The Pomp Podcast - Alex Gladstein, CSO of the Human Rights Foundation: Bitcoin and Global Welfare

Episode Date: February 22, 2019

Alex Gladstein is the Chief Strategy Officer of the Human Rights Foundation and a guest lecturer at Singularity University. In this conversation, Gladstein and Anthony Pompliano discuss Bitcoin, foreign aid, Web 3.0 as a decentralized world, unbanking the banked, and the surveillance state. ----- Join the Off the Chain newsletter. Pomp's daily email analyzes the crypto market for institutional investors. Simply, it’s the best crypto newsletter delivered to your inbox every morning. No frills. No bullsh*t. Just everything you need to know in a 3-minute read. https://offthechain.substack.com/ ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Alex Gladstein is the Chief Strategy Officer of the Human Rights Foundation and a guest lecturer at Singularity University. In this conversation, we talked about Bitcoin, foreign aid, Web 3.0 as a decentralized world, unbanking the banked, and the surveillance state. I really enjoyed this intellectually deep conversation, and I hope you do as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions

and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys, welcome. We have Alex here. Thank you so much for coming and making this happen.

My pleasure. Can't wait. I'm super excited. As many of you probably know, Alex is the chief strategy officer at the Human Rights Foundation, and he's a guest lecturer at Singularity University. So that's what you're doing now. Maybe let's just start with your background, and then we can figure out how you eventually ended up playing with internet magic money. Sure. Yeah. So I think this conversation is

going to start a little bit differently than some of your other guests, because I come from the world of political science and studying governance and government, as opposed to studying finance and money. And at the Human Rights Foundation, we study authoritarianism. You know, we study the way that societies are built. And we study the fact that about 52% of the people in today's world live under a highly centralized government, where all the powers in one place, under one person, one king, one lord, one dictator. And that's kind of how human history always was, right? After the agricultural revolution, people shaped themselves into these kind of hierarchical top-down governance structures. But you know what?

2,600 years ago, someone had a really cool idea. Let's be ruled by rules, not rulers. This was Cleisthenes in ancient Greece. And for the last 2,600 years, we've been tinkering with this idea of democracy, literally, you know, rule by the people. So democracy is a technology that disrupts and decentralizes political power in the same way that the internet is a technology that disrupts information power and Bitcoin is a technology that disrupts financial power. So throughout this conversation, I want to kind of keep coming back to this sort of triple theme of government, information, money, and how democracy, the internet, and Bitcoin have changed and are going to change things for the better. Got it. And so when did you first come

across crypto or Bitcoin? Sure. So at the Human Rights Foundation, we work with people who live under dictatorships, authoritarian regimes, and for them, technology is really important. It's either being used against them to surveil and spy and control them, right? Or it's a liberation tool, right? So people have been using encrypted messaging apps like Signal and Wicker, you know, even like more basic stuff like PGP for years. Digital hygiene is really important for them, right? You know, for us, it's kind of a luxury, slippery slope type thing. But, you know, if you're living in a country like Burma and you're doing investigative work, you're doing anti-corruption work, it's very important that you keep your information safe,

Right. So we've always worked with tech companies and people who are trying to build tools to help activists. And, you know, again, that includes encrypted messages, VPNs, ways to like fight censorship and surveillance. A couple of years ago, I got into a conversation with a guy named Bill Tai, who's a total legend. Bill has been mining Bitcoin since 2010 in his apartment. He's the one who eventually introduced Richard Branson to Bitcoin. It's why Richard Branson hosts this sort of Bitcoin, you know, brainstorming session on his island in the Caribbean. And Bill was like, hey, I'm on the board of this organization called Bitfury. We should do something together, right?

Bitfury was, is at the time and now still a very prominent Bitcoin mining company. And that was in 2016. And then the next year, we brought a Bitcoin conversation to the Oslo Freedom Forum, which is the conference that the Human Rights Foundation, we produce each year in Norway. which brings together activists and journalists and people who are fighting for a free world together. And the activists get to tell their story on stage to a huge room of influencers and people who can make a difference. It's kind of like the Davos model flipped on its head, where instead of like the bankers and people in control on stage, it's the people who are trying to disrupt the establishment on stage and the establishment's listening. This is our sort of flipped model.

But anyway, we brought we started bringing in Bitcoin into this because at least, you know, I believe that censorship resistant money is such an important tool for people who are struggling under authoritarian governments, hyperinflation, tight financial controls, financial surveillance. And let's before we get really deep into Bitcoin and the kind of decentralized money, let's start with just pure centralized money. Right. I think most people understand how the fiat world works, but what are the downsides to kind of centralized money? Yeah. So I think when we talk about cash and we talk about fiat money, we need to understand we're entering into a world that's going to be cashless. Right. So one thing is if a government creates money and prints it and allows us to have that. so we're walking around exchanging $20 bills, that at least still has a semblance of privacy and ownership and sovereignty. Of course, bad things can happen with inflation, things like that. But generally speaking, when I hand you a $20 bill, that's a bearer asset. That's a private

transaction. And people, I think, are underestimating how powerful that is. We've always had cash in civilization. A lot of people who attack Bitcoin like to say that, oh, all this crime is going to happen with private money. We've always had private money. I'm more concerned about a world without private money. So the writing is on the wall for all societies in 10, 20, 30 years to be living in a completely digital financial world. We're not going to be carrying around pieces of paper and metal anymore. These are going to be looked back at as like fossils basically, right? From a different age. And in that world, I want to make sure we have privacy freedom and rights over our money because if not it's going to be mass financial surveillance

and then social engineering and we're seeing this played out in real time in china today and it's terrifying and i don't think people want that yeah explain a little bit more about what's going on in china for those that don't know sure so you know i'm not sure where exactly all the listeners here are chances are you live in a relatively free society where there's a separation of technology and state, which is like a kind of an important idea, meaning the U.S. government, for example, or the German government or the Norwegian government, you know, countries like that, they don't control the tech companies. They can like get into arguments and try to tell them what to do. But generally speaking, there's a separation, right? In China, the Chinese Communist

Party basically owns, you know, these technology companies. There may be like a formal separation, but they have to do whatever the communist party says so they become tools right so the communist party has used the tech companies to create technology infrastructure that can suck all of the personal financial health location communications behavior data up of its citizens through tools like wechat which is a super app that basically is so much better than anything we might have here in the united states that does absolutely everything ranging from you know think about Uber, Amazon, Twitter, Google Maps, all in the same thing, right? And it's what most urban Chinese people use every day to connect to everything, right? So the terrifying side of

it is that the government has all this data, right? So step one for these authoritarian governments in the information age is to build this data collection mechanism. Step two is social engineering. So once they have all the data, then they start thinking about the carrots and sticks they can put out there to make you stay loyal. Right. Because violence alone is not very efficient in controlling a population. What's much better if people have to police themselves. Right. So if people in China today are now starting to think about, oh, I shouldn't say that because then I won't be able to get fast internet or get a visa to leave the country or get a good rate on my mortgage or send my kids to a good school. That's a really powerful incentive. Right. So

what the Chinese government is starting to build, it's experimenting all across the country. There's not like one unified system, but it's this idea of a social credit system. And they want to implement it nationally in the next few years. They've been very open about this. And the idea is that unlike a credit score here, where it's just sort of like your financial behavior and are you paying back your credit card on time and how responsible have you been, they add in your friend circle and your behaviors and your sexuality and your ethnicity and your religion and things like that. And that adds to basically what amounts to a social credit score, which basically is like a loyalty score. So the government is going to use that to determine

whether you get access to like basic goods and services. So not only are they sucking up all this information with no limits on your, you know, there's no such thing as like individual privacy, But then they can use that to start shaping the population. And that's something that's going to happen everywhere, including in your country, wherever you are right now listening to this, unless you stop it. And there's two ways to stop it. Old school human rights and civil liberties advocacy and building technology that can't be manipulated by authoritarian governments. And I think you are in the same camp as I am of like there's an inevitability of us living in cashless society, right? Around the corner is a Joe and the Juice and they don't take cash, right? They literally said I heard themselves tell somebody you have to not use cash here. And so if that's going to happen, I think the argument you're making is either we can try to plea with governments or any sort of authoritarian regime to not surveil, not do nefarious things, or you just build the technology from day one in a way that cannot be manipulated, cannot be abused, etc. Yeah, there's a great quote from a famous cryptographer named Wei Dai, and he says something like, you know, governments are always going to take freedom from their people.

It's inevitable. Even the most benevolent ones will find a way, right? So let's make technology that makes that impossible, you know, and that was the ethos that went into the creation of Bitcoin. Let's make something that they can't control. Let's make something that empowers individuals. So let's talk about cashless society, right? And I think that we're aligned in building that technology that's not manipulated. But what does that look like from a user experience standpoint, right?

If I'm a citizen living in a cashless society, how does my life look different than today? I mean, it's a creeping difference, right? It's something you don't – You don't wake up tomorrow and it happens. You're not like, oh, my God, my life is so much different than it was. But when you think about it, think about your life now versus 10 years ago for most of your listeners. I mean, a lot of things are touchless. You start to use your phone for a lot of things, paying back friends, things like that.

It all sort of happens off your phone as like the central point of, you know, your financial life. As opposed to 10, 15 years ago, obviously, that wasn't the case. So there has been a dramatic change. It's just been very creeping and slow, right? Like I remember the first day someone said, oh, I'll Venmo you. And I was like, what the heck is that, right? Now it's like just, you know, I use it without even thinking. Yeah, exactly.

So it's about convenience, right? And convenience is going to be the key factor here because convenience will win. If you look at the number of people who use, like, privacy technology, it's fairly small from a percentage basis, right? People use things like PGP signal, things like that. And that's because people, in the end, to be frank, don't really care about their privacy, which is highly unfortunate. So what needs to happen is that the people who do care about privacy and who know that it will become so important to the future of money and the way we network with each other, They need to build that into our systems today and make the most convenient and best financial products have privacy. This is a super important idea.

And I think part of the lack of concern about privacy, half of it seems to be people just don't understand why it's important. They don't care about it, etc. The other half is most of the products that they should use from a privacy standpoint are more friction. It's not, you know, kind of built into the daily consumer products that they use. And so it's almost like, oh, that would be harder for me to use and therefore I'll choose convenience over privacy. It's also it's been demonized. I mean, a friend of mine pointed this out the other day, but think about the little icon Google uses for incognito. It's like some sketchy dude, right?

No, this is like a fundamental human right. I mean, think about it. Do you want everybody else to be able to see what you're doing at all times? No. And again, it's something we're not going to realize until it's too late. Right now, you're probably like, well, I use Venmo and PayPal and I don't really own my own money. I mean, it's living with some bank and that's not really causing a problem for me. Well, it's not maybe causing a problem for you because you live in a democracy where the government can't just come take your stuff.

But again, 52% of the population of this planet, 4 billion people, live under an authoritarian government where they absolutely can, will, and do come and take your stuff. So if not for you, for them. And it feels to me like the creation of Bitcoin and kind of this censorship resistant, you know, seizure resistant money was born out of a time that forced people to understand more about the global financial system than they probably did previously. Do you buy into that narrative or do you think it's more coincidental that the time and place of where Bitcoin was created just coincided with some of that? I think it's all about personal responsibility and education. I agree with you. I mean, think about the way that democracy over time has forced people to be more civically engaged and educated about how politics works. Right. Think about the way the Internet, especially now with all of the competing news sources, let's say, has forced people to think hard about what's real and what's not.

Whereas before they were just listening to whatever the government or the rich people who are in the newspaper said. There were no other options. Today, when you learn about Bitcoin, you learn about money and you learn about how to control it and how it works. So I think this is all like an arc of personal responsibility and people having to take a little more control in their lives. And I agree that can be a little scary, but I think it's really important for the future so that we don't all become sheep. Well, it also falls in line with the idea of like decentralized politics or decentralized information, right? Kind of Bitcoin is as decentralized money is another component of other aspects of life that have already gone this way, right? So like democracy, I think, you know, you and I have talked about democracy is just merely decentralized politics to some degree. Absolutely.

And the Internet is decentralized information to some degree. Bitcoin is an extension or an evolution where we went politics, information, money. That's what I'm saying. Yeah, I mean, think about it in a decentralized society, the people who print the money and who make the news and who run the military and who run the justice system and who make the laws and who are in control of science and medicine. they're all different. There's a separation of powers. And this is kind of the most important thing in a democratic society. And this allows things like free expression, a marketplace of ideas. It allows things like opposition, political parties and opposition politics, civil society, watchdogs, nonprofits, human rights groups. All these things grow out of this idea of

separation of powers, decentralization. At the very top, the cherry on top are elections. elections are just a mechanism every dictator has elections so elections are like the cherry on top of democratic society and you can think of this sort of in the same way with with information and with money in as much as the most important thing at the bottom is a separation of powers so on the internet we need to have different people who own the production of information news and data and we have to be able to choose and these and these these entities compete with each other and it's a marketplace right um in bitcoin the production of money has been decentralized right it's no longer one person there's no longer a single point of failure

it is kind of like this community effort which is broken down into miners and merchants buyers and sellers and coders and people developing infrastructure and users who run full nodes So there's this like really interesting ecosystem of people who all balance each other out. And just like it's really hard to commit a coup in like a healthy democracy, just like it's really hard to pull the wool over someone's eyes if you have a lot of information that you're digesting from the Internet. It's really hard to do a coup in Bitcoin. Really difficult. So the interesting thing about decentralized systems is that they're anti-fragile. They're much actually much more strong than centralized societies.

Dictatorships can crumble in a moment, right? as we've seen many times through history a healthy democracy cannot crumble in one day doesn't work like that and i think you're going to see the same thing with like the internet and information of course and of course with bitcoin these things don't crumble in a day they're actually stronger and there's another area that i'd like to dig into a little bit which is this idea that you know oh bitcoin is going to allow all these evil people to do things like crime and, you know, terror and drug trafficking. I think this is wrong. Okay. And let's go back to the idea of decentralized politics and government. If you ask a seven-year-old,

which society would you rather live in? What's safer? The one with the most police and the most rules and guns or the one with like a lot less rules and guns where people can kind of do whatever they want. I think they're going to choose the ones that the society with the most rules and guns, but it's counterintuitive. Terrorism and corruption breed inside tyrannies and dictatorships much more than open and free societies. Open and free societies are better for humans. Whether you care about patent rates, innovation, advances in science and technology and exploration, whether you care about inequality, fighting poverty, access to water, having everybody have a proper home to live in, whether you care about maternal health rights, literacy,

Anything under the sun, really, that's good for humans is better in open societies than in dictatorships. And it's a little bit counterintuitive, but I would also argue that an open information system and an open financial system is going to be better for humans. It's going to have a heck of a lot less corruption and arbitrary abuse of power than our current centralized financial system. I mean, think about how much fraud is done in our current financial system that people, I mean, literally are ignorant to or are ignoring. I mean, we talk about the banks, right? I mean, look at Danske Bank, this one Danish bank. I mean, the $30 billion fraud case that they were caught with a few months ago. I mean, that's more than a third of the entire cryptocurrency market cap.

And that's just a drop in the bucket, man. Well, the United Nations, I think it's the Office of Drugs and Crime, came out a couple weeks ago now. And they estimate that $2 trillion a year are laundered in the legacy system, which is like 20, 23x what the cryptocurrency entire market cap is. And then on top of that, you know, you look at something like Wells Fargo, right? So Wells Fargo goes down for multiple hours in a day. And it got me thinking about this idea that customers are going to start to demand that the infrastructure and the security is decentralized in the companies that they use. And it would be interesting if it goes from just a, oh, that is nice that it is more secure or, oh, it is nice to have that it is decentralized to it becomes irresponsible for an organization or a company to have centralized control of sensitive information or money, etc. And that's not going to happen overnight. But that wouldn't surprise me if, you know, 10, 15 years from now, we're actually saying it is irresponsible to not have encryption. Right. Just like that happened today. At one point in life, you know, 20, 25 years ago, that wasn't the case. Is decentralization the same thing?

Yeah, I think what gives me great hope and what should give you all great hope is that a decentralized financial system, I think, is going to be just better from every angle than a centralized one. Not just for security and privacy, but also for speed, efficiency, all these things. And it doesn't look like that right now. People are going to laugh. Bitcoin only does a couple of transactions per second. Well, you know what? Bitcoin's about 10 years old. OK, let's see where it is when it's 20 years old.

When you think about it, decentralized systems can scale exponentially. Centralized financial systems scale linearly sort of at best, right? So if Visa wants to do like more transactions per second, they have to build more data centers and hire more security guards and interns and HR people and consultants and write a whole bunch of more paperwork and suck down a lot more energy, right? That's a lot, right? when we talk about the way that Bitcoin is like clearly and obviously scaling on these second layer networks like lightning, these are built in a different way. They're user powered. Anyone can just join the permissionless and they're going to grow organically around the world, just like the Internet spread. I have this firm belief that this is sort of the way it's going to play out

and it'll allow us to on ramp hundreds of millions of people onto Bitcoin in a much faster and more efficient way than it took to on-ramp all these people onto these sort of what we now think of, hopefully, sort of older financial systems, centralized financial systems like Visa. How does all this relate to the parallel economies thesis? Yeah, so there was a Czech thinker, Václav Banda, who in the Soviet-occupied Czechoslovakia was, along with Václav Havel, one of the great thinkers in that country's history and who fought very bravely for freedom, human rights, free expression.

And they noticed while they were under this sort of communist government that they started to interact with each other in an interesting way. They started to create what they called a parallel polis, like a parallel state. And they would kind of live their life humdrum, like up above ground, right, Abiding by all the rules, but like by themselves at night in their homes and conversations, they would have like this parallel state, right? They would have this parallel economy. They would have this parallel set of ideas, right? And eventually this ended up winning.

And now Czechoslovakia turns into the Czech Republic and is now a free and open democracy. And the kind of conspiring parallel polis people ended up becoming the leaders of this country. And I think it's kind of a metaphor for what's going to happen with Bitcoin in many ways. Bitcoin is a parallel economy. When you think about something like foreign aid and the way that like large money flows around the world, when the U.S. government wants to help people in Rwanda, let's say, I'll pick a country kind of out of the hat. What they have to do is send a whole bunch of money through the banking system of the dictator of that country, in this case, Paul Kagame. And then, you know, Paul Kagame's banking system gets to decide where that money goes. Oh, maybe to that person, but maybe not to that person.

They get to take a cut here, cut there. They get to exert financial surveillance, all these things. So that foreign aid goes, and then it sort of trickles down, right, through the system. Does it really reach the individual farmers in the end? Sometimes, but it's very hard to say how because it's not an opaque system. And certainly, it's not all the money. I mean, it's basically pouring, fornate in many ways is like pouring water into a bucket with holes in it, right? So we can just say, screw that, and we can just go straight peer-to-peer to these people.

All they need is a cheap cell phone and an internet connection. They can have an open source Bitcoin wallet, and we can send them money directly in a censorship-resistant peer-to-peer way. I think this is really game-changing, and it's going to start to have the most impact in places where the financial system is like broken, is kind of my thesis. So we're already witnessing this in places like China, for example, where I would argue that the system is broken because there's these unjust capital controls. Right. Or in Venezuela, where there's hyperinflation or in a place like Iran, where there's sanctions and the people can't interact with their families abroad. So you're starting to see people use Bitcoin in these places where the financial system is sort of broken because innovation happens at the edge. But it's eventually going to spread. Mm-hmm. And do you feel like the foreign aid issue has a solution today with technology and Bitcoin and kind of the infrastructure that we have? Or is this theoretically there should be a world where this works and so we've got some work to do to build the infrastructure?

I mean, I think it's fascinating to me, this idea of we can now circumvent all of the I'll just call them the bloodsuckers in the system. Right. Everyone who's there who leeches off of the foreign aid and now they don't have a chance. No, and they deserve every every every bit of your of your ire. I think we need kind of like a space race-sized, Manhattan Project-sized effort, public-private partnership to get this done. There's so much to be gained here. And I'll walk you through how this would start to be really specific. So I have a friend who's from Burma. She's a member of the Muslim minority, the Rohingya.

So she's been persecuted her entire life by this Burmese military dictatorship. Her father was in prison. She was in prison for seven years. The woman's not even 30 yet. She spent seven years in prison for having basically, number one, a different religion from the government, but also different views. And she was telling me about the status of these camps where the Burmese government and their proxies have basically chased tens and tens of thousands of Rohingya out of Burma into neighboring Bangladesh, like over this river into these camps now that the Bangladeshi government has been basically forced to set up because they don't want them coming into the society, right? So they're in

these camps and we're talking about what is it like in these camps? Do people have passports and IDs? Not really. No. Okay. Well, is there internet? Yeah. There's scattered intermittent internet access. Okay. Is there markets? Like are there merchants? Yeah. So every day, like Bangladeshis come in, buy and sell things, clothing, food, whatever. Okay. So I'm having this conversation with her in berkeley california and i'm telling her well we can just send a bitcoin transaction from our dinner table right here to one of these stateless refugees and they can receive it and they don't have to ask permission from any government or bank they don't have to prove their identity to anybody this is a peer-to-peer transaction now what do they do with that bitcoin

is a great question and here's where like on ramps off ramps become really important local exchanges. And this is where I hope to see a lot of effort being expended by do-gooders in the future. But think about it. Eventually, someone's going to figure out they can make a pretty good living being a broker who comes into that camp and accepts Bitcoin in exchange for different goods and services, right? So here we've just completely disintermediated the entire banking and aid system and just turned this into a peer-to-peer operation. I mean, that's kind of amazing absolutely and going back to this idea of like the identity and if the financial system works right in terms of a decentralized financial system that allows you sitting in berkeley

california to send money directly to a refugee or somebody who needs aid that identification is uh sometimes an oxymoron i think in crypto you hear a lot about using blockchain and um You know, other kind of decentralized technologies to create digital identity on a blockchain, verifiable and all of this stuff that sounds great theoretically. But then we talk about a permissionless financial system where maybe actually identity is a negative piece to the financial system. How do you balance those two ideas around the actual application in, you know, foreign aid or maybe some of the other ways that you think adoption happens here? Well, look, in the same way that the Internet disintermediated a lot of the control over information and news and now, you know, anyone can kind of have their voice and, you know, we're struggling with that. That's an evolution. But it's going to sort of see the same effect with Bitcoin in as much as we're not going to need state provided financial identities anymore. I'm not going to have to go and beg some bureaucrat for the ability to receive money for my family.

This is this is going to be a big change and people are going to fight it because people have a lot to lose. right uh the financial industry is massive and what we're going to basically see is that the very concept of what is identity i mean generally speaking identity is something that a nation state confers upon someone uh so that they can participate in that nation state um what we're probably going to see is less of the like let's let's bank all the unbanked and let's unbank the unbanked like like explain what that means yeah so so people say let's um let's bank the unbanked like let's bring all these people who don't have access to the financial system into the financial system i think what we need to be thinking about is um bringing some of the people who are part of

that financial system uh kind of out of it so they can have more control over their own money and so that they have more of their own money and have more uh say in where it goes it's timely we're talking about this because um the south korean central bank just did this big six eight month study on uh central bank digital currencies right so kind of state-backed issued digital currencies and what they looked at was if they created a kind of bank of korea issued digital currency yeah what the impact would be on the legacy system and what they literally say in the paper is people will choose to trust the blockchain-based digital currency over the fiat currency held in a commercial bank. And we cannot allow that to happen because the second

people trust the blockchain-based one, they will begin to withdraw capital from the commercial banks. And the deposits are how they do lending. And so they'll have to raise rates and they'll have this whole kind of ripple effect on the on the legacy system and so rather than saying blockchain-based digital currencies are better they just say we're not going to issue one because we actually think it'll have a negative effect on these organizations that people don't trust right on the banks and so in my mind people aren't going to not use blockchain-based digital currencies they're just going to go find a non-sovereign one right they're going to go find a bitcoin and say i'm going to withdraw the money anyways i might not do it as rapidly or kind of

violently but i'm going to still take my money out of your system and opt into this other system yeah i mean i think when we start getting into the world of like like um whether it's dictator coins or nation state coins or fed coin or facebook coin i think there's there's kind of limited returns here i mean how how different are these things really than the than the existing digital money we have. At the end of the day, is it centralized or is it not? Does it have a back door or does it not? Bitcoin doesn't have a back door. There's no one who can sit there and edit the records on the back end. The reason why the Chinese government is really into blockchain, this idea of this word blockchain, is because it can kind of connote this idea of transparency

and accountability to the people. You know, they can market that. Xi Jinping has given these huge speeches about how blockchain is going to change China. And the Communist Party ran this program about eight months ago, saying that blockchain was going to be like 10 times bigger than the internet. Jack Ma keeps saying it's not about Bitcoin, it's about blockchain. This is because they can kind of fool the people. They can kind of say, hey, we're going to crack down on corruption, make things more transparent with this open ledger. But in reality, they're absolutely going to have the keys to that ledger. And that's going to be a ledger that they edit on the back end. so it's not really revolution at all um so it's total like wolf in sheep's clothing right and

that's that's what you see with a lot of these sort of blockchain projects the real question you should be asking yourself is not whether it's a blockchain or not um but is there a backdoor or not and if there's no backdoor then that becomes really interesting that's why bitcoin's such a revolution um it then it kind of takes the cheat code out from the government they can no longer edit the records and print whatever money they want i mean if you think about it a lot of governments when you look at the money supply a lot of it's digital anyway to begin with um so when we talk about these like you know nation state uh you know central central bank cryptocurrencies things like that i mean are we going to see more of these absolutely i mean you know the petro was

sort of the first one in venezuela um and that's not working out so well it's a tool of repression not of liberation obviously um but the saudis and the iranians the chinese you know they're all building uh some sort of nation state currency and you know what you know people savvy people are going to be like, well, you know, maybe that's a good investment. And maybe it's smart for nation states to start doing this. But it's a different technology completely from Bitcoin. I mean, that doesn't create a parallel economy that let's say centralized cryptocurrencies that nation states and companies run only increase their power over you. OK, Bitcoin is operating on a different level. Bitcoin is taking their power away and is giving it back to

you well and i think part of this is uh the central bank of south korea realized if people get access to this type of technology they will essentially um circumvent all of the legacy organizations infrastructure etc which they don't want yeah and i think this is this is not a process that happens immediately uh i'm someone who doesn't believe that um you know i don't think governments and banks are going anywhere. I just think they're going to be forced to change just like they were forced to change with the idea of democracy, just like they were forced to change when the internet came and started to empower people and allowed a lot more knowledge and information and investigation and journalism. You know, we live in an age where people know a lot

more than they did several hundred years ago. And we live in an age in a lot of the world where people have control over their governments and can kick them out if they're being corrupt or repressive, which is an astonishing change in the world. I mean, to go from a world where all we had were dictators of different shapes and sizes and flavors and whatever, to a world where nearly half the world is ruled by people themselves is extraordinary. And I think it should give us great hope that eventually, although the road is rocky, the internet and the ability for anyone to hold the whole sum of human knowledge in their pocket is

eventually going to do the same thing for news. And Bitcoin holds the same promise for money. And I think this is just so powerful, this idea that you can kind of own and control your own money and have a participation in that ecosystem. I mean, when you think about just the very idea of when someone sends a Bitcoin transaction to you, I was helping my father-in-law set up his ledger right and we're doing this and we're putting the money on the ledger right and then we put the money on the ledger and it's kind of this moment where it's like okay that's mine now no one can take it from me you know whatever it could get burned or buried as long as you have the backup codes it's fine you can have a brain wallet i mean you can walk across a border with

a billion dollars in your head right um this is wild this is absolutely wild wild yeah i mean it is wild. So and we're just at the beginning. I mean, the crazy thing for me and what I want to focus on at the Human Rights Foundation with our efforts in this area is education. This is first and foremost, so critical. Most people to begin with in the cryptocurrency and blockchain space couldn't even pass a basic 10 word questionnaire about how Bitcoin works. Let's change that. Everybody should read this book called Mastering Bitcoin by Andreas Antonopoulos. No matter what you're doing, if you're an investor, a trader, a builder, whether you're building an enterprise project or you're building something on a decentralized computing platform like ethereum

you should read this book because at least you'll understand uh how like the very idea of why we needed a blockchain in the first place was to create this decentralized money system of bitcoin and you'll learn a lot about how it works you don't need to be a coder or a technical person to understand this book i think it's really important that we start with education first And then from there, we can start talking to people in real terms that aren't overly complicated about how this is sort of going to start to change their life. Right. I think it's in many ways we can learn a lot from, you know, how email and the Internet and e-commerce came about, you know, in the early 90s and mid 90s. You know, most people are kind of afraid of it. Right. And they didn't think it was going to change the world. Well, we've kind of seen this movie before, right?

And I was talking with someone who's in the telecommunications industry in India. And he was saying in 1994, like, you know, most people didn't think everybody would have a cell phone. But he knew. He could just feel it. He could just see that this was what was going to happen. And there were so many people at that time and those years prior who knew the Internet was going to change everything. But most people were kind of like, you know, nah. I mean, you know, there's so much inertia and criticism of any major innovation.

I mean, look at the cell phone. look at the telephone uh you know apparently no one wanted to buy it at the time when grand bell came up with it right they were like that's never going to work look at the look at the car everybody was like well we have horse and carriages and how our car is going to work on the horse roads look at the airplane you know look at the internet right so bitcoin's the same way people are going to be skeptical of it attack it until they understand it so again education is the key piece here and i think we need to do a lot more to create uh educational materials which are clear about what is Bitcoin, why was it created, and how can you get involved with it.

Now, separately, then you would break that out and separate that from other crypto and blockchain projects, which have different goals. Okay, some of them are very laudable. For example, Zcash and Monero. At the moment, Bitcoin is not a privacy technology. Is it better than using the existing banking system where the government can just call up the bank and get all your records? Of course it is. It takes enormous amounts of energy and money to hire Chain Analysis or one of these companies and play this investigative game to find you. But they can do it in the end. So it's better than the existing system, but it's not what we need when it comes to private money. So that's why efforts like Monero and Zcash are so important. Not only are they innovating in this space, they are creating communities of people who care about private money and are building stuff that may one day get sucked into Bitcoin.

Um, now there are other projects, whether they are decentralized computing platforms like Ethereum, um, or, you know, enterprise supply chain stuff, you know, those things need to be separated out and treated as completely different technology subjects than Bitcoin. They shouldn't get to like latch on to Bitcoin. You know, oftentimes I live in San Francisco and I hear these famous VCs and all these people talk about crypto and blockchain. Um, they're describing an imaginary idea. you know, I'll hear someone talk for 90 minutes about crypto is going to do this, that and the

other thing. What do they really mean? What they really mean is Bitcoin plus like a bunch of other magical things that they think are cool. Same thing with blockchain people. I mean, you'll even get a really well-known book written by famous people where they're talking about how blockchain is going to do this, that and the other. They're really they really mean it's Bitcoin. So let's I think it's really important in the education piece to teach people about Bitcoin, why it works and why it's different than other things like the goals of the bitcoin community are to create decentralized money system that's extremely different from like um you know creating a decentralized computing platform or you know helping supply chains become more efficient

i think this is a very very key thing that we need to do and i would argue that if the bitcoin community is successful in building decentralized money they will be successful in building decentralized computing and all these other things we just saw um abra recently announced that they're going to do an essentially tokenized stock. So you can buy Apple, quote unquote, right? But it's all on the Bitcoin network. And so I think that people will build not just for the asset of Bitcoin,

but they will build other things on top of what today is the most secure computing network in the world. I mean, I'm so excited about what people are going to build on top of Bitcoin. I mean, not only are they going to find ways to attach like what you're saying, you know, different kinds of assets and different ways to create value and exchange value.

But, I mean, we're going to create entirely new payment networks. I mean, think about, I love thinking about the idea of, you know, micropayments. I mean, you had this talk at the TED conference in Vancouver last year where Jaron Lanier, who's the guy who came up with the term virtual reality back in the 80s, total legend. And he's talking about how when we created the Internet, we sort of had this fatal sin, right? Because we wanted this sort of like lefty idea of like the Internet should be free for everybody, right? But those same people loved Steve Jobs and loved entrepreneurs. Right. So what was the sacrifice that was made? What was the compromise that was made? Advertising. Right. So John Lenya talks about how this has corrupted the original vision of this peer to peer Web 1.0. Right. And now we live in an age where all of our data is owned by giant companies. You look down at your phone. You don't own any of that. You don't own your Uber locations. You don't own your Google Maps locations. You don't own your Netflix stuff. you don't own your Amazon purchases. I mean, someone else has that data on some cloud computing data center somewhere else. And that's kind of where we are today. And he ended his talk

with like a clarion call for like, we should be able to communicate and transact with each other without third parties interfering, without third parties spying and profiting. And this is kind of the key message of Bitcoin. Because what's interesting is I see a lot of people agree on this in the same way that's like pretty universally agreed by people who at least can access information that democracy is better than dictatorship, like people should have a right to participate in their government. That's like a universal right, right? We're starting to see the same sort of universal agreement around maybe it's really bad that like Amazon and Facebook and Google and all these people control all of our data information. Let's figure out a way to

disintermediate that. But where I think we're missing is in the solutions department. And if you start thinking about what you can build on Bitcoin, the censorship resistant network that nobody owns. The possibilities are pretty intriguing. So if you think about what could end up happening with something like a lightning network, where you can do these tiny little instantaneous censorship resistant micropayments, right? If we invest enough love and care and resources into this and it grows the right way. I mean, you know, is advertising even necessary anymore? I think the business models will change. I mean, people can do, whether it's, you call it a la carte or whatever, people are going to be able to buy, you know, articles by the word or

listen to music by the second or whatever, drive their car and pay their taxes by the foot. It's a little bit of a dream and I know it's not going to quite shape out like that, but you sort of get what I'm saying, right? I mean, if we can have micropayments, then it sort of provides us an attack vector on the surveillance state and on this sort of like, you know, web 2.0, you know, advertising uh behemoth yeah it gives us a way of getting in there and shaking that up what you're describing right from a practical standpoint would be somebody who's got a netflix account rather than pay their 10 12 13 bucks whatever it is now per month instead they're gonna pay as they go right they're gonna say all right i'm gonna pay up to 15 bucks a month and if i don't watch

anything this month i pay zero if i watch you know 75 minutes i pay you know 75 cents or whatever it is and and kind of as they consume they well it's more like about cutting out netflix completely and paying the content creators directly right um because there isn't really a good infrastructure for that and i think it's also more about paying content creators directly with like blogs newspapers like the the emerging new way information is consumed i mean think about the way twitter has changed everything right i mean and now you're seeing medium right and you're seeing these things where you can just reach out and and podcasts like yours i mean you guys content creators should be able to be have a really healthy relationship with your consumers right your clients basically

and right now that's all being done through intermediaries but i think you know in the end i think bitcoin and things that are being built on top of bitcoin will change this de facto reality that there has to be this intermediary um you know look who right now let's face it provide a very valuable service i mean there's a reason why you know content creators pay someone else to help them. Um, but I think that is going to be less necessary in the future. And in the end of the day, intermediaries don't add value. Okay. So, I mean, they provide something, it's kind of like a stepping stool or like training wheels. Eventually we're not going to need them anymore. What you're describing is what 3.0 is not just about decentralized money. It's also about

decentralized information, decentralized data, uh, decentralized, uh, infrastructure. right is there kind of a sequential um way that this has to happen where we have to get the decentralized money first and then we get decentralized data etc or can it happen simultaneously so i i like to think of this as like a family of technologies that are related and bitcoin is is kind of first step decentralized money but then you also have other non-blockchain related technologies that are going to be extremely important in this area so for example censorship resistance storage if we're going to have decentralized money we should also have the ability to put things on the internet and store them and share them with the world in a

way that no one can take down so obviously bittorrent was like an early pioneer in this area and it's just amazing we've already seen that humans want this i mean this thing what it consumed like half the internet traffic for like years and it was it was impossible to kill I mean, the only way to kill something like BitTorrent and Bitcoin is if it becomes useless and then people stop using it. No central party or individual can come in and just kill it. You know, it's an idea. And we're going to see other things beyond censorship-resistant money and censorship-resistant storage. We're going to see, I mean, when it comes to more advanced encryption of your data and, like, stuff like zero-knowledge proofs and me being able to prove to you something without showing you, this is such an exciting area.

I mean, we're talking about the possible reality of, you know, me having my location data, health data, whatever data, sovereign to me, stored locally on me, and then I get to disclose what I want to third parties. So I get to disclose what I want to the healthcare industry or to Google who's tracking me or whatever. I can selectively do that, and maybe I decide to start selling some of that data. But again, I think these kind of like what I call anti-authoritarian technologies, advanced forms of encryption like zero knowledge cryptography, censorship resistant money, censorship resistant storage, decentralized Internet access so that we aren't just relying on one Internet service provider, that we have satellite Internet and we have different ways of getting online and mesh networks. I mean, again, all of these things contribute to the same decentralized future that we need to go to, or else we're going to end up with the WeChatization of all of our lives. Mm-hmm. As we go down this path, right, you talked a little bit earlier about personal responsibility. How much can we rely on people's kind of self-motivation, right, versus is it the responsibility of developers and technologists to build technologies that are convenient,

that can grab the attention of users, and it's their responsibility to make sure that they're putting these people into an environment where there is privacy, security, lack of control and essential authority, etc. Well, just stop and think about the way that technology has changed in the last 10, 20 years. I mean, you've seen society go from learning about email to learning about e-commerce to people starting to own laptops and phones. And these things kind of shrink and become more convenient and become more powerful. I mean, it seems quite inevitable that we're starting to get into the sort of like ar wearable space right of course like things like the apple watch are becoming uh kind of like ubiquitous um this is just going to proceed and it seems

obvious to me that eventually we're all going to have chips of some kind we're going to have you know bio enhancements this seems kind of quite clear to me and you look at joke all time we already have the chips they're just not under our skin yeah exactly exactly i mean it's not that far of a stretch so i mean you think about this progress uh of of technology and you just start to realize how important it is that we don't become kind of like control points from for some government or for some corporation um it's so essential that we build privacy and freedom into this technology now and not later um and that's why there's like even on a micro level debates in Bitcoin about, oh, should we scale or should we do privacy? Well, I think we should, I think

we should do privacy first, right? I think that's the most important thing. And it should be for any of these projects that you all, all you people listening are working on. You know, in the end of the day, what I'm saying is that we're all going to be reliant on technology. We already all are, and we're going to be increasingly reliant on it as even just enters us. I mean, you read stuff like Yuval Noah Harari, right? And you think about the way that, you know, we're all going to start kind of merging with technology right and that's why this is so critical to do now and that's why like technologists are going to control the future so the people building things like networks and communications protocols and financial protocols and things like bitcoin i mean they are dictating

our future they are building the rails for which you know we are going to move forward on so they have enormous responsibility and you who whoever you're listening whether you're an investor a builder a student i mean i think you need to get involved now i think you need to learn about bitcoin and how it works i think you need to take some of those lessons uh into what you're building and help us build a future we can protect our rights and freedoms i mean or else we're going to end up as you know pawns in someone else's game for sure uh before i wrap up i like to do rapid fire but i don't want to go quickly i'm actually super interested in some of your uh your thoughts here um what do you think is the most important company in crypto the most important

company in crypto it's a great question um that's where i normally say i only ask great questions i'll kind of take it slow and and talk about a couple different things i think you're the only person that's allowed to answer with more than one answer all right all right but i'll have an answer okay but i'll kind of give like um some second place people okay or like some other people that are really important look at the end of the day building bitcoin infrastructure to me is the most important thing about crypto at the moment so we talk about wallets we talk about uh you know ways for people to own their own bitcoin on ramps off ramps um what's what's maybe a little counterintuitive uh i mean i think everything like um like people promoting ownership of full

nodes like casa really important people building in infrastructure like lightning uh like lightning lightning labs for example blockstream really important um companies that are building private money like zcash i think actually really important um the little guys who are building stuff like you know like this awesome wasabi wallet that can do end-to-end encrypted bitcoin transactions really important. But right now, what's kind of ironic and intuitive and may kind of maybe trigger some people, but I think what's really key is on ramping people into Bitcoin. So that's why I think like right now, companies like Square and Coinbase are the most important, because that's how people are acquiring Bitcoin and starting to get involved. You don't start from

an area of expertise. No one starts by being a Bitcoin expert. They start by acquiring a little bit, hearing about it, learning about how it works. So on-ramps right now to me are absolutely critical. So, I mean, I think the way Square has done it is so amazing. And I would say that they're probably number one in my book. Yeah. I usually answer Bitcoin. And I think that the, my second answer would be anything that's the infrastructure to in and around Bitcoin. So I think that's fair um what's your most controversial thought meaning what do you believe that you think most other people would disagree with okay so i was just i got the tremendous opportunity to be a guest of someone at the world economic forum this year my first time i went and i've never

been before it's so fascinating it's like all the world leaders everybody who controls everything on the planet in one place you know morals off the table dictators thieves criminals Morals, legitimate heads of state, bankers, everybody in one place, right? It's kind of so fascinating. And it's like a real rogues gallery mixed with all the good guys, too. You know, it's really, really interesting. Good guys, thieves. Oh, yeah.

And the thieves who are pretending to be good guys. It's just a place where people put morals off the table and just say, let's party, you know? Let's have the Saudis sit down next to Tim Cook, you know? Someone who might be responsible for our future privacy and building equipment that we're going to use, hopefully, in the future. They're sitting down next to somebody, you know, who's representing a government that assassinates journalists. You know, it's it's it's par for the course there. I think that all these people are going to get wiped out. I just was sitting there with this kind of feeling that there's this coming storm where I really think Bitcoin is the key driver in this.

That's going to start to disintermediate a lot of what they've been able to do. And a lot of the ridiculousness of Davos, where it's like a whole bunch of rich people who fly there on private jets lecturing people about yada, yada, yada. That's not I don't think that that's going to be the case in the future. And I think a lot of it has to do with centralized control of money. So I'd say my most provocative belief is that I think in the same way that we believe or most people believe, listening, hopefully, that democracy is better than dictatorship or that the Internet is better than centralized control of information. that ownership of money is and bitcoin is going to be seen in the same way meaning that centralized control of money in like 100 years is going to be looked back at and laughed at remember that time when every when a small group of people controlled all the money yeah that was insane so that's my

provocative thought what regulation would you change if you could change one in which country i'll let you pick okay so you can change or improve a regulation anywhere in the world okay anywhere in the world well i guess most of your listeners are probably here in the united states um i would change some of the regulations around the telecommunications infrastructure and the way that telecommunications are built that allows the companies that build them to just sort of siphon off our data so i would whether it's through like allowing i'm not i'm not an expert in this area but i want to see more protection of of our data and that's a public private partnership thing it's not going to be done by the government it's not going to be

done by only companies it's going to have to be done in in a collaborative way where like citizens are also involved where there's like citizen oversight boards on this stuff but i don't want to see, uh, you know, my texts and emails and, and, and things that, that people think are private, you know, just being like grabbed, uh, you know, at, at, at, through the telecommunications infrastructure. What's the most important book you've ever read? The most important book I've ever read. Um, there's quite a few, I will say that just in terms of it being sweeping and moving and educational and thought-provoking uh and it maybe maybe it's a little trite but i will have to give the credit to sapiens it's just pretty amazing it's like the brief history

of time but for humans what would be one or two others that uh that are up there with that um i love this book called the looming tower um it's a history of osama bin laden and an fbi agent who was tracking him and it's a dual history of their lives and it's it's a lesson about so many different things but it's a history of the middle east it's a history of america it's a history of police work and counter in intelligence and counterterrorism and it's just such an amazing book um i would encourage everybody to read it and you know what it really the lesson which is so important for this pot for this podcast this conversation and i think for regulators in general is that we're going to fight terrorism and the bad guys through old school, hard, um, hardworking

kind of like investigative, investigative police work and collaboration. We're not going to do it through mass surveillance. Okay. We don't need mass surveillance. It's not an excuse. So you talk about the failure to catch, um, bin Laden and stop nine 11. Um, it was just such a clusterfuck basically. I mean, you had different intelligence agencies not speaking to each other. Um, you had people being stopped from being able to do their jobs. Um, you know, there were smart people who were onto this, who could have stopped this and they were stopped. So I think we need to understand that if we want to catch the bad guys who, and there are plenty of bad guys and I'm a huge supporter of, um, of all the people who sacrificed their lives to protect us. Um, but I think we need

to let them do their jobs and I think we need to let them do their investigative, investigative police work. And we don't want, it's like a sweeping vacuum of all of our data. That's not helpful that's only going to lead to tyranny it's not going to lead to a safer society and that's the lesson of the looming tower and that's why you should all read it i love it um i asked one non-crypto question and then you can ask me one to finish it up you believe in aliens i believe it is inevitable that life uh either has existed or will exist or does exist somewhere else outside of our little tiny pale blue dot a higher probability existed before or will exist after us um after after what well i mean i think there's like like if you believe

in in the creation of the universe right that there's been like a finite time between then and now there could be an infinite time beyond us so um just sort of a basic guess there that's fair what uh what one question do you have for me um what is your best argument for bitcoin when you talk to people who are ignorant or kind of scared or uneasy or dismissive i mean what what what do you tell them when you're sitting down with them and you're basically like look this is going to change everything like what do you tell them so i've shifted very drastically when i go talk to people that uh mostly institutional investors that have no concept whatsoever of blockchain crypto money you know all the things that as you kind of go down the rabbit hole you become much

more familiar with and a lot of these narratives and data points and what i explained to them is the internet it would be really weird if one country controlled the internet and they say yeah that'd be pretty weird right and i say to them does it make sense then that the global reserve currency is controlled by one country that is not the largest right and they just happen to control it because they're the most powerful and that usually gets some blank stares some like i don't really get it and i then i explain wouldn't it make sense for there to be one currency that everyone agrees on that everyone has transparency into that no one could manipulate and also could be used on the internet in a global scalable way that was more efficient

and cheaper to use than what we have today and i would say you know 30 40 percent they get there and like oh yeah that does sound pretty interesting right the idea that hey today we've got the internet and i can send it from my phone and i don't have to worry about you know hours of operations and all this kind of stuff. There's probably about 30, 40% that say, I understand what you're saying. I don't believe it'll happen. Right. So you kind of get, let's call it 60 to 80% of people. They, they get the idea and there's 20% who just, I don't get it. Right. And the people that I get most excited about are the people who actually get it and don't think it's going to happen. Because as I go back and talk with them a month, three months,

six months you know 12 months later the probability in their mind that it's not going to happen has reduced so they started out at 99 likelihood is not going to happen now they're at like 96 right now they're at 90 now they're at 85 and what you can see is that they are it's becoming demystified to them right they're starting to understand it a little bit better they're starting to now pay attention when wells fargo goes down exactly i can't actually use my card right the system is broken yeah they just they weren't paying attention right i call it like everyone's asleep at the wheel both the incumbents and also kind of the population but once you've been made aware of a different type of system you may not believe that the new system is better but

you do become more aware of why your system is broken and i think that's the like getting them to see that over and over and over again just takes time and eventually they convert over and to say, yeah, you're right. And as a concluding thought, I would tell everyone listening, it's a really smart idea for you to invest your time in Bitcoin. Even if Bitcoin project, even if it fails, which I find highly unlikely, the time you spend learning about how it works, why we need decentralized money, why we need private money, why we need cash in a cashless society, how do monetary systems work? What is the relationship between monetary systems and government? How does government create money? How do people network together? How do peer-to-peer

networks function? What is cryptography? What is public-private key cryptography? How do these things manifest into liberation tools? What is it like for people who don't have access to a working financial system? What is their day like? You know, how does their savings get taken away from them? When you learn about Bitcoin, you learn about all of these things. And it's such a valuable investment of your time. And hopefully it lights a little fire in you to start learning more and more and more like it did with me. And it shows you how relevant and it kind of is like this great reveal. It's like taking the red pill in the matrix. I can no longer kind of look at the world in the same way. And if there's one thing I could gift to someone else, it's this gift of

starting to unravel the world through the lens of Bitcoin and how just how curious it makes you, how how staggering it is and you know how how much it teaches you about what you didn't know so i think that would be the concluding thought invest your time in bitcoin i uh i love it man i really appreciate you coming on this is awesome i think people are really going to enjoy it so i'll do it again i hope so thanks so much hey everyone pop here if you like this episode of off the chain and want to help us take crypto to the top of the apple spotify and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off The Chain homepage,

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