The Pomp Podcast - Why Is Bitcoin Stalling While Gold Soars? | Jeff Park

Episode Date: October 2, 2025

Jeff Park is a Partner and Chief Investing Officer of ProCap BTC. In this conversation we talk about what is going on with bitcoin and gold, should we be worried about bitcoin lagging gold’s performance, how to think about bitcoin as living software, durability of bitcoin vs gold, and a new theme referencing the retardification of society. ======================Check out my NEW show for daily bite-sized breakdowns of the biggest stories in finance, technology, and politics: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠http://pompdesk.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠======================Core is the leading Bitcoin scaling solution, enabling you to lock in yield by locking up your Bitcoin. Simply lock it on the Bitcoin blockchain to secure the Core network, and get rewards. No bridging. No lending. Just holding. Still your keys. Still your coins. Now your yield. Start at https://stake.coredao.org/pomp======================BitcoinIRA: Buy, sell, and swap 75+ cryptocurrencies in your retirement account. Take 3 minutes to open your account & get connected to a team of IRA specialists that will guide you through every step of the process. Go to https://bitcoinira.com/pomp/ to earn up to $500 in rewards.======================Timestamps: 0:00 - Intro2:02 - Why gold is ripping and bitcoin is lagging behind8:11 - Global financial markets and why London is struggling14:23 - Durability of gold, fiat, & bitcoin17:25 - Will bitcoin catch up to gold?26:44 - How investors view bitcoin as living, breathing software37:51 - The impact of the retardification of society on financial markets

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. 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. The thing that is really interesting then is, hey, what if we then actually do find a way to find liquidity, a funding-based liquidity on the trillion dollars of gold and buy Bitcoin. And a trillion dollars of Bitcoin is actually hugely impactful for the Bitcoin market. And so if there's a way to unlock the ability to build leverage on the paper gains of gold to take a call option on Bitcoin, there's something incredible here that could happen. And the math is pretty simple.

What's going on, guys? Today, we've got a great episode with Jeff Park. Jeff is the chief investment officer of ProCapBTC, and he's going to explain what's going on with Bitcoin and gold. Should we be worried about Bitcoin lagging gold's performance? Why is gold going up so much? How should we think about Bitcoin as living, breathing software? And the differences maybe between the durability of gold over time.

And then we get into a brand new theme, which is the retortification of society. and why things like the lack of reading and the decline of how much people are actually reading is linked to things like the Mag7 going up or many other topics that you should be talking about across the economy. Here's my latest conversation with Jeff Park. Hi, Jeff. I thought a great place to start the conversation is gold's been ripping. It's like the perfect storm for gold. It's up about 15% since Jerome Powell's speech at Jackson Hole a couple of weeks ago. And there's a lot of people in the Bitcoin world who are like, hey, gold and Bitcoin both are the solution to the same problem. Why is gold going up and Bitcoin's not?

Are you worried at all? Or how should we think about this? Gold's definitely been the story of the year. And I think at some level, there's a common parallel with Bitcoin, but there's also a distinct tone that's quite remarkable to gold itself. And I think to understand that we have to return to some geopolitical, some history and recognize that other than today, these are driven by market participants and buyers and sellers and ultimately flows that take dominance over what I might even argue as just facts that we can observe technically speaking. So big news this week that the US Treasury's gold reserve has actually hit a trillion dollars. That's a big number.

And that's because gold is not at 3850. The other side of this is the fact that the US reserve of gold is actually at a 90-year low. This they did not report in the mainstream media. And here I think lies the dilemma. Gold is going higher, but the US share of its gold reserve at a global level has decreased to a pretty low level. And this is the tension. And I think people like to talk about the price of gold, but the other dimension we need to consider is the relative level of gold's ownership

across the geopolitical arena beyond just the absolute price itself. So I think this is partially why we're seeing such dominating flow with gold narratives because there's active geopolitical participants, namely China. China has been very, very active in the marketplace in wanting to exert some influence on the dollar hegemony, but also have now actually taken action

by purchasing gold directly in the marketplace. So I think there's a lot of moving parts here, but ultimately the salient facts are that at one point in time, post-World War II, the U.S. had over 50% of the world's global gold reserve supply as a central bank, and now it's less than 20%. So who's making up for that compensation on their side? Likely China and many other brick countries in the lead. And I think that sets the backdrop for the conversation in gold that is at this point in time, different than Bitcoin's adoption story to come on the institutional front. So it feels like there's a couple of things happening with gold. The first is definitely there's geopolitical tensions, which just make people want to have a hedge, right? So people go

and they buy gold. You also have central banks buying some of that might be because of geopolitical tensions, some of that might be because of price, you know, there's kind of many different factors. There's also interest rate cuts that are playing into this as well as people kind of think about, okay, cheap money is coming back, will inflation come back, whatever. If you're the United States, and you see China just buying lots of gold, should you also be buying? Or is there a little bit more of like a global chessboard here? And there may be reasons why you're okay with another central bank buying a lot of a asset like gold. And you're saying, hey, look, I'm just going to hold what I have. And there's a reason why we're kind of making that decision.

Absolutely. When we talk about the dollar hegemony, you'll find people on boats at the camp saying that actually the US dollar has never been stronger. And then you'll find people who say, what are you talking about? I see the complete opposite. And this is actually the heart of the question as to what facts are they looking at? When you look at the total purchase of US treasuries by our foreign holders, that share has increased. There, in fact, are more foreign holders of UST long-dated debt than before. So on one hand, that makes it feel like we're secured in the dominance of actually being the world's greatest borrower. But the other side of it is that the dollar has actually been decreasing for settlement purposes across global

trade, mainly in the ways that we think about how to do big business with oil and global trade commerce that exists with hard commodities. So this tension, I think, is ultimately represented by what we're observing with gold price and the amount of gold reserve that is now being held in the US versus other countries. So for a country like China, if you're actually trying to make the renminbi, a settlement currency that you want to use for oil import and want to settle using CNY, one of the ways that you can actually do that is to really just buffer up your own reserve of central bank gold such that you can feel to be a more creditworthy counterparty than it ever would have been. And so the launch of the Shanghai Gold Exchange, I think in 2012,

was not a huge event back then, but it has now become a focal point for everyone to recognize what has happened in the past 10 plus years is now Shanghai does have the market for having the largest gold trading volume in the world for physical gold settlement. I mean, that is pretty astounding. That is the thing that people historically associated with London and the European markets, but physical gold now actually trades in China. So the other thing that they did earlier this summer that I think is remarkable is they, for the first time, opened up vaults in Hong Kong to allow offshore investors to put their gold in reserves to entice perhaps other central banks.

And so the model that I think China is going for, in which you can back your sovereign fiat with gold that can then be used for trade, is not dissimilar at all from how the US eventually forced its will upon its dollar hegemony. We're just seeing China do its own version, which is why they have been the biggest buyer of gold since 2014. And I think the most shocking charts, if anyone can see today, would be to just pull up how much gold exists on the Shanghai Futures Exchange. Back in 2014, it would have been less than or around 10K. And now it's actually above 70K. It's crazy. I mean, it is nuts. It's actually one of the most incredible up-only chart you'll ever find in the commodities market. But I

that's why gold has been so strong it's always flows driven and there are there's a natural buyer for physical gold and the paper gold as dictated by the shanghai futures exchange you know what's interesting is there's a storyline in there that has not yet got enough attention um london has seeded uh the epicenter of gold to shanghai i saw that london has recently dropped out of the top 20 for ipos and uh mexico now has more ipos than london um it does kind of feel like uh the museum of europe in this financialization of the world uh and the proliferation of the internet actually london of all places has been hit pretty hard in a relative comparison right there's still plenty of economic activity there's still plenty of financial institutions and all

this stuff but then you also can look at like anecdotes of i mean dubai is basically uh you know leeching as many people to move there with tax incentives and and various other kind of economic policies that people just say well why don't i just move there and i'll just pay less that way like it does feel like london is under attack uh they just might not know it yet um and you can kind of see all these data points that show up in uh in global finance yep so interesting I think also this is more of like a sociological comment than economics, but maybe there's just in history a transition of wealthy countries who then exhibit the ability to dominate on the cultural front where they vote social capital. That actually is just as important and long lasting. And so what you see with most of world history is rising economies are backed by some economic and military might to which they're able to then produce culture.

And if you believe that human civilization, the greatest output you could have is incredible culture. Culture can pay dividends for thousands and thousands of years. You know, I remember going to Italy with my parents and, you know, my dad having worked in Korea and watching the economic miracle of South Korea through the lens of Samsung would comment how incredible it is that Europeans can literally just live off of culture. that there's infinite tourism, infinite people interested in distribution efforts by aligning themselves with the cultural mindsets. And actually, it's the greatest asset that Rome has ever left behind. And they still live off of it. So maybe part of the trend we're seeing here is the US is a relatively new country, right? Our culture is a global export today, but it's nowhere nearly as secure. And China, above all, today does not win the culture war. There's

actually no one in the world who would look at China to say their culture is exactly what I want to adopt. I like their aesthetics at my home. I like the way of thinking. I like their TV shows and comedies. There's literally none. So I think it's maybe a gradual evolution that we get to see in Europe has, for better or for worse, been in the leading space for much of human civilization. It is funny how I think China, if you had to describe in one word from many different facets of evaluation it would just be efficiency right um culturally they have been very efficient both in their economic productivity but also i think just like the aesthetics the you know technology like everything is all about like innovatively pushing us forward to be more efficient um europe

is the exact opposite right like actually uh they will mock people who like why are you being so efficient like why why are you working so hard why don't you take a nap in the middle of the day why don't you you know go for tea why don't you you know do all these things that i think we are drawn to because in a way um you almost feel like coming from a culture where uh efficiency and capitalism stuff like how do they survive yeah like almost kind of have to go see for myself this is nice right like oh wow we can just relax yes a hundred in a way that you know maybe china new york whatever like would would never be able to embrace yeah no totally and actually you know when we talk about store of wealth gold is a fungible commodity that is easily accessible

because it lacks character and personality, and it is just a social covenant that we accept. But the highest forms of wealth preservation tends to have a social element, right? So if you think about art and the greatest productions ever made by the European masters and why those retain value, it's because the scarcity is not just in the physicality of it, but also the social capital. So actually leveling up scarcity beyond the physical realms is actually the most important thing. Even when I think about Europe's greatest export outputs to world brands, I mean, the richest person in Europe these days tend to be in some kind of consumer-facing business. Maybe it's a retail business or it's LVMH, right? You don't see anything that China exports where even Chinese

billionaires are carrying anything but LVMH handbags and Rolexes, right? I mean, that's a European good that they're willing to align with. You don't see a Chinese Hermes. And it takes time to build a Chinese Hermes. It comes with exactly what we described, a sense of leisure, a sense of I think abundance, and the ability to then will your mind to sacrificing towards that kind of advancement that's not driven solely by efficiency. You know what's funny is today's episode is brought to you by Bitcoin IRA. Are you a crypto investor with a retirement account, but don't have any crypto in your retirement account listen up this is for you bitcoin ira is revolutionizing the way americans save for retirement by helping smart investors diversify their savings with

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account. Search for Bitcoin IRA in the App Store or visit bitcoinira.com to join 200,000 Americans on their journey to upgrade their retirement. That's bitcoinira.com to upgrade your retirement today. When you look at companies to purchase, one of the things that people will always talk about is no amount of money can actually build the durability of a brand. You can buy a brand that has durability but no matter how much money you spend you cannot create durability except for the expiration of time and gold i think is you know the the ultimate uh asset there 100 but i do think a lot about like the dollar you know if you think so bitcoin has been around now for let's call it you know 15 16 years so pretty much if you're like 18 and above you were alive and probably

remember a world before bitcoin anyone under the age of 16 in the world is going to grow up and like is there really a difference between okay fiat got started in 1971 and bitcoin got started in 2009 like if you were born in 2015 they're both before you were born right and the difference of like 50 years and 15 compared to gold's thousands of years is actually not that different and i think there's a psychological component to this of um whether you call it gen z or you know whatever the the kind of age group is um gold will still always be the thing that's been around for thousands of years but i don't think there's a big difference between the thing that's been around for 50 to 15 and that actually may be a very big attribute that bitcoin carries that people kind of

underestimate yeah i completely agree i think gold's greatest cultural power is it's a permanent fixture in our mindset and durability for eons of human civilization. And it's universal too. I think both of those components make it totally timeless. When I got married, a bunch of my relatives in Korea gifted me gold. And I remember even then thinking, man, what a thing to just keep in my closet now in a vault. And I don't want to deal with it. It's kind of annoying. And then when I had kids, it's very traditional in Asian countries to also gift your child gold related jewelry. So here's now my son who's one years old and he has this giant thick gold bracelet and, and rings. I think we got like seven different rings and a jumpsuit as

well. I mean, soon the teeth are coming, I'm sure. And so like we have this pile of gold and it's in our closet right now. Um, and the funniest thing is that has outperformed almost any gifts that ever got since my kid was born i would say actually the greatest loss was maybe on the diamond that i got for my wife in the proposal for which scarcity apparently is not as strong for diamonds as we all thought yeah well and you know i think part of this conversation of bitcoin and gold is the sound money principles that no one can create more of it uh diamonds used to be thought and now these like lab grown diamonds um i've got a friend who uh his family is probably one of the largest uh jewelers they come from india and he's like uh we have like experts yeah they have a hard time

deciphering the difference between these assets um and so i think that that obviously has an impact um now with bitcoin specifically are you worried that bitcoin hasn't kept up with gold's performance i think it will catch up um i think as i've mentioned before and as you would agree All of these are ultimately driven by flows. We need buyers in the marketplace. And I think it's inevitable that there will be more buyers at the institutional level for Bitcoin adoption, but we have to move that agenda with a little bit more focused deliberation.

I do think that's why when we talk about gold in the context of Bitcoin, the first prong that we all attach to is whether the strategic reserve can be allocated to actually buy Bitcoin for the US in which we are sitting on a bunch of paper gains with gold in particular, right? Because gold has been marked at the treasury at $42 an ounce. And we all know right now it's trading at $38.50. That's 100x, right? That's 100x that we're sitting on. And if you do the math, that's a- Great investment. Hugely profitable investment and reflexive in some nature as well as to what the US was able to accomplish with on the back of the dollar. But there's a trillion dollars of basically paper

gains, right? And a trillion dollar, actually, it sounds big to us, but it's probably not that big in the grand scheme of how indebted the country itself is, right? $33 trillion of US debt out there. So a trillion dollar, maybe it's actually not that big of a reval event anymore. So this is kind of, I think, the tension as to do we do it, do we not do it? If we do it, it doesn't move the dial that much. But the thing that is really interesting then is, hey, what if we then actually do find a way to find liquidity, a funding-based liquidity on the trillion dollars of gold and buy Bitcoin. And a trillion dollars of Bitcoin is actually hugely impactful for the Bitcoin market. And so if there's a way to unlock the ability to build leverage on the paper gains

of gold to take a call option on Bitcoin, there's something incredible here that could happen. And the math is pretty simple. If you own Bitcoin and you assume that it's going to go up by 12% a year, you'll make a 30X in 30 years, right? I mean, it's actually going to be able to cover most of the fiscal deficit hole that exists. And if you think it's actually going to go up by 40% per year, which is what the CAGR has been otherwise annualizing, it's 10 years. so the the idea of having a gold revaluation event that's bitcoin aligned i think is really the most interesting political and economic story that um reimagines the opportunity set to be so much bigger than what even micro strategy is doing with its own balance here's

what's interesting to me is um let's say that that works exactly how you just described um you've got gold it's got paper gains you borrow against the gold you go and you buy bitcoin and maybe it's not a trillion, maybe it's 200 billion, whatever the number is, it would be a big number. That seems like if it was an investment firm making this, maybe you have an investment committee, but that seems pretty hard to like, hey, we're going to lever up this thing

and we're going to buy it, whatever, right? Kind of decision-making by committee is usually not aligned with we're going to take risk, right? A family office, no brainer. Like some person's like, hey, we're going to do this. They issue the order, it gets executed, done. um a company where like a ceo has uh voting control okay got it the government is like the extreme of management by committee so it almost begs the question of like does the president

united states just have to issue the order and figure out can the executive branch do this unilaterally um without being stalled or stopped by the rest of the government like to me that is the only path where you get something like that done because the second you get congress or the senate talking about this stop right like you know first of all you're gonna have somebody who's like the gold's not there right you have another person who's like we have more gold than you know we we told you about you have a bunch of people who are like why do we even own gold orbit you know i mean like it's just like too many people involved so is that the answer is like trump just has to like issue the order i think the executive path is a great starting point to create a watershed moment

But the optimistic person in me believes that no democratic coalition is truly bought in until a legislative motion, because I believe that U.S. citizens are ultimately the shareholders of U.S. government as a construct of what a corporation could in itself be. And so doing it legislatively is the ultimate path for broad-based adoption that's ultimately irreversible. The problem with a strategic initiative is that they can be unwound by the next person if they find it to be politically challenging, whereas a legislative approach is a permanent output. And actually, I think that's what we all should aspire for. It's part of the Bitcoin movement. It's why you and I and everyone does the work of trying to make people understand Bitcoin better, not just as a way to store wealth, but the social mission behind it. Because one of the reasons gold, I think, has won so far is because that narrative has been unchallenged by almost a global level. Gold is the store of wealth, and it especially is a store of wealth for sovereigns. And I think if we're able to kind of channel that conversation to it being the same for Bitcoin, then it's really only a matter of time. And going back to kind of my example of having all this gold in my closet, in my vault, I don't like it.

I think it's a lot of risk with it. and I'd rather own something else kind of in a way that I can hold to myself in a sovereign way, a line of code I can memorize, that will give me a lot more peace. It comes with risks, of course. Some older people like physically touching stuff. I don't need to think about physically touching stuff. So for me, it works. And you know what? Young people are mentally more able to do things that older people can't. And so the trend of young people understanding digital store of wealth to me is the big picture here. You know what I was thinking about the other day as I saw gold continue to go higher other than uh good for all the gold bugs what did the costco people know

right remember when costco remember like six months ago or nine months ago when all those reports came out like costco couldn't keep enough gold yeah like they were selling so much gold like who the heck were the people who were like you know i'm gonna go to costco and buy like the little bars of gold and i'm sure they're just you know everyday american costco members whatever but just like what did those people know right like they front ran the central banks yeah and it's like a stupid example, but I think it's part of a much bigger trend where like the people actually are beating these large pools of capital to these investments. And the Costco membership was the alpha that we should have all known like gold's going to run because like middle America

is buying gold, right? Like it's kind of a weird thing to think back and be like, yeah, there were signs. Yeah, totally. It's funny too, because I think we always think about the trade off between paper Bitcoin and physical Bitcoin. And it's the same in gold world too. I mean, there's benefits to trading gold futures and gold ETFs because liquidity is at ease and you can monetize your gains pretty efficiently. I mean, those physical bars you get from Costco, there's costs associated with that, not just from storing, but also imagine actually having to remelt it into something else if you wanted to find a way to find scale and the ultimate output into something productive like jewelry, for example. And there's always a bid offer that comes with intermediation

in that dealer market too. So I think part of the arbitrage here, if I had to make a choice of buying a Costco gold bar or something gold adjacent else is actually gold jewelry, right? Because here you get the sense of gold in itself being the anchor to a store of value. But also, I mean, I think women just know this better than men. There are social capital associated with certain things and and gold backed luxury goods like watches and other fine pieces are just as valuable um am i gonna see you walk into the office with like a big gold chain tomorrow maybe if bitcoin hits 150k but then bring my gold chain and all my son's rings and start flashing them out here i love it today's episode is brought to you by core you can earn yield on

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securing, join millions of others in exploring the largest Bitcoin DeFi ecosystem. There are over 100 live apps in the network and the deepest liquidity in all of Bitcoin DeFi. get off zero and start earning yield on even just one percent of your bitcoin by going to stake.cordow.org slash pomp again that's stake.cordow.org slash pomp or go click the link in the description one of the big differences between gold and bitcoin is uh gold has that permanence uh not only obviously from time but also um yeah you can melt it but still gold right there's like a chemical property to it um bitcoin is living breathing software that continues to evolve and we have seen people uh maliciously attack and try to make changes we have seen

people make uh pretty consensus driven upgrades and improvements um we have seen forks we have seen debates we have seen all kinds of things that um to the like average investor who's just by maybe the Bitcoin ETF, they're completely oblivious to this stuff. But I think people in the community are like, hey, there's very material, important debates and changes happening here. How do you think that plays into the investment case moving forward? I think it plays a lot. I think it's actually the incredible opportunity of Bitcoin and its greatest fallibility, which is that when I was pitching Bitcoin to investors at Bitwise, an easy parallel you would draw is Bitcoin being called digital gold.

But I think all those who know crypto well enough know there's an asterisk behind that, which is gold, to your point, is physically immutable. But Bitcoin actually is a living, breathing code that actually does require stewardship and maintenance, which is why there's developers and nonprofits that actually take part. They have to run the clients. It's supported by miners. There's different mining pools. And there's actually kind of an economic activity behind the endeavor of the final output that is a Bitcoin block. And so I also thought one of the reasons maybe Bitcoin may not be accelerating as much as gold, I don't think this is actually the case, is that there is so

much internal drama right now within the Bitcoin community about very small things that has captured the imagination for some of these technological slash existential philosophical risk questions. So in some sense, maybe it's a little bit of a disservice to our own community that we do it so openly in a way that is all about public information sharing towards a community-owned project. But at the same time, if I were outside and I was a BlackRock ETF buyer, and I listened to the conversation that's happening between the Bitcoin developers, I might say, hold on a second.

This is crazy stuff I don't understand at all. What is a spam filter? I don't understand what a relay policy is. And this doesn't sound anything like I can hold in my hand. And then it's very dissuasive, actually. And so the line we have to walk is being thoughtful about why this is actually an important conversation. And it's a conversation that helps us future-proof Bitcoin as the ultimate store of value, which requires work and education. And it's time to kind of level up, but at the same time, do it in a way that's cohesive and one that shows a unified front across the Bitcoin community. and that's always been the fun part of the social mission of bitcoin um there's always cycles of investors and developers coming for different missions as to what bitcoin represents in the moment of decentralization there's a little bit of um mom they're fighting again right and like

the fighting a lot of people are just like i don't want to i don't want to be involved in that um do you think people aren't buying bitcoin though because of it like to me i think back to times where there was a lot of infighting right i mean block size war you know all the all these moments um i think those felt like could this be something different than what i thought it was going to be spam filter stuff like that almost feels like uh maybe it's a little anchoring bias because once you've gone through like the really big kind of super controversial ones you're like this it'll get figured out right we should make a good decision we should be thoughtful bitcoin is not going to be different than i thought it was going to be based on the decision

or outcome here versus the block size wars and forks and like that felt like hey if this goes the other way almost down to like the thing i'm holding may be worthless yeah right i don't think it's gonna go the other way but like if it does here it feels a little bit less um magnitude to a degree and so like how do you think investors maybe underwrite that risk i think investors generally today are not underwriting these risks which is why i don't think it's affecting current sentiment from a flows perspective but there are times you wonder if it's hitting an inflection point that could. So for example, I think last week there was a conversation

that Luke Dasher would actually hard fork Bitcoin and enforce spam filters in ways that the Bitcoin community is not going to in their V30 rollout. And so when you hear the word hard fork, that has implications. Anyone who's lived through it knows that requires a ton of management. And if you're an ETF issuer, for example, there's actually rooms for divergent outcomes too depending on which path you might choose and which custodian you actually are using and so when you go down that path deep enough it does

then become like hold on is this actually a good time when this political unfolding is affecting the community and so i think there's always like a moment where the line can't be totally crossed and i think we got kind of near there which is why i think we found more original bitcoin developers coming in and participating in the conversation, to your point, to minimize this particular topic of op return. Because at the end of the day, it doesn't, I don't think, affect the big course of Bitcoin adoption's history, but it does have that kind of smell and inkling of what the block size war was ultimately about, which is the uncomfortable truth about who owns Bitcoin, right? Ultimately, who is running consensus at Bitcoin? And what the block size

war ultimately showed was that the node clients are very valuable and they are in control versus miners and their self-interests. And that was a huge moment because it showed you decentralization was alive. Sometimes you can take that to a more extreme level about what exactly that quote unquote decentralization is. And this is one version of that where those who are pro or anti-filters are coming at that lens of what is good for a sovereign node operator versus a bigger operator for which these technical trade-offs are being made i forget who said and i wish because i've referenced this hundreds of times probably since the block size wars but i remember reading a tweet and it said something to the effect of he who can veto holds the true power and to me it was

just like yeah like actually the governance is not nearly as um uh fine uh final as that veto power and if you think about the node operators like that is you know it was a veto totally totally it was a you guys can play all the games you want but we say no this is this is correct i think most folks don't realize there's various levels of buy-in required for the bitcoin network to operate properly right at the at the very high level is actually the consensus that is the most insurmountably important kind of things that everyone needs to agree on right 21 million or bust right insurmountably important um understanding how transcription in itself works for what the limits of like the block sizes are insurmountably important uh but then there are

other things that are a little bit softer which is actually kind of the exercise of running defaults on like your node operators and what you actually consider like a social policy so you don't have to hard code it, but the actors around can enforce it from a social perspective to ensure a good outcome for the network. And what you see oftentimes is what is that line between kind of hard coding things versus soft coding behavior, which I think is amazing because this is ultimately what all conversations about money is, right? Like it's ultimately the same social experiment that the dollar represents and how do you draw that line? You know, I think this particular op return debate,

the reason for me, at least, it's fairly straightforward is because the removal of like the spam filter itself from the 80 byte limit is probably a technical decision at the core that's not going to change a lot of the outcomes to come. And so it's actually in the long run, like good for the hygiene of the network to be able to have more in sync

with kind of the default provisioning so that like the block space is cleaner and it can propagate faster and the mempool actually is a little bit more resilient than otherwise creating like an anarchic situation because everyone who's been in this conversation will tell you whether that filter exists or not is relevant because anyone can still put arbitrary data

in the taproot inscription in a contiguous way and still clog the block space. This is really a hygiene question at some level. In a way, this is ultimately good for efficiency gains. I think about this in the context of Korea, for example. In Korea, we never had a mortgage market. I think you'll find this really interesting. Korea only recently started to have a mortgage market, really starting after 1997. Before that, we had the system called jeonsei. And what the system was is landlords would essentially take in huge sums of cash up front. It's usually anywhere from 50% to 80% of the value of the property.

And by taking that sum of cash, you would let your tenants live there. And then after two years, maybe five years, you let them out and you give back your entire principal. So actually, what this means is the tenants lived rent-free, except they didn't live rent-free because they lost the opportunity cost of that huge sum of cash. And the system developed because the landlord knew there was a higher yield in cash that they can take and invest. And it's better than charging rent, especially in a growing emerging market. And so in a way it worked, but you can also imagine there's lots of reasons why this is not how you should structure a real estate market. It could go bad for many different reasons, including things like leverage. And so I share that example because just because a person does

something in a particular way, if you don't ever question fundamental motivations, what are this incentive alignments? What are people trying to achieve by efficiently solving for their needs versus the counterparty? There's always a decision to do the thing that is transparent and clean for the end consumer and incentive alignment that I think wins. And so that product ultimately is obfuscating the real issue, which is people need to buy a house, but they can't access credit. And so how do you actually build a system around that?

And so I think this is kind of at some level the philosophical question as well, which is how do you build a system with technical kind of regularities at the same time giving enough people freedom to do the things that they want to without bastardizing kind of the opportunity set as itself. Before I let you go,

there's one thing I want to talk about, which is a tweet you had, which is probably one of the best descriptions that I've read about what's going on in the world. You said that there's a retartification of society and you had four charts and these charts were, I think, pretty eye-opening things. Reading is down, but not like, hey, I used to read, you know, 10 hours a week and now I read six hours a week. Like the number of children who read a book yeah at all yeah is down significantly um how do you think about financial markets and some of these dynamics right because i think that the optimist view of let's just take the

reading thing oh well uh they're watching youtube videos or they're you know quote unquote not reading a book they're reading you know uh x or reddit or whatever there's a lot of people who are like come on stop it like a book versus you know tweets is not really the the same density of sophistication. So how do you just think about kind of society's evolving and sort of financial markets, are they tied together? Sure, sure. At the core, those four charts that I posted, even though they look unrelated, are all related, is I think the point that I was hoping to make and drive, which is that this retardification of society, if you will, is ultimately rooted by a combination of things that are happening secularly, but mostly focused on

a growing sense of instability and a loss of um durability to the ways people invest their time and so um the first chart was showing that people are reading less i think people are reading less because at some level uh there's lots of different ways to consume information but also that consumption of information in that particular format probably doesn't help you develop breadth and depth beyond the kind of superficial things that you're observing right which is which is kind of bad, which means there's actually just like an attention economy issue. And then, you know, the other chart that I showed was that Mac seven and Pokemon cards have been like the best outperforming assets since, since basically like the S and P 500 and anything else. And got to

catch them all. And there's always more, by the way, that keeps coming out. My kids tell me all about it and I've, I've lost track at this point, but you know, that shows you that some kind of memification of these markets is happening because the attention matters so much. I think part of reading less and the rise of Mac 7 is correlated. I truly believe the attention economy that Amazon, Meta, and Google are all profiting off of comes directly at the expense of people reading. There is a contradiction here. And then the point that would be arising are the other two charts that I shared. One is that gold is actually just becoming a higher percentage of share that foreign central banks are holding relative to UST. And now both of them are kind

of near the 20% mark, where it's pretty inevitable that gold is going to cross over US treasuries, which shows you that there's a geopolitical issue where there's like a lack of stability. And then the fourth trade I showed was the probability of US shutdown, which is probably going to be imminent, is going to be happening. And that's what PolyMarket showed you, more likely than not. It happens all the time. It's total dysfunction. So I think what you're It's a full circle. If there's so much dysfunction in our political system, and that dysfunction is rooted by there being a lack of support for investment in a particular way of the world, as perhaps been pushed by the Washington Consensus, humans are less likely to invest their time into things that they know there's a permanent payoff for that investment they make. if someone told you, you got to do these things for 10 years and the payoff is guaranteed later, which is what education kind of is, this idea that you go to school, you go to grad school,

and then you're going to have this thing at the end. If you're told none of this is going to happen anymore because the world is so unstable, well, you just don't do that stuff anymore. And then you read less and you invest less in yourself. But then the other part of that is, again, the direct beneficiary of all of this is the max seven companies at the core, which is becoming more powerful at some level to create some of this chaos in itself. So I think it's all related. But one where the optimistic purview is that there's great opportunities when there's a big reset at a global level. And I think we should all try to read more. I think we should all get educated. But it probably doesn't have to be the way we read growing up. in the way we had like ap english curriculum and reading pride and prejudice was the most important thing you know people will still do it but there's other kinds of long-form reading that

i think should be prioritized over kind of the you know it's the sensationalism of what kind of the twitter headlines can drive you know what's interesting is um there's a bunch of coverage now like if you go ask i think it's like gen z or middle schools whatever uh what do you want to be when you grow up youtuber is the number one career like going back to this attention economy like the thing that they do they aspire to be the best at right or to participate in um whereas i don't know what it used to be but i'm assuming it used to be things like you know policeman firemen doctor lawyer you know whatever kind of was put on a pedestal by society um but i also think i mean you know we both have young kids right um maybe actually watching an educational youtube

video is better than reading right now again i want my kids to read but also like i watch them and if they're watching something that is the equivalent of like ai slop but for you know youtube um like i'm sure you've seen the like asmr you know like marvel's going i'm like geez like let's shut that off right um that is like you know not headed in the right direction um but then i will watch you know they'll watch something and i'll see them repeat it later or you know whatever and so like i do think it's like kind of like the quality of the format really matters yeah um but i even think about it for maybe folks that are like you're my age uh i have a lot of friends who probably don't read that much they listen to a ton of podcasts right or um they do they scroll a lot

on uh x but it's not what crazy for you page you know stupid video it's like they're following a bunch of people in their chosen field and they're learning and and you know become smarter and so i always take the reading stuff with like a caveat of you know if you just replace reading with audiobooks or with podcasts like actually maybe consuming more rather than less um but i do think there's an underlying trend of like no like actually people are just getting a little dumber in some cases and maybe we should fight that yeah yeah well the other trend too and i don't think this is part of the same economic like modeling and polling output but um i would guess in relation to readership going down is also a readership decreasing in fiction versus non-fiction

that I do think there are still people who read to learn and therefore they read a lot of nonfiction. But fiction as a hobby has probably been going down at a secular level. And the thing that I always tell my friends is we have to read fiction. And I think it's actually more important now than ever to read fiction

because of the way AI has come into the marketplace. The quest for knowledge acquisition has a ceiling. And actually beyond that knowledge acquisition is the ability to tell a compelling story. And if you only learn how to tell stories by reading Twitter headlines, you're the algorithm in which you speak like the Twitter headlines,

which is actually not compelling. And the art of being able to be persuasive by storytelling is the thing that I think AI still will find somewhat challenging because styles change amongst humans all the time. So to learn that style, I think reading fiction at this point is actually more profoundly important than ever.

And fiction too, the reason why it's so great is because it has nuance. When you do analysis in your head after reading where your views came out of the author or the characters, rarely is it so black and white the way non-fictions try to create a story that you have to buy into.

There's room for ambiguity. There's room for judgment. There's room for kind of grace and sympathy in the ways you acknowledge different kinds of arcs. And I truly believe that's what makes a person a person at the end of the day. So even if we're listening to the podcast or the audio book versions of knowledge acquisition,

maybe the vouching I would make for is to embrace more fiction in your life. I like it. I violate that rule, but I should maybe take your advice. Well, it's harder now because your kid count has doubled last week. Sorry, maybe I'll read to them, right? Where can we send people to find you on X

or your writing that you're going to start doing more of? Oh man, I don't know if I'll do fiction writing anytime soon, but I will say I did one take at it, which is I wrote a very short story about a corporate bond manager who did not buy the MicroStack Convert. And it was a little bit of a story that people enjoyed. It's in my history feed, so people can find that one up.

You can find me on Twitter. My handle is dgt10011. And I also have my sub stack there where I do some more long-form writing. More often. more often that's my goal is to get jeff to write more all right thank you so much for doing this thank you