The Pomp Podcast - #585 Aleks Svetski on Bitcoin as Sovereign Money

Episode Date: June 18, 2021

Aleks Svetski is the cofounder and CEO of Amber, a mobile company focused on making exposure to Bitcoin and the new wave of digital assets as simple, low risk, and automated as possible. In this conversation, we discuss emerging nations embracing bitcoin, ETH is state sponsored attack on bitcoin, bitcoin as sovereign money, node level decision making, and Amber’s progress. ======================= Revolut is a finance app in the US and UK, that say they're the simplest way to access crypto. Sign up today at Revolut.com/pomp and make 3 card transactions to get $15, which you can exchange for any tokens Revolut supports. As usual, when you move your money from fiat to crypto your capital is at risk. See T&C's for details. Revolut is a financial technology company. Banking services provided by Metropolitan Commercial Bank, Member FDIC. Cryptocurrency services provided directly by Paxos Trust Company, LLC. ======================= Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp  ======================= OKEx is a world-leading cryptocurrency spot and derivatives exchange that offers some of the most diverse and sophisticated trading products and crypto finance tools on the market. Trusted by millions of users globally, we believe that cryptocurrency will reshape our money and society, enabling more financial inclusion with alternative tools and methods for wealth creation.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Alex Svetsky is the co-founder and CEO of Amber, a mobile company focused on making exposure to Bitcoin and the new wave of digital assets as simple, low-risk, and automated as possible. In this conversation, we discuss emerging nations embracing Bitcoin, Ethereum as a state sponsored attack on Bitcoin. Bitcoin is sovereign money, node level decision making, and Amber's progress to date. I really enjoyed this conversation with Alex, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors.

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These guys have made it easier to get some skin in the game. As usual, when you move your money from fiat to crypto, your capital is at risk. Sign up now through Revolut.com slash Pomp to get a $15 reward and put them to the test. Revolut.com slash Pomp to get $15 and you can let me know what you think. Next up is Cosmos. Cosmos is building the internet of blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more.

You can dive into Cosmos at cosmos.network.com. Again, cosmos.network.com. The internet of blockchains marking a new era of interoperability, scalability, and usability. cosmos.network.com. Last but not least are my friends over at OKEx. Crypto moves fast and many crypto-focused companies can't keep up. Crypto exchanges that cut through the noise are the ones that give you access, wherever you are in the world, to the cutting-edge projects emerging in this new asset class.

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one. Anthony Pompliano runs POMP Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Alex here with me. What's going on, man? What's up, man? How are you?

No voice left, so I don't know how I'm going to do this. We're talking shortly after pretty big news of El Salvador in about a four-day period went from announcing that they were going to create Bitcoin as legal tender within El Salvador or accept it as legal tender. Then they basically put forward a bill. They voted on it. They passed it. It's now legal tender. The president jumps on Twitter spaces. He's talking about all kinds of stuff, answering questions.

super candid uh seemed like a pretty like open book at some point mining comes up he's like ah well we have this like volcano uh volcanic energy that is 100 renewable 100 clean zero emission uh and basically free maybe we could use that for mining 24 hours later he's literally already drilled the well and like seems like he's off to the races what the hell is going on in el salvador this is i mean el salvador and bitcoin it's like the the this space moves so fast it's like two weeks ago the pope was like we can't use bitcoin like two weeks later we've got a country putting some bitcoin like talk me through like from what i understood it's they're going to so they've made it legal tender people who don't want to hold bitcoin they can actually sell it

back to the government so the government's going to hold the bitcoin and give them fiat is that right so uh in el salvador and again this is a over generalization but there's basically two banks that you're going to hear about you're gonna hear about the central bank right or kind of the the state balance sheet the reserves because they technically don't have they don't have their own currency uh so there's like a reserve assets of the government then there's this development bank that is owned by the government the development bank uh looks more and feels more like a regular bank that you would see the united states but it's owned by the government at that development bank so not the reserves of the government but at the development bank they are basically creating

a 150 million dollar fund uh they keep referring to it it's like a trust fund uh and the purpose of that is they will seed it with dollars 150 us dollars uh they then create a mandate that any merchant must accept bitcoin not exclusively so somebody shows up with dollars you have to accept the dollars somebody shows up with bitcoin you have to take the bitcoin now it's very similar to the in the united states somebody shows up with dollars you have to accept it right it's a mandated thing. It is not necessarily a mandate if somebody shows up with a different type of currency, depending where you are, what the currency is, all that stuff. But in El Salvador now, dollars and Bitcoin will be mandated to be accepted by the merchants. Some merchants

want dollars. Some merchants want the Bitcoin. So the merchants that want the Bitcoin, they'll accept it and they'll hold the Bitcoin. The merchants that want dollars will accept Bitcoin if somebody wants to pay them in Bitcoin. And then the government says, turn around and you sell us the bitcoin and we'll give you dollars so so we'll give you choice as to what you hold but you have to at least accept it for uh for payments and so what that 150 million us dollars is there for is basically that is the liquidity pool if you will that will be used to purchase from the merchants uh once it is uh purchased the government will hold the bitcoin in the trust fund or in the development fund so 150 us dollars is eventually going to get converted to 150 us equivalent of

bitcoin right depending on prices whatever and uh what's interesting is the government's basically market making and so they are going to maybe make a little bit of money lose a little bit of money over and over and over again i have no clue how sophisticated this is it's gonna be technology or it's literally gonna be like you know bring you bring your bitcoin you know type thing it's like there's details that still need to kind of be flushed out here um but uh strike is one of the companies that is providing a bunch of technology uh blockstream is another um and so strike's got some pretty sophisticated ways to do conversions via an api and stuff like that so i actually think it'll be pretty well done um and the whole idea is just like now the government says

hey we're gonna make bitcoin legal tender you as a merchant have to accept it just like you have to accept dollars and uh we'll help you de-risk we'll give you free choice in the back end let's go well that piece there the the ability for a merchant to just swap it and the government being able to backstop that that's really interesting so that that means that they're not only enabling the you know the merchant side of it but you know the government's actually gonna put bitcoin on their own balance sheet yeah and the way they're in the way that they're doing it is like uh it's unique because technically they can say that they're not putting it on their balance sheet yet uh if you make it legal tender though uh my guess um is that that is the intention is that they will

put it actually on the balance sheet as well but then they have this like trust fund and so like is the trust fund the balance sheet like technically no but indirectly yes right in that well it was money off the balance sheet that went into the trust fund and therefore the government controls it whatever uh but i think that just like overarching a nation state is adopting bitcoin yeah right and we can debate how sequentially should they do xyz whatever but like it's legal tender they're going to be buying bitcoin from people with dollars and then now they're talking about mining yeah what else do you want from a nation yeah it's well this is like i've i've always thought and i mean all of us have been thinking for a long time is like how does this

play out and like it's literally playing out in front of us like and the thing is none of us could have guessed in what order like you said what sequence what pattern what method what uh mechanism would be used to do this so so i actually i i didn't say anything on the day when you know jack announced that i was like yeah okay i just want to see what it actually means but then after the call you know after i dug into a little bit i was like fuck this is actually this is actually good so this is what do you think the ramifications are like with either other countries uh individuals corporations man it i've been saying this for ages a couple years ago one probably even maybe longer than a couple like five or six years ago it was a risk not to be associated sorry to be

associated with bitcoin right it was a risk to have some bitcoin now it's you know quick more and more rapidly becoming a risk not to have an association with bitcoin and that that that game theory change or that that incentive change can like create like a spiral effect or like a really rapid move uh like the pendulum will swing to the other end it's kind of what happening sort of here in america with the masks thing right so it's like miami came out and said all right you know we're not doing that and now all of a sudden texas came out and you know someone else and someone else so so the pendulum swings back very quickly and and that kind of momentum if you're if you're positioned right for it like there there is huge opportunity in that momentum and and that's sort of where this

is it so it'll be it'll be really interesting to see like i mean we saw the laser eyes already with a bunch of different people so so you know we don't know what that means yet but i mean i i would hate to be the imf and central banks right now oh i i actually don't even know if it's uh necessarily combative yet maybe it gets there but here's a perfect example so uh we explicitly asked on the twitter spaces uh there was convening of heads of state there was the head of el salvador uh there was nick carter who is head of uh the twitterverse uh there was me jack dorsey and a bunch of other people who are the heads of the interwebs and so we brought all these heads of state together on the diplomatic call kidding and we were all on this twitter spaces call uh i

can't remember if it was me alex gladstein nick whoever asked him somebody explicitly said hey have you heard from the imf or from the united states or governments or whatever and there was kind of like a uh offhand yeah i heard about it hold on a second i'm like doing something and then other questions got asked and it almost like didn't get answered so people started just dming me non-stop and they were like hey get an answer for that so i said look you know apologies for having to ask twice but like what did they say and the response that the president gave was very interesting it was kind of nonchalant like oh we're gonna have a meeting like i don't think it's a big deal he was like actually this is good for the united states this is good for some of

these places and so immediately it's like well how and one of the things he said that i thought was fascinating was he said listen the united states one of the biggest problems the united states has with el salvador is that a bunch of our citizens keep going there and illegal immigrating right and if so we have a bunch of illegal immigration to the united states and you want to stop that the best thing we can do is make our country a place that you want to stay that that there's opportunity, that there's wealth generation, that there's safety, all this stuff. And this is a great way to do it. And so that was a really, really fascinating thing to kind of unpack where you start to say, listen, a country that is in the developing world that

many people cite the murder rate or the lack of economic growth or whatever the thing is, now says we found a way to be more prosperous, to be more safe, to be kind of more beneficial for our citizens and they're going to stay here and by the way we're going to solve one of your problems pretty interesting way to kind of frame it right i mean that's that's framing dude we like the thing is the imf and central banks don't care about that problem they don't care about solving that problem like you know if we've seen anything in the last 18 to 24 months like their business model is one of um you know extracting wealth from others like so central banks exist not to produce anything but to extract so you know bitcoin is an assault on

that kind of a system like you know it it exists it's a peaceful protest it's a peaceful protest but it's still an assault on that system like it it it rips away like it rug pulls the the raison d'etre for a central planning see i don't i don't think that it actually is combative though That's part of why I like Bitcoin is it doesn't do anything to the existing system. The existing system can continue to exist. For example, the existing system over the last 12 months has done a fantastic job of doing what they do best, implementing their power, doing all this stuff. Bitcoin has still succeeded and Bitcoin is a beneficiary of it, but there's no kind of

combativeness to it. Like Bitcoin can actually win and there'll still be coexistence with the legacy system. now the legacy system as we all i think agree is going to lose users but like take yahoo for example right yahoo was the pinnacle of the internet it was the front page of the internet for a long time today if you see a yahoo email address or somebody's like oh yahoo's my home page there's like a certain framing there right of like it's a certain type of person usually a little bit older all this kind of stuff and it's in generalization that's not always true but even though younger people have all moved on to other websites other things other email addresses

whatever still a remnant yeah yahoo's one of the largest uh finance websites for example in the world yahoo finance is massive right and so i think that's similar to what we're watching here which is like there's a generational shift for sure there's going to be some of the older generations also that transition uh bitcoin will succeed but i don't think it's like 10 years from now there's no fiat and it's all bitcoin not 10 years but on a longer on a longer time so what do you think the timeline is i think 200 years no hell no no i think it's like three or four decades so 30 to 40 years from now you think that the entire fiat system's gone uh more or less yeah because here's what happens it precipitates on the way out so so it starts to fall faster and

faster and faster because what you get is like you get if there was a demise reverse collapse basically right so sorry not reverse collapse you get like you get a collapse as you get hyperinflation and hyperinflation is a confidence thing it doesn't matter how much money you've printed it actually is a complete confidence thing so when the thing starts to fall apart and the confidence is lost that's when the whole thing starts to completely collapse so um where like the way this is going to play out is this decade is going to be messy as fuck um so there'll be there'll be points at which like i think the next three or four or five years socially is going to get even worse like you know there'll be more restrictions there'll be more

stupidities there'll be you know desperation on the part of banks and central banks and all this sort of stuff to try and fix things that they've broken and in the process break them even more um you know we'll sort of hit some sort of trough period and then at the same time like i call it um i'm gonna swear now but pockets of brilliance in a sea of shit basically so so there's there'll be all sorts of crap going on but the pockets of brilliance will be represented by kind of things like that are going in el salvador etc now the reason i say this is because there is only one way for large nation states or central banks to exist. And that is to blanket tax or to print money. In the absence of those two tools, they actually can't fund themselves. A government,

a nation state level government or a central bank is a bankrupt institution. And what Bitcoin does is it eliminates the capacity for a bankrupt institution to exist because you can't tax the bitcoin forcefully like what you need to do is you need to provide a service uh in order to get someone's bitcoin um or you need to well that's the only way or you need to beat them over the head with a club and take their private key but you know if you hit them too hard they're not gonna remember it so it's like it changes the dynamics of how societies should function i call it moving from an overlord subject relationship which is the relationship we have with governments and central banks today moving to a customer and service provider relationship

But through necessity, that means jurisdictions are going to have to get smaller. They cannot remain large because you cannot feasibly economically run a large region profitably. So in the absence of being able to print money and keep yourself in business fraudulently by borrowing from the future, by leeching from people and by taxing, you're screwed. you have to provide a service and you can't do that at scale like it has to happen um at a small scale that's why you know a lot of people talk about if fiat and bitcoin will coexist they will not like for a while they will but when when the thing starts falling off like it'll be like you know bitcoins is black hole and you know we're getting closer and the fiat system's getting closer and closer to the black hole but once it hits the event horizon it's gonna yeah i think

there's just different times we're talking about right i'm talking about 10 years from now you're talking about 40 50 years from now i'm talking yeah a couple more decades so i think this decade is where we get close to the thing next decade is probably where we start to reach the event horizon somewhere in there and like 20 40 onwards like you don't have fiat anymore there's absolutely no need for it so if we think about this whole idea of uh coexistence for some period of time i think what el salvador is super interesting but what should other countries do just do they immediately run and take the playbook from el salvador and basically implement it in their countries or is there different ways to do it 100 take take the fucking playbook and do whatever

variant you need like this is so this is where the the small countries that have been traditionally like backwards or you know broke or broken um so so my parents come from macedonia um i i was there last year and like i you know whenever people sit here and talk about like oh you know communism is great i'm like just just just go to eastern europe for a bit and like go specifically to macedonia like where there's no soul left in the country like everyone's like all the youth has left anyone with a brain has left anyone with ambition has left it's like sort of left like a husk of a nation and and like it's it's broken nothing works everyone's defeated and you know it's dead but those places potentially have an opportunity to do something well it's just the developing world

or those that are broken nations they have the opportunity to leapfrog the current uh kind of leaders it's exactly what we see technology is the innovators dilemma and the powers that be uh they're sitting cushy and so the upstarts the challengers they're the ones who have the opportunity exactly and but they they have also the extra opportunity that they're small so they have less space to manage and less shit to deal with i mean some places have a lot of crap to deal with like you know with you know a completely broken infrastructure but the smaller you are the quicker you can actually evolve into what jurisdictions are going to look like in the new world like they're not going to look like what they look like today is there something about a

smaller country also just has less bureaucracy and there's usually kind of more centralized power in the country and therefore uh they're they can move quicker like el salvador went four days from announcement to having its legal tender look that absolutely helps the the thing is some countries don't have smaller bureaucracy like so so so maybe in el salvador it's it's interesting because he's got you know he's got some strength there um whereas like in a dumbass country like macedonia you actually have more bureaucracy than america for like one million people it's ridiculous so so so that kind of depends but yeah definitely having having a director or having you know dictator whatever the word is like having someone to to lead that and and point

um that of course is gonna help what's fascinating to me is with the el salvadorian or with the salvadorian uh situation is uh everyone's like oh he's a dictator he's this whatever i'm not an expert in salvadorian politics don't want to be uh but i've never seen a dictator hold a vote and 25 of the congress vote against them like they just get killed right like you know what i mean like like and again dictators all around the world bad people the whole nine yards uh but to me it's just i think there's a lot of politicalization of this in el salvador so therefore uh people outside will never understand it when you move to some of these other countries like macedonia for example i don't i couldn't tell you who the

leader is i couldn't tell you what the political structure is i couldn't tell you what the process is i couldn't tell you if i literally couldn't even tell you is it communist is it democratic is it whatever again that's just because i think most people are worried about where they live right and so if we're going to play this game of uh every time a country says hey we're interested in technology, we're interested in Bitcoin, or we're interested in, you know, kind of a new path forward. And then we all try to scramble to become experts on those political environments, I think we're gonna have a really hard time. And so instead, if you simply just say, listen, it doesn't matter if it's a democratic leader or a dictator, if they adopt this as money within their country,

it prevents them from being able to do what we see other dictators do with fiat systems. right well that comes back to what we said earlier bitcoin naturally subverts fiat like bitcoin actually the whole bitcoin invention is a subversion and a a um a forking of the road from the fiat path that we're on like i i think it's so important that you know the whole aliens thing and you know the great filter right i think if there is any other societies that you know hadn't made it through the great filter they blew themselves up by either dropping a nuke on themselves getting whacked by an asteroid or through destroying their society through fiat like because i i think fiat was it is a necessary progression that all human species have to go

through like all all homo sapien all sentient species like we we naturally like money is the thing that permeates all of existence right you cannot do what you do i cannot do what i do and we can't you know collaborate and interact without some sort of uh mechanism to exchange human action right that that's effectively what money is so money's or money will exist from the from the beginning of time until the end of time so long as the sentient species exists the only thing that changes is the object that we use uh for money now we have come to the point now where we had to go through salt seashells cattle blah blah blah you know gold uh paperback gold you know the fiat abomination and all of that but when you when you look at it on a longer

time scale like me and francis pullio were talking about this it's like when we look back on this if we make it through the great filter now like if we actually can measure human action effectively and if we can restructure the system such that um positive actions uh spiral upwards and negative actions actually correct right so at the moment we cover up negative acts so if you do something dumb it just gets socialized to everyone else right so it's it that actually rots the system but you know on a bitcoin standard you know you can actually move upwards you can move downwards which is really important and downward motion gets corrected very quickly and upward motion spirals so in that kind of a thing we have the opportunity as to sort of progress society now

on a on a long enough time scale like we'll look back on this thousands of years from now we'll say all right the the um the inventions that made uh homo sapiens or humans in whatever capacity we're going to be in like a intergalactic species was fire bitcoin teleportation like honestly internet electricity all this other stuff was invented for bitcoin like that sounds nuts right i know it does all right that's how big all that's how big bitcoin is going to be for all of those things like what is the biggest critique of that view uh my own personal critique no like if if you had to think of the critics what would they say is like why you're wrong uh the bitcoin's slow like i think the only critique would come from someone who doesn't

believe money is this important everything stops without money you you can't like you don't have the capacity to do anything how do you think about like the inflation and all of the recent announced was like so we're recording this uh the consumer goods uh prices just got announced five percent increase uh it's the most since the global financial crisis um if you look at uh all sorts of other metrics you know through uh may i think in the start of 2021 inflation is at like 2.7 percent uh and likely to continue to go higher like does all of that just feed into this is that a response to bitcoin is bitcoin just a beneficiary of what they were already going to do that's all bread crumbs that fell off the side of the table like bitcoin has such a larger impact like all of these

things is we're just playing games we're a bunch of like again when you spread out the time scale like fiat is a 150 200 year experiment on a far far far far far longer time time span and all we're doing is we're we're placating ourselves so so i wrote a recent article um so i'm taking jordan peterson's 12 rules for life um and then i'm writing about bitcoin through the lens of each rule so i'm up to chapter two now oh i'm with chapter three but chapter two was about bitcoin chaos and order and and in there i talk about how uh you know you've got the study of matter and the study of what matters so the study of matter is like empirical sciences physics etc And the study of what matters is things like philosophy, economics, tradeoffs, you know, psychology, etc. Now, what we've tried to do is because the study of matter has been so effective over the last couple hundred years, particularly with the formalization of the study of matter and sciences, you know, with the Renaissance, we have now tried to take that process and apply it to everything else.

So we've tried to deconstruct economics, which is not a study of matter. Like economics is the study of individual human beings who make actions that are different at every single moment in time. Like you cannot replicate an economic period. Like we can't take what happened last week and do it again this week. Like we can't press the rewind button. So trying to distill something like economics into an empirical study is completely mindless. So doing all these things like measuring CPI and like trying to like figure all this stuff

felt it's all vanity metrics like none of it actually really matters and then on top of that they go around and they're like okay well with cpi let's just take this out let's take this out let's take this out and it's a it's a fake metric designed to to make the to give the model some semblance of sense like so they're trying to fit reality to the model instead of the model to reality it's the opposite way around and so we're literally like we're driving a car with a fake dashboard with a fake speedometer with a fake everything and we think it's okay because like you know the dashboard says we're driving you know 60 miles an hour but in reality there's a fucking wall there and we're driving 200 miles an hour right into a wall but we feel good about it

what about all the other cryptocurrencies other than bitcoin um i would say at best they're um they're attempts by people who have no idea why bitcoin exists um so so bitcoin is a system of rules not rulers right so so these guys are like oh so bitcoin is about sending money to each other for free no that's not what it is but so so they go on you know roll their own version of it um and they become their own rulers of their own money so so at best it's like naive and stupid at worst i think it's a state level attack um on bitcoin so this is an interesting attack vector and breed love and i were talking about this um a couple months back about the state and central banks and governments and all that sort of stuff like you know grouped in into that sort of sphere

will continue to realize that they can't do anything about bitcoin like they'll throw fud they'll throw like oh the fbi hacked it you know like the the energy is going to boil the oceans like every year it's boiling my favorite is senator warren what what did senator warren say recently yesterday she had some real good ones please tell me at least one i mean basically uh bitcoin consumes more energy than some countries and therefore we need to uh you know basically regulate it control it get rid of it whatever nonsense she was saying we should ban clothes dries because that actually consumes more energy than bitcoin but anyway my favorite is christmas lights yes christmas lights thank you we're gonna cancel christmas yeah we should definitely cancel

christmas because it uses up too much energy um so so they'll throw everything at it but they can't beat it they can't stop it um so i think the best angle of attack like if i was a government i would go in and i would start supporting something like an ethereum or something like a cardano or something like a whatever like one of these other um shit coins and all you have to do at that stage so bitcoin is enforced at the level of the individual the node operator enforces the rules of bitcoin now i enforce those rules of bitcoin for myself and i do it voluntarily and i come into consensus with everybody else who's enforcing the same rules that's what makes bitcoin so powerful whereas with all of these other networks it's not enforced at the level

individual there's a foundation there's a group there's an institution there's a you know there's a coalition there's a governance structure that decides how this thing runs now if i was the government i would be becoming friendly with the joe lubens and the vitalics of the world give them as much free reign to sort of hoodwink everyone into this idea of decentralization and you know competing with bitcoin proof of stake is like the perfect like proof of stake is central banking like of course that's what it is so you know these guys are going to move over to that and then whoever runs the largest chunk of stake calls the shots and if i was a government i'd come in and say all right well this is how we're going to run things

now we're going to issue the the imf dollar on ethereum or whatever well it's there's two different things one they could just spend a bunch of fiat and become the largest you know staker right uh or they could nationalize it or they just they don't even they can do it behind the scenes man like you know if if i'm someone who's been trying to pull the strings at the imf or at the central bank whatever these you know three-letter soup organizations are i'll just go to dinner with vitalik and say this is how it's going to happen um doesn't matter what you say and you know you'll you'll start to see it back what do you think his reaction would be i don't know vitalik so i don't know uh i think that i want to caveat this with uh it's obviously he's

very intelligent i mean like scary intelligent um and i'm going to always put for people i don't know like i assume that they're doing what they believe is like the best thing so like a good actor um and if they do something that is misplaced like don't assign malice where ignorance could be explanation right so from that lens like just game theory it out somebody from the existing system comes and sits down with i don't know five of the largest ethereum holders and says we want you to do x like what do they do what could they do what what can they do they can't do shit in terms of they can't change the system or they can't say no they can't say no that they can't say no that that's the problem like i mean we all know what happens to people who disagree with you

know these large-scale organizations like i mean you know you've got people with a lot more balls than um vitalik and all of that that have you know had their countries blown up taken over blah blah i was literally just going to ask you do you think that it's more risky from a nation-state vantage point uh to be the heads of a country that tries to get off the dollar or to be uh Somebody who, not just Ethereum, but just one of these things that the government decides, hey, we're going to try to leverage this for our benefit and you don't want to do it. I still think it's worse to be the nation state head. Probably.

Yeah, probably. It's probably more dangerous to be the nation state head. But here's the thing. You mentioned before Vitalik Smart. Everyone thought Elizabeth Holmes was really highly intelligent. and and i mean to an extent she was yeah there and us exactly um so so like i actually think uh vitalik is um he's not so smart i think he's highly naive i think he's um he's like you don't think he's smart at all no not really because i mean because because i understand that's a wild

comment dude i understand what he talks about and he just talks in fucking circles like that's the thing like he actually doesn't make sense what do you okay so here's an interesting question uh we may disagree on this what what do you disagree with him on or what do you think he's wrong on his first principles so like you know what does that mean so the first principles he doesn't take a first principles approach to building things okay so like you know as an example um he is still of the opinion that uh and from the beginning like you know he he got sort of laughed at when uh his suggestions about bitcoin you know we should do smart contracts on the base layer blah blah so so he's a bit of a he's a naive kid who thinks that bitcoin and money is just some

sort of toy that we can play with um and because he couldn't get his way in bitcoin um because all these suggestions were stupid he went off and built his own toy um and because he's intelligent enough to sound intelligent and because he looks the part um you know a lot of people buy into the kool-aid idea like you know they sort of take the kool-aid and they're like oh you know he's the boy genius blah blah and you know you ask someone uh to explain what vitalik's actually talking about in a podcast they'll be like i don't know but it sounds smart um so i'll listen to him so so so it's like people don't actually know what the fuck he's talking about half the time and when you actually listen to the things he says like half of the things are contradictory like half

of his statements give me an example well his thing about proof of work like he thinks proof of work is inefficient proof of work is the most efficient mechanism for um doing anything in life i mean if you're an artist what are you doing proof of work if you go to the gym what are you doing proof of work like proof of work permeates all of existence proof of stake is a human created aberration in which a group of people want to have an advantage over another group of people like that's the first principles approach to proof of work whereas he's trying to take some high level abstracted view of let's tweak some variables up the top here and we can create a game theoretically sound system that doesn't matter like what is missing is the actual first

principles of why proof of work actually functions so to me that tells me he actually doesn't get it um so he's completely missed the point is it possible that he understands that but thinks that the bigger uh benefit is the trade-off between um getting efficient like energy uh consumption let's let's say that was his thing right he wanted to get more efficient energy consumption and he was willing to trade off the decentralization or the proof of work value all that stuff because it's not more efficient in terms of energy it's not proof of stake is actually inefficient okay explain so okay let's think about the the greatest example of proof of stake at the You just got real excited, so I'm excited now.

All right, let's go. So proof of stake represents the way the world functions at the moment, right? Like he who has decides and decides for everyone else, not just for himself, right? So what that creates through necessity is layers of bureaucracy. The biggest damage we do to the environment as a species is not the use of fossil fuels. like fossil fuels is actually a direct extraction of energy from you know something that existed beforehand and use of that energy so things like i'm going to go on a slight tangent here and then i'll come back in things like you know renewable energies and solar panels and wind and all this

other stuff and this is a whole different rabbit hole but they're actually less energy efficient than fossil fuels and they do more damage to the environment because the amount of energy consumption that's required to build these things is never actually paid back you know when you count up maintenance when you count up all the other things and the fact that they're subsidized through the taxation or creation of money what that actually means is money represents human resources it represents natural and human resources combined so when you're actually leeching money from one thing to subsidize something else you're the actual real environmental cost of that is a lot higher than what you think it is on paper so all of this sort of renewable

energy stuff is all like one big mess because it actually is not helping us like if we put all of that energy time and effort into making the extraction of fossil fuels more efficient i'm going to do a podcast next week with alex epstein we we would have like cars would be more efficient um power plants would be more efficient like all of the things that we take for granted today in an energy rich society would be way more efficient but coming back to um so energy use so energy use is correlated with um and you know it i think is extremely causal with like um uh human prosperity right like you know the the more we do the better we do the more energy we exactly so that's not where the problem is the problem is is all in all the wastage so when you think about

what is required to maintain a system which is built on proof of stake so government central banking all this other stuff the layers of bureaucracy the waste like you know for the u.s to function you need the military industrial complex you need the whole banking system you need wall street think about all the buildings that the unnecessary people that are hired all of the crap that goes in there like you know with governments as well like i mean the masks thing is a perfect example 30 billion disposable masks get dumped every month all because of a moronic mandate like all of these misallocations of resources all of that stuff basically we're probably like if i had to just take a number out of my ass like 60 70 80 percent

of the energy we use is wasted on stupidity so the biggest impact bitcoin is going to have is because it eliminates the wastage we will actually become a far more efficient society consumption goes down like we we blindly consume shit that we don't need because the incentive is to spend like you know gdp gross domestic product is not a measure of production it's a measure of consumption it's it's everything's fucking ass backwards so tying that to proof of stake is that that kind of a system trends towards bureaucracy it trends towards waste because it's not tethered to proof of work so proof of work drives efficiency because it's tied or it's tethered to the second law of thermodynamics that's actually what creates

efficiency when you create these abstractions you move away from reality and you don't know what you're doing and you waste and waste is actually what destroys the environment destroys resources destroys energy wastes energy etc so is it fair to say you think proof of stake if i to categorize your argument. It is one, those who are rich get to call the shots, which is a direct kind of comparison or evolution from what we already have. And then two is proof of work drives a level of efficiency because less percentage of the energy that is consumed is used for wasteful purposes versus proof of stake would end up being high waste regardless of the total energy consumption. Correct. Proof of stake will turn to waste. It'll trend that way.

in the beginning it may not you know in the beginning i mean you know proof of stake you know the stake is represented by an amount of capital now when do you think they're actually gonna do the update i actually heard there's some more delays now so it's like now it's 2024 apparently um because they have to build a scaffolding that sort of uh sits below so then you need to stake a bunch of eth or some shit like that on um on the scaffolding and then you can't take that off so that so it's like it's stuck there until you know that's sort of ready and then they have to merge everything across dude ain't gonna happen for another couple years does it ever happen probably not and who really cares i think it happens i agree with you though

that it takes a longer time i mean at this point like the whole the whole thing we're trying to do here with bitcoin is we're trying to transform the world from one in which any authority has the capacity to decide for somebody else like i don't want some bureaucrat who's never met me to decide what i should do with my money with my life with my decisions or any of that sort of stuff so bitcoin ushers in a world of sovereign individualism that doesn't mean every man for himself like this is something we need to sort of like clarify because whenever people hear this it's like so what everyone's going to live in their own cardboard box or in their own bunker and like sort of war that's not what happens human beings like do you have friends of course you do

i mean kind of i have friends like what what do friends do do we are we forced to have friends no like we we find people that we align with that we have similar values with and we create these communities that they're emergent they're bottom up and and so so bitcoin enables a world in which we can actually do that voluntarily and by our own volition as opposed to being forced into these you know group identity politics and all this sort of shit you know by morons who think they know better for everybody else because they don't have any discipline in their own lives so it's like that you know like a politician or a bureaucrat or a central banker is someone who like doesn't have any capacity to have control in their own life so they want to control everyone

else's life and all we're seeing with crypto and all this stuff is just a replication of that but just in a digital form like i don't we don't need a group of nerds to replace a group of bankers like you know they're the same thing it's just one's just the younger version of it i don't think i've ever heard anyone say replacing the bankers with the nerds uh but proof of stake for sure whoever has the most gets it what about the critique of that that says well that just means you have more skin in the game and therefore because you have skin in game you actually protect the network um i guess that is a critique um so you've got more skin in the game and you protect the network that in a way i agree with right um because like i've actually

said this me and gladstein were discussing this about voting i was like you know if if you don't pay taxes you should not get a vote basically um and and what that actually trends towards is voting just actually being an economic decision so you abolish voting altogether and the only voting that anyone partakes in is uh what you buy like your your purchase is your vote so you know you you vote for the car you want to buy by you know buying it but um you know in this sense the problem we've got with it is that yes you've got more skin in the game and you know yes you should have the right to to make the decision but money how the money functions should not be anyone's decision it should be enforced at the level of the individual and it like you know

that there's a joke which is you know god gave humanity money and he fucked up like i'm paraphrasing it's something different but that's kind of what it is right so like money should be outside of all of our hands no matter who's got the biggest the lowest stake like the rules of money should sit completely outside of anybody's hands so and so is that uh gold would fit in there gold kind of fits in there exactly because it's it's it's a metal we can't change the chemical properties of the metal so so it exists as that gold just has physical properties that make it uh prone to being held in large quantities by certain authorities so the whole idea is sound money it's outside the system you can't create more of it uh and therefore that

makes it that quote-unquote sound money it's just that bitcoin's a digital version gold's physical version correct but bitcoin actually so so remember before i was saying money is this thing that permeates all of existence so money is like a meta idea or meta energy or information at its very like purest form bitcoin makes money information again so you know bitcoin's like slogan should be make money great again like that's sort of the um the the thing so it puts it out of reach of all of us so none of us can play god with anybody else so so again like the idea of uh having extra skin in the game to call the shots makes sense but not for the the the mechanism via which human action is measured right and that's money like that's the most important

thing once we've got that out of the way we can do everything else like we move into a world of and this is you know maybe another unpopular opinion is like we don't need decentralization decentralization has one reason to exist and that is for censorship resistance and we need censorship resistance on money all the other stuff we can compete our way into better products and services and so i think the future that bitcoin gives us is not a future of all these decentralized products and decentralized finance all this other crap that that's all noise in the short term in the long term what will happen is we will have competing companies competing ideas competing entrepreneurs all this sort of stuff competing their way to better products and services

because they can't get a they can't get regulatory arbitrage they can't grow big and then socialize their losses when they fuck up they can't get um excess capital that the little guys can't get because they're close enough to the monetary spigot so all of that stuff gets removed and we actually live in a world where we get this dynamic um equal sorry this dynamic inequality so we'll still have the 80 20 going like we'll still have larger companies and smaller companies but we'll actually be competing in a way that is not unfair today like if i want to create a twitter competitor twitter gets access to public money to 401k money to like all this money there is not a chance in hell i could ever compete with them but in a world in which all of that funny money doesn't

exist where we have to compete on merit i could compete with a twitter so so so we start to actually we don't level out the playing field but we create an 80 20 instead of a 99.9 0.01 and that's like we live in a world of unnatural inequality today whereas bitcoin will sort of bring in natural inequality um and it'll be dynamic um as opposed to static talk about amber and what you guys are doing lately all right so amber is still only in australia um so things supposed to surprise surprise take longer to um to do but the app is really stable in australia it is the best way to buy bitcoin in oz we actually introduced amber black so this is the bomb so you can you just pay a membership fee and you can buy and sell as much bitcoin as you want

there's no fees but more importantly you get like a series of cool features so you can like auto withdraw to your cold storage and then my favorite button is the auto buy the dip so you can you can set an if this then that function so like if bitcoin falls x percent in 24 hours buy me this much bitcoin so that's like the best uh button ever so you can like you can stack on normal dca um and like while you're sleeping if the price of bitcoin dips you know you can extra stack so that's that's where the product is at the moment um next step for us is in the next couple weeks we're going to be rolling out the beta for the us so you know if anyone wants to try it out dms i think the the handle is at the amber app uh with the the at the front so the amber app

but dms or follow us or whatever and um and we'll get you going on the on the beta so we'll when we land in the u.s it's only going to be amber basic so amber black won't come straight away um we just got to get you know grease up all the uh all the gears and stuff and make sure it's all functioning so we'll do that very shortly thereafter we're going to look at uh introducing a um an amber debit card so the whole point will be to save your bitcoin spend your fiat right and so so we'll link that strategy absolutely like that's what everyone should do like my whole goal is actually to build mini michael sailors inside the app so that way you build up like i always say this when people say so what's different to amber than like a

than a coinbase i'm like well coinbase wants you to trade like they literally want you it's a shitcoin casino that's that's what i call it and amber like what we want you to do is build enduring wealth uh in the form of bitcoin and you know everything is designed for you to accumulate bitcoin so it's a bitcoin accumulation app it's not a trading app and when you do that hey you might have some fiat in there you know you you might have topped up your account you know i want people to use it as a bank account but also as their you know bitcoin savings account and then you know we're going to integrate uh lightning and layer one uh the bitcoin wallet in there so that way you can actually interact with the bitcoin world and you'll you know with your

debit card and then depending on which jurisdiction you'll you'll have a functional fiat account in there so you can receive your pay you can send money so that way you're connected to both worlds and it'll act as this bridge um over time and then we'll link the um the the bitcoin account with the fiat account through being able to borrow fiat against your bitcoin so um in that sense you've got like a constant credit line inside the app where you never have to sell your bitcoin if you need some fiat emergency borrow 500 bucks against your bitcoin you know it locks it up in there in a multi-sig you know we won't really hypothecate we won't do any of that and then that way you can spend so that way you've actually got like a bitcoin bank in your pocket that talks

to both worlds so you know if you're in el salvador um and you need to buy something use lightning um if you're in america or in australia um use your debit card like you you'll have the options and you can take amber with you anyway so that's sort of the plan but in the short term next step us and then we'll look at other places and this is pretty much all retail right if you're if you're an individual this is for you 100 100 what has been the biggest surprise over the last 12 months in terms of building it hmm biggest surprise the biggest surprise or biggest challenge both okay biggest challenge has been getting good devs man like you know good product people so so so what's hard in in the bitcoin space is you you get one of two things you know

you get people who are like hardcore bitcoiners really really really really get bitcoin but they haven't had the experience in like sort of building tech right or building a tech company so so you know you sort of got one side lacking then on the other side you get like people who had loads of experience building product building tech doing all that stuff but they don't get bitcoin so so like trying to find the unicorn that gets both that's that's a that's a real challenge and you know we're on the hunt for for people particularly the best uh for the best exactly we're on the hunt for the best like we we need we need bitcoin product unicorns so so So that's sort of that piece.

Surprise-wise, I mean, I don't know. I think I haven't been – actually, probably one thing is just like the level of stupidity of some of the legacy financial institutions that we deal with back in Australia. I won't name any names here, but one of the partners we were working with has an upper limit on volume. I was like, I'm trying to give you more money. I'm literally trying to give you more customers, and you charge me per customer. so i'm like literally trying to give you and they're like sorry we can't accept it i was like

what kind of an industry like operates like that why do they do that it's like a fraud prevention or something some risk thing but like we actually have less of a default rate than a gym so like like but but we're in a higher risk category so it's like it just this is again like a ramification of the fiat world instead of uh you know the market deciding you know which is you know the market says that we're a safer product than your gym down around the corner the regulator says that we're a much higher risk and therefore should not be allowed to direct debit more than a certain amount it's it's complete madness so that's the surprise it's fascinating to me how uh backwards it seems sometimes dude it's it's and sometimes there's a good reason but also sometimes

maybe not the thing is a lot of the times the reason that started back here upstream it was a good brain fart like oh you know we should do this the problem is is when it's mandated as a blanket solution to something what happens is all regulations end up being designed such that it's harder for legitimate people to do anything because like in order to stop a bad actor with a regulation or a rule you have to blanket everyone so you have to basically screw everyone over but then the bad actor all they do is just figure out a way around the regulation anyway so what you've done is you haven't stopped the bad actor you've actually inhibited all the good actors that's why regulations don't work like that's why bureaucrats just need

to get the fuck out of the way and let us innovate because the fact that there's more good actors is we'll out compete them but we're getting handicapped the good guys are getting handicapped and the bad guys are just doing what they want to do anyway so this is why none of that stuff works i think that the system is messed up and it will get changed i didn't know you thought that i mean yeah it's just the incentive is to have those in power keep the system in place and for those not in power to change it well of course i mean that that's always been the case i actually just think that this time it's going to be the greatest shift that's ever happened in humanity like literally this if we if bitcoin doesn't win like if bitcoin doesn't break the state which i

think we've already won one but by the way but if bitcoin doesn't we are going to either blow ourselves up or we're going to become like a big collectivist dystopia in which like you know ubi and all this sort of stuff what it does is it actually rips the soul out of humanity like again macedonia is a great example is you know in order to equalize society in order to equalize humans you can't force people upwards you actually but you can force them down and and that's what happens and and you get that through force but you also get it through the the maligned incentive of if you work harder than i do but we get the same thing what are you gonna think you're like fuck this guy i'm gonna work less but then as you work less than i'm gonna be like man he's

working less now so i'm going to work less and you get this downward spiral and that's effective what's happening so so when you like when you look at society people are going to start getting free money just to sort of be placated so that they don't go out and riot but at the same time you know you get this sort of equalization effect that you know everyone's the same and we're all equal all in this together like we're fucking not but you know apparently you know the state likes to say that we are so as we do that we actually kill the spirit of overachievers we kill the spirit of the 20 who do 80 of the effort and in doing so we hollow out society and we make it weaker so so like we're getting weakness through safety instead of getting strength through freedom

and and that they're two divergent paths and you know bitcoin is a counter to that but you know if it doesn't win we we end up in a world in which like things get worse and worse and worse and worse like we erode the capital that we've spent millennia building um people get more and more empty um you know the the whole wef you'll have nothing you'll have no privacy and you'll be happy you know like staring into the camera like i swear i'll be happy um and like that that's sort of the the future that we're moving into which conspiracy theories aside like it doesn't even need a conspiracy theory to no they're saying it like that but even beyond them saying it like they actually think it's a good idea like of course i i i'm a big believer that most people

who do dumb things don't think that they're bad people and they don't think that what they're doing is wrong they're just literally dumb people correct and and and and the problem is that the dumbest of the dumb are the bureaucrats who are actually deciding where resources should go how people should operate what people should think what they should be taught at school what they should put in their bodies like i was there was just the best meme the other day the the belgian health minister you know like the one that looks like jabba the hut and there was this other guy who's like a personal trainer who didn't want to get the vaccine so one of them has a health passport and the other one doesn't and like i was looking at that i'm like man like so

it's just wild right and unless unless bitcoin wins we're going to be living this sort of twilight zone disaster and and that doesn't bode well for the human species like it really doesn't bode well like at some point we'll wreck ourselves like either the energy grid will fall apart and what a lot of people don't know and i don't want to get too doomsday's here is doomsday-ish here but as we start to like do this moronic push to like you know eliminate uh fossil fuels and all this sort of stuff like california's already a disaster right like we're gonna break things that were built that we don't even know why they were built in the first place and like people don't realize how like interconnected especially modern society is and how fragile it is like you

break one chunk of the supply chain things get really really bad really really quickly like food breaks down energy breaks down heat breaks down like we saw it in texas last year like really briefly or if it was early this year or whatever it was but that's a bad place um and bitcoin is the only thing i think that exists today that really has a chance of counteracting that and that's where i get annoyed you know with all the crapto people and all the blockchain people like we've got this thing here that fundamentally changes the base incentives of society like if you remember from sovereign individual like the whole thesis about uh changing the returns on violence right we move away like by lowering the cost of defense and increasing the cost of

attack you actually change human behavior you change how society functions but more importantly what bitcoin does is it actually transforms the individual's relationship with three things with energy with their own time which includes you know their relationship with their own future and with natural resources so what that means is like we actually start to have a lower time preference and more of a respect for the things that we have because we actually have wealth you know we can save we're more we're more discerning about the way we spend and you start to create a better individual and when you create a better individual you make the world better and that's the genesis of the bitcoin fixes this meme so that grassroots foundational shift what that does is it gives us

tracks that don't lead off the cliff like at the moment all we're doing with crypto crypto blockchain fintech government politics like all this shit is we're fighting over which person is driving the train that's going right off the fucking cliff bitcoin says here's a new track this one's going to a nice like green pasture like let's go on this one and that's what bitcoiners have realized and we're like the fuck are you idiots arguing over the train wreck for you you're literally gonna run off a cliff and you're trying to keep us all on the train you're not letting us off like we are actively exiting and we're jumping on a different train and that's the theory i think that's how it works where can we send people to find you on the internet uh well um i used to be

on at alex svetsky at twitter so we need to find a way to get my ass back on there but at the moment i'm ghost of svetsky on twitter okay um but if you if you search my surname s-v-e-t-s-k-i you'll find me on medium uh what else do i do oh actually i've got a podcast apparently uh called the wake up podcast so you know i've got like lots of broad guests we go into philosophy psychology energy like we're gonna do carnival like all sorts of random stuff so so there um and then check out amber.app um to to keep an eye on what we're doing with um with amber and when we're bringing it to the u.s and stuff amber.app and then ghost of svetsky on twitter hopefully the real one will come back at some point yeah awesome let's thank you so much for doing this we'll definitely have

to do it again in the future absolutely brother thank you