everyone. So mining has not begun until that day passes 150 Bitcoin blocks.

And there were people from all over the world that contributed code to push this out. There's like folks from like Poland, folks from like, you know, United States, et cetera. And, you know, essentially the, I think people thought we were crazy, including, you know, the mayor of Miami's legal team. Like I heard this only after the fact. Suarez was like, we all thought you were crazy. We thought like if this thing made $2 million to the city, that would be a huge win. Fast forward to like December of 2021, there is $30 million in Miami's.

wallet and we're kind of just getting started. Yeah, it was crazy. It's been like total community thing and there's no investment for any VC firms. It was just like a community kind of like taking an idea and like starting to mind the idea, you know. So right now the like the website lists New York City and Austin as also focused or as also kind of live and active, but they're not built. Those aren't tied to the government. of those cities yet. Is that correct? So Austin hasn't been activated yet, although, you know, what I'm hearing is, you know, the city of Austin really wants this and they're going to, they're going to start to take

steps toward it. The city of New York has their coin activated and it's like doing really well. Like specific departments in the city are essentially in the process of learning how to accept their funds. So that's like a, that's like an in process sort of thing. But the interesting thing, too, is like back in the fall, we is, like, our community, our community is like tens of thousands of people. It might be almost 100,000 people at this point. And, you know, they were like, they're like, who should we decide is the next city? And, you know, the vote is Austin.

We want Austin next, like after New York. Because the New York mayor was like, I want my coin. He was very public about it. So the community activated it. What we're learning now is that we have way less control than we thought we did in terms of whether a city can activate their own coin. And, uh, or at least we, uh, let that assumption that we go and decide and like, you know, vote on which city is next, uh, is starting to like dissipate, essentially. And what I mean by that is, um, you know, recently we've seen, uh,

we've seen cities from all over the country and all over the world that have, uh, been like, you know, their mayors are like tweeting, like, we want a city coin. And the reality is, this is all open source, they can see the code. Literally all they need is like a stacks address. And someone in the community, whether they're pseudonymous or whether they're known, would just simply push the code, just like anyone else could. This week, Philadelphia, their CIO, went on Twitter, said, Philly is greenlit for a Citigoin. And I was like, whoa, snap. Like, that's cool. Like, I mean, I didn't talk to the mayor. Like, I didn't talk to the mayor. Like, I didn't talk to anyone, but like a major U.S. city is asking for this. So I think that's kind of,

That's kind of interesting because we literally couldn't stop Philly from activating their corner if they wanted to just as much as they couldn't stop us if we wanted to. But they would have to accept the funds. They could stop us. But we couldn't stop them. I think that's kind of neat. It's like I'd have our control. It's interesting to how quickly that has happened.

When did you guys go live with even just the concept? Was it summer of last year? Was it late spring or was it fall? Time has lost all meaning, obviously. but what is time um so april last year i think i think i tweeted like oh i think i've squared this and i linked some like code that's like looking back and i'm like wow that code is like not pruned it's like yeah not the kind of code i'd want to represent today i said like i think i squared this uh the concept of a city coin is something that um is really inspiring and i kind of want to

i kind of want to contribute to this idea you know uh so that april is like when we uh I believe when we first started like talking about it. And I think my personal concern was like, you want to, you want to activate. You want the highest chance of success. And like, who knows how long that bull market was going to last for. So like there was like a mad dash like to get Miami their coin as soon as possible. I think we were like, we knew we didn't have to wait for Miami to accept. We were just like, okay, we're taking a risk.

You know, like we're activating this thing. And then boom, we activated it. then, you know, like a month, month and some change later, like Miami accepted their protocol donation. And essentially, what happens when a government does that is they essentially link themselves to that coin, like they provide legitimacy for the coin. NXO is a trusted and easy to use crypto platform where you can buy cryptocurrencies at the touch of a button and start earning up to 18% annual interest that is paid out daily.

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with up to 85% lower fees than competitors. There are no fixed minimum fees, no ACH transaction fees, and no withdrawal fees. One of the largest exchanges in the U.S. FDXUS is also the only leading exchange that supports both Ethereum and Solana NFTs. When you trade NFTs on FTCX, you pay no gas fees. Download the FTCX app today and use referral code Breakdown to support the show. This week alone, we saw news at two very different ends of the spectrum. As you mentioned, Philadelphia's story came out that I found out about because Laura Shin had tweeted about it because apparently the CIO of Philadelphia was listening to her podcast and this podcast. That's pretty cool. But that was how I found out about it. I think then you saw it and we're like, oh. And then, but then on the other end of the spectrum was Mayor Suarez, who said that he was announcing that they were receiving their first ever disbursement from Mine City Coins, which is a total. of 5.25 million. So like an actual serious amount of money when it comes to a, when it comes to a,

you know, a polity like that. I guess one question is how much is this, you know, something like municipal bonds, right? There's been a concept of people investing in their community and in a, in a financial kind of way for a long time. But this is, you know, is this just a change in kind of scale and speed or is it a fundamental change in kind? It's like apples and oranges. If you were to compare it to municipal bonds, I'd say it's 100x improvement on municipal bonds. I'll tell you why. Municipal bonds are not held by citizens. Like, do you, like, have you, has,

is anyone you know hold a municipal bond? Like, probably not. And the reason is, like, interest rates are so low. Usually when you're making money on muni bonds, like the spreads are large because the city is about to go bankrupt. And so, like, you really don't want to hold municipal bonds. Like, large, like, sovereign institutions do. And also, they're issuing debt, which, like, not all debt is bad,

but they're issuing debt that later has to be repaid by the city's taxpayers. So that's like that's a tax out of compulsion as opposed to out of opportunity. So city coiners, they pay a tax to the government, but they do it out of opportunity and they do it out of civic mindedness. And so there's a lot of people that want to do that. And so if you hold city coins as opposed to municipal debt, you have a shared stake in the success of a city as opposed to just owning the city's debt obligation. I personally think it's 100x better than a municipal bond. But it's a complete different animal. Just like you can use them to code like one.

I think there's real value in creating a community around a coin. I think there's just inherent value in doing that. It's like a coordinating mechanism to to have people who have skin in the game, want to like improve a concept or kind of like go toward a mission. Like for example, if you had like a Mars coin, you could organize people to try to like, you know, get on Mars and like terraform Mars. with a city coin, you know, people are trying to essentially improve their cities. They can program applications.

They can mint NFTs, like create artwork. And there's been like $200,000 worth of NFTs that have been minted using Miami coin and New York City Coin, which is pretty great, like getting a lot of artists off of subsistence level living. And, you know, people are building like cool applications. Like someone built this like proof of hoddle access control application where like you could like a door unlocked. when you prove that you hold some Miami coin. So like, that's kind of a whimsical idea. But, you know, conceptually, the concept is whimsical and even what I'm about to say is kind of whimsical.

But like, you can expand the footprint of a city in that way. Like, if you can only access a certain space, an outdoor space or an indoor space or even an application through access control using that city's coin, like does that space become that city? Like kind of yes, kind of no, but kind of yeah. Like that is like kind of Miami. You know, we're just getting started. Like people are going to do independent journalism that's like funded by Citicoin yield.

I think people are going to, you know, people are going to, you know, set up like Wi-Fi and like have it be powered by their city coins. Like there's going to be all sorts of things that people are doing. And we have a multimillion dollar Citicoin accelerator that is that's got like amazing mentors like Amanda Cassatt, who's the old CMO of Consensus. It's got like the founder of Skype, Sten, Tam Kivi. It's got Bollerjishira Nawazen, who everyone knows. It's got the founders of stacks, like Trung Fan, who's like an expert in virality and meme master. And just like amazing mentors. Like this is the year of utility for Citiguins.

Like 2021 was the year of like seeing if this thing works as a fundraising mechanism and we can build a community around it. And we've proven that. And I think like, you know, just like, thematically, if you were to view like Web 2.0, like the way cities benefited from Web 2.0 was that they just got like a dot-gov URL, right? That was it. Like they could show information and tell people what they're doing. Like that's a, that's a great level up from what they had before, which was not that.

But now, like, if the Web 2.0 way for the government to use kind of like internet protocols was to get a dot-gov. the Web 3.0 way will be for governments to have their city coin, for cities to have their city coin. So instead of dot-gov, it's city coin. What have you guys noticed? And I know your observations might be different than some of the others, but, you know, in terms of motivations for people who are involved in mining city coins in these places, you know, it seems like there's a clear financial incentive that's designed at the protocol layer for the governments to adopt, but it sounds like from the description that you just gave, that it's actually less like raw financial

speculation and more actual kind of interest in utility that's gone into the consumer side of it so far. Is that accurate or is it a combination of everything? A combination of everything. You're always going to have you're always going to have people that join clubs, that join movements for the wrong reasons. But overwhelmingly, we've had like city corners or people I trust. I think this is like a high trust kind of community. And the reason I trust them is because their affinity is towards civic-mindedness. They tend to be like just really good people who, like, want to see the world become better. Citigoin is reminds me of Bitcoin a little bit.

And like, I'll say it. Like, it really does from like the no pre-mine to the impact it can actually have on like the real world. Yeah, I'm biased because, you know, I'm a part of the project. But it's the first time I've like felt like that since Bitcoin. You know, when I first saw Bitcoin, I was like, oh, wow, great. The meme is, don't mess with our money. otherwise we have this release valve that essentially breaks your MMT model. And that's pretty dope.

And we shall love that and we shall try to get as much Bitcoin as possible and never sell. The Citicoins is very different. It's like, okay, now that we've done that, let's build crypto civilization as opposed to just crypto-anarchy. And so I think that's like a vision worth moving toward. It's like how do we have like a smooth, peaceful decentralization as opposed to a chaotic anarchic decentralization? what is your sense of how cool cool no no i i think it's that's that's one where i like i it's

funny i like to actually let that type of thing kind of just sit and and have the listeners be able to digest it um and that seriously i think you know what do i need to add to that right um no i wanted to ask though you know what your perception is i guess building off of that of how this geographic battle starts to play out because obviously you have, you know, you have a mayor in Mayor Suarez who is making a very strong play to actually bring people to Miami, which is, you know, the call has been heard and obviously a huge number of people have. How much do we anticipate, do you anticipate that type of activity to become normalized? And even going back to what you said about kind of cities before, you know, one of my, one of the things that I always thought was

fascinating, random, but not only has Damascus been a city for something like 12,000 years, it's been named Damascus or the equivalent, D'Mish, for basically that entire time, right? And that's through so many different empires and being destroyed and rebuilt and destroyed and rebuilt. And, you know, cities that are in kind of the old world, i.e. not America, have that thing where they've lived through a lot of different phases of human organization on top of of the city structure. Obviously, U.S. cities are different because they're, they've always been cities inside the U.S. kind of regime. But, you know, how do you see that geographic competition continue to play out, you know, in the U.S. in particular? But I get, you can expand to the world

if you want to. Yeah. So I heard a few things like, the one thing regarding like cities being like eternal beings. That's actually a Peter Thiel quote. I found that like, like, someone like sent that to me. They're like, hey, have you seen this? And he was like, there's something interesting about cities. They're like eternal beings. Like you like there's very, very rarely, uh, do cities get wiped off the face of the earth and just never return. And like boundaries can change, but cities remain, you know, I think in regards to like the competition, that is only going to heat up, like for sure going to heat up. Like this new archetype, CEO of the city, it's really like, I think web, like, Web3 founder of a city is like too much of a mouthful. So I think people just say CEO of the city is going to

be a new archetype like for sure. And like I said before, that's just like, you know, mayors making outgroup arguments to attract capital and talent to their city and running their city like almost like a company and that means competing you know company to company you know competing for you know if someone's like hey I'm trying to decide whether to move to New York, Austin or Miami. It's like well then one of those mayors had better like be in in your replies being like move to you know move here move here we want you like we're seeing that happen. And I think insofar as the sort of like global geopolitical game, I think that game is all about which countries, cities, and whose citizens can amass the most Bitcoin.

Because essentially, like, Bitcoin is becoming its own point on like a geopolitical triangle to borrow a term from Bologet. And you have like sort of like woke capital that's a U.S. You have, you know, CCP capital. that's like China, which looks like it's got a lot of growth ahead of it. And then you have Bitcoin. And you're starting to see, you know, countries like El Salvador rightfully, just making sure that they can potentially safely, safely untether from a currency that

from a reserve currency that might not be as strong as it would like to be. So I think every country is just going to want to get as much Bitcoin as possible. And like that's, that's the game. Where do you think the dominoes are for this year? I guess maybe a better way to ask this. So it's less of a full-on prediction is what places are you watching, pay attention to observing? Or is it less places and more infrastructure as well? The places I'm looking at are cities in the U.S.

And interestingly, it's not a matter of being a Democrat or Republican. Like there's been equal Democrats from Republican-run cities that have been asking for citycoins, maybe more a Democrat even. It was kind of surprisingly. But in terms of globally, I think South America is like a really great place to experiment. It's on the, it's on the same time zone as the U.S. Like people from the U.S. can like, you know, visit like take a look, see if they want to like, you know, stay there a little longer term. Also, they're kind of like in dire need of, you know, offsetting of inflation.

They're also, they also can benefit tremendously from, you know, developers that want to build, that want to build, you know, kind of open source software in their area. sorry, one sec. So South America is very interesting. India is very interesting. Like, you know, India is a country with a lot of locked up intellectual capital. And, you know, 20 years ago compared to today for India is like night and day. So that's very interesting. And obviously, like, the West you can categorize as like descending and Asia you can

categorize as ascending just from like a state capacity standpoint. Like state capacity is just like government's ability to get done and improve the quality. of lives for their citizens. What I've witnessed is, I love the United States. Our state capacity does seem to be dwindling or lowering. It doesn't seem like we can get as much done as we used to be able to get done for fewer dollars. Whereas Asia and specifically China seem to be able to do that. And obviously China is not without their faults, but that definitely does seem to be the trend, like Asia rising, the West descending. And part of my hope is that city coins can actually act as like a safety net for some of the West descending and kind of like buoy it a bit.

What besides city coins, besides this geographic type of battle, what are you watching in 2022? What are you anticipating? What are you kind of thinking about? One thing I'm thinking about is like whether the Fed can actually like, raise rates as much as they like to say they can. I, you know, I need to, like, the Fed raises rates like, even like, even like a few hundred basis points. We're spending like a good chunk, maybe like 30% of our entire federal budget on, on the interest payments for the debt servicing.

So what that tells me is that we actually can't raise rates very high. And, and if we, if we, uh, yeah, it tells me we can't. raise rates do I it's like you know if if people are baking in like uh you know 1.25% interest rates uh by the end of the year my my sort of prediction is like I don't know if we'll go above 0.65 actually because I don't I don't think we have the stones to kind of do that. Uh and uh I think you know this is like the year like if you're trying to raise cash like raise cash this year and like be like have have dollars on deck. Uh, you know. I'm looking at markets, things like that. It's kind of a shame we have to like, by the way, like from like a, from like an information

theory of money standpoint, it's kind of a shame. We have to like look at the Fed to like see how we're going to plan for like our business and our livelihoods. It'd be like, like, that's part of the one of the reasons like Bitcoin's so awesome. And it's like, I know it's going to be 21 million, you know, by this year, by this year in the future. And I know the schedule. It's like Bitcoin's more like a, sorry if I'm going out tangent here, but like, yeah, it's

Good tangent. It kind of, yeah, it kind of, it really sucks actually. Like as a business as like a, like, people who are doing business, they should be focusing on the businesses. They shouldn't be focusing on, on like, whether the fed's going to raise rates or like whether we're going to, yeah, whether the fed's going to like land this thing, uh, on this like narrow strip, uh, as opposed to, or whether we're going to like monetize our debt and going, uh, or going to inflation or hit a recession. It's like, you shouldn't have to think about that all day, you know, like that, that sucks. And so, you know, it's part of the reason that you know, you build on. Bitcoin, you try to save in Bitcoin, you know, and, and you build on something that is a reliable

carrier of information as opposed to one that has a lot of noise in the system, which is, which is the Fed. Not to say the Fed's all bad. I'm just saying, like, like, it comes with its negative externalities, you know, Bitcoin's like, Bitcoin's on like the complete different dimension. It's nice, it's nice that there's a stable dollar, like, no, no, no denying that, but it's also nice that that there's a store of value and, and a money that essentially, directionally goes up in value over the years. It's interesting. I feel like I've watched Bitcoiners and Crypto folks have this full kind of 360 journey

around the sun where they have learned over the last 18 months that they really do need to pay attention to what's going on in traditional markets and how traditional markets think about things and what the dynamics are as related to the Fed. But then are reminded of how stupid it is, how much attention and how much sort of, universal attention is given to these are micro proclamations of a small member group as it relates to the economic dynamics that everyone else will be, you know, experiencing. And even if while still sort of understanding that it's going to be a factor because of just the nature of Bitcoin expanding and being a thing that's held in different types of portfolios and

portfolios that have other types of constraints that are still tied to that traditional world, like re-rejecting it almost as on a matter of principle and kind of getting re-invigorated by Bitcoin. Totally. It's like Bitcoin is also like a sponge for liquidity. And like if interest rates are super low, you're just going to get more money going through the system. And, you know, Bitcoin is going to absorb that. So we have these high highs when interest rates are super low.

Question for you. Do you think Bitcoin needs the dollar? In what way? in any way, like as a foil for its own ascendancy or as, yeah, I don't know. It's kind of an open-ended question. I guess more, let me not to do a real podcast or slash academic thing, but like answering a question with another question. I think a version of that question that would be really interesting to explore is,

does the economy need a dollar and a Bitcoin at the same time? Like, are they actually sort of does one suffice? or not because they're presented in this way that is sort of a, you know, a dialectic, right? It's like Bitcoin answers the follies of the dollar. However, in a modern economy, do you actually want an inflationary currency that can be kind of using this way that doesn't have to support its value, right? A lot of the people who reject Bitcoin basically say, you know, or their argument is effectively that like your critiques of the dollar are correct, but that's not the dollar's job. You've got the dollar's job wrong. And I think that's a really interesting thing to

explore. Yeah. You're you're getting me thinking about some of the sort of like Keynesian aspects of the dollar, which like, you know, if the dollar were to be going up in value, like, if it gained like 10% annually, you'd be like, okay, I'm not doing any consumption. I'm not doing as much consumption as I was before. It actually makes more sense to save. And therefore, the economy is not being stimulated as much. So, like, I think, I think that argument exists, to the degree to which it's defensible, you know, I'm unsure about. However, like, the flip side of the argument, one of the flip sides of the argument is like, but don't you want people saving more money and becoming more robust, you know, as like citizens and not so, like, reliant on the government as like a nanny to,

like, you know, take care of you, you know, and that argument also does have some validity too, where it's like, you know, half of Americans can't afford a $500 medical bill. If they would pay 500 bucks, they would break the bank, half of American, over half of Americans. And that is like, there's a lot of, it's not like just that in its own is a bad thing. But, and actually, I do want to make one more prediction after this that I think you might enjoy. That alone is its own bad thing. But there's second order effects. Like if you don't have financial independence, you can't actually like, you don't have,

you don't, you might be more afraid of getting canceled for. saying things that are just factually true and like shouldn't be and and you know maybe the mainstream doesn't want you to say it for example. And you lose you kind of like you almost like kind of lose rights as a citizen as you become more poor, right? No, I mean, you do in a way. I think you have less freedom to kind of navigate the world. And you might be in a more fearful position where you make bad decisions as opposed to making like good decisions that are like, you know, you might make antisocial decisions. You might not make good decisions that have like a, that create like a positive functioning society.

One prediction I do want to make is that by the end of this decade, just as everyone, essentially everyone is on the internet today, I think everyone's going to be an investor, like both out of necessity and out of accessibility. necessity being, you know, I think MMT will be largely proven wrong by the end of the decade. There'll be some few hangers on that like, like the same type of people who are like, if you were like getting bombed in a war, they'd be like, there's no war, you know, like nothing to see here. I think that that will happen. Sorry, my dog's barking. The accessibility thing is like Coinbase and Robin Hood opening up the gates for like anyone with a mobile phone to own some

crypto. So I just think that's like that's like a major, major, major, um, uh, two, two like forces that are going to cause everyone to be an investor. And I would go so far as to say, like, just like everyone was like a farmer back in like the 1800s, like 98% of people were farmers. I think people actually might make this their profession. Like almost like an overwhelming amount of the population might make this profession. And I know how like much that sounds like let them eat cake. in a way, but I think that actually will happen. It'll be more proven to be happening by the end of the decade.

Well, to tie it to the other kind of question that we wandered down, which, by the way, I know the audience is going to be like, you should have gone all the way down that rabbit hole, but we'll save that one for another podcast. But I do think that sort of the question that you get into in terms of, on the one hand, you're talking about sort of incentivized consumption versus incentivized savings. and the difference of a Bitcoin-based system versus a dollar-based system incentivizing, savings versus incentivizing consumption.

And I think the toggles that are reasonable to pull are what you're trying to incentivize. The place that it starts to get uncomfortable is like how much the money system dictates you, like one towards the other, you know, and how hard to kind of escape the velocity of one versus another it is, how much the system is constructed upon you having to participate in one

versus the other. Sort of I'm definitely a freedom maximalist. So it's funny, I can almost see my answers. Which side of that argument I would be on would be based on who I'm talking to, you know, a little bit. But the related, though, I do think that there is a, so another piece of that is the human psychology aspect and whether people are more inclined to save or to spend.

And I think investing is actually the thing that blows apart that heuristic or that blows apart that dialectic in the sense that in saving feels passive, consumption feels active. Consumption doesn't do anything actively towards the future, but it's an active thing that you're participating in where saving is just sort of the absence of doing something. Now, maybe if you have savings with a plan, it's different, but then you are actively investing and your mechanism may be saving but not. And I think that one of the things the floodgate has been thrown open on, and I think crypto is probably the biggest factor in this. And I think that the sort of next wave of Wall Street Betts is sort of another part of it. But the idea that people, if you have 15 extra

cents or 15,000 extra dollars, can use that to actively invest in the future and participate in markets in a meaningful way is something that will be, I believe, one of the legacies of this period in history. And you're seeing it in terms of the, you know, if you look at like, I can't remember the name of the app, but there's an Indonesian finance app that lets people have, you know, they can invest in Bitcoin, they can invest in even gold proxies, they can invest in proxies of U.S. equities in some ways. And it has unbelievable uptake. And these are, you know, like with users who are investing like a dollar at a time, right? And it, and it turns out that it does not matter what your wealth level is. Humans have the capacity to think in terms

of investing in their future. And in fact, I would argue that it's the, the, what technology has sort of obliterated is there aren't really technical barriers to investing in those small levels now. And in some ways, what needs to catch up is the narrative. If you look at financial media, it's still largely exclusionary. It's designed around terms and experts who are kind of like, they're commenting inside baseball type of terminology. And if you don't get it, you don't get it. I think that's also shifting, obviously, you know, the rise of independent media is a big piece of that. But I tend to agree that this sort of shift in, uh, how the breadth of people who view themselves as investors, or at least view investing as a key

piece of what they do, it's going to have some pretty dramatic impacts on the shape of society. Absolutely. I love that last thing you said, having impacts on the shapes of society. But just like the internet and Web 2.0 impacted the shape of society because software was eating the world. I think Web 3 will impact society because markets are eating the world. I think markets will eat basically everything, just like software is basically eating everything. Well, we got our topic for the next time you come on where we start. And it's been an awesome conversation, man. Really, really enjoyed having you here.

And appreciate it. Look forward to the next time. Yeah, thanks so much. There's tons that we could dig into on this, obviously. And I just want to point out that I think the reason that watching experiments like Citcoins play out is that they are really at the epicenter of these. two key trends. On the one hand, the massive shift in how we organize our lives geographically and what geography means. On the one hand, it means less than ever because you can be remote and work from wherever. But at the same time, that actually makes geographical consideration, such as the climate you

want to be in. The access to nature, the outdoors, whatever you prioritize also can matter more. But you have that converging with new ways to organize social systems powered by crypto, which is really just a mechanism for aligning incentives and distributing power across networks. I think that we're just scratching the surface of where those trends are going to take us, and I think it's important to keep watching what places are on the vanguard of that like Miami. It's certainly something that I'm going to be keeping an eye on, and I hope that you'll continue to join me on that journey. For now, I want to say thanks again to my sponsors, nexo.io, Arculus, and FTX,

and thanks to you guys for hanging out. Until tomorrow, be safe and take care of each other. Peace.