The Tim Ferriss Show - #547: Balaji Srinivasan — Centralized China vs Decentralized World, The DeFi Matrix, Ascending vs Descending Trends, Bitcoin Mining as Energy Storage, Reputational Civil War, and Maximalism vs. Optimalism

Starting point is 00:00:00 We have an important preface, an important caveat, an important disclaimer before we get started. And here it is provided from my lovely lawyers. Here we go. I am not an investment advisor. All opinions are mine alone. There are risks involved in placing any investment in securities or in Bitcoin or in cryptocurrencies or in anything. None of the information presented today or really anytime since you might be listening to this anytime, is intended to form the basis for any offer or recommendation or have any regard to the investment objectives, financial situation, or needs of any specific person. That includes you, my dear listener. So everything you're going to hear is for informational entertainment purposes

Starting point is 00:00:39 only. And with that said, please enjoy. Hello, boys and girls, ladies and gentlemen, this is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show. My guest today is a repeat guest. His first episode on the podcast roughly a year ago was one of the most popular of the last year. His name is Balaji S. Srinivasan. Who is Balaji? Well, on Twitter, you can find him at Balaji S. That's B-A-L-A-J-I-S. He is an angel investor and entrepreneur, formerly the CTO of Coinbase and general partner at Andreessen Horowitz. He was also the co-founder of Earn.com, which was acquired by Coinbase Council, which was acquired by Myriad Teleport, which was acquired by Topia and Coin Center.

Starting point is 00:01:30 He has been named to the MIT Technology Review's Innovators Under 35. He's won a Wall Street Journal Innovation Award and holds a BS, MS, PhD in Electrical Engineering and an MS in Chemical Engineering, all from Stanford University. Balaji also teaches the occasional class at Stanford, including an online MOOC in 2013, which reached a mere 250,000 plus students worldwide. The mere is a joke, obviously. That is a large number. To learn more about Bology's most recent project, sign up at 1729.com. That's 1729.com, a newsletter that pays you. They're giving out Bitcoin, BTC, each day for completing tasks and tutorials. Subscribers also receive chapters from Bology's free book, The Network State. And I highly encourage you to check out Tim.blogs.com for show notes and timestamps for this episode. Feel free to jump around. It is an extensive and wide-ranging and long episode. In the very beginning,

Starting point is 00:02:26 we dig into Afghanistan and its importance that lasts for the first, I would say, five to six minutes. And feel free also, if you want to listen A to Z, to just listen, listen, listen. If a subject is not of interest to you, chances are within a few minutes, we move on to a new topic and we cover a lot of ground. To hear our first conversation, you can check out tim.blog slash Bology. Please enjoy this very, very wide-ranging conversation with Bology S. Srinivasan. This episode is brought to you by Eight Sleep. My God, am I in love with Eight Sleep. Good sleep is the ultimate game changer. More than 30% of Americans struggle with sleep, and I'm a member of that sad group. Temperature is one of the main causes of poor sleep, and heat has always been my nemesis. I've suffered for decades, tossing and turning, throwing blankets off, putting them back

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Starting point is 00:07:22 Apology, welcome back, sir. It was good to see you. Last we spoke, it was Q1 2021. It is now Q4 2021, late October. And I'd like to ask you, where should we begin? Well, I thought we might begin with some premises, some of which were sort of predictions in the last pod. One in particular was, I think I had mentioned that COVID-19, I thought of it as a military defeat for the US. And the reason I thought of it as such is because literally billions of dollars had been allocated for biodefense over a span of about 20 years since

Starting point is 00:08:05 the anthrax episode in 2001 and during SARS and Ebola all of these scares happened and so in the U.S. in 2018 it announced they had a national biodefense policy that was supposed to combat man-made and national threats and so there's an expectation that of the WMDs, nuclear, biological, and chemical, that the US military would have some trick up its sleeve, just like out of the movies where hard men would come in in America's time of need and step in with some magic thing. And that totally didn't happen. And when that didn't happen, that's why I said COVID-19 was a military defeat, even if it wasn't being presented that way to the American public, a big piece of the military industrial complex or the military,

Starting point is 00:08:49 whatever you want to call it, was like cardboard. It was like a Potemkin village just fell over with a push. People argued with me about this and they said, no, no, no. Because it was right on the border of what you would think of as military or not. Since most of the folks who had been talked about publicly were the CDC and the FDA and the civilian agencies, but certainly billions had been allocated for biodefense. It was borderline. You could argue it wasn't military. You could argue I was off base there, that the military was actually highly competent. But then one thing that happened six months-ish later after our podcast was the whole Afghanistan thing. And so now you had something where the U.S. military had 20 years and $2 trillion and total air superiority and total surveillance and the local government

Starting point is 00:09:36 that they had set up and a military that they had trained, local military that they had trained and handpicked and equipped, and even a timeline that they had negotiated with the Taliban, which it had, for the most part, adhered to in terms of its terms. It hadn't fired on American troops during that process. I think it adhered to its side of it. And those are advantages that you normally don't get in a military conflict, folks, with that level of advantage. It's like a huge handicap in golf. And there's that saying, right, with military things, amateurs talk tactics, professionals talk logistics. And the withdrawal showed that the U.S. military is no longer really that amazing

Starting point is 00:10:11 at logistics. Also, the president and the secretary of state, Blinken, said something like, the collapse won't happen from a Friday to a Monday. It basically did. It was like a Monday to a Wednesday or something like that. I forget the exact dates, but it happened just over a few days. And Biden said there's not going to be a scene that's like the helicopter evacuation in Vietnam, and there was. And the thing is that I'm not, by the way, saying it's not a political comment, really. It's basically about the decline of state capacity over the last 20 or 30 years. In many ways, in 1991, the US was the hyperpower.

Starting point is 00:10:43 After the collapse of the Soviet Union, it was a hyperpower, as the French put it, that could win everywhere without fighting. And in many ways, the combination of administrations over the last 30-ish years have blown maybe the biggest lead in human history. Now, rather than winning everywhere without fighting, it fights everywhere without winning. So the Afghanistan thing, I think, was sort of, I hate to call it a vindication because winning. So the Afghanistan thing, I think, was sort of, I hate to call it a vindication because it's a very unfortunate thing, especially for the Afghans who are now subject to this medieval regime. But I think that that is something which also has important ripple effects, kind of flips over a card. And you kind of think there's something

Starting point is 00:11:19 that's 70% probability, and then it goes to 100% probability. Then you think about what the consequences of that are. So that's like one, quote, prediction or something that came true or piece of a world model that was vindicated. Let me pause there and get your thoughts. I have no thoughts to share. Please continue. Okay, okay. All right.

Starting point is 00:11:39 So I will just kind of download content and then pause and then you jump in, okay? And you will be met mostly with silence or I'm not familiar if my last performance is any indication. But I appreciate the pauses, yes. I can also, since we're on video, I can raise my hand like a student and then request a pause. But yes, please proceed. Okay, great.

Starting point is 00:12:02 So one thing that as a meta comment that I want to do is sort of A, invite pauses, certainly. B, enumerate my premises and sort of open source my thinking so that people can understand where I'm coming from. And if I open source my premises and my logic comes from those premises, and you can at least isolate, if you think I'm off base, I'm either wrong in the premises or the logic, but at least we started to decouple the two. So how do I build my model? Well, what's rising? What's up? Technology, which is drones and biomedicine and robotics and AI and so on. And particularly cryptocurrency, which is the new backend of all of software, as we'll come to. So technology, cryptocurrency, China, and India. Tech and Asia are up and to the right on many

Starting point is 00:12:52 different kinds of graphs. Those are words, but that captures the phenomenon of literally billions of people every day moving up and to the right, whether it's global trade or its number of smartphones, or it is the number of people doing cryptocurrencies or the progress of AI, all that is often to the right. And then what is falling is the West as a percent of GDP. If you make a graph of the US and the EU's percent of global GDP, that's been dropping basically for the last 40 years, whereas India and China's share in particular has been rising. Actually, as of 2019, McKinsey had a report on this, but Asia was more than 50% of GDP, I believe, by 2019 on certainly PPP terms. And I think it's

Starting point is 00:13:39 going to pass or has already passed soon. PPP is what? Pricing power parity? What does that stand for? Purchase power Parity. It's basically like- Purchase Power Parity. Yeah, that's what I believe it is. It's sort of what can the dollar buy there? What can your renminbi buy there in terms of number of Big Macs? They have an adjustment for that because some of the production costs are less. $10,000 goes a longer way in some of these countries. So Asia isn't really the future, it's a present. So what's falling? A, the West is a percentage of GDP. There's a graph by Visual Capitalist, the US share of the world economy that shows it in sort of absolute terms. And then you can kind of calculate the

Starting point is 00:14:15 zero to 100% terms. So West is a percentage of GDP, the US military strength, as we just discussed, and that's a very important topic to discuss further, internal US cohesion, and also just the European percentage of the world. It was much higher in the early 1900s, and now it's like on the order of 10%, and so just the percentage of the world. And so if the West is declining a percentage of GDP in terms of its relative military strength, in terms of its internal cohesion, and in terms of just raw percentage of the world. Yet all of these institutions that were set up years ago kind of assume Western predominance. For example, like the United Nations is the US, the UK, France, Russia, and China. I know it's only four out of five, so it's a small count, but that's 80% Western or at least European. If you think of

Starting point is 00:15:04 Russia as a European country, you can argue that. Whereas there's no India, there's no Brazil, there's no Japan, and you can argue whether that actually reflects the world as it is. Certainly, probably India should be there rather than France. You might say India should be there rather than the UK, and the EU should be there rather than France or something like that. Go ahead. All right. I raised my hand for those who can't see me. I like this approach.

Starting point is 00:15:29 This is a good approach. Professor Balaji, I have a question, sir. Please. That is related to the up and to the right with respect to technology and let's just take China as an example. But we can grab both China and India because we discussed India last time as a dark horse of sorts. Yes. And a lot has right with respect to technology

Starting point is 00:16:08 and Bitcoin or cryptocurrency or blockchain, more broadly speaking, within China and, say, India? Does it mean that the best entrepreneurs or many of the best entrepreneurs simply get scattered to the wind to places like Singapore and elsewhere from China. What are the implications and what are your thoughts overall? So a lot has happened this year in Chinese, American, and Indian crypto. So just to discuss that, when we were talking, a Chinese interference with the Bitcoin network was something that was TBD. It hadn't actually happened yet. With Chinese crypto, what we discussed was that they might pursue the state, Chinese state might, for example, block at the firewall level, but allow money to continue, which would mean like sort of a peekaboo problem where the Chinese chain gets extended, but so does the rest of the

Starting point is 00:17:09 world and so on. And that would be bad. But what I also said was, that's like, in some ways, the worst case scenario, it's actually better and perhaps more probable that they would just ban mining entirely or go after that. And they're the one state in the world that is ruthless enough and has a low enough disregard for civil liberties and contract law and all of that type of stuff for them to just be able to do that. And that is what they did, meaning they just went after, they just said, get out of China. And so if you go to blockchain.com front slash charts, front slash hash rate, and go to the all-time chart and look at kind of the period from May to July-ish of 2021, you'll see it drop from about 180 terahashes per second to about 80 to 90 terahashes per second.

Starting point is 00:18:02 And what is a terahash? That's 10 to the 12th hashes per second, meaning 10 to 12th attempts to solve the inequality that allows you to mine a new block of Bitcoin. So it's kind of a measure of the computational speed of the Bitcoin network. And the higher that is, the more secure the network because the harder it is to falsify history. Quick interjection. Why did China do this? And there may be a headline press release equivalent, and then there may be some degree of speculation or informed opinion. I would just like to know kind of both. I think the fundamental thing is, and we can drill into this, China is the exception to the sovereign individual thesis. India, by the way, might be the partial exception,

Starting point is 00:18:54 but China is the exception to the sovereign individual thesis where they want root over everything. If it's not made in China, they look at it with suspicion. And it's funny, you know, made in China, it's sort of a play on words. If it's not, they look at it with suspicion. And that's why actually they were very early on things like the Great Firewall or social media bans. Many years before politicians were getting deplatformed from Twitter, Xi Jinping denied Facebook's attempt to come into China. And instead, basically, they set up parallel social networks that could operate within China, but which the Chinese state had root access to. They've articulated this actually explicitly. It's an interesting concept, and I think at least they've got some philosophical

Starting point is 00:19:45 basis for it, which is the doctrine of intranet sovereignty. That is to say, if a nation state is allowed to intradite the physical packets crossing its border, then it should be able to intradite any intranet packets crossing its border, and they're doing customs for that. That's how they justify the Great Firewall. By the way, there's actually an article that's sort of making the rounds that folks who are listening to this probably should read on Wang Huning. Did you see this article? I did not. How do you spell that name? W-A-N-G, H-U-N-I-N-G. So the Triumph and Terror of Wang Huning at palladiummag.com. And this whole site is actually really good. But what's great about this article is, first of all, reading this, you're like, okay, the depth of this is just the IQ level is frankly much higher than what you're accustomed to seeing in mainstream media because it just doesn't come from the same set of trite premises and rehash things that we usually see. So I think it's informative. And the whole site is actually really good. But basically what this article is about

Starting point is 00:20:47 is a guy, Wang Huning, who's been there over three Chinese administrations, I think Jiang's, Hu's, and Xi's, which is unusual. Meaning he's worked in the government. In the government, most senior levels, the seven-man standing committee. And at least what the article says is he's China's top ideological theorist. And to be consistent across those three administrations, it's sort of like being a rough analogy would be like Robert Gates, who was sec def under, I believe, both. Was he under both Bush and Obama? I think so, right? Yes, he was appointed under both Bush and Obama, which is unusual. Usually political appointees get fired by the, you know, if they're appointed by how much they've been conscious about the need for state control.

Starting point is 00:21:47 Because they saw the fall of the USSR. They saw the US move in after that. They saw that Russia actually didn't do that well. They saw the loss of control. So they've always been about control. And what's interesting is there's been a tension between total state control and, of course, capitalism, which is decentralization of control. And one thing that is true that I think is a constant across these three eras of China, so the Mao era was revolutionary communism. Then Deng, Jiang, and Hu was internationalist capitalism. And now I think it's fair to say under Xi Jinping, it's now pretty clear that it's a nationalist socialism, a militarism, and economics is no longer first.

Starting point is 00:22:32 It is there, but they're reasserting root control, but from the nationalist right rather than the communist left in some ways. And so the reason I think that's important is it's a genuine change, in the same way that you can argue the US had a genuine change in culture over the last seven or eight years. Call it the Great Awakening, which is what Matt Iglesias' article at Vox kind of dubbed the whole thing. And you can sort of see this religious fervor taking over the country, all these graphs up into the right of various words. In kind of the same way, China for a long time had this keep your head down policy where they didn't like a lot of the things the West was telling them, but they sort of gritted their teeth and they manned the factories and they tolerated the humiliation of having their embassy at Belgrade blown up by a stray bomb and the US being like,

Starting point is 00:23:21 oh, our bad, you know, that type of stuff. They didn't have the power to protest on a world stage. They were just like, you know what? Just suck it up and we'll just continue trading for a while. But with Xi, that is no longer the case. They are, have you heard this term, wolf warrior diplomacy? Wolf warrior diplomacy? I have not, if I'm hearing that correctly. Yeah, wolf warrior.

Starting point is 00:23:42 I like the sound of it, but maybe I shouldn't. I'll wait until you define it for me. This is not deep China analysis or anything like that. And I basically consider myself, I think, reasonably informed in China, but certainly there's folks who speak fluent Chinese. It's like a logarithmic scale. There's folks who know 10x, 100x as much as I know in China. So Wolf Warrior Diplomacy, what it refers to is there's a movie called Wolf Warrior

Starting point is 00:24:03 2, which was China's number one movie, I think, in 2017. It's worth watching. And the reason it's worth watching is it's sort of surreal. applied to a masculine Chinese-speaking hero where the Chinese are basically cast in the role of the USA and the USA is cast in the role of the USSR. So it is kind of like a rotation where you realize what aspects of filmmaking are constant and what are highly variable. Do you know what the number one movie in the world is right now as of our time of speaking? I do not. I learn so much when we have our conversations. No, no, it's fine. Frozen 5. No. No, it's, well, so that's the thing. It's a battle of Lake Changjin, Chinese language movie. Here's the thing. It tells you a few things. First is China's in-person movie market is massive and it is able to do number one in the world. And I think it just crossed like a billion

Starting point is 00:25:12 dollars in box office. Number two, what the movie depicts is basically the defeat of the US military in the Korean War by the Chinese military. So that's where their head is at. They are making massive blockbuster epics with all the Hollywood techniques about the Chinese military winning and the Americans losing. And moreover, what you can get canceled for in China is insufficient nationalism. As somebody once said, you know,

Starting point is 00:25:40 in like the West today, for an ambitious young person, they would articulate a desire to, quote, change the world. But in China, it is serve the motherland. Yeah. Yeah, it's different. It's different. May I interject for just a second? Of course, of course. I just want to say that lest listeners get too judgmental about what they're hearing, the U.S. has done what we're describing, or I should say, US entertainment certainly has done what we're describing for a very, very long time. So this isn't unique to China. It just,

Starting point is 00:26:12 I think, indicates what is to come, right? It's a harbinger. And it's also a gauge of public sentiment. Public sentiment meaning Chinese sentiment on a certain level. Yes. And I find that deeply interesting. Also, what I find interesting from an entertainment media perspective is, as an example, I just went to see The New Bond. It was my first time in a real movie theater seeing a film since COVID. And there were many different trailers. Most of the movies had at least one Chinese lead actor or actress, and that is very deliberate because they need Chinese eyes. They need that.

Starting point is 00:27:02 And so that's another chess piece on the table. It's more like backgammon than chess probably because it's not a game of complete information, but you on the table. It's more like backgammon than chess, probably, because it's not a game of complete information, but you get the idea. So I just wanted to just note that because I do think these are trends that are going to become more intensified over time. This is a startup analogy, but Microsoft made, I believe, $150 million investment in Facebook in 2007 as part of a way to keep it from Google. And they did the super high valuation, basically playing Game of Thrones when Facebook was still a startup. That was actually maybe Bomber's best decision in some ways. But what that did was that thing

Starting point is 00:27:36 grew and grew and grew until Facebook is now, it's not extremely hostile to Microsoft, but it is certainly a peer to Microsoft. It is up there. It has grown into a redwood tree of its own. It is also like a roughly a trillion dollar company. It's the youngest of the big five, Google, Apple, Amazon, Microsoft, Facebook. And in sort of the same way, what the US did was it made a startup investment in China when Nixon went to China, because USSR was the number one rival at that time. And they've just executed phenomenally well over the last 35 to 40 years. And now they have the market size, the internal market size, to be the number one movie market in the world. And they dictate terms now. Winners write history,

Starting point is 00:28:18 winners film history. And they are writing a history where they're the winners and they're the good guys. And the thing is, the airbrushing is super obvious when it's somebody else's propaganda. For example, in this movie, which is worth watching, by the way, it's hard to kind of see. You have to get a streamer out of China or something like that. And by the way- This is Wolf Warrior or the other? Wolf Warrior, I think you can just download on iTunes.

Starting point is 00:28:40 But the Battle of Lake Changjin is not that easy to see right now. One of the things about it is this itself is a change where China used to be super freewheeling on IP. The new Xi Jinping regime is not freewheeling on IP. It's hard to get that. It's basically almost as hard as it is to get an American movie on the internet. You have to kind of actually try. It's not just widely accessible DVD on the street kind of thing. And some people think this is similar to the whole Shang Yang school. Are you familiar with that? Legalism? No. Okay. So again, I'm not a student of Chinese philosophy and so on. I know some, but basically

Starting point is 00:29:21 there's a philosopher named Shang Yang who is well known as an exponent of legalism. And legalism, we would call it the super harsh, one of his sayings, if I roughly paraphrase, if I'm getting this right, is if there are harsh punishments, there will be no punishments. Meaning if you articulate what the law is and you ruthlessly enforce it, then people won't actually go near the border and so on. And there's like another thing. After one year, people would not pick up items left lying in the street, nor would they take anything that was not their property. The army had grown strong, and the feudal lords lived in fear. What is the source of that? Oh, that's like from Shang Yang's biography. So the point being is Xi Jinping used working on all

Starting point is 00:30:04 this stuff since the beginning, but the tipping point only came near the end of his first term, sort of like how the Great Awakening was also happening in the US and just kind of went exponential in 2020 and 2021. China has changed. It is now a different thing than what you and I grew up with, which was the internationalist capitalism of the Deng, Zhang, and Hu era. Hide your strength and bide your time, I think was like the official philosophy. And make plastic stuff for the West, have them call us uncreative, have them depict us as emasculated on TV, just assemble iPhones, grit our teeth, tolerate the pollution, breathe the bad air, blah, blah, blah, and then work our way up. That's kind of the mentality. And now they're

Starting point is 00:30:43 standing up, right? May I just add one thing to that, which is when I was in Beijing, I lived in Beijing in 1996. I went to two universities there. And the most popular book at the time, and this is very understandable for a lot of reasons. This is not to fault anyone, but the most popular book at the time, which was stacked, it was widely counterfeited, but also bought legitimately stacked everywhere. You could see it in the streets in front of stores. It was called China Can Say No. I think it was 中国可以说不, and it was China Can Say No. And there was this deep sense of, I think warranted deep sense of being disrespected on a lot of levels from a geopolitical perspective. And that is not new. That is not new. And it's just taken

Starting point is 00:31:33 a while for them to play the game so well that they're now in a position to execute extremely well on multiple fronts. That's right. Now, the thing that's interesting is, if I recall, that was modeled on the Japan that can say no, but there is a difference. Some people will basically say, oh, you know, people talked about the rise of Japan in the 1980s, and why won't the rise of China turn out the same way? There's a huge difference, by the way, between China and Japan, which is that Japan is literally occupied by the U.S. military. Yeah, Huge difference. Huge difference. The US basically wrote Japan's operating system and constitution

Starting point is 00:32:10 after World War II, and they have literally a military base there. And I think in a real sense, they are a independently operated US subsidiary. The purpose of NATO was keep the Americans in, the Germans down, and the Russians out. I haven't, but I can imagine. May I also just pull us back to an initial query for those people who are wondering what some of the punchlines are. So with respect, and then we can come back to all of this,

Starting point is 00:32:42 so just bookmark for a sec. When we look at the Chinese government's decisions with respect to Bitcoin mining, and perhaps cryptocurrency more broadly speaking, what are the sort of first order, second order, third order effects of that? Some of which may have already been seen, but what has happened and what do you expect will happen as a result of that? And we could look at what that means within China and outside of China or however you want to approach it. What they've done is setting up the decade and maybe the century. I don't think people realize how important some of this stuff is. Think about, for example, their social media ban. How important is that today versus how important was it seen to be at the time? Yeah, huge.

Starting point is 00:33:29 Huge, right? That was a branch in history. So basically, China wants to maintain root. And because they want to maintain root, I think they're going to have significant short and perhaps even medium-term advantages. But in the very long run, like 20, 30, 40 years, I think the century lines up as centralized China versus a decentralized world, or a centralized China versus a decentralized West. And I actually think India may be actually a big component of that. And that's where I think things land up by like 2040-ish or so. But it's really hard to say because time compresses in the internet era. And just to kind of drill into that, let me give sort of a sci-fi scenario here. This is a sci-fi scenario. You know, like when you do a simulation and it's like, okay, all the molecules kind of

Starting point is 00:34:16 move in this path, but they can move in other paths. So I don't assign super high probability to this, but let's call it a scenario. I don't assign zero probability to it. Chinese control, American anarchy, Indian intermediate. So basically, coming back to the thing that we kicked it off with, which is the U.S. military basically just got defeated by COVID and in Afghanistan. So obviously, the immediate question is, will they lose versus China? And in particular, will they lose? What will happen with Taiwan? Now, there's sort of the first order response, which is, oh, Taiwan and Afghanistan are totally different. Taiwan is obviously a first world country, and it's an independent nation, and it has its own judiciary and military and a long history of operating independently in civil society and blah, blah, blah. Whereas Afghanistan,

Starting point is 00:35:04 obviously, that was a fixer-upper at best and has a long history of civil war and blah, blah, blah. Whereas Afghanistan obviously was, that was a fixer-upper at best and has a long history of civil war and was very difficult. So of course they're totally, totally different. But they're not because there's certain things that are the same. And one of the things that is very much shared between the two things is America's willingness to fight. Because the withdrawal from Afghanistan was based on a reluctance to pursue quote-unquote forever wars and a thing where the American consensus on the right is isolationist, like why are we helping these folks out by fighting their wars for them? And on the left is also isolationist, which is why are we harming these folks by bombing them? We should pull back. Well, the stance is perhaps different. And actually, I can see reasonable things on both

Starting point is 00:35:45 without litigating the percentage on each, the sum force is withdrawal. And so it is, from Taiwan's view, questionable as to whether the U.S. would fight. And here's the problem. Wars get fought when things are questionable. As Zhang Yang said, if the punishments are certain, there will be no punishments. Wars happen when there's a miscalculation. For example, I believe Saddam Hussein invaded Kuwait in 1991 because he thought he had gotten the go-ahead from April Glaspie at that time, who was the U.S. ambassador. Basically, he was like, you know, 1991, the Soviet Union was falling and so on, new world

Starting point is 00:36:24 order, let me settle scores. There's a transcript. There's different transcripts. He's like, you know, 1991, the Soviet Union was falling and so on, new world order. Let me settle scores. There's a transcript. There's different transcripts. One of them was, we have no opinion on your Arab conflicts that you dispute with Kuwait. The Kuwait issue is not associated with America. Secretary Baker has directed me to emphasize this. And so the thing about this is I'm not a scholar of this particular issue.

Starting point is 00:36:44 And she may have gotten a bum rap on this or what have you, but people thought that she'd given unclear instructions to Saddam. Now, first of all, what's interesting is the U.S. would basically greenlight an invasion is interesting in its own right, that it could happen versus not. But that's what being Leviathan means. If you're the guarantor of order, the Soviets allowed the North Koreans to go and invade the South. The North Koreans were looking for the nod, the go-ahead from their patron to be able to do that. And similarly, the U.S. had actually been working with Iraq during the Iraq-Iran war because they were against Iran. And they thought Iraq was a good way to put a thumb in the eye of the Iranians who had done the hostage crisis. And so that was, you've seen the whole video with Saddam shaking hands with Rumsfeld for many years ago, right?

Starting point is 00:37:25 How does this tie into China? Coming back at the SEC. So the thing is that that kind of uncertainty is what causes wars. Or provides fertile ground for wars, depending on how it's planned, right? Yeah, because it's not like invincible US military, solid commitment to Taiwan. All right, we're not going to start a fight. It is, will they, won't they? You're now decision-treeing it out. It is uncertain for everybody involved. It's uncertain for Taiwan. It's uncertain for China. You have many scenarios.

Starting point is 00:37:52 One scenario, which I think is underestimated, is China speaks a language. They have lots of people cross-border. They have total focus on this. Xi Jinping wants it. So one possibility is they try to force a gun-to- to the head referendum, where they try to get KMT, the Pan Blue Party, to just vote for reunification with China. And that's something where there'd be an obvious gun to the head, but it'd be like a peaceful Anschluss, like Germany and Austria, right? They vote for it. Another possibility, of course, is an actual military conflict where maybe the US just doesn't even intervene. Maybe it does. And then there's like a shooting war. And we don't know what happens after that. But I think it's quite

Starting point is 00:38:30 likely that the US loses. Now, why do I think it's likely the US loses? A couple of books I'll recommend. There's The Kill Chain by Christian Brose, who was formerly very senior on the Senate Armed Services Committee, saw the entire $700 billion defense budget, including the classified parts. And he has a quote in there, which is, over the past decade in US war games against China, the United States has a nearly perfect record. We have lost almost every single time. And he says, this is well-known in the Department of Defense, but the American public doesn't know this, and Congress doesn't know this. And he actually goes on in the first chapter to outline a scenario where China basically

Starting point is 00:39:08 pursues an asymmetric strategy against the US, uses area denial weapons, forced the US Navy to be way offshore while it's invading Taiwan. And it can't get the reinforcements over there, over this huge ocean. They're all blown up or forced back. And basically, he thinks China would win. So that's a nonfiction book. There's also another book that came out this year called 2034. Kilshane, I think, came out last year. 2034, which is co-authored by a former US Marine who's on the ground, this guy, Elliot Ackerman, and another guy, James Stavritis, who I believe was the former NATO commander. That also essentially talks about a serious Chinese effort on, or conflict with China, rather, in the South China Sea, where the U.S. does not definitively win. In fact, they almost portrayed the U.S. as this old battleship that's

Starting point is 00:39:58 getting its butt kicked by the Chinese, and it goes to nuclear very quickly. That's in their scenario. I don't want to spoil it, but India intervenes at the end to kind of play mediator in a sense. Just a quick thanks to one of our sponsors, and we'll be right back to the show. This episode is brought to you by Wealthfront. Did you know if you missed 10 of the best performing days after the 2008 crisis, you would have missed out on 50%, 5-0% of your returns. Don't miss out on the best days in the market. Stay invested in a long-term automated investment portfolio. Wealthfront pioneered the automated investing movement, sometimes referred to as robo-advising, and they currently oversee $20 billion of assets for their clients. Wealthfront can help you diversify your portfolio, minimize

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Starting point is 00:41:23 wealthfront.com slash Tim and open a Wealthfront investment account today, and you'll get your first $5,000 managed for free for life. That's wealthfront.com slash Tim. Wealthfront will automate your investments for the long term, and you can get started today at wealthfront.com slash Tim. If we have, hypothetically, centralized China, decentralized with the China discussion on some level. What has happened in India since we last spoke with respect to crypto? Okay. And where do you think it's going? The good news is, and I may have actually influenced this on the margins,

Starting point is 00:42:20 India had been floating, or there's folks in India rather, who had been floating like a crypto ban in January thereabouts. I wrote three articles on this and the Indian crypto community, the Web3 community really got out there. And now Nirmala Sitharaman, who's the finance minister of India, like the equivalent of the treasury secretary, is actually quite smart and has made good comments on this in public. And moreover, with the deliberation, she said, this is not going to be a ban. It's going to be regulation of some kind. Over the last nine months, Indian crypto has just absolutely exploded. There's Coinswitch slash Coober, and there's a bunch of these exchanges. I won't remember all of them. They've all just gone vertical with the rise of cryptocurrency

Starting point is 00:43:00 this year. There's multiple India crypto unicorns, and Indians are a huge part of the global crypto community. And in the meantime, China has basically forced mining outside and is basically done with their new bill. It's almost like pushing a guy until he's just almost off the cliff. They essentially have, in 2017, they pushed pretty hard to stop much retail trading activity happening within China. And so hence, like Binance kind of left the country and Huobi and OKCoin were surfaced overseas. But OTC was sort of allowed or kind of winked at. Now they're kind of going after OTC. They're going after mining. What does OTC mean in this context,

Starting point is 00:43:39 over the counter? But what does that mean in this context? One version of trading cryptocurrency is you go to a website, you click a button, you buy cryptocurrency, there's a user interface and so on. And OTC trade is like a big block trade where you call somebody on the phone, you're like, I want to buy a million dollars of Bitcoin. And the thing is, them as a seller and you as a buyer actually have an incentive. See, if they try and sell a million bucks of Bitcoin, they might move the price. You try to buy a million bucks of Bitcoin, you might move the price up. And so you both sort of settle on a mid-market price and you do the trade real quick because you don't know if it'll go up or down. So that was kind of allowed, but they're cracking down on that too. Now,

Starting point is 00:44:17 what they haven't done, and you can read this bill, it's posted on their website. It's a long thing. That bill, it's like an announcement announcement rather what they haven't done is they haven't criminalized holding they have that in english yeah it is in chinese chinese is a little rusty i heard you say something in chinese just now so i thought it's like i guess you could probably use google translate possibly to translate the page yeah that's what i did it basically the the people's bank of china statement on cryptocurrencies posted on their website it's is a super long URL. We can put it in the show notes. Yeah, it's like, notice on further preventing and disposing of the risk of hype in virtual

Starting point is 00:44:53 currency trading. That's the English translation via Google Translate. And I have a tweet on this. But basically, they've kind of done everything up to criminalizing holding. So they haven't criminalized holding. You can still hold. Let me ask you a dumb question. Where do you purchase your holdings, or is it just pre-existing holders of crypto who are now legacied in somehow? How does it work? Yeah, it's kind of like that. It's unclear. One of the things about China, a friend of mine over there said, is in the US, there is rule of law where you have written laws and that's supposed to constrain the state and you can operate with those. Whereas there, it's often more like guidelines in a negotiation, which is actually more like interacting with the regulatory state in the US where it's like a moving boundary and they will basically do what they want. It's not something where the laws are meant to be binding on the government in the same way.

Starting point is 00:45:47 We don't know exactly how it's going to be enforced, but it definitely signals a step up. And the way you can see that is actions speak louder than words. And that drop in the hash rate is actually a remarkable drop. Now, importantly, by the way, it came all the way,

Starting point is 00:45:58 I shouldn't say all the way back up, but it came back up to like 150 terahashes. So even the Chinese government going after Bitcoin mining, it slowed down transactions a little bit for a few weeks, but not really all of it. How much of that do you attribute to new mining operations elsewhere, places where you can get cheap energy, where they would expect friendlier regulation or lack of regulation versus just the vertical climb of popularity in Bitcoin and cryptocurrency. What do you attribute that regaining of hash rate?

Starting point is 00:46:32 So I don't know the exact breakdown. One could say there's folks who are looking at this every day, which I haven't been doing for a while. But Bitcoin mining is now actually understood to be something which is a component of the energy grid. Because in a sense, just like when you say a document, it's both a paper document and it's a digital thing. We use the term interchangeably now. So in a sense, Bitcoin mining is now like a money battery. Because on the power grid, you can't store power that easily. You have to start

Starting point is 00:47:02 instantaneously generate it as being consumed. And every flick of a light switch and so on is sort of in this model of this Gaussian where all these small events, you can't predict whether you're going to flick the light switch on or not, but you can have sort of demand prediction and it kind of goes up and down. You generate the power in proportion to that. The problem is that if you've got sources of power that are themselves variable, like renewables, for example, is the sun shining or not? Is the wind blowing or not?

Starting point is 00:47:28 Now you've got volatility on both sides and it's hard to match that up. And Bitcoin mining actually comes in there because it's a load that you can put basically in any location and dial it all the way up. And rather than trying to store that energy in a battery, you, quote, store it as money by mining Bitcoin. And depending on the economics, it may be better to do that and then with that BTC buy energy later than to actually store it in a conventional battery. That's super interesting.

Starting point is 00:48:01 Super interesting. Yeah. This is an important thing that is happening now. Actually, Ted Cruz, of all people, actually gave a talk on this. So it's starting to filter out into politicians. Wait, Ted Cruz gave a talk on this subject? Yes, just a few weeks ago. Wow. That's unexpected. All right. That's the thing is, this is becoming a big thing within natural gas and so on,

Starting point is 00:48:21 because the flaring problem looks like this dystopian blast of flame into the air when you have stranded gas. That gets addressed with this. So was he speaking within the confines of the state of Texas, or was it more broadly applied? It's much more broadly applied. And this is something which I'm not an expert in this area, but Google Bitcoin mining, oil and gas, and you will be able to read about this. It's not just oil and gas, it's also renewables. Essentially, your renewable energy source, Bitcoin mining, increases the profitability of it because there is always demand for the renewable energy you're generating. Say that one more time, please.

Starting point is 00:49:13 Your renewable energy source, especially if it's volatile, like solar power or wind, now there's always a way to make money from it, even if there isn't demand on the grid, because it's volatile. For example, the sun may be shining, but nobody's turning on their appliances, or the wind may be blowing, and nobody's actually consuming the power, but you can use that to mine Bitcoin. Yeah, that's very interesting. No, I was just saying that's super, super interesting, yeah. Power is like instantaneous energy is over time, but go ahead. This is going to be a very stochastic conversation by design and by the nature of it, I think. Let me just come back. We may return to this subject, but come back to India for a moment. What would be your, predictions may be too strong a word, but what are some plausible things you see happening or developing in India over the next three to five years with respect to

Starting point is 00:50:07 cryptocurrency or Web3, blockchain, all of the above? What's interesting is now that China's taken itself out of crypto, it has left the door open for others. The US certainly has a big crypto sector. There's a huge fight within the US on crypto regulation and Web3 and whatnot. And we'll see where that pans out. And we'll also see where it pans out in India. It might be better. It might be worse. We will see. But basically, I'm cautiously bullish in both the US and India on cryptocurrency. And I'm cautiously optimistic that both India and China will maintain some degree of stability. And so I'm not saying it's a five-year thing, but like a 15-year ish kind of thing, 10, 15, 20 years, India could be an intermediate between like kind of a coming

Starting point is 00:51:01 American anarchy and total Chinese control. Let me explain what I mean by this just to go back to that scenario we were talking about. Again, it's a sci-fi scenario. I'm not saying I put a lot of weight on this, but I think it's possible. Let's say I had this one-liner, which is the US government has lost root control over the system. The future of hard power is CCP, and the future of hard money is BTC. This is related to that NYT-CCP-BTC triangle that we talked about last time, which is woke capital, communist capital, crypto capital. And just to recap that, communist capital says, you must submit. That's a communist party. They're strong. You're weak. They have power. You don't. Bow to the government. It's

Starting point is 00:51:43 very straightforward. It's just down the middle like a fullback. Woke capital says you must sympathize. And that's different. That says it is because you are powerful because you're white or male or straight or cis or you're rich or something. You have power. And therefore, you must sympathize. You must apologize. And you must bend your eyes down. Your eyes are downcast. Your head is bent. But it ends in the same position of submission as communist capital with a bent head and a dispirited stance. So it's also an ideology of control. It's just a little more subtle. Rather than saying they are powerful, they say you are powerful. And the trick of it is with the algebra of intersectionality, everybody's an oppressor on some axis. So everybody's either white or male or straight or cis or wealthy.

Starting point is 00:52:31 Dave Chappelle, he's an oppressor on some axis, for example, right? So anybody can be turned into an oppressor in this way. So everybody kind of lives under threat of having their card yanked and instantly turned into an oppressor because they're an oppressor on some axis. So that's how woke capital works. It's more subtle, slightly more subtle. And then crypto capital, BTC, is the third point on the triangle. And rather than saying you must submit like communist capital or you must sympathize like woke capital, it says you must be sovereign.

Starting point is 00:52:57 You must hold your head up high, jaw out. And you must not just hold your own private keys. Ideally, you're living off grid with a solar panel and you're growing your own food and you're in a Bitcoin citadel where you're waiting out the Mad Max and so on. So all of those are actually like extremal points. You must submit, you must sympathize, you must be sovereign. And the thing is that while each of them is actually bad if you just go totally to that point, but they're also bad if you have the total absence. So for example, obviously you don't want to just completely bow your head to this totalitarian state you must submit. But the

Starting point is 00:53:35 opposite of that, where nobody submits, is San Francisco, where you can walk in and they've legalized crime. Anything under 950 or something, you can shoplift from Walgreens. You go in, help yourself, walk out, repeat it. And that's why 22 Walgreens are closing in San Francisco. Did you hear about that? I did not, but it doesn't surprise me. Yeah. So they basically have legalized crime. And then the city government is denying that this is a real thing. They're like, oh, Walgreens published in their SEC filing three years ago that they might shut down some stores, therefore they're just doing this to make more profit, blah, blah, right? And they're like, the rate of crime, reported crime has dropped in San Francisco. And this is basically like quoting statistics from the Soviet Union at this point.

Starting point is 00:54:18 Nothing to see here. Move along, folks. Crime rate in SF is so high. Anybody who's there has seen multiple crimes happening as you walk down the street there's open-air drug deals there's public defecation there's people who walk into a store and shoplift something you can just record probably put a camera up there you'll see a bunch of crimes the reporting doesn't happen because the prosecution doesn't have the police design so okay point is if you do not submit you get san francisco then okay if everything is quote sympathizing everybody is competing to be a victim all the time, and that's kind of where we are in many ways in American society.

Starting point is 00:54:52 But the total opposite of that is also bad because the total denial that any victims exist is the denial of charity and many of our good impulses. And that leads you to a society that's Russia in the 90s, where for 70 years, all compassion and charity and goodwill had been sort of milked out of them because communism had said, share at gunpoint. So all of that had been linked out. All sympathy was kind of leeched out. And that's what you get there and the total opposite of that. And then sovereignty, of course, I'm sympathetic to this, but total sovereignty is actually the opposite of, for example, division of labor, which is also capitalist virtue. You're trying to do everything

Starting point is 00:55:33 yourself. Total sovereignty is also a position of total distrust of everybody else in society and taken to its limit. Unfortunately, the thing about the internet is people do take everything to their limit. Taken to its limit, it's like one person can do everything by themselves, but humans are not just individual animals, they're also social animals. Now, of course, the total opposite of sovereignty is also bad. That's actually the woke capital and communist capital model where they can deplatform you via the corporation or the state at any time, censor your speech, et cetera. So this triangle model is kind of useful because each extremal

Starting point is 00:56:05 point on the triangle is bad, but so is the opposite point. And so that's why I think what we want to do is carve out a decentralized center that has a healthy optimum between these with the recognition that different people will trace out different optima. For example, the Netherlands is a functional society, but so is Singapore, and so is Dubai in its own way, and so on. And these have different trade-offs of submission, sympathy, and sovereignty. So with that as like a political philosophy-ish kind of thing for the modern era, I think one new piece of information for me over the last seven, eight months is that the woke capital corner of the triangle, the NYT corner, the reason I say NYT, CCP, BTC is

Starting point is 00:56:46 in many ways, while CCP is in control of China, it is a state-controlled press. It is something where nobody in the press is going to go investigate Xi Jinping or whatever. In America, there's a saying, if China's got a state-controlled press, America is a press-controlled state. And one way of seeing that is a corporate journalist can get a politician fired, but not really vice versa. So the org chart is the other way. Who can get who fired? Who's superior? Now, the thing is, immediate rebuttal is, well, what do you mean? I can write an article and they may not necessarily get fired. And I would agree, it's like a stochastic org chart, and that's what sort of hides the lines of reporting. But if let's take, I don't know, the Department of the Interior,

Starting point is 00:57:29 if the guy from the WSJ and the guy from the Washington Post, the guy from the NYT, who all have the beat that includes the Department of Interior, just started writing negative article after article on the person in that position, they'd eventually get capped. Almost like a board meeting where it's like a three to zero vote and they get fired. I just want to share something that came to mind, which has been on my mind for a while. And that is the trends in the US, I suppose is somewhat obvious, are very different from the trends collectively in China in one very important respect, many respects. But one really jumps out, and that is nationalism is unifying on a lot of levels. But what we're seeing in the US with, as you put it, the Great

Starting point is 00:58:14 Awakening, and this is not to point fingers at any one side necessarily, but much like the nature of warfare is going to change, is changing over time, and it's going to involve more and more cyber attacks, non-physical attacks, although there will be physical components. I would argue just by watching an audience of, say, 10 to 20 million people per month over the last several years, that we are in the midst of the beginning of a reputational civil war where the weapons are provided by companies that produce tools for social media and so on. And the attacks may not be those that we would see among different ethnic groups in a case of, say, ethnic cleansing, but nonetheless, the damage is seen reputationally. And that it's not just the New York Times and a politician, it is like neighbor

Starting point is 00:59:12 against neighbor. And I find that absolutely terrifying. But I do think we're in the middle of that. When I look at it, the scale and the intensity, it is absolutely a reputational civil war and the weapons are technological. You can argue that the corporate takeover of the US actually happened in the 1970s when three privately held newspaper corporations, you know, the Washington Post, which is owned by the Grams, the New York Times, owned by the Oxelsberger family, and the Wall Street Journal, which is owned by the Bancrofts at the time before their sale to Murdoch. They all went after Nixon with the post certainly leading the way. And essentially they got, quote, the most powerful man in the

Starting point is 00:59:56 world fired. Now, of course, you can argue, and I think it's fair to say that Nixon was a crook. He actually did do those things. He hasn't denied doing Watergate or the Berkeley or anything like that. I'm not litigating that part. What I will say is that at the time, what he thought was and was certainly talked about was that JFK had done it as well in his race against Nixon in 1960. So he just had to do it. And actually, there's a book by Seymour Hirsch, who is a legendary investigative reporter, exposed the My Lai Massacre, won the National Book Critics Award. So he has a book called The Dark Side of Camelot and claims, for example, that Kennedy stole the 1960 election with the help of the mafia and all this other stuff.

Starting point is 01:00:38 Some of the stuff has kind of filtered out into the public that Kennedy had lots of affairs and all this type of stuff. But the election part is, I think, the material thing where Nixon thought that Kennedy had gotten away with it and, quote, stole it fair and square, and Nixon decided not to contest it for the good of the country. And then Nixon kind of did it himself, and then he got tagged for it when no scrutiny was applied to Kennedy. Point being, though, that this concept of, quote, journalists holding politicians accountable means that the U.S. is a press-controlled state. It also means, by the way, how's that accountability doing? If journalists are holding politicians accountable, and over the last 30 years, the U.S. government has done very

Starting point is 01:01:16 poorly, who's holding accountable the people who are holding the government accountable? If they are actually the most senior management, the board of directors vote who comes in an emergency to remove the CEO, namely the president via an impeachment or investigation or something. Well, ultimately the board of directors is responsible. So the thing is though, that the whole thing is set up to exercise power without responsibility because it's a stochastic org chart. No one reporter thinks of themselves as being like in control of somebody because it's like throwing a stone at somebody who's being stoned. No one stone thinks of themselves as being in control of somebody because it's like throwing a stone at somebody who's being stoned. No one stone necessarily kills them, but the fusillade, the hailstorm does. And of course, if you're at the Times or the Journal or the Washington Post back before

Starting point is 01:01:57 social media, you had pretty big stones that you were tossing. And what's interesting is there is, just to be on this topic for a second, there's a concept called impact journalism, where the whole point is to make an impact, like that stone hitting somebody, like the impact of a government truncheon hitting your head, where the idea is that people will brag, this article led to a government investigation. This article led to so-and-so reforms. And what those reforms mean is that the state made something that was previously discretionary now mandatory or forbidden. Let's say a law was passed, freedom was constrained. In the most trivial sense, it's like a 40 mile per hour and 55 mile per hour speed limit puts you in a box on the V-axis of velocity. You can't go below that or can't go above that. Freedom was constrained. You were previously discretionary, now you're in a box. You may argue that box is good or bad, but as every law is passed,

Starting point is 01:02:48 you're in a box on more and more and more and more parameters, right? You can only do, you cannot be below this amount, you cannot be above this amount. So it's literally like an ideological box, like a constraint. So the thing is that when you are able to, quote, cause impact in this way, you are powerful. But because it's stochastic, it's not like you order it and it happens with 100% probability. You can deny that that power exists. The whole system has sort of evolved for the deniable exercise of power. In many ways, the org chart is actually even embedded in the language. Do you know what the concept of Russell Conjugation is?

Starting point is 01:03:24 Eric Weinstein is big on this. Do you know what that is? I do not know Russell Conjugation. So Russell Conjugation, at first it just seems like a funny curiosity. It's by Bertrand Russell, the concept, also known as emotive conjugation. So it's like, I sweat, you perspire, but she glows. Got it. Okay. So he doxes, she leaks but the new york times investigates no i got you right so that's actually a great that's a great example actually that's a really

Starting point is 01:03:53 good example really it's a very important example and the reason it's important yeah here's why is when it comes to like what journalism is like what real journalism, anybody can go and set up a blog to go and review movies or restaurants. Well, pre-COVID, probably easier, but review books or whatever. All that stuff, huge portions of a modern newspaper, you can just kind of go and do and set up and do yourself. What is the one thing that you can't do on your own? I can think of a lot of things I can't do on my own, but continue. I would argue it is the investigative journalism part because you can't just go to somebody and start digging through their garbage, interrogating their

Starting point is 01:04:38 friends, acting as essentially a for-profit intelligence agency, because basically what they will do is they will put somebody under surveillance. That's literally what being a quote investigative journalist is. You're putting somebody under surveillance, essentially wiretapping them, eavesdropping on them, and so on. And it's an extremely hostile thing because the goal often is to try to get that person fired, to cause harm to them, to cause harm to their company, and to essentially write up a prosecution and put that in the paper. And that's why they say the court of public opinion, it's basically like an indictment. In fact, we sometimes use the same word, like a biting indictment appeared in the paper, but it's stochastic. It's out there and it's deniable as to what happens. You know, hey, just put it out there. Arthur Selzberger used to say,

Starting point is 01:05:29 our job is to tell the public that the cat is jumping through the window. The public will take care of the cat. It's like a disassembled bomb strategy where you give them all the parts and you emotively conjugate, you Russell conjugate the whole article such that the reader who's unaware of this is led to a conclusion, but you kind of have no fingerprints on it because you just did it with language. Yeah. It's semantic, like word laundering. Yeah. It's semantic. That's exactly, it's power laundering. I'll give you some concrete examples of this. Like here's a really good one. There's an article in 2012, How Punch Protected the Times. You can just Google that. And it talks about how dual class stock was the savior of the times. And, you know,

Starting point is 01:06:15 it was something that was really good because they could think about the long term. Then a few years later, in, I think, 2019, you can't fire Mark Zuckerberg's kids' kids. And this is a denunciation of the same thing. Oh, we are creating a class of royalty that controls our national dialogue. Without, basically, it just emotively conjugates its other way. So dual class is good when the Selzbergers do it,

Starting point is 01:06:39 and it's bad when Zuckerberg does it. I would love to, if it's okay with you, I'd love to shift gears just a little bit, but it's going to be, it'll be tangential. Yes. Still related. So we chatted very briefly about, I think, a pretty justifiable stance that we are already in the midst, not in the middle, but in the beginning of what we might call widespread reputational civil war in the US, which is just going to intensify. And it's going to get a lot worse once we have AI driving additional misinformation and so on.

Starting point is 01:07:09 It's going to be a hell of a thing, which is not that far off, I don't think. But where do you see the U.S. going in the next, say, three to five years? If we can constrain it a little bit, because I know it may be easier to go to, say, 15 directionally, but if you had to make some educated guesses, or while that speculation is just based on your reading of the gestalt, next three to five years, what do you think plausibly happens in the US? So let me give a scenario. And I'm certainly not saying this is desirable. I think this is possible. The scenario is Chinese control American anarchy. So a Chinese

Starting point is 01:07:48 victory of some kind in the South China Sea over Taiwan, whether it's a referendum or military victory or something like that, especially if the US prints money only to lose because you print a lot of money in a war, foreign military defeat of that kind would show that the US is no longer a hyperpower. And what that would potentially result in, you know that saying fiat currency is backed by men with guns? Yes. Finally, a saying I recognize. Yes, I do. All right. Yeah. So that's actually, Krugman himself said that in an interview to Joe Weisenthal several years ago. Fiat money is backed by men with guns. So what happens when those men with guns lose? And not in a sort of deniable way to COVID or Afghanistan, like we didn't really try or it wasn't a military thing, but to a peer competitor.

Starting point is 01:08:33 Well, there's potentially an economic markdown that happens. I mean, Russia's outcome in World War I, Sean McMeekin has a book that argues that the Russian Revolution, it's called like A New History of the Russian Revolution, argues that, very good book, that Russia's most important thing was it was at war during 1917. And that's what allowed Lenin and others to take power. It was a wartime thing. It wasn't just some random proletarian revolution. It was the chaos of war that led to that. And so foreign military defeat, or even foreign conflict, is the kind of thing where it turns things molten, things that were bubbling, things can flow and move around. And here's a bad scenario. The bad scenario is an attempt to repeat Executive Order 6102, like the gold seizure.

Starting point is 01:09:20 Do you know what that is? Well, I can kind of read between the lines, but why don't you tell me what it is? During the rise of the centralized government of the US, and I'll come back to this, the concept of peak centralization, basically one of the things that FDR did was Executive Order 6102, which seized all the gold in the US. And it basically forced it to be kind of exchanged in at a certain price and whatnot. Now, right now, we're seeing insane levels of money printing. And it is certainly possible that at some point in the future, they try something like an executive order 6102. And in fact, there's this guy on Twitter who has a moderate following who basically is starting to advocate for this type of thing because he'd been predicting Bitcoin was going to go to zero. It's like Facebook is a fad. It's a bubble. Oh, no, it's terribly powerful. It must be stopped. You know, it's a flip from this thing is nothing. It's going to go to zero to we must drive it to zero or we must seize it. So if they try something like that, and the reason that might be possible is you print a lot of money to finance this war.

Starting point is 01:10:17 And now you've got an executive order 6102 like thing, an attempted Bitcoin seizure. That is the type of thing that could kick off serious civil unrest. It's possible. The reason is, if you're trying to seize BTC in a time of rampant inflation, that is no longer something that can be portrayed as being for the good of the population. Because inflation touches, I mean, inflation is already pretty high, but it touches everybody. It touches white people, black people, Latino people, Asian people. It is economics. It's very hard to portray it as some grand historical conflict or something like that. It really is the state versus the people. And it's not like the people were printing dollars or managing the economy.

Starting point is 01:10:55 That was supposed to be the Fed and the Treasury and whatnot. So if inflation is rampant, any tricycle BTC, that I think could be the match for the next wave of conflict. Just a quick logistics question. Is additional instruments and abstractions or created ETFs, futures, etc. in a seizure scenario, would that be limited to a certain form of BTC or would it apply across all of these different instruments? I don't know. But I think that basically, there's a huge difference between physical gold and ETF. Yeah, yeah, exactly. That's right. And custodial Bitcoin, which is like,

Starting point is 01:11:40 let's put it as user custodial Bitcoin versus holding coins on an exchange. If you have your coins on your laptop or your device, you're not saying not your keys, not your coins. That is something where there'll have to be a serious legal process or even a SWAT team to try to get them from you. Whereas if they're on an exchange or, but I advise complying with the law at all times, you know, blah, blah, blah. But this would be something where it would be easier to enforce that law on a giant exchange that has all their coins there. Yeah, sure. You just log in and you get a notification. Yeah, that's right. So there's a graph that I posted November 17, 18, 2020. Bitcoin is moving off exchanges,

Starting point is 01:12:25 prices are moving up, ecosystem will be building out, having its constraints supplied all time high, maybe just the beginning, which turned out to be true. That was almost exactly a year ago. And there's a graph from Glassnode,

Starting point is 01:12:35 Bitcoin colon balance on exchanges, all exchanges, which seems to show that coins have been moving off exchanges. And there's another graph from Thalamu, T-H-A-L-A-M-U underscore, also showing that BTC held on spot exchanges may be falling. Now, I haven't dug into this. You need a pro subscription to Glassnode and so on and so forth.

Starting point is 01:12:59 But that's an important metric to monitor because coins on exchanges are easier to seize than coins off exchanges. And to come back to something you said, do you think the main driver there is because people can stake their coins and get a higher return on decentralized platforms? Is that why you think they're coming off? Interest is a massively scalable application, right? Just park your money and get money back. And DeFi offers insane interest at very high risk. And just for people who don't know, so DeFi, decentralized finance.

Starting point is 01:13:39 Decentralized finance offers an absolutely insane level of interest. I wouldn't even quote the numbers because any number I quote, you can find a higher one if you can take on more risk, basically. And what does that risk mean? It means possibly loss of principal, like the smart contract could be hacked, possibly other kinds of things. But you can put in a million bucks and get like $100,000 a year or more in interest. The thing is that you could also try and put a million bucks and try to make $10 million because some of these coins will 10x. So it is absolutely like the upside of crypto.

Starting point is 01:14:10 By contrast, in banks, they're at like zero interest rates or like nothing. Now, just to play the other side, nowhere can you make more money and also lose more money if you make poor decisions. Exactly. Crypto, it's like the Unix of money. You can room-rf your entire fortune or move millions with a keystroke. Do you know what room-rf is? I don't, but I love that. I almost want you not to explain it because like five people in my audience will find that amazing and the rest won't get it. But I mean, I can sort of intuit what that means, but why don't you, why don't you spell it out for me? Vroom-RF is, it's like a, it's like a Unix command, which means remove everything,

Starting point is 01:14:53 dash recursive, dash force. So you do it at the top of your directory hierarchy, dash R means descend into everything, dash force means don't ask me any questions. And, you know, people are used to doing this when they want to just nuke a directory but if you do it in the wrong spot you're like oh my god i deleted my entire files or whatever right oops yeah now now modern systems will kind of detect what node you're in and may not actually allow you to do that but that's what being a quote power user means the computer will do what you tell it to do, not necessarily what you actually wanted it to do. That's what a bug is.

Starting point is 01:15:27 You've instructed the computer to do something. There's an error in your logic. You didn't think through a scenario. You didn't think through an input. And it does what you told it to do, but not what you want it to do. By the way, this is like a super important thing in terms of cryptocurrency because it solves the principal Asian problem and replaces it with your ability to debug. Do you know what I mean by that? Should I talk about that for a second?

Starting point is 01:15:48 You said the principal agent? Principal agent problem. I'm kidding. I'm just kidding. Sure. I wanted to know who this principal agent is. Yes, principal agent problem. No, I don't know what that means.

Starting point is 01:16:00 Please continue. So this was like back in 2013 when I understood the full scope of this, I was like, holy cow. And the reason is whenever you have a principal and an agent, for example, you have a venture capitalist as a principal and they fund a CEO who's their agent, or you are the principal and you hire a plumber who's your agent to fix something, or you hire a banker to go and sell something for you. The problem is that in the two-by-two matrix of you win, you lose, they win, they lose, all four outcomes are possible. In particular, it is possible for you to lose and them to win. For example, they take a commission

Starting point is 01:16:39 without delivering you returns on your portfolio. And in fact, the principal agent problem is a fundamental thing of every single relationship on an org chart, manager, engineer, CEO, manager, VC, CEO. Every single edge there has a two by two matrix of who can win and who can lose. Now, the key is to try to diagonalize this as much as possible, such that the win-win and lose-lose, you both win the most together and you both lose the most together, such

Starting point is 01:17:12 that there isn't any temptation for one party to defect off-diagonal and win at the other guy's expense. Yeah. Yeah. Read your terms and conditions carefully. That's right. And the thing is that this becomes more complicated when you have just two people, it's a two by two. When you have three people, it's a two by two by two

Starting point is 01:17:29 because there's eight outcomes. Win-lose times win-lose times win-lose. It's a Cartesian product. When you have N people, it's two by two by two to the Nth power. It's like this hypercube. And so it gets very complicated. So what starts to happen in large organizations

Starting point is 01:17:43 is that some subset of people picks the strategy where they win and everybody else loses. For example, 51% can vote themselves the money of the other 49%. That's a straight win-lose, zero-sum kind of dynamic. Now, the way that startups avoid this is with equity. If you've heard the term aligning incentives, it actually comes from math, where it's like a diagonal alignment pointing through this hypercube of incentives, where the key thing to do is, especially at a startup, 51% could vote themselves out of their 49% money in theory if everybody is a shareholder vote and everybody's equal.

Starting point is 01:18:20 But there isn't any money to distribute. All the money comes in the exit. So internal politics are limited because internal resources are limited in a small company. And so what you do there is, rather than encourage people to compute every possible strategy in this giant two by two by two by two hypercube,

Starting point is 01:18:39 instead you say the win, win, win, win, win, win, win quadrant where all N of us win together in an exit, you know, an acquisition or an IPO, well you don't have to do out the math, that pays off the most. And every other off-diagonal thing where some coalition wins while the other group loses is suboptimal, okay? Now, here's the thing. The principal-agent problem comes from the fact that when you've got two human beings, their interests never fully coincide. There's a situation where one can die and the other can live, or vice versa, you know, trolley problem type things.

Starting point is 01:19:08 Push hard enough, and there's often a divergence in incentives. Not so for robots. Not so for programs. Not so for intelligent agents. And you're going to tie this into crypto or blockchain. Yes. Yes, great. Because with cryptocurrency, a program can now trade on your behalf.

Starting point is 01:19:26 You can, rather than hiring a banker to go and trade for you, you can write a program that will trade for you while you sleep on cryptocurrency exchanges and especially decentralized exchanges worldwide. That program that you write to trade, especially the reason I say decentralized exchanges worldwide is that is truly just packet to packet. That's full internet. There may not even be a signup process that is fully on chain. So that is something where, just like you go from a telephone number to an IP address, telephone number is a human associated thing, but an IP address is a machine associated thing. Any machine can call any other machine via an IP address. That's what an IP address really is.

Starting point is 01:20:04 You go from a human bank account to a cryptocurrency address and you've removed the human association. And now a program can hold money, make money, lose money fully autonomously. So now rather than hiring the banker, you write the program. There's no more principal agent problem because the program has no mind of its own. It's only the mind that you give it. This is super important because as trust in society decreases, it is harder and harder to maintain a scaled organization of human beings because there's more and more divergence. It's an individual era. Everybody is going in this direction.

Starting point is 01:20:44 Why are you the boss? I should be the boss. In fact, both equality and freedom, while in some ways they're often made antipodal to each other, where they're actually also similar in another respect, which is if we are all equal, totally equal, if you ain't the boss of me, I have total freedom, then there's zero hierarchy. It's all flattened out. It is basically anarchic. And in that situation, everybody feels that everybody's interests have diverged. So I'm, you know, every man for themselves. Now, in that situation, it's hard to maintain a civilized society. So I think that the answer is going to be robotics, cryptocurrency. How do those things

Starting point is 01:21:20 relate? Well, when you give a robot instructions to go and unpack a box, it just does it. There is no divergence between the capitalist and the worker. The capitalist is the worker. Management becomes automation. There's a great book, Factory Physics. You ever heard of this book? I have not. It's way harder to build an assembly line than to work on an assembly line. Factory Physics is a good book. Also, Eliyahu Goldratt's book, The Goal, is quite good. He kind of managed to wrap a... It's kind of funny. It's almost like a fictional story around operations research type stuff. It's executed better than it sounds, okay? It's like, who moved my cheese for operations research finance?

Starting point is 01:22:04 That's right. That's right. That's right. So both of these are good books. Factory Physics is like, it's like a textbook that takes a very quantitative approach to cycle times and other parameters when in fact resecting. But the main thing that you take away from that is, and so, you know, I designed a robotic genome sequencing assembly line like 10 years ago as part of my first company. And this is something where you realize, whoa, it's actually way harder to build an assembly line than to run it. It's like the difference between writing a program and running a program

Starting point is 01:22:34 because every box there, it's actually very similar to architecting like a data analysis pipeline, which more of your viewers will have done because something has to flow out from this and into something else. It has to be the right format. It has to process only this many units at a given time. You need to use buffers and queues to get rid of it and so on. And in many ways, by the way, that data analysis pipeline thing now integrates with the offline physical stuff where you'll do some physical processing to wait for a computation online, and then the physical process kicks off. So 10 years ago, I was kind of merging robotics and AI and cues and all this type of stuff. You know, in the same way, like tech people,

Starting point is 01:23:10 you'll mess around with a Palm Pilot years before people are using an iPhone, or you will be in World of Warcraft before people are doing VR, or everybody's on Twitter before other people are on Twitter, right? So I kind of saw this firsthand. And one of the biggest things was what you want to do from any process like that is eliminate as much human error as possible. And eliminating as much human error as possible means as limiting as many humans from the process as possible. It's an error to have humans if you want to eliminate human error. Okay. And if you can reduce it to just bugs in your code, that's way better because you can see that on screen. It's super consistent, at least. The error is made in the same way every time. Just to give you an example,

Starting point is 01:23:50 if somebody rotates a so-called 96-well plate, an 8x12 plate, if they just rotate it wrong, if they're cranking through high volume and they just rotate it wrong, which is easy to do. I mean, they've got kind of markers on it, but people are people, can screw up. There's 96 samples that are off. 96 patients get the wrong report. Wait, 96 patients of what type? What does the plate have to do with patients? So visualize like a plastic tray with indentations in it to contain liquid. And so those indentations are like really small, basically eyedropper scale indentations. If you Google like 96 well plate, you'll see, go to Google Images, you'll see like a visual of this, right?

Starting point is 01:24:30 Okay. And so each cell there is often like a patient sample. So you might have 96 samples from 96 different patients in this plate. And then you're putting various reagents in there and putting it through this process. And if you rotate it wrong, everybody gets the wrong result. Like 23 and me. Oh, I see what you're saying. Right.

Starting point is 01:24:49 I understand what you're saying. They are matched incorrectly. Is that what you mean? Yeah. Yeah, exactly. Right. So they had like a sample swap error back in 2010 where a bunch of people got the wrong ancestry results.

Starting point is 01:25:03 They were, oh, you know. They thought they were this ancestry, they were another ancestry. They thought, oh my God, am I an illegitimate child or something like that? So the downstream consequences of this very human error are something that the error was to include a human. And so what is going to happen is cryptocurrency means that you don't have to hire a banker.

Starting point is 01:25:25 You can write an intelligent agent to trade for you. Robotics means you don't have to hire a worker. You can program a robot. Management literally becomes automation. So rather than writing out instructions and setting up the assembly line and positioning workers there and calculating cycle times and so on and so forth, you as the manager, for many people, by the way, management is not tangible.

Starting point is 01:25:47 And that's why they devalue it. The way the labor theory of values is talked about, the Marxist theory of value, starts with a visual of the factory floor. You have these workers who are working, and it's like, oh, weo, weo. And you have this evil fat cat boss with a cigar who's got his feet up on the desk and is just basically cracking the whip on these poor workers. And of course, scenes like this did exist in late 1800s America. I'm not arguing that unethical bosses didn't exist, but the fundamental premise of this

Starting point is 01:26:18 is, oh, the workers are doing all the work and this fat cat is just sitting there and contributing nothing and so on and so forth. And part of that is because capital and management are kind of intangible, and it's often denied that they create any value. But now, what is actually possible is a totally different model, where it doesn't start at the factory floor, but instead you start, let's say, in an academic lecture hall. And now you say, okay, let's say it's physics. What percentage of people are able

Starting point is 01:26:46 to comprehend the material and what percentage of people could write the textbook? And then what percentage of people could rewrite the textbook? And it is on that small minority of people that we depend for refrigeration and flight and fiber optics and so on. It's the opposite. Rather than this small set of fat cats who exploits this giant pyramid with all these workers at the bottom, it's like an inverse pyramid theory where the vast, vast majority of people depend upon this small, small group of technologists to create all the stuff that they don't understand how to operate that maintains modern civilization. The funny thing is that your engineering grad student often has both of these mental models in their head at the same time. And it just depends

Starting point is 01:27:29 on whether they're thinking of themselves as a poor, exploited worker or a sophisticated engineering character. And what I'd argue is that in the 20th century, the reason that the labor theory of value preponderated is that there was leverage to large groups of workers. They could do a strike. Because of mass production, you needed workers to operate a factory. So there was leverage there. And of course, what happened was they, in the Soviet Union, they pushed everybody into a lose-lose scenario where, yeah, there was a strike, but it wasn't a win-lose scenario

Starting point is 01:28:01 where the workers win and the bosses lose. It was a lose-lose scenario where after enough strikes, you got communism where nobody could strike. You had the White Sea labor canal. You had the gulag. You had basically communism as this giant slave labor country, this prison state where you couldn't escape. They would shoot you if you tried to get over the Berlin Wall, for example. So actually, the leverage existed between workers and capitalists in a certain way. Now it's a different kind of thing. Now with the dock worker shortages, with the truck driver shortages, there's a huge incentive for automation and for robotics. And people are just doing, if you've heard this thing, the great resignation. It's happening across many different social classes. With labor shortages

Starting point is 01:28:39 of a different kind, it's not a strike, it's a resignation. Okay, well, I can't get somebody at this price. Fine, let me figure out how to automate this with robots. And now strike. It's a resignation. Okay, well, I can't get somebody at this price. Fine. Let me figure out how to automate this with robots. And now, and here's a critical thing, it is not intangible anymore. Management is not intangible. It's not just instructions that the boss is giving to the workers and he puts his feet up on a desk. It is literally code in GitHub. It is lines of code that say, move this arm here, position it here, calculate the degrees of freedom here. It is math. It is computer science. It is now tangible because it is code. And now you're not giving instructions to a worker, you're giving instructions to a robot, a computer, an agent. All right, this is actually a perfect segue to what I was going to lead into. And I'm just going

Starting point is 01:29:20 to talk for a little bit to set the stage. Beginning probably just before our last conversation in Q1 of this year, and certainly with increasing depth over the last six months, I've been spending a lot of my time in what we might consider Web3, more immersed in blockchain and cryptocurrencies, NFTs, etc. So many of the things that I had read about have become less theoretical for me. And there are things that I've been able to explore and thankfully not experience in some of the negative cases that have led me to all sorts of realizations. So for instance, one is, if you just read crypto Twitter, at least some of the people on crypto Twitter, which I would suggest no one do, if that is your sole source of information, but some interesting discussions nonetheless, there are some techno-idealists or techno-optimists who sort of paint this decentralized future that is just utopian in almost every respect. But there are risks in bad code, right? Smart contract risk.

Starting point is 01:30:36 And there are insurance companies, Nexus Mutual and many others of different types that try to provide ways for people to protect themselves against the downside of certain types of smart contract risk. We talked about the pseudonymous economy last time, whereby people would use alter egos of different types that didn't change constantly, but rather accrued some type of reputational value. This is another thing that I've seen most acutely for myself within DeFi and NFTs specifically, within NFTs, people who are collecting high value or what are currently high value JPEGs in essence, right? But pieces of artwork that are non-fungible. And people now have hundreds of millions of dollars worth of these pieces of artwork in some instances, and very few people, if anyone, knows their real names. I've had this experience for the first time where I've even met some of

Starting point is 01:31:39 these people in person and tried to make small talk. We chatted about this before we started recording and I'm like, oh, hey, where are you flying in from? And they're like, nah, yeah, I'm not going to answer that. And I was like, oh, wow. Okay. This is the different conversation that I'm accustomed to. But there's also some degree of counterparty risk when you're dealing with pseudonymous identities, let's just say, where you don't yet have established some reliability score outside of a verified account and checkmark on Twitter, which can also be faked, that can also be sort of hacked in some respects. So here's my overarching question, and I'm going to lead into it. So I'm sure you've heard this line, you know, trusted third parties are security holes.

Starting point is 01:32:27 So on paper, I'm like, that makes sense. But when you start to really wade into, say, NFTs, just as an example, and people say, you need to be your own bank, there's a lot of responsibility in logistics that goes into being your own bank. In the same way that if you, for instance, wants to or imagine living in this kind of utopian decentralized world where there's a degree, I'm not saying this is you, but a degree of anarchy. And we saw this during riots in the last year or two in places like Portland, in many cities

Starting point is 01:33:02 around the world. You quickly end up in a state that is not unlike what we saw during Hurricane Katrina, where these atrocities being committed left and right, because there's no law enforcement. So then that leads to questions of, do you want to be your own law enforcement? I've seen how much fraud there is and sophisticated sort of social engineering goes into some shadowy corners of the world of NFTs, say with people posing as customer support and discords, and then taking snapshots of people's QR codes and so on. I mean, there's a level of kind of sophistication

Starting point is 01:33:39 that I hadn't personally been exposed to because I'm shielded by my, you can, I'm sure, pick this apart, but I'm shielded on some level from certain trusted third parties, right? I do not have the obligation to act as my own bouncer and security guard and banker. So I'm wondering if you'd like to kind of comment on any of this, because I have realized that for me personally, being Jason Bourne in my physical and digital life on every level is a scale and scope of responsibility that I don't really want. Even though I have firearms training, I have some technical ability, I have an incredibly good network. I could actually organize my life around some of those sort of pillars of self-sufficiency,

Starting point is 01:34:34 but I'm not convinced I totally want to. And I'll tie this in also, you were talking about Singapore before we started recording, and you said it's for centralized, it delivers. So I'm just wondering for muggles who might be listening and i would include myself in that group where we're like you know what i'm not ready to be the lone ranger on the frontier of complete decentralization for all of the perceived risks that at least i see once you start to wade into it where's the goldilocks point and how do you decide that for yourself? I thought about this a lot from many different angles. And let me at least give you my thinking on it and shoot at it or agree as you want. This kind of relates to the thing I was

Starting point is 01:35:16 talking about earlier with communist capital, woke capital, crypto capital, submission, sympathy. You must submit. You must sympathize, you must be sovereign. And that last point of the triangle, you must be sovereign, as you are discovering, is actually not. That's why I said it's an extremal point. It is too hard for pretty much anybody to not just hold their own currency, but grow their own food and get their own water and so on and so forth. Humans are individuals, but they're also social animals and you make some compromises. Now, the stuff I just discussed on robotics actually reduces the necessary scale of societies. In theory, you could have,

Starting point is 01:35:57 and this is where I think we end up in 2050 or 2040, maybe even sooner, you could go back to the future and have robotic farms, robotic autarkic farms, where if you're looking at the automation of agriculture, it's getting there. It's really improving dramatically, AI for picking things and so on. And you kind of give your instructions to your robotic field hands because then you go truly full stack.

Starting point is 01:36:16 You're quote off the grid, but you have maybe a modern life. Now, of course, you need enough land. You're still going to have trade. You're not going to be able to grow every crop there, but you might be able to do okay. So I do think that there's an eventual thing. I don't know what the minimum scale society is, but I think it's smaller than 300 million, might be smaller than a million, might be even a few thousand people could operate something decent.

Starting point is 01:36:35 There's actually, to make that more explicit, there's a, you know, the project open source ecology. I don't. I recognize the words I can imagine, but why don't you describe it? Yeah. So it's a little different than what people think when they hear the word ecology. It's basically a kit of 30 open-source machines that if you build them from scratch, you could rebuild civilization. The Global Village Construction Set. Okay, open-source.

Starting point is 01:36:59 So it's like, how do I get running water? And how do I get this? It's all the things that civilization depends on. But it's machines that you can build yourself. And there's also a couple of other books like this. There's a book called The Knowledge by, I think, Louis Dartnell, which I think is really good. And How to Rebuild Our World from Scratch, kind of the post-apocalyptic thing. That's what The Knowledge is about? Yeah. The Knowledge, colon, how to rebuild our world from scratch.

Starting point is 01:37:28 And then there's another book, which is How to Invent Everything, A Survival Guide from the Stranded Time Traveler. And those books, I think, are quite good. Okay, those two, as well as Open Source Ecology, because it addresses some of what you're talking about, which is how would somebody start from scratch and do this? We don't know how to do it. And in some ways what's happening is there's a cycle of centralization, decentralization that just happens. For example, in China, it's like there's a boring states period, and then the whole thing is unified. And then it breaks up again and it's unified. And we see this in the

Starting point is 01:37:59 computer industry in a totally different context, which is you have mainframes, then you have personal computers. Oh, and then you have cloud,, then you have personal computers. Oh, and then you have cloud, and then you have cryptocurrency and smartphones. It kind of goes back and forth like this. The thing about this is when a system is centralized, people chafe at the control, and they want sovereignty, they want power, they push on it. Then they manage to break it up, and then it's all decentralized and it's chaos. Now what is scarce is leadership. They're like, oh, let's put it back together and so on. Seen from one vantage point, this just looks like a cycle. You just keep coming back where you came plane, but we are making progress in sort of this ascending cycle over many generations. Now, I'll put an asterisk on that too, which is I don't believe that progress is necessarily

Starting point is 01:38:55 guaranteed. In fact, there's a couple of good podcasts or shows like the Fall of Civilizations podcast or, you know, Samo Berge actually has some good stuff on this where he talks about Gobekli Tepe, which is like the oldest human civilization. It appears, looking at some of the civilizational records, that humans may have like gotten pretty advanced and then just kind of totally collapsed. And we've done that a few times in human history. So you're saying you believe in Atlantis? Well, I'm kidding. I'm kidding. I'm kidding.

Starting point is 01:39:25 I'm kidding. I'm kidding. So like Gobekli Tepe, for example, it's this site that's kind of like Stonehenge, except way older than Stonehenge, found in what is today modern Turkey that pushed way back our dates of when civilization started.

Starting point is 01:39:42 Okay. So it might be like playing a video game where you get to level 15 and then you die. You get to level 27 and then you die. And this just might be the most advanced human civilization we've built to date, but it could just collapse and we might come back. I mean, it happened to the dinosaurs.

Starting point is 01:39:58 They got hit by a meteor. I mean, there's some pretty bizarre archaeological records and really interesting carbon dating done in South America also that would point to advanced civilizational collapse of different types. That's right. And so the thing is that when you say progress is possible, but it's not guaranteed, for example, think about Christianity and the Roman Empire. Christianity, in some sense, was no offense to your listeners. I have nothing against it, but it was like the original communism at the time of the Roman Empire. It tore down the Roman Empire. It said, slaves are good, and sooner a rich man go through the eye of a needle than get to heaven. And basically, it delegitimated the

Starting point is 01:40:40 Roman Empire, and eventually it fell, at least the Western Roman Empire. And that was something, you got the Dark Ages for a while until this sort of fusion emerged on the other side. You had the Germanization of Christianity. You had, for example, why do you have St. Nicholas and Santa Claus and snow next to a scene of Bethlehem and the manger in the desert? Those are two totally different cultures, thousands of miles apart. But what's happened is it's copy pasting one story next to another, like horizontal gene transfer in organisms. The meme replicates, even if the substance is changed quite a bit. So what happened was eventually after the dark ages, you got a thing that was a contradiction in terms or oxymoron before the Christian King,

Starting point is 01:41:28 not the Roman empire, the Holy Roman empire. empire of course it wasn't continuous with the thing but conceptually and you kind of had that rapprochement but there was a dark ages like a collapse of civilization in between and so bad ideas or or let's call it i say it's a bad idea let's call it certain ideas can collapse civilization that has happened happened. Okay. Yeah. And yeah, we've recovered, but it's not necessarily a guarantee if we've collapsed, this is a guarantee that we'll completely recover. The dinosaurs didn't, of course.

Starting point is 01:41:49 Well, some ideas are even generated or myths to collapse civilizations. Right. Yeah. So, right. So, so this gets to something which I think of as a very important part of the

Starting point is 01:42:02 future political axis, which is, you can say it is, you know, Democrat, Republican, you can say it's centralization, decentralization. But I think an even more important axis in the medium to long term is going to be transhumanism versus anarcho-primitivism. And we kind of talked about some of this before, I think, did we? Yeah. Let's reiterate it. And then I just want to make sure I bookmark that I want to come back to how do you find this sweet spot on the spectrum? Because one concern I have is that the decentralized tools, given the literacy required and the precautionary measures and tech savvy required required will forever remain, or for a long

Starting point is 01:42:45 time, maybe not forever, but for a long time remain the tools of half a percent of a given population, or maybe a few percent of a given population, unless there are UIs slapped on top, which will ostensibly just create, again, trusted third parties. So it seems sort of antithetical. But I don't want you to lose your train of thought, but I want to make sure that we come back to that. So let me quickly do anarcho-permitivism and transhumanism, then we come back to your point. So the quick thing on that is anarcho-permitivism says, we're not living in nature. We're far away from it. We're having all these plastics. We're having all of this pollution. That's why maybe

Starting point is 01:43:23 there's like a right of center version of that, which is like our testosterone count is down, which it is. Actually, that's not like a conspiracy theory. It's actually like a scientific fact. It's like way lower than it used to be for adult men. All that is down. And so there's some aspect where this is now neutral. We're diabetic.

Starting point is 01:43:41 We're eating all these grains. It's all bad. Instead, we need to kind of reject modern civilization in part or full, like the Unabomber thesis, and just go back to the land. And of course, the problem with this is I think that's a romanticized version of what going back to land is. I don't care if some people want to go and do an Amish thing and live on their own or snapshot some point in time. They want to tear down industrial civilization. Conversely, the transhumanist thing is the opposite, which says what makes us human is technology. You know Richard Wrangham's book, How Cooking Made Us Human? You ever heard of that?

Starting point is 01:44:13 I have, yeah. Okay, so- Finally, one book I've heard of. So Wrangham's book is interesting because it says- I've also read Horton Hears a Who, just to establish my level of reading. Continue. Your Chinese is way better than mine. And we have a non-over,

Starting point is 01:44:31 and I shouldn't say non-over, I learned from Tools of Titans is amazing. Thank you. But Cooking Made Us Human essentially says that technology is actually part of humanity in the sense that we sort of outsource our metabolism to cooking and therefore

Starting point is 01:44:45 could evolve in a different way. And that's probably also true for clothes and other things. You know, there's this book, The Naked Ape, which is kind of also about that. And the idea is that, you know, we are a technological species. Technology is not some anti-human thing. It is humanity. It is a difference between us versus animals. And so our destiny is to get to the stars. Let's do this let's become transcendent beings like one with the machine brain machine interface this vessel is just what we are today but our ancestors ancestors if we really want to make our ancestors proud they were single-celled organisms or like non-human creatures so whatever is in front will be to us as

Starting point is 01:45:22 we are to them and so that's like the transhumanism thing. And what's funny is both of these in their extreme form are like off-putting to some people. They're like, why can't we just like stick where we are? But the nature of things is that those people who have ideological zeal will start pulling the train in one direction versus another. It's very hard to kind of keep something

Starting point is 01:45:39 just stable in one state. You'd have to end technology and communication, et cetera, right? So now coming back to your point, basically, what do you do when all these institutions collapse because most people cannot be that sovereign because it's like an overnight plunge into refounding everything it is not simply be your own bank it's maybe be your own food supply and there's certain things that are sitting on your desk that cost you 10 bucks but you would never be able to build them, or it's very, very expensive to build them from scratch. I don't know, like a USB cable. Well, how am I going to build this? I'm holding up a ballpoint pen.

Starting point is 01:46:13 Yeah, of course, that's a famous thing. No one can build a pencil. The first unit rolling off the assembly line is wildly expensive. Then the one millionth or billionth unit is super cheap. But getting to that point of technology from just a grass field and sand is super hard. Yeah, it's going to be hard to do from your intentional community in the jungles of Costa Rica. That's right. But all the supply chain stuff is going to start forcing a greater degree of autarky. If we're lucky, it is just a gradual ramping up. If unlucky, it is too fast and you don't have time to adapt. It's like the difference

Starting point is 01:46:51 between working out gradually versus go put up 300 and break your elbow or whatever. The point is, what I think happens is unbundling and rebundling. One of Mark Anderson's collaborators a long time ago had this throw-off line, which I love because it's so funny, but it's also true, is the only ways to make money in business are bundling and unbundling. And this gets back to the spiral thing I was talking about. For example, you take the songs off of a CD and you unbundle them into MP3s, then you rebundle them into Spotify playlists, or you take the articles out of a newspaper and you put them into individual URLs, and then you rebundle them into Twitter feeds. Yeah, or you take the articles out of a newspaper and you put them into individual URLs, and then you re-bundle them into Twitter feeds.

Starting point is 01:47:29 Yeah, or a subscription, right? Or a subscription, that's right. And you take the countries that we have today that people no longer feel a loyalty to, you're unbundling them into the coming American anarchy, and then you're going to re-bundle them on the other side into groups that do have something in common. And that will be probably a really messy global process when this Pax Americana falls. One analogy is the 30 Years' War. In some ways, by the way, that's actually quite analogous to what we're going through. Do you know about what happened then? I do not. I would love to know. Tell me, sir. The printing press, I have this tweet actually on this. Printing press plus

Starting point is 01:48:11 Martin Luther led to the Reformation, led to the counter-Reformation, led to the religious wars, the 30 years war, led to eventually the Peace of Westphalia and the nation state. And the internet plus Satoshi Nakamoto led to the decentralization by analogy to the Reformation, led to the counter-decentralization, led to potentially the coin wars, the American anarchy, and then question mark, question mark, and then network states. So let me explain what that means. By the time of Martin Luther, the Catholic Church had become this ossified centralized power and had, for example, this thing called indulgences where you could go and sin and you could just go and

Starting point is 01:48:52 pay some money and be like, yeah, it's a church. They'd be like, no biggie. Okay. You have- Hall pass. Yeah. It's a hall pass. Exactly. Right. You can argue it's similar. And I know this is a little bit of a poke, but like a carbon credit, go and sin with carbon and then buy a credit, right? You can argue it's similar, and I know this is a little bit of a poke, but like a carbon credit. Go and sin with carbon and then buy a credit, right? You might argue it's a good thing or a bad thing, but it's analogous. Got to make those fuckers more expensive. Got to make them more expensive. Anyway. An even better example is TSA Pre, where everybody's a sinner, everybody's a potential terrorist, but pay this money and you can be in an express lane. Like, huh? It doesn't strike anybody as right. It's like this weird thing where if the issue

Starting point is 01:49:29 was safety, why can you pay for it? Or at least it arouses question marks. So two things. Now, I was just going to bring us back to your tweet. The other thing I'll say for folks is if you want to learn a bit more about Martin Luther and many of the things that followed, there's an incredible podcast episode, takes a little while to get warmed up, called Prophets of Doom, which is on hardcore history by Dan Carlin. It was the first episode I ever listened to of his, which got me hooked. Fascinating listen. So I recommend that to folks. And back to our regularly scheduled biology, sir. Please continue. Great. Also, there's a good thing on this called the Bitcoin Reformation with Tur Demeester, T-U-U-R-D-E-M-E-E-S-T-E-R. That kind of goes through some similar ideas, basically like analogizing Bitcoin to Martin

Starting point is 01:50:14 Luther. So maybe look at both of those together, and then you know the historical version and some of the parallels. But briefly, Martin Luther, because it was the time of the printing press, he didn't just nail his 95 theses to Wittingen in, I think, 1517. Basically, people were able to copy his arguments. And for the first time, people had heard these sort of deconstructing arguments that said the Catholic Church is a scam. You should have a personal relationship with God. It doesn't matter what the church says, et cetera, et cetera. And so, yeah, that was a religious argument, but it was also an argument over power and who should hold power. And for a long time, when I was a kid, I didn't understand why are people arguing about the body of Christ like a

Starting point is 01:51:00 wafer? It seemed like the weirdest kind of thing to argue about and fight and kill about. I just didn't understand this. Now I understand that a lot of those things were sort of proxies for who has power. Does the church have power, or do these new guys have power? And so what happened was the Reformation was like this thing of basically of decentralization of power away from the church. And the counter-Reformation took a little while to get underway, but this was the Catholic church saying, uh-uh, not so fast, and basically fought. There are some reforms. There's also some combat. And these were the wars of religion. Do you go with the centralized church or the decentralized Protestant movement, Protestant versus Catholic? And eventually, after 30 years of war, very bloody war, people were like, okay, we're going to come up with essentially a live-and-let-live philosophy, the Peace of Westph, okay, we're going to come up with essentially a live and let live

Starting point is 01:51:45 philosophy, the piece of Westphalia where we're within nation states and you have the monopoly of violence within that. And a transnational religion doesn't have influence within this geography. So that is to say the Catholic church doesn't have influence here. And it was like, okay, we're both pretty bloody. Let's settle this. And the thing is, that's way out of living memory. That is many generations ago. But sometimes people seem to need, one thing that's funny is a lot of things kind of, you can argue they happen in like 70, 80 year cycles because things drop out of living memory and then certain aspects repeat. So I think people have sort of

Starting point is 01:52:26 forgotten how bad war is in some ways. So they're kind of LARPing it, and maybe they'll make it into a real thing. This is actually, Fukuyama mentioned this, that his end of history thing actually had a prescient comment that people on some level are wired to struggle, and if they don't have struggle, they will re-e reinvent struggle. They will struggle against order and prosperity to kind of make it hard. Manufacture struggle. Yeah, absolutely. Yeah, exactly. That's right. And that's Francis Fukuyama. Yeah, let me actually, I'll find the exact quote. Hold on one second.

Starting point is 01:52:58 And while you're looking for that, then I want to come back to the Bitcoin or cryptocurrency comparison. And the part that I stumbled over when you were reading the tweet initially was the, I want to say the great re-centralization or something like that. And I just wasn't sure what that was. So centralization, decentralization, re-centralization is like entity unbundling, rebundling. It's like CDs, individual MP3s, playlists. It is newspapers, individual articles, Twitter feeds. It is countries, anarchy, new countries, new cities. What is that in cryptocurrency, the re-centralization? So it is, for example, an exchange. It's happening on many different scales, but one of them is

Starting point is 01:53:42 store your money in a bank. Okay, pull it all out. And now you've got Bitcoin on your computer. Store your money in an exchange. Okay, pull that out and then put it on a DEX partially. Each step here actually gives you greater control. D-E-X, decentralized exchange. Decentralized exchange. And there's ways of kind of doing this where you have less risk than on a centralized exchange.

Starting point is 01:54:02 For example, it's an atomic trade. It's on the DEX like a flash loan, and then you're getting it back in the next transaction. There's various ways of doing this where a centralized exchange improves your control over a bank, and a decentralized exchange improves your control over a centralized exchange. Even if there's parts of it that seem like you're reinventing the wheel, the wheel was reinvented. In fact, there's this great graphic that shows an original stone wheel, and then a chariot wheel, and then a modern Michelin tire. We do need to reinvent the wheel. And we have reinvented the event, and then there's this huge fight with the Counter-Reformation, and then eventually a truce where Protestantism basically won relative to the previous era, but Catholicism did not die out. It's still a big thing.

Starting point is 01:54:55 Similarly, I think you can think of the era we're in as the decentralization and now the Counter-Decentralization. So just like the printing press and Martin Luther kicked off the Reformation, the internet and cryptocurrency have kicked off the decentralization. And what does a counter-decentralization look like? It looks like deplatforming from social media platforms. It looks like unbanking. It looks like the Chinese surveillance state. It looks like basically exercising root control. It's basically root versus routers. So do you have root over this computer system and you're exercising root control. It's basically root versus routers. So do you have root over this computer system and you're exercising root control? Or do you have this decentralized set of routers that are just routing packets back and forth? And the counter

Starting point is 01:55:34 decentralization, I believe, is going to succeed in China and fail in the US. And what I mean by that is, I think China, because they have very ruthlessly competent managers, there's actually a good video by Eric X. Lee from 2013, which it doesn't hold up in every respect today, because there's certain claims he makes that, for example, that Xi Jinping will step down and that they've figured out political succession, Xi Jinping repealed that or whatever. There are things where he says that the Mao era is continuous with the Deng era when really Deng was really a coup against Mao's successor. It was a total shift in direction.

Starting point is 01:56:12 It's not what Mao intended. So those two parts, maybe he just has to say that for domestic consumption or what have you. So you have to take it with a grain of salt. But the rest of it is actually very interesting, where at least it gives a 2013 Chinese vantage point on their system. Why do they actually have these ruthlessly common advantages? Because the way that the CCP works is, yes, there isn't voting.

Starting point is 01:56:31 If people want to exercise political power, they join the party, sort of similar to how in the US, yes, you can vote. But if you really want to be politically powerful, you want to run for mayor or something like that, that means joining a party. So sort of like that, of course, not the same, but roughly analogous, those people who are, quote, politically ambitious, join the Communist Party, and they might start as running some small, really tiny town of 100 people. And then they level up, and they go to something of 10,000 or 100,000 people, or a million, and then eventually 10 million. And each level becomes more and more competitive. And they have surveys they do of the populace,

Starting point is 01:57:05 and they do like 360 reviews where they're looking at your peers who are running other cities, and they're looking at your superior supports. It's like promotion in a corporation. And so now, of course, there's patronage, and there's connections, and so on that go into it. But it's like a giant corporation where they're looking very much at metrics. And did you build this many toilets? Did you hit your numbers from above? Did you manage the population's discontent? Is this region, does it have higher dissatisfaction than other parts of China? And so on and so forth.

Starting point is 01:57:32 So corporation is not a democracy, but it is responsive to its customers in a certain way. And the Chinese government was always kind of conscious of losing the mandate of heaven and having too much dissatisfaction. So they did all these polls and so on, try to keep ahead of public sentiment, solve these kinds of problems and so on. Again, I'm not saying they're good. I'm saying that this is how they selected for competent leadership. That's why they have a lot of engineers in their ranks. And that's why they built the Great Firewall and other things, because they have guys who are basically selected as capital allocators as managers. So because of that, because they set up the Great Firewall, because they banned social media, because they've done other things, I think China is going to

Starting point is 01:58:08 win the counter-decentralization where people thought that their bans on the internet and their controls on the internet wouldn't work. They kind of did. They basically just had their walled garden where they have root access and Xi Jinping can basically push a button and anybody can be disappeared. There's like super famous actresses that just got disappeared. Now that's, as I said, ruthlessly common because that's kind of a scary thing to be under. You don't really, you don't have any recourse. There's no civil liberties. There's no human rights. And yeah, it's true that over the last 40 years, they've delivered a lot of benefits to their population. There's this huge group that's being pulled out of poverty, but that level of absolute power can also go south. But the point is that I think they will succeed,

Starting point is 01:58:48 they have succeeded, arguably, in the counter-decentralization. By contrast, in the US, the US establishment is, by turns, apathetic. It's either apathy or panic. For example, on COVID, oh, it's not a big deal. Oh, for example, these tech journalists wrote this article, no handshakes, please, trying to make fun of anybody for taking precautions, trying to shame, taking precautions. Folks wrote about, oh, these bubble boys are so concerned about this, making fun of this early on in COVID. And then they switched completely to panic later and never acknowledged that they had had all this false reporting, misleading reporting. They accused people of being racist for saying, hey, maybe we shouldn't have the Chinatown parade with the Wuhan coronavirus on the loose after Wuhan itself

Starting point is 01:59:30 had canceled its own parades. This is like January, February 2020. So what happened was they were at first apathetic. Oh, this is not going to be a big deal. Nobody should do anything. Then they're panicking. Oh, my God. And so that kind of mode is very common. The US establishment is not selected for folks who look ahead. It's selected for actors, propagandists. It's not selected for capital allocators. Just a couple examples. Lorena Gonzalez, this legislator in California, thought that a relatively junior guy at Founders Fund was a billionaire. Or Brian Williams and a member of the New York Times editorial board thought that if you divided Bloomberg's fortune by 300 million Americans, all of them would get like a ton of money. And obviously they wouldn't. So you actually select for folks

Starting point is 02:00:10 who are verbally good, but innumerate. And that's very different from what the Chinese system selects for. And that results in folks who are not like VCs or technologists, who are not like calculating ahead or doing contingency planning or saying neither apathy nor panic,

Starting point is 02:00:23 we can have a technical plan to potentially succeed if we do X, Y, and Z. So what that results in is the US establishment that's always behind the eight ball. Lehman is a surprise. Bayer is a surprise. COVID is a surprise. Trump is a surprise.

Starting point is 02:00:36 Afghanistan's a surprise. Everything is a surprise. And then they react in this very reactive way. Facebook is a surprise. And why is it a surprise? Because Facebook's a fad. Facebook's a bubble. These tech journalists, for example, in 2013 even, there's this article, Why Facebook Will Never Make a Significant Profit, or famous article, Amazon.bomb,

Starting point is 02:00:54 or another NYT classic, Google's Toughest Search is for a Business Model. And it's something where, this goes back so far in some ways. Basically, these guys are, they're so used to inheriting something that they could never have built. They sit upon this US establishment that they don't understand what it is to build something and they don't think anybody can build something. And so for their dismissive of the stuff until it gets so big that it can't be denied, and then they react in this super panicked way. So let's extend that to current and near-term crypto, and you could take that in any direction you want. It could be BTC, Ether, otherwise. In the US, is there going to be a rash regulatory whiplash? Because we've already seen cease and desist letters and so on to DeFi companies, and there's a lot of scrutiny over lending products. Where do you foresee that going?

Starting point is 02:01:52 By the way, I will say one thing, which is once you do get in the mode of trying to react to this stuff that's all at 0.00001% traction, you're thinking like an angel investor. Because it's like when you start looking at that dashboard, and you no longer set your filter at something that's at 50% of the population traction, or even 10%, you know, when you go to point oh 1%, and a tiny percentage of population

Starting point is 02:02:14 using it, the number of things you're looking at explodes. And you need to have a really good detector for what will be important, but won't be and it's going to be erroneous at times. And it needs to be quantitative, because you put in 50k into this and 50 mil into this. And so it's hard, but that's actually what capital allocation involves, especially in the modern era is figuring out what's going to get big and getting ahead of it. So to your question, what is going to happen with sort of the regulatory states collision with crypto? There's various scenarios, but I think on balance, they're going to lose. And let me explain what I mean by that. They meaning the US government?

Starting point is 02:02:52 The federal government is going to lose. Federal government. And why do I say that? Well, the short version is the US government is losing control over both domestic and international affairs. And so states and cities within the US will take positions at variance with the feds because cryptocurrency is becoming so valuable to them that they'll have the equivalent of sanctuary states and sanctuary cities for crypto. Crypto entrepreneurs will write model legislation that will be adopted by places like Texas and Wyoming and Colorado and Florida and other kinds of things that, for example, prevent Bitcoin seizures in law before the thing happens.

Starting point is 02:03:27 This is already there, by the way, in some ways, like Wyoming's Dow law is quite advanced. Miami has accepted some city coins, and Texas is big in Bitcoin mining. This is already happening, but the next level of that is doing the same thing that they're already doing versus the feds, which is openly defying them and saying, actually, we're doing state nullification. And just to give you some recent examples of this, the federal government is losing control of events. I just made a little list of this the other day, but both domestic and international affairs, inflation, Afghanistan, China on Taiwan, France on the AUKUS thing, El Salvador on Bitcoin. 17 states, by the way, oppose this idea that the FBI should be sent to school board meetings. So 17 states wrote a letter on education.

Starting point is 02:04:11 Texas has taken a different policy on vaccine mandates and abortion. Germany went its own way on Nord Stream 2. Florida is pushing back on this financial surveillance thing, saying that they are not going to abide by the federal government's edict on this. So you're seeing significant energy at the state level within empire, and then also outside from places like El Salvador or Switzerland that are just taking policies that are at variance with what the US government's position is. Now, this is quite different from 10 or 15 or 20 years ago, when under Obama, for example, there was a lot of kicking in doors in Europe, going after Swiss bank accounts or sanctioning everybody on the planet or invading everybody for democracy like under Bush. So abroad, a lot of muscle is being thrown around.

Starting point is 02:04:55 And then domestically, basically the feds would step in and force states to do something. But over the last few decades, what we've seen are sanctuary cities for immigration. We've seen states have different gun laws, had seen states have different marijuana laws. We're seeing a larger and larger divergence. States, for example, had different gay marriage laws than the feds for a long time. We're seeing a larger and larger divergence. States are becoming genuinely differentiated from each other and from the federal government. And that's happening within. And then countries abroad are also taking a different route. So France, for example, now they're going hard on nuclear, which is definitely not a priority of, to my knowledge, at least the current admin. Germany is trading with Russia. That's not something the US government wants them to do. India is trading with Russia on some missile stuff. That's, again,

Starting point is 02:05:42 something the US government threatens sanctions on. So countries are doing things that the US government doesn't want them to do. And states within the US are doing things the federal government doesn't want them to do. So because they're losing control over world events, the whole Pax Americana is based on the repeal of the 10th Amendment at home and regulatory harmonization abroad. So FDR effectively repealed the 10th Amendment where everything that wasn't officially to federal governments was left to the states. But a very broad interpretation of the Interstate Commerce Clause said that everything is interstate

Starting point is 02:06:13 commerce. So the states actually don't have any rights. We're going to reinterpret it as a federal government having power over everything. And therefore, you get these alphabet soup of agencies, FDA and SEC, and all these things kind of rose out of the FDR era. And then abroad, go ahead, you left. No, I was just like the alphabet soup of agencies, FDA and SEC and all these things kind of rose out of the FDR era. And then abroad, go ahead, you left? No, I was just like the alphabet soup mention. It shows you my level of humor, sophistication.

Starting point is 02:06:33 But if I could interject for one second, if you had to live in the United States, where would you live and why? Texas or Florida. Okay, why? Probably Florida. Why? Because those are becoming like freedom states. I think Wyoming is also good. I think Colorado under Jared Police is really good. You're basically

Starting point is 02:06:51 seeing the pro-freedom... Jared Police is a Democrat, by the way. He's a tech founder. He understands... That was Blue Mountain, right? Way back in the day. Didn't you have Blue Mountain, the gift card company way back in the early days? I could have sworn that that is. Yeah, that's right. Yeah, he was a few years ahead of me at Princeton and did very well. Super smart guy. I think he actually is involved with tech stars and so on. So it's something where in some ways sort of the center and south of the country are going to diverge from the West Coast and the Northeast, I think, you know, roughly speaking, but that's not straight Democrat Republican, that is more decentralization versus centralization. And so I

Starting point is 02:07:36 think that those states, it's literally like a search engine, right? One thing I've wanted for a long time, and actually I've wrote about this like eight, nine years ago. But I think that the next political model is what I call a crowd choice, where you have a search engine where the rows are jurisdictions and the columns are policies, sort of like nomadlist.com. But it's basically a bunch of attributes. And then you just put in your preference and you sort and filter. But then the next step is to group with a bunch of your friends and have you all put in your preference vector. And then it finds a jurisdiction that is closest to your collective preferences. Let me ask you just before we, I want to not lose that, but with Florida and Texas, when we're talking about freedom, what does your hierarchy of freedoms look

Starting point is 02:08:21 like? Because there are also a lot of people listening, just to act as a proxy for the listener, would say, well, you may have greater, say, financial freedom because a state might act like a crypto safe haven of some type, but there may be sacrifices that you make and sort of tacitly endorse in civil liberties. Yeah, for example, reproductive freedom. Exactly. So how do you think about how to stack rank those things? The first thing I would say is, as a pragmatist, being in the U.S. in the U.S. citizen means you're sort of de facto funding all the wars the U.S. wages around the world and so on.

Starting point is 02:08:58 So people are implicitly already making moral trade-offs of some kind. When you point that out, that sometimes takes the heat down because a new thing is different from the thing that's already baked, the moral compromise they've already made implicitly. You buy stuff and you don't know where that supply chain comes from. Maybe there's something that you would disagree with ethically. So people make these compromises all the time. And fundamentally, I think it's a vector. Policy is not a scalar, it's a vector. It's a set of decisions, a tax rate of X and a zero one as to whether drones are legal, and this is your reproductive freedom slash abortion policy, and this is your this policy. And there's an aspect of de guspus non disputandum.

Starting point is 02:09:38 I cannot specify- Before you ask, I don't know what that means. Oh. Sounds like some Latin though though if i'm not uh probably mispronounced it but degustibus non est disputandum is in matters of taste there can be no disputes so there's aspects of this that are preferences rather than absolutes i might say thou shalt not kill but i can't say thou shalt like the color green that's a preference so some of these things and crucially by the way i think there are multiple optima this by way, I was coming up with sort of a name for how I think about,

Starting point is 02:10:09 you know, my philosophy or something. Could you define optima, please? Sure. Yes. So imagine looking down at a bit of hilly terrain and a local optima is the peak of one of those hills and a global optima is the highest peak of the highest hill. Right. Got it. So if your goal was to ascend to the highest height, you might ascend to the top of one of the hills, but really what you want is the global optima in this case, which is the top of the highest hill. However, it could be the case that you could have multiple hills all in the same region that are basically of the same height. Got it. Okay.

Starting point is 02:10:49 If, for example, you thought of your kind of latitude and longitude there as, I don't know, let's say your percent of time spent remote and your, I don't know, your equity compensation versus cash percentage. In a company culture, these are like sliders that you could set to like zero and a hundred, both of them. And if you replace that Hill analogy with latitude and longitude with these two zero and a hundred sliders, you could imagine different kinds of companies that had different combinations. They're both equally successful in market cap on the Z-axis, but that had different policy combinations. Yep. How does that apply to states? Similarly? How would you look at that?

Starting point is 02:11:24 Very similarly. That's right. Because I think right now we sort of think of companies, currencies, cities, countries, communities as being different things, but they're all going to become the same thing. Essentially the projection of a social network or rather companies become like apps effectively on, this will sound like tech babble, okay, but a blockchain is property rights, identity, historical records, marriage and birth certificates, all the type of stuff. A society can run a ton of stuff that it currently does at City Hall on a blockchain. It's property rights. It is who has admission to what building, who owns what

Starting point is 02:12:05 property, what sale occurred at what time, who paid who, dispute resolution. A lot of that stuff goes on chain. And then a lot of companies butt off from that and use that as an application point. So all of these things basically settle around companies, currencies, cities, countries, communities, all settle around chains. That is like the software stack for running a community. And an analogy to this is before the internet, books and movies and music and songs, television, telephone calls, those were all different. And then after the internet, they got turned into packets

Starting point is 02:12:39 and all kind of mixed together. And so the normal thing that a macroeconomist will say is he'll say something like, governments aren't households. Have you heard that before? Nope, I have not. There's a quote actually, I think it was Tyler Cowen quoted it. I think it was John Lanchester in the something review of books. Gosh, hold on, let me find it. January 2013, Richard Feynman was once asked what he would pass on if the whole edifice of modern scientific knowledge had been lost and all he

Starting point is 02:13:10 could give to posterity was a single sentence. What axiom would convey the maximum amount of scientific information in the fewest possible words? His candidate was, all things are made of atoms. In a similar spirit, if the whole ramshackle structure of contemporary macroeconomics vanished into thin air and the field had to be reconstructed from scratch. The sentence which packs as much of the discipline into the fewest possible words might be, quote, governments are not households. The reason this is really important is this is why people will argue that what I'm talking about for companies doesn't apply to cities or to countries because they're fundamentally different. Governments are not households. And there's a whole discipline of macro that has arisen around this.

Starting point is 02:13:46 However, I argue that actually, in many ways, American and Western macroeconomics is in its own way as pseudoscientific as Soviet economics was. There's a whole discipline, by the way, of Soviet economics, Marxist economics that had all these equations and so on. And there's some aspects of it that are still useful, like Cantor's work on, I remember it was Cantor-Kentorovich on linear programming and optimal allocation. So some of it is okay, but a lot of it was basically essentially just a recapitulation of Marxist premises. And when they say governments are not households and they say that recapitulates the whole field, what they really mean is that

Starting point is 02:14:25 the government has guns and households do not, and therefore the government can seize money and coerce people to do things, and households cannot do this. So everything which assumes some ability to do redistribution, some ability to print, some ability to do this, some ability to do that, that is a hidden assumption. The bullet point at the end of QED is a bullet. And the assumption is, of course, a force, as opposed to physics, where the analogy gives us to physics and atoms, the human element isn't there. So once you say governments are not households and you think of it from a different angle of governments have guns, yes, it is true they are different.

Starting point is 02:14:58 But I do think that in the medium-term future, because of exit, because of global mobility. I mean, we have this tension now. I talked about exit a lot even before the coronavirus as the most important right. But post-corona, post-lockdown, people prize it way more. When it's taken away, you prize it more. You prize free migration. You prize ability to leave. And we're seeing a great migration in the US. So the great resignation, the great migration, remote work, and lockdown, all this stuff has made people both more aware of how important the policy is of the state that they're in and were able to move. And by the way, everybody doesn't have to move. Only a small percentage of the world moved to the US and look at what a big deal that was. On the margins, some degree of mobility can cause massive change a chair or something like that, everybody didn't need to leave Google.

Starting point is 02:16:08 Enough people need to leave that he's like, okay, this is real. Google is a real competitor. And eventually that led to him stepping down and Satya taking over. So the thing is that the great resignation, the great migration, remote, lockdown, all of these things mean much more exit. When there's much more exit, when you can hold your coins on your person, when you're renting rather than buying, when you're basically running light and your stuff is in NFTs rather than real estate, and when all of the stuff, when your books are in Kindle, when your mail is in Gmail, or ideally in some kind of decentralized thing versus centralized service, when you don't have obligate ties to the land, then the state has less leverage.

Starting point is 02:16:51 And so because of that, over time, it moves, for example, to like a subscription model. When you say it, you mean residency in a given place? Yeah, like Swiss cantons have something like this where you pay X dollars per year, and that satisfies your obligation to them to live there. And I think the future business model of governments is A, subscription and B, inflation. What that means is there's a SaaS type service that you subscribe to, and that gives you access to all this government stuff. Like a V0 of that is like SingPass in Singapore, for example. Estonia has something called Xroad. And the thing about this is it actually isn't just a revenue model for them. It's also actually a crime and punishment model

Starting point is 02:17:23 where right now we think of digital deplatforming as completely lawless and policing as forceful and inhumane. But it may turn out that in the future, if your punishment is being deplatformed for something, but it's written in law beforehand, it's not some arbitrary thing that's being made up. It's like seven-day suspension in order for doing this. And it's like having your driver's license revoked for infractions. Yeah, exactly. And so the thing about this is, I'm not saying that's good necessarily, but it is more humane than jailing somebody, arguably. And again, I'm not also saying, I'm not so unrealistic as to think that physical punishment is never necessary or anything like that. Not at all. But I do think that having levels of steps are valuable where you

Starting point is 02:18:03 don't have to escalate it all the way. You can have a deterrent, which is, you know, a slap, you know, digital slap or digital suspension versus all the way to the gun. The gun is a really serious thing. So basically when you have these subscription states, you pay and you have effectively access to this service and doors open and literally physically open, like, you know, the key unlocks it. It's basically digital border control in the sense of why do you have access to the state? Because you've paid in. You have a subscription, you have an identity, unifies passport, driver's license, all of this stuff. Now, immediately people say, oh, my God, that

Starting point is 02:18:41 gives the root operator of the state enormous control. And it does. So that's why you have to preserve the right to exit. You have to preserve Bitcoin. You have to preserve cryptocurrency. And then there's boundary cases where if you went and killed somebody, would you then have the right to exit right after that? Probably not. And so there's some social smart contract that you sign upon physically entering or virtually entering this jurisdiction, just like

Starting point is 02:19:05 terms of service on a website, but it's more serious. And you might require like a cryptocurrency deposit, for example, rather than just a click through of I have read this. And so it's almost like posting bail or posting a bond to enter the jurisdiction. And if you were posting a deposit with rent, and if you exit without doing that, then that is forfeit. And that is significant enough, for example, to deter petty crimes and whatnot. So that's like the subscription aspect. And the inflation aspect is, I think, as I said, unbundling and bundling. Bitcoin is necessary as a corrective to 20th century fiat.

Starting point is 02:19:36 But there's an other way of thinking about fiat, which was actually a useful thing for me to conceptualize. You know, Chesterton's fence, you know that concept? I do not. So there's a fence sitting out there and someone says, I don't know this fence is here. I'm going to tear it down. He's like, well, if you know why that fence is there, then maybe I'll let you tear it down because it might be there for a good reason. There's a second version of this, which says

Starting point is 02:19:55 often there's a structure that exists and the reasons that people give for its existence are not the actual reasons. For example, religious taboos on preparing milk and meat a certain way, treif or haram, the theory is that that was related to in a desert environment, food would spoil, and these taboos would roughly keep people safe. Even if they were kind of religious as opposed to scientific, they sort of help people stay away from impure food. And so people thought you were struck down by God if you violated them, but it's really a bacteria or something you had. So the practice kept you safe. So even if the active ingredient wasn't well understood. So one thing about fiat currency that I observed the other day. But hold on, hold on a second, pause there. So you said they believe

Starting point is 02:20:36 something or they believe the justification for something. I think there's sort of an inaccurate assessment of the history of something. So that is true. You take that to be true or untrue, what you just said about the religious food taboos? Okay, got it. It's sometimes true. I haven't run the study myself to see if these written religious practices actually ended up in food purification. There's certainly things where there's tribes that have had potion preparation processes that include a genuine active ingredient that pharmaceutical companies have then extracted and put into a pill.

Starting point is 02:21:10 Yeah, yeah. There's often an active ingredient in some folk practice that we don't yet know how it works. For example, one thing that's sort of interesting is like acupuncture and bioelectricity. Bioelectricity is actually like a real thing, and it's not really talked about, but evidently has implications for wound healing and so on. and maybe acupuncture is tapping into that this guy uh he's got a great tiktok are you on tiktok no but educational tiktok um what's his name nas jack n-a-s-j-a-q has a great video on bioelectricity and limb regeneration with citations and visuals and

Starting point is 02:21:46 so on. So sometimes there's stuff and it works and we don't know why it works. And in fact, maybe our reasoning for why it works is wrong. People actually still disagree in some ways on how Lyft works for an airplane. And of course, with physics, there's things like this. So the two business models of states in the future will be, I think, rather than coercive, will be subscription and inflation. Subscription, we just described. Inflation, the idea is this. Bitcoin is short-term volatile, but shows immense long-term appreciation.

Starting point is 02:22:17 The US dollar is actually the opposite. It is short-term, relatively stable. Forget about inflation for now. I'll come back to that. It is short-term, relatively stable. But over long-term, you can see it has had a huge drop in purchasing power. Now, right now, this is talked about in a moral way, and I understand why, because essentially the, quote, fiat engineers don't really acknowledge this as a trade-off or even recognize it as

Starting point is 02:22:41 such. It gets back to this thing of the religious taboo. But if you think about it from an engineering mindset, most people hold a portfolio. They don't hold 100% BTC or 100%, well, some people hold 100% USD, but you don't usually hold 100% BTC. You hold some BTC and some USD.

Starting point is 02:22:55 Why? Because some of this is stable on a daily basis and the rest is appreciating over time. Now, here's the concept. What if those are just opposite engineering trade-offs? That is to say, the long-term depreciation of fiat provides effectively the funds to stabilize it in the short term. And just to think about that from an equation standpoint, if you were to... Do you know what an order book is? Probably not what I have in my imagination, so why don't you tell me?

Starting point is 02:23:28 Okay, so this was something actually which I didn't know before I got into cryptocurrency. And I think, I mean, the number of people who know what this is, is probably increased by 100 or 1,000x over the last 10 years. And it's very important because it describes how supply and demand and prices really interact. Prices don't come from storks. They come from this. And where does it come from? Okay. So let me explain. Then I'll come all the way back up. So you go to the store and you buy, I don't know, a gallon of milk. That's going to cost you, I don't know how much it is today. Let's say it's five bucks. Okay. Maybe 10 bucks

Starting point is 02:24:00 with all the inflation, but all right. Five bucks. So fine. You're a price taker. If instead you go to the store and you say, I want all your milk, I want 200 individual one gallon bottles. I'll pay five bucks per. You can do that. But now if you want yet more milk, you need to go to the next store. They have an inventory of 30 gallon bottles, but it's 550. And as you start buying out inventory here, word gets around and people start hiking the price because they know you're going to walk in and clear them out of all of this liquidity of milk. And that is a difference between having a small enough demand that you don't really affect the price and having a large enough demand that you actually move the

Starting point is 02:24:41 market. And one way of thinking about it is these are like bids that are placed on either side. One store has placed a sell order of 200 gallons of milk at five bucks. And the next store has placed a sell order of 30 gallons of milk at 550. And all of these add up to be all of what is for sale. And there might be a ton, there might be thousands of gallons. If somebody really wants to pay 20 bucks a gallon, there's like thousands of gallons that become profitable to produce at that level, at that price. And then conversely, demand is sort of lowest at $5, but there'd be a ton of demand. There might be lots of people who would buy a gallon of milk for a dollar. So you can visualize this sort of V-shaped thing where the current

Starting point is 02:25:26 market clearing price is five bucks. But if a lot of people suddenly buy and clear out the supply, then the next available unit might be at like eight bucks or 10 bucks. And conversely, if there's a huge amount of supply and there isn't demand, the market clearing price drops from like $5 to like four or $3. Okay. With me so far? I am. So that is called an order book. And that is actually how prices are born. Prices literally come from the interaction of supply and demand. So all kinds of people are being trained as true capitalists because they're actually seeing the root acts of the system, how prices are set between supply and demand. Supply and demand are now like computable, visible, tangible.

Starting point is 02:26:09 This has huge implications for lots of things because those order books are going to come to everything. As we cryptify the whole world, it's not just BTC, USD that has an order book where you're buying units of BTC for blocks of USD or vice versa. It's not just either USD. It's not just every coin versus every coin. It's every asset versus every asset. This is what I call the DeFi matrix. A digital wallet doesn't just hold Bitcoin.

Starting point is 02:26:31 It can eventually hold everything. It can hold fiat currencies, Ethereum, tokens, NFTs, whatever. And so it's got billions of rows. But it doesn't just hold everything. Everything trades against everything. Well, just to interject for a second, I mean, a very concrete, I feel like NFTs and expensive or not expensive JPEGs are sort of the, will be an on-ramp. It's like a gateway drug for a lot of people into crypto and Web3 and so on. And you can see, just for people who want to look for

Starting point is 02:27:00 articles on this, and certainly you can see it yourself. But if you compare traditional art to, say, OpenSea and collectibles or NFT artwork on OpenSea, price discovery and the sort of transparency of order book that you're talking about is right there. And then there are analytics being built on top of these marketplaces. I want to give one example of what's already happening for folks. Exactly right. So essentially, order books mean price discovery. All kinds of things suddenly become liquid and priceable. Things we could never price before, like a minute of your time as a JPEG, a megabyte on your hard drive, all that type of stuff becomes priceable. And just to relate it, I'm going to talk about the DeFi matrix, come back up to the order book, come back up to smart fiat, then back up to subscription

Starting point is 02:27:48 and inflation, then back up to the rebundling after the American anarchy. What is the DeFi matrix? Digital wallets mean you can hold every asset in your computer, not just Bitcoin, not just Ethereum, but fiat currencies like CBDCs when central bank digital currencies come out, every stock, every bond, every NFT, every video game potion, you have a billion items in your digital wallet. Those billion items, you don't just hold them, you trade them against the billion items. You have this gigantic table. And every existing exchange today, a crypto exchange, a stock exchange, a foreign exchange, foreign currency exchange, all of them can be considered sub-matrices of these. A crypto exchange is fiat currencies and cryptocurrencies versus each other. A stock exchange is stocks and fiat currencies. A foreign exchange is currencies

Starting point is 02:28:28 versus currencies. All those are just sub-matrices of this massive DeFi matrix. And some of them are actually exchanges, and some of them are so-called automated market makers, where you've got some rare piece of art, and you've got some infrequently traded token, and you've got another infrequently traded token. This will give you some conversion between them at some price. It might be a high price, but you can go directly between them. The DeFi matrix means everything is just getting repriced all the time. Every asset competes against every other asset. People don't understand how big a deal this is.

Starting point is 02:28:55 It's kind of like... It's a huge deal. Huge, huge deal. Yeah, even for a Luddite like me, it's a fucking huge deal. Once you really start to look at it, it's huge, enormous. It is the intranet of wealth, the intranet of money. And it's going to be similar. It's like every newspaper went online and then Google News came online and indexed them. And suddenly every newspaper is competing against every other newspaper. And so what that meant was that

Starting point is 02:29:20 now all the ones that were just reprinting AP stories were no longer competitive. And so lots of weak newspapers that weren't adding that much value died. And so in the same way, when every asset is competing against every other asset, that is like extreme capitalism. There's no geographical advantage anymore. cross-collateralize and do all sorts of wacky, not wacky, but new things that are going to upend a lot of our current thinking around how capital flows. That's right. And one of the big ones is it's actually a second attack on fiat currency. The first attack is that Bitcoin appreciates and Bitcoin can't be seized and so on, like all the stuff we've known over the last 10 years. The second attack, what do they call it when you sell a company or you go IPO? They call

Starting point is 02:30:08 it a liquidity event because cash is universal barter and you can exchange it for other things, whereas you can't exchange stock directly. The DeFi matrix changes that. Everything is always liquid all the time. So at some price, you can get a quote for something so long as it's not banned by the state. And if you can get a quote for something so long as it's not like banned by the state and if you can get a quote for something do you need to actually convert it into cash you can just do it instantaneously you can liquidate as necessary and in fact you want to hold minimum necessary cash and have everything else because cash doesn't appreciate in fact cash depreciates and so now liquidity is itself a second whole axis where it reduces the amount of wealth held in fiat currencies.

Starting point is 02:30:49 The DeFi matrix is this very, very big thing. It will be to this decade what the social graph was the previous one. And you might say, well, why don't countries just ban it? Well, the thing is that coercion only works within your borders. And large countries can try it. But small countries like Switzerland or Singapore or Dubai or Estonia will see an opportunity here to level up their fiat currencies, recognizing that they no longer have a geographical advantage, just like local newspapers no longer have a geographical advantage. They were just put into this global competition. Recognizing no longer a geographical advantage, they might add privacy features.

Starting point is 02:31:22 They might add transparent management of reserves. They might add Bitcoin backing. Suddenly, currencies are competing with each other in a way they never have before on features and not simply like monetary policy and so on. Central bankers become Vitalik and Zuko, the smart ones, at least, and the ones who don't just are like the newspaper guys that don't. NGMI, you've heard that one? Yes, I do know NGMI. Not going to make it. Exactly. Not going to make it.

Starting point is 02:31:50 Probably nothing. Yeah, probably nothing. Exactly. This is the same thing that the remote economy has done is it has put Miami in direct competition with San Francisco and poorly managed cities, right? This was recently reported. I don't know how true it is, but the mayor of SF told the mayor of Miami,

Starting point is 02:32:10 hey, stop taking my people. And he's like, I love you, but no. That is awesome. And the reason that is awesome is we're moving from the tired two-party system to the wired in-city system. From two parties to 20 or 30 or 50 or 100 cities competing for you means that internal disputes are less and inter-city competition is more, which is healthier, arguably. You can say that gets bad when it goes to interstate violence, but it is good when it is economic competition because that is this marquee of Queensbury rules

Starting point is 02:32:50 and make your city better and make it greener and make it cleaner and make it healthier and have a better life for people and you'll attract good residents. So coming back up. So the DeFi matrix was every asset against every other asset. All assets trade against all other assets in the DeFi economy, just like all cities trade against all other cities in the remote economy. By the way, those are related because municipal bonds and municipal equity, like city coins are like municipal equity, the equivalent of municipal bonds in a sense, or like the next version. All of those will also trade. And so you'll have the price of a city. Every ideology, everything will have a price which roughly reflects people's measure of belief in it.

Starting point is 02:33:28 Are there more buy orders? Are people long on the city? Do they think it's going to improve in 10 years? Is it the next Shanghai? Or is it the next Detroit? Sell, sell, sell, sell. That's reflected in real estate values currently today, but it's kind of opaque. That all becomes REITs that are on chain.

Starting point is 02:33:43 And so the price of a city goes up and down. And in fact, that is actually probably going to be the determinant of your reelection. Did you boost the REIT of the city or not? That's actually quantitative and numerical and empirical. It cuts through the BS. Did you deliver shared prosperity for your residents or not? Basically, did more people want to buy into the city, buy a subscription, buy a piece of the digital REIT versus not? And by the way, let me just talk about the REIT for a second, you know, REIT, Real Estate Investment Trust. One thing I've thought a lot about is

Starting point is 02:34:12 there's an interesting way to sort of cut the Gordian knot of NIMBY YIMBY. What the hell is NIMBY YIMBY? I was like, I got Gordian knot, but what is, what the hell is NIMBY YIMBY? NIMBY YIMBY, I'm a little surprised you haven't heard this one because this is a big thing in cities and probably in Austin, but NIMBY is not in my backyard. You can't build in my backyard. And then YIMBY is a more recent movement that's like, yes, in my backyard, we need to build housing. Housing scarcity is bad. And essentially this is like this intra-city kind of thing. Now, what leads to this dispute is that the NIMBYs have their own houses, and their property values go up if they can constrain supply while demand remains constant.

Starting point is 02:34:54 A lot of the stuff they did in San Francisco, restricting housing construction because of shadows and so on, I think is short-sighted because by driving away demand, it's something where the long-term, it's Detroitifying the city. Tech is leaving, not even that long-term. It's happening now. Especially with such a limited inventory. I mean, especially for a city of that size, right? Yeah, the rebuttal to this is,

Starting point is 02:35:15 oh, that place sucks. It's too crowded and the food sucks. That seems like a contradiction. I'm butchering that. You know the proverb. Nobody wants to go there. It's too crowded. But there's a truth to that,

Starting point is 02:35:24 which is, why did Friendster not make it? It couldn't handle the traffic, so people went elsewhere. Nobody goes there anymore, it was too crowded, meaning it fell over, it couldn't handle the load, it couldn't scale, and therefore it lost. So yeah, the demand goes up, and then it crashes down to nothing. So nobody goes there anymore, it's too crowded is not always a fallacy, it's sometimes a real thing. It means the thing couldn't scale.

Starting point is 02:35:44 The point is that with NIMBY YIMBYby and hear me out because i'm going to say something that will sound totally shocking or whatever okay maybe thank god this was this was the whole conversation was just so timid please continue okay okay so so maybe the problem is actually that direct ownership of non-fungible property leads people to only have an interest in their local house, but not a shared interest in the city or community or town as a whole. And if you can separate out the utility of living in the house from the value proposition of selling the house, and actually Xi Jinping Jinping, of all people, was like, houses should be for living in, not speculation.

Starting point is 02:36:28 The more that people move into the digital realm, the more they start thinking about things in terms of investments and so on. Just like you can split out, for example, a corporate stock, you can split out the voting shares versus the economics, and you can sell the vote independently in some context. Can we split out the utility from the appreciation? And one model is you buy

Starting point is 02:36:47 a big plot of land, like a Burning Man style thing in the middle of nowhere, and you set up a reit on it. And basically every square, I don't know, maybe every square meter or something like that is like a share in the reit because it's all equal at the beginning. And you might say the city center is somewhat more valuable than the outside. When somebody goes and lives there, they do not own their home. Instead, they own shares in the REIT. And so as the city expands, if they're asked to literally demolish their home and move to maybe a bigger home but something differently, they have an interest in the city as a whole. They have an economic interest in the city as a whole, not just their individual home. Do you see what I'm saying? I do. And I was thinking, in addition to the REIT, I can't remember the terminology used,

Starting point is 02:37:31 but like the municipal bonds, the city tokens, I'm not sure the proper phrasing, but if your taxes or your SAS fee that you paid to a given city or state went into a city or state-based token in sufficient quantity, and you'd have to figure out what the sufficient quantity is to properly incentivize someone who's resourced at X level or Y level or Z level, that would also sort of align. So it's interesting. You could kind of go back to, have you heard of Georgism? I haven't. It sounds like it has something to do with George though.

Starting point is 02:38:09 Yeah. So well, yeah. So Henry George, this was this concept, which is, is obscure. Now this one is a pretty obscure, I guess, but it's, I think it might come back to the future. So Georgism is the idea that the one thing that governments really do own is land. That's the arbitrary thing. And that all revenue should come from that. And it's interesting because kind of outside of left and right, the premise is everything else is value added by humans, but land is this thing that was arbitrarily sort of stolen or controlled or whatever by a government.

Starting point is 02:38:40 And so land is the ledger that states have access to. And more generally, land plus natural resource rights. And the thing about this is you can imagine, people talk about like gold-backed currency, you can imagine land-backed city coins, where the city is because legacy cities might not be able to do this reform. Basically, like land reform under communism, you know, in a sense, collectivization, except it's capitalization. Ideally, you would be opt-in. Sounds tricky. Sounds tricky. Yeah. So like doing it with a legacy city, I don't have a good answer for it. But let's say you go and buy land in the middle of nowhere. And there's a ton of middle of nowhere, by the way. America is still a big country. Russia's big. Canada's big. There's actually lots of wide open piece of land. And what you do is, because it's the internet, you do a drone overflight of it. You recruit people to crowdfund this territory. And they have to buy in and hold the city coin. That's like the right to build on this number of shares shares like square meters or whatever the

Starting point is 02:39:46 territory they have to commit to some holding period they can't just buy and then leave and speculate there's a commitment to actually build into it and then you you have something where at the beginning that's another thing just a quick side note that's another thing i learned about since kind of wading into the waters of web three's wash trading and all that kind of yeah anyway we don't have to go down that rabbit hole but yes so to prevent people from flipping there's a holding period it's essentially something where it's again unbundling and rebundling where in a sense markets say hey screw loyalty it's an economic transaction and you sort of rediscover loyalty or patriotism or loyalty cards or frequent flyer miles or hodling periods, whatever you want to call it, loyalty is valuable

Starting point is 02:40:32 because loyalty produces collective goods that an individual can't necessarily have on their own. Other people's loyalty to something is valuable to you because you know it'll be stable and it'll be there when you come back. We should take a second just for people. So hodling, hodl, H-O-D-L. I've read a number of different explanations for this. One is hold on for dear life. Another one is hold, but it was a typo. Yeah, that's what it is. Yeah, that's what it was. Basically, it was a typo. There's a guy who's drunk and he posted, I'm not smart enough to do the trades. I'm just hodling. And off it went. Have you heard the term backronym? I have not heard the term backronym. A backronym is a reverse engineered acronym. So hold on for dear life is like a reverse engineered acronym.

Starting point is 02:41:21 I like that. I like that. That's clever. Yeah. They often do this for like, you know, bills coming out of DC, like the Patriot Act or something. It's some abbreviation or whatever. Yeah, yeah. Or the CARES Act. So basically, and by the way, on the topic of loyalty and so on, this is actually a deep point because my friend and somebody who I agree with on some things, Noah Smith had this tweet about how when the police were basically quasi-abolished in San Francisco, you have organized crime looting these stores. And actually, the working class employees at these stores are being victimized by essentially a mafia, a criminal class, because the police have left. It's not like some Jean Valjean going and stealing a loaf of bread. It's a guy who's just methodically loading stuff into the car and then going and fencing it on Amazon or eBay. Very different kind of thing. It's genuine crime, organized and willful crime.

Starting point is 02:42:09 Yeah, totally different. And people can look back at the Loma Prieta earthquake and what happened during that period of time in San Francisco. Same story. After the Loma Prieta earthquake, that happened? Well, after the Loma Prieta earthquake, people overestimate the amount of infrastructure, mobile infrastructure that is available in a given city, right? So in San Francisco, I did disaster response training with the, it's called NERT, Northern California Emergency Response Team training with the fire department. And I believe the police department was also involved and they just kind of specced out how long you could expect to go without services if certain capacities went down, like water or electric.

Starting point is 02:42:51 And during Loma Prieta, which was also called, I believe, the World Series earthquake because it was caught on camera during the World Series, people were, well, I shouldn't say people, criminals were greasing the hills at Dolores Park and just carjacking car after car after car after car, which is sort of like just a reminder of some of the possible harsh realities that await you if you have no available law enforcement or infrastructure. So let's get to decentralized defense in a bit after the American anarchy, but... I still don't know how inflation fits into all this. Yeah, yeah. Okay, okay. So the thing about this is abolish the police, abolish the economy, or at least the physical economy. And the reason is in the digital world and everything that you can map digital, you can

Starting point is 02:43:41 protect it with the cryptography, but the physical world still requires physical violence. It may eventually move to robots, like drone enforcement of law or something like that. That would actually mean code really is law. But at least for a while, it is going to be physical police and so on. But we're starting to see robocops, like robo-dogs and stuff, walking around with the cops and so on. We're like in the one of this era, the 0.1. But abolish the police, abolish the economy means if you don't have police, then people are just going to steal. If they're just going to steal, there's no property rights and there's no stores and all the Walgreens leave and whatnot. But it's actually also deeper than that, which is, you know, unless there's some prestige or praise, because, you know, the police, the military do

Starting point is 02:44:22 risk their lives for relatively low pay. Actually, I mean, I know policemen are sometimes well-paid nowadays, but in general, and you can argue this point, of course, there's lots of people who get mad about this, but in general, at least for service, the risk of death is actually non-trivial. And so the price often can offset that. But what it does is the patriotism and the feeling of serving your country and serving your collective and whatnot. When that loyalty and patriotism is no longer there, when that center doesn't hold, when people don't believe in it, it's not like the economics can just continue. Or at least they can't continue very easily because the guys who will step up to essentially collectively defend property and going back to the earlier thing, you know, it's when there's uncertainty that war happens. It's when there's uncertainty that war happens. It's when there's uncertainty that crime happens.

Starting point is 02:45:07 If there are strong punishments, there will be no punishments, the Shang Yang concept. It's like the variable reward, the variable punishment that kind of is like, should I make a break for it? Should I go for it? If it's certain, then people typically won't do it. It's like a very swift and certain deterrent. If it's worth the risk, it might be worth the risk. What you don't want is for people to start calculating whether that kind of crime pays. Once they start calculating it, then it's

Starting point is 02:45:28 bad. You get a destabilization because more people do it, and that overwhelms even more limited resources, and you start moving to a new equilibrium of a mafia state, which is like Russia in the 90s, which unfortunately I think is similar to what the coming American anarchy might be. So just talking about this coming back, so the DeFi matrix is all versus all, all assets versus all. The order book tells you how prices are determined. And when I mentioned that future states will have subscription versus inflation, all currencies are going to compete against all other assets. And cities will also be able to issue their currencies alongside states. Issuing a currency will become a new business model. It already has been. And the currencies of companies and cities and countries and communities will trade alongside

Starting point is 02:46:13 digital currencies in one gigantic thing. Do currencies, almost like tokens, become... And we have to be careful here with, I mean, who knows how it'll get resolved, but sort of unregulated securities. But they're sort of interchangeable in this hypothetical example, right? Yeah. On that topic, by the way, I do not believe tokens are securities any more than I believe YouTube is television. And the thing is, YouTube was not regulated like television.

Starting point is 02:46:39 You don't need a TV license. You don't need a broadcast license. Skype or telephony to go and place a WhatsApp call, that's not regulated like AT&T. Email is not regulated like the post office because we didn't take these super old things and apply them to the internet. And the same way going and citing 100-year-old statutes or stuff from the 1930s in the 2020s or 2030s is simply in a posit. Larry Page had this saying, any law that's more than 50 years old just has to be reexamined. Probably can't be right. I mean, it's before the internet,

Starting point is 02:47:09 paraphrase Larry Page. So I think these laws will get reexamined. I think what the Soviets call the correlation of forces is against them. But so far as they're in effect or being interpreted that way, of course, be compliant, et cetera, et cetera. With that said, not every country is America. And in fact, actually, I RT'd something the other day where it's actually more and more common now for crypto projects to ban Americans from buying into them. You may have seen some of these things, right? They literally IP ban Americans. And the thing is... Like a lot of Swiss banks. Yeah, exactly. They're just ID banning instead of IP banning.

Starting point is 02:47:43 That's right. This you should expect more and more of, where the US throwing its weight around with sanctions and threats and so on is suddenly starting to realize that it's backlashing on them. Because the expectation is, oh, so you want the American market? Well, you need to comply with us. And now entrepreneurs realize, I don't need the US market to win. So no, thank you very much. I'm just going to block Americans. This already happened in New York with the BitLicense, where it basically meant that any crypto innovation, I mean, in a sense, it was good because it just ensured that we move the future of finance out of Wall Street.

Starting point is 02:48:20 Now, could you describe what BitLicense was and then what happened? Yeah, it's a set of onerous regulations on cryptocurrency companies where it was just basically passed so that somebody could have a career achievement. And it was something where you just had to fill out enormous amounts of paperwork, and it was uncertain, the timeline and the cost. I mean, you're a company, right? You can't, a startup can't wait years for a possible license before it operates. So what happened was New York

Starting point is 02:48:45 overestimated their leverage. And they're like, we're New York. What are you going to do? We're the center of the world. You can make it here. You can make it anywhere. Actually, no, I can make it elsewhere. And New York is last on the list. And so rather than putting them at the front, it was too onerous. It was too high a form to fill out, too high a price imposed for that first customer. Because that's what regulation is. high a price imposed for that first customer, because that's what regulation is. It's the price of your first customer. Or another way of putting it, your first customer is the state that grants you the license to operate and have access to their market. Now, as that relative share of that market declines, as the rest of the world becomes

Starting point is 02:49:17 bigger, as the percent of GDP that New York controls or financial GDP, whatever you want to call it, finance market that New York controls drops, suddenly its leverage drops off a cliff, but its regulators haven't caught up and they still think that they have that leverage when you just IP ban all New York people and just have them last. And maybe you do that feature three years in. So it ensures New York is at the back of the line for innovation. So startups just move. Startups just move, but they also IP ban. And so this is a new thing because the US is supposed to be at the front of things and whatnot. Well, that's happening in Asia Pacific, right? In the sense that entrepreneurs are sort of leaving the gravitational pull of China to have their physical base elsewhere.

Starting point is 02:49:56 Yes, absolutely. So both China and the US are driving away their best. Actually, all three corners of that triangle, NYT, CCP, and BTC, their fundamental weaknesses are they're driving away some of the best. NYT, for example, is piling up the midwits, but it's losing Mark Anderson and Glenn Greenwald. CCP has certainly got a bunch of nationalist zombies. I mean, some of them are actually pretty smart, but they're losing the next Jack Ma and Meituan CEO and ByteDance CEO and so on. They've decapitated all of their major tech companies, and they don't make the pretenses about it. When NYT did that to Uber, because it's decentralized, because it's stochastic, because the press can't just fire somebody like Xi Jinping can just basically order and fire somebody. It had to be like a thousand articles and this whole process to decapitate them and replace Travis with a guy who I like, but who was formerly on the NYT editorial board,

Starting point is 02:50:51 who is acceptable to NYT. So the journos effectively went and decapitated a tech company. They're trying to do that to Facebook now, but because there's still some pretense of rule of law and some pretense of due process and free speech. It can't just be like they do in China where they just chop and gone, but it certainly is doing something where it's alienating many of the best from the NYT corner, just as CCP is alienating many of the best from the CCP corner of the triangle. And actually even the BTC corner of the triangle, maximalism, which is like the extreme version, is alienating people like Vitalik or Zuko or the Solana founders or anybody who wants to

Starting point is 02:51:27 innovate on so-called L1. They're kind of being pushed away from that corner. So those three corners are kind of pushing what I think of as the decentralized center. It is the folks who no longer believe in NYT, the folks who are leaving CCP, or the folks who want to do L1 innovation besides BTC. They may be BTC and they may respect BTC and use it and hold it, but they're not mononymists. That is to say, there's monotheism. Monotheism, only one God.

Starting point is 02:51:54 There's also monostatism, only one government. The government can do everything. There's this ad from 10 years ago, government is the thing we all belong to, where people replace G-O-D with G-O-V as the strong man up there is like, rather than the guy with the beard, it becomes like the U.S. government, the U.S. military.

Starting point is 02:52:09 It's really strong and it's benevolent. It can kill your enemies and it can redistribute the money and take care of the poor. And then the third version of that is mononymism, which is not replacing G-O-D with G-O-V, but G-O-V with BTC, where it's like there's certain people who believe the government can do anything it's sort of a joke bitcoin fixes this and i do believe by the way bitcoin fixes a lot of things but it doesn't fix everything and when you project so much onto it it actually becomes unrealistic again to be clear relative to most people i'm probably down near that corner but it's like a log scale.

Starting point is 02:52:47 There's people who are 10x or 100x. So what are we missing for the matrix? Because I definitely want to ask you some additional questions. So I'll just come back up those six points. So DeFi matrix, all versus all, all currencies trade against all other currencies. The order book is each cell in the DeFi matrix, how that price is determined. How does this relate to the concept of the future business models of governments? So subscription and inflation. Basically, you pay for the subscription to have this effectively digital passport, wallet, driver's license,

Starting point is 02:53:14 currency of the city, login, property rights, marriage certificate, birth certificate, death certificate, all that stuff. The inflation comes from the smart version of fiat says, hey, Bitcoin is volatile today, but appreciating over time. Fiat is flat today, but depreciating over time. And the reason it's flat today is we're sort of seizing some of the money a little bit to maintain its price stability against a bunch

Starting point is 02:53:40 of goods. And this is where all the pieces link together. So essentially, if you were to design not a fiat coin, but a flat coin, where it's not the dollar or the renminbi, it is a new digital asset whose property is that unlike the inflating dollar, it is flat against the number of chairs or bottles of milk or things like that. A flat coin would try to be as flat as possible in a time of money-driven inflation. In order for that to work, you need some reserve of that flat coin. Let's say there's 10 goods that you're monitoring, the price of flat coin versus chairs, the price versus milk, the price versus tomatoes, whatever. Those are 10 order books with buy and sell demand like we talked about. In order to maintain it to be flat,

Starting point is 02:54:26 you need to keep the price within that V, just like not moving too much. And that means some amount of money so you can place buy and sell orders to stabilize it when other people are selling and buying. Now, that will deplete that amount of money over time. And where do you replenish it from? Let me ask a dumb question. When you say, so you can place buy and sell orders to maintain the flatness of the flat coin, who is you in this case? It's basically the manager of that flat coin. It is the city or the government or the entity. I see. I see what you're saying. Basically, it's a new central banker.

Starting point is 02:54:57 Right. Exactly. It's like the central bank. Got it. You know, Greenspan is a concert with the Plunge Protection team. And the thing about it, and this is crucial, you might say, well, wait, didn't we just invent the new boss? Him is the old boss. So how come you're saying central bankers? That's why, like I mentioned, the helix, like the spiral, unbundling and rebundling, just like you go from CDs to MP3s to playlists. Here you go from unconstrained fiat, where you have no alternatives, and it is just being printed and seizing everybody's money silently, to Bitcoin, which checks that, and now to a checked fiat, where if they print too much

Starting point is 02:55:33 or inflate too much, and they're doing too much more than is necessary to achieve short-term monetary stability, you exit to BTC. In the same way that with a company, if it issues too many shares and dilutes everybody down, you're like, no, thank you very much, and you liquidate to cash. Bitcoin at $100 billion valuation market cap. Bitcoin at $100 billion is an industry. Bitcoin at a trillion is a government. Bitcoin at $10 trillion or maybe $100 trillion, somewhere in that range, is a world government,

Starting point is 02:56:00 just not the one that anybody imagined. Essentially, there's this vision of a world government that was like this sort of communist socialist world government thing that everybody would be brotherhood of man. And there's sort of the libertarian thing of F that, F the UN. And then Bitcoin is actually like a libertarian-ish world government, which constrains every state in the sense that they can't spend more than they have because their users will go to the DeFi matrix and cash out the currency for BTC. BTC is like the zero will go to the DeFi matrix and cash out the currency for BTC. BTC is like the 0-0 of the DeFi matrix. Most people don't think about this, but gold is... When people thought, okay, Bitcoin would achieve convergence with gold,

Starting point is 02:56:36 it has done that, by the way. It's around a trillion. It's like the same order of magnitude as gold. And gold's like two, and Bitcoin is like one or two. It's like 1.2. So Bitcoin's like 1.2 trill, and I think gold last I looked's like 1.2. So Bitcoin's like 1.2 trill. And I think gold last I looked was like two trill. So it's the same order of magnitude. Bitcoin has now hit gold. But here's the thing. Gold today is a shadow of what gold was. Gold was the thing that kings wanted, that it was a thing that constrained all states. It had its flaws because Spain could mine gold out of the new world and basically cause this huge inflation shock of gold coming back. So it wasn't like a constant in the same way. But Bitcoin is digital gold. If the world economy is re-centered around it, that's not a trillion dollar thing. That's like a hundred

Starting point is 02:57:13 trillion dollar thing. That's like the thing that everybody cares about. It's a very, very different matter. So that is how basically future governments though are subscription and inflation, which is roughly similar to a SaaS company's SaaS subscription and its equity. Those are the new business models of governments, right? Subscription and inflation. They're non-coercive because it's not profitable to be coercive. Setting SWAT teams around costs money. And so instead, what you want to do is have somebody hit a key and enter your society. Enforcing compliance is costly. Drones and so on may change this. And so that is actually, I think,

Starting point is 02:57:48 a trend for like 2040, late 2030s. When I say drones, I don't just mean aerial drones. I mean like autonomous robotics of all kinds, walking robots, driving robots, all that stuff. As we mentioned earlier, that solves the principal Asian problem. You don't need to have people fold into you. The robot will do exactly what you say.

Starting point is 02:58:06 So an individual can exert much more control if they've got a robot fleet. So coming back up, this is how I see us re-bundling eventually after the coming American anarchy. And why do I say American anarchy? If you recall, we talked about the decentralization and the counter-decentralization, and why I thought the counter-decentralization would succeed in China, because they have highly competent management. They're ruthlessly competent, but they're selected for capital allocators, people who can get ahead of the curve, engineers, folks who basically set up the Great Firewall and block social media before anybody in the West realized how significant that stuff was going to be. I mean, they had seen the Arab

Starting point is 02:58:41 Spring in China, so they knew what it could be, but they acted early. And now today, what you have is the same writers who celebrated free speech at that time are now U-turning on it and basically arguing only media corporations should be considered true. And they're trying to jam the jack in the box, but it's already kind of sprung out because they're very rearward-looking. In the West, I think the counter-decentralization will fail because these guys are rearward-looking, because it got too big, because also they're very rearward-looking. In the West, I think the counter-decentralization will fail because these guys are rearward-looking, because it got too big, because also they're not selected for engineering competence. How many people in Congress can even name what a firewall is? How many of them could define what a private key is? They're selected for being lawyers and actually also actors. And why do I say actors? This is actually a bigger thing that I realized.

Starting point is 02:59:22 Hollywood explains more of America than I'd realized. Essentially, everybody who's an influencer is like a celebrity, and politicians are reading lines given to them. And when there's less and less and less connection with the real world, when it's more and more just rhetoric to win elections and celebrity influencing online, they basically become like actors reading scripts, and there's no follow-through. There's no follow-up. Of course, this trend has been going on for a while. You know, obviously Reagan was an actor and there'd been famous actors on the basis of name recognition. But now just the concept of acting, you know, Bruno Macias has also written about this, how, you know, the current admin is kind of like a, and it has been for a while, Trump as well. It's not a partisan thing. It's like a hologram. It's like an order that people are going through the motions and acting, but something very

Starting point is 03:00:05 different is bubbling elsewhere. It's like CCP and BTC and these things that are not part of the movie. So the thing is, with San Francisco in 2019, I actually had this post that I think holds up fairly well. You know, I said, this is like about six months, seven months right before COVID-19. And I said, San Francisco has, this is like June 19th, 2019. San Francisco has 30,000 car break-ins a year. The streets are filthy and a health hazard. It's extraordinarily expensive,

Starting point is 03:00:30 yet fees and prices rise in tandem. This is a bubble which will burst when the right alternative finally appears, just like taxi medallions. And I said, San Francisco can be compared to a terrible product with great legacy distribution. Users hate it and want to leave, just like they want to leave Oracle or something like that. But network effects keep people in for a while, at least, as extractive rents continue to soar. When the true alternative finally arrives, exit will be rapid. When was that? That was June 18th, 2019. Good timing. Good timing, right? So I was like, you know, this feels like a rubber band tension, which is getting too strong.

Starting point is 03:01:09 And what was funny, by the way, was Paul Graham's response, which I actually think also held up well, which I only actually saw much later. Paul said in response, this seems unlikely. Historically, it's been common for hubs of certain industries to draw people despite high costs and low quality of life. When they decline, it's always due to some external force e.g the whole country does not simply an alternative appearing and there's a guy who replied to both these that looks like both tweets held up from october 2021 it's pretty isn't that good yeah that is good right that is good and and so essentially you know there's a there's a recent

Starting point is 03:01:41 post that i actually like a lot have you heard of the concept of tensegrity? I have, actually. That's a nice boost to my confidence. Yes. I'm familiar with tensegrity within the context of Buckminster Fuller and different design principles. Yeah. And so this is something where I had probably seen it, but I was not actually aware of the word, you know, until a few days ago. And tensegrity is, I think, an excellent visual metaphor.

Starting point is 03:02:11 See, I had thought of things, a lot of things implicitly in terms of that, in terms of like rubber band tensions and like force diagrams. And like there's a rubber band tension in SF between how horrible the city was, which was pushing people out, feces and prices rising in tandem, just being attacked on the street in this super expensive city, no public transport, and it's unsafe for women and crime, all this stuff, right? Yet on the other hand, you had all these tech jobs and all this stuff keeping people, and the valuations of these companies kept going up. So the money was available to compensate for this

Starting point is 03:02:44 stuff, Uber this year and expensive apartment or whatever. So there's this crazy thing happening where money is being pumped in from the cloud and just incinerated by the city. And it's $12 billion a year on this stuff. I think it's $13.7 billion now. It's probably the worst managed. You can't even call it a first world city really anymore. That doesn't even apply.

Starting point is 03:03:03 It's a descending world city. Did I tell you about that? I don't use the term a first world city really anymore. That doesn't even apply. It's a descending world city. Did I tell you about that? I don't use the term developed world and developing world anymore. It's just all ascending world and declining world. And that's a declining world city. That makes sense to me. Let me say one thing just real quick on tensegrity. So it's a combination of tension and integrity.

Starting point is 03:03:19 Here's the definition. The characteristic property of a stable three-dimensional structure consisting of members under tension that are contiguous and members under compression that are not. So you can find this on Wikipedia. There are also somatic or physiological examples of this. At least, certainly some people would posit that. Fascia and some of the internal structures of the body, one could make an argument, would also fall under this principle or definition of tensegrity.

Starting point is 03:03:49 Yes, and there's this good post, you know, there's a blogger who I hadn't heard of before, but it's panalysis, P-A-N-A-L-Y-S-I-S.substack.com, front slash P, front slash Y, dash wars, dash charts. So the tensegrity model of international relations. I thought this was really well done because this is kind of how I modeled things in my head. It was great to see a visual metaphor for it and relate to stuff I already know, like force diagrams and stuff, where in this post, you can see, for example, the UK and Germany. They both align because they have

Starting point is 03:04:21 democratic ideals and they have auto and meat trade and they're part of the NATO alliance. But what pushes them apart? Language and they have differing regulations, right? So there's both pull and push. And the thing is that whenever you have that like rubber band tension, but tensegrity is a better model because it's not just like one force at a time, it's many different forces. This thing can kind of withstand some push and pull and whatnot. But if something just goes really strong or really weak, suddenly the whole structure goes

Starting point is 03:04:48 ka-chunk because there's things that are connecting to other things. And so what happened with San Francisco was I could tell that these forces were in extreme tension, but I felt that it would collapse. I didn't realize that it was going to be COVID, of course, six months before COVID, but I did know that it wasn't going to be COVID, of course, six months before COVID, but I did know that it wasn't going to persist. And just what happened was these forces were there, and then one of them just suddenly went to zero because everybody went remote, since you didn't have to be in the city at all. And all the culture changed at once. It was a crowd exit. It was a collective exit. A cultural convention changed, which said, if you're serious, you're not in person. Because before, if you were serious about a deal, you were in person. But now, if you're serious, you're not in person. Because before, if you were serious

Starting point is 03:05:25 about a deal, you were in person. But now if you were serious about your health, you were not in person. And so now there's an excuse in a sense, not just an excuse, but you can turn down every plane flight. You can turn down every in-person conference. They must offer a remote option. It's actually really important now. So the thing is that that's why COVID-19 is a permanent shock. Whenever you take a bunch of people who are at the zero point on an axis and then you spread them out where like some of them were a hundred percent remote, even in the removal of that force post-vaccination, it doesn't all come back. It's like hysteresis. Absolutely. Yeah. There's a lot of durability and we could just look at examples of how many Zoom invites I get,

Starting point is 03:06:05 even though we could just do telephone and walk around, even though people are now re-engaging with one another. And also, there's something to be said for the proof of concept that we witnessed for mobility and relocations during COVID. So people prove to themselves and their peer groups prove to them that it was possible to not just trial other locations while working, but insist on being relocated or else you are going to take a different job. And those kind of macro trends feed on each other. And Austin is a great example. When you have zero friends in Austin, moving to Austin is a harder decision than if you have five. And once you have 50 friends in Austin, it becomes quite easy. And I think we see that along a number of different directions.

Starting point is 03:06:57 That's right. And now the new thing is those 50 friends can all move together. Yeah. So I wrote an article at 1729.com front slash Miami, which actually cites articles from 2013 that I think predict this in some detail. I gave this talk, Silicon Valley's ultimate exit, and I had a follow-up essay called software is reorganizing the world that talk about how software is enabling these mass migrations. And that's fundamentally the resolution to our current disaligned world. What you really want is not a 51% democracy. You want 100% democracy. That is, you don't want a situation where it's the absolute minimum necessary consent,

Starting point is 03:07:33 where it's a Fosbury flop like we talked about before. You're just barely clearing the bar, and you have 51% of people vote and 49% of people are unhappy. those 49% will comply in the most grudging way possible. And your majority is very contingent and could drop with one bad headline or event. What happens is low levels of consent, the 51% may feel like they want to impose their will on the 49% via coercion. And that's actually bad because it's easy to coerce when it's like 0.01% of the society, when it's like some random murderer, you're going to get 99.99% of society agreeing that coercive force is legitimate against them. When it's 51 versus 49%, not only is coercion much, much, much harder

Starting point is 03:08:17 to do by orders of magnitude, because the ratio of 99.99 to 0.01 is much greater than the ratio of 51 to 49, not only is coercion much, much, much harder, it is also not obvious that it's going to be something that'll even maintain your majority because even the application of coercion reduces your majority. So instead, what you want is to resolve this. You're not going to resolve that by just voting more. It's going to be resolved by some combination of either coercion or migration. And when I say why coercion, well, one side coerces the other into just completely agreeing with them. They basically win a civil war. That's what happened with the Russian Reds versus the Russian Whites after the Russian Civil War. But there was in the US, in the Cold Civil

Starting point is 03:09:01 War, there was an article on this in 2018 that actually was RT'd by both Jack Dorsey and Evan Williams. And it was, here, hold on, I'm going to see, get the exact. There's an article from early 2018, so almost four years ago now, The Great Lesson of California and America's New Civil War, Why There's No Bipartisan Way Forward at This Juncture in our history, one side must win. And the people writing this, Roy Texera is a co-author,

Starting point is 03:09:32 the emerging Democrat majority. And essentially they say, remember the great lesson of California, the harbinger of America's political future, and realize today such bipartisan cooperation simply can't get done. And essentially what they're basically saying is, California is a one party Democrat state, and that's what you want for the country. So then the natural continue of more progressive

Starting point is 03:09:51 to more moderate solutions and got worked out within the context of the only remaining functioning party. So essentially they're just saying just win. And now, of course, it is a question mark as to whether you actually, quote, want democracy if you want your party to win every single election. If you don't even want the other party to exist and consider them illegitimate, then that's actually not really in a democracy anymore. Or if it is, it is something that's actually more similar. If it's a one-party rule, it's more similar to a communist party where it's just a smoke-filled

Starting point is 03:10:23 room where the primary is not really the general election. The general election is just a formality, and the primary is the real election. So you could argue it's still a democracy if the primary is an open primary. But the thing about this is Evan Jack basically RT'd this. He didn't endorse it, per se. He just said, interesting take. But it definitely got a fair amount of attention. And this is what I mean about one path forward when you have massive disagreement like that is just one party just coerces the other. And coerce

Starting point is 03:10:48 includes a lot of stuff. It could mean physical force, but it can also mean what we've seen, which is deplatforming, unbanking, etc. In fact, one way of thinking about this sort of cold civil war is 1861 to 1865. If you look at the map prior to 1861, the blue and the gray were geographically separated. And of course, they were ideologically separated. But the victory condition was obvious, like the North invades the South's territory. Ideological and geographical victory coincide. But today, if you look at a map of the US, blue and red, they're at the county level. They're all mixed between themselves. And so there's nothing to invade.

Starting point is 03:11:29 There's nothing in physical space that you can invade. They're all mixed. But there's an article from 2017 that gives a visual from cgr.org. Its title is Study Breitbart-led right-wing ecosystem altered broader media agenda. But the main thing about this is the graphs that are mid-screen on this. I have no opinion on the article itself, but the graphs that are in the middle show, here, I just pasted in the link for you so you can see them. The graphs in the middle show that even if the blue and the red are on top of each other in physical space, they are completely disjoint in digital space. Yeah, that's interesting. Okay, did you see that?

Starting point is 03:12:05 I do, yeah. So that is where the war is being waged. And here's the thing, if victory in the physical realm is invading somebody's territory, victory in the digital realm is invading their mind. Victory here looks like blue blotting out red or red blotting out blue.

Starting point is 03:12:23 And now we can actually look back on the last several years with a completely new lens, which is not the marketplace of ideas, but the battlefield of ideas. And now we understand deplatforming, unbanking, canceling, et cetera, not as disputes within a free society, but as digital warfare. Yeah. Where you're trying to take out their tanks, their battleships, et cetera, their big guns on the other side by having them wink out of the digital space so they can't recruit more soldiers, energize them, et cetera. Now, this is war that is fought with

Starting point is 03:12:57 words and with keystrokes and with economics. It's not guns and shells, though it did bleed over to the real world during the riots in the Capitol and so on. The physicality of this is secondary, but it's not non-existent. So this, I think, is actually not the coming conflict, though. This conflict is Democrat-Republican. I think the coming conflict rotates it by X degrees or in a different plane. The coming conflict is going to be centralization versus decentralization, where it's going to be basically like fiat versus Bitcoin. I think that's quite likely to come. And so a lot of people switch sides. There's going to be people who are, let's say, super patriot Republicans who will side with the government, my country,

Starting point is 03:13:41 right or wrong, like the guys who were in the Russian military who stayed in the Soviet military. It doesn't kind of matter. And then there's folks who will switch to the, or take the decentralized side. And that's actually many of the tech CEOs. Jack Dorsey is a Bitcoin maximalist. Zuck is now doing Ethereum with Facebook and so on. Many of those are going to go on the crypto side. So I think Bitcoin itself will be like the main flashpoint of the conflict. Then crypto is sort of. Bitcoin is different from crypto because maximalists want it to be different. That is to say, whether you think of them, it's kind of like, is Taiwan part of China or is it its own country? If you're the Chinese government, Taiwan is part of China. And if not, it's its own country. Now in reverse, if you're a maximalist, Bitcoin is its own thing

Starting point is 03:14:23 and all crypto is just scams, et cetera, et cetera. Whereas if you are in crypto or in Web3, actually, Bitcoin is great, but it does one thing, which is digital gold, and then we need that. We also need private cash, and we need programmable currency, and we need smart contracts. We need all this stuff. For what it's worth, I had a couple of tweets on this, but basically, Satoshi wasn't a troll. He didn't start fights on the internet. He spoke to Zuko, who was the founder of Zcash. He endorsed the idea of name crime. In general, I think he was about as attitudinally different from some of his self-styled disciples as the mythical Jesus was from the Spanish Inquisitors.

Starting point is 03:15:01 So I definitely wouldn't call myself a maximalist. However, and moreover, I would also say, if you look at Satoshi's writings, you know Hal Finney? You ever heard of Hal Finney? Who's basically like the- I have heard that name, but I can't place it. He's the first named person to engage with Bitcoin. The first person to engage with Bitcoin publicly other than Satoshi, like replied on the original email. Some people think he was Satoshi and used his name to boost it. Certainly he fits, but he passed away from a general disease. However, he froze his body, so maybe we can revive him at some point. But here's the thing. Hal Finney and Satoshi had a discussion, and Finney said, Satoshi, are you endorsing the idea that additional blockchains would each create

Starting point is 03:15:38 their own flavor of coins, which would trade with Bitcoins on exchanges? Satoshi said, right, domain objects, parentheses, domain coins, question mark, could represent the right to own a domain for a year. So Satoshi Nakamoto did entertain the concept of issuing other digital currencies, domain coins. So that might seem like totally obvious to you or me, whereas I or you might think of Satoshi as like a Newton and the Bitcoin white bear is like Principia Mathematica, like a feat of science or a feat of engineering. A lot of maximalists think of it more as like a religious text. And to be fair, you can argue it's got aspects of it because it's not simply an engineering innovation. It has implications for how one lives and that basically debt is bad and

Starting point is 03:16:25 inflation is bad and equity is good and capitalism is good. There's a lot of principles that are bound up in it, freedom, pseudonymity, lots of different principles, the network society, all those things are bound up in it. Even the Genesis block has this concept of the bank bailouts being bad. So it does have something which is more than just F equals MA. And so I understand where that comes from. And basically, in many ways, I think this will be seen as something like the Bible or the Quran or the Communist Manifesto or the American Declaration. is going to be something that, just like there's Sunnis and Shiites, Protestants and Catholics, there's all these different schools of thought. And there's maximalists, and there's Ethereum people, and there's CBDCs are this weird kind of thing, like the counter-reformation. The Catholicism adopted some aspects of what Protestantism was criticizing them for.

Starting point is 03:17:19 CBDCs are the state, the centralized state, adopting some aspects of what digital currency criticism is. All of these things come out of this. Hold on. May I interrupt? Here's what it is. Here's what it is. Okay. I'll just say this. All right. 60 seconds. I'm going to give you 60 seconds. Here's what I was saying. I was saying that the past iteration of this Cold Civil War was Democrat-Republican. Think of that as World War I. Now there's like a rotation of it, which is like World War II. That may not be the best analogy because there's most of the same groups who fought at the same time. We might

Starting point is 03:17:49 come up with a better one, which is like World War I and the Cold War, or World War II and the Cold War, where the US and the USSR were on the same side, then on different sides. But the point is that that's when it's Democrat or Republican. The next one is decentralized versus centralist, and Bitcoin maximalist on one side and woke capital on the other. And then there's folks who are in the middle, and like crypto is sort of in the middle, Web3 is in the middle, but I think it's more on the decentralized side. And then you'll have folks who are Republican types who are also more in the middle, but they're going to be more on like the state side. So that's, I think, what the coming axis is, which is a rotation of the current axis.

Starting point is 03:18:23 And that leads to, I think, significant civil conflict because they're kind of irreconcilable. But I do think the decentralized version will win. But now let me give the mic to you and I'll come back and explain why. Okay. All right. We may end up hitting pause on that and coming back to it in another conversation. I want to say a few things, then I'm going to segue to some rapid fire questions. We'll see how successful I am. But the couple of things I'll say, number one is that for people who are interested in how humans make meaning and create myth, spread myth, you could substitute ideology for myth. If it makes you sound smarter, that's's fine i would suggest they read or reread dune so i'm rereading dune i've read it before by frank herbert and it is

Starting point is 03:19:12 incredibly sophisticated and nuanced with respect to as an adult as an adult. As an adult. Oh, absolutely. As basically meme warfare. And the use of not just myth, but the human proclivity, almost necessity for myth, whether that myth is something called my country or whether it is a religious doctrine. And this we can get into separately. We talked about it a bit in the first episode, but I would suggest people reread Dune, which I'm doing right now because I'm about to see the movie and I want to make sure my memory is fresh. But the whole idea of the lineage of the Bene Gesserit is really worth looking at very, very, very closely.

Starting point is 03:19:57 Also really talks about, in a sense, decentralized guerrilla warfare on multiple fronts it's a fucking fantastic book so everybody should read that and a bit of trivia because i imagine a lot of people listening will be if not crypto native crypto curious so the word the word and the name nakamoto is in japanese japanese is a lot better than my mand, but is center origin would be one way to translate that, Nakamoto. And the character for Naka is the same character, different reading, as the Zhong of Zhongguo of China, Middle Kingdom. Although I think the better way to translate that is center kingdom. And I just wanted to drop a

Starting point is 03:20:46 little bit of trivia for any language nerds out there, but Nakamoto is a really, it's a great last name for Satoshi Nakamoto. All right. My questions. First one, very important. Have you always said RT'd instead of retweeted? I guess. I don't know. I mean, I think I might use them interchangeably. Is this like an accent thing? No, no, no. I just like it. I've never heard that verbally before, so I like that. All right. So you said, I'm not a Bitcoin maximalist, but I want to ask you a question. I'll preface it with saying, people listening, this is not investment advice, informational purposes only. It's a way for me to better understand and share your thinking. Apology.

Starting point is 03:21:26 If you were starting from scratch, had no holdings in crypto, but could only bet in one place, BTC versus ETH versus other, you only get to pick one. Which would you choose and why? BTC. BTC. BTC. Why? And the reason is, everything else is a technology company, whereas Bitcoin has become almost like an element like gold. That's to say, the fact that Bitcoin not only is the first, but it has the disappeared founder, it has... Because it has a disappeared founder, it fits a certain kind of mentality where because there's no leader, you don't feel like you're submitting to somebody.

Starting point is 03:22:10 You don't feel like you're submitting to somebody by buying gold. Satoshi is who you make them out to be. This is not how I think about money typically. But if you look on any dollar bill, there's weird incantations. There's a pyramid with eyes on it and so on. Most forms of bills, they have the most famous people in the country on them. The branding exercise is actually pretty important on this stuff. And the thing is that you can separate out the economic, the ideological, and the technological. As I said, it's a log scale.

Starting point is 03:22:41 Most people would consider me from the outside very similar to a Bitcoin maximalist, but I'll give you two thoughts on that. So first is on the economics. Yes, if I can only buy one thing, you just buy Bitcoin because nothing competes with it. It is possible, by the way, now to be clear, do I think it's 100% chance of success? No, I think it's possible that there is some remaining security issue associated with the code. But what's interesting is Square is now doing something with decentralizing mining. And the fact that mining is being driven out of China is actually good because I don't think any other state has the state capacity to do what China did and the ruthlessness. So it's unlikely that there's going to be a technical attack on Bitcoin. The only thing

Starting point is 03:23:15 that's going to happen going forward is potentially a regulatory or software attack. But outside of that, its community is so strong that can probably repair on that. Regulatory attacks are also less likely to kill it because the US is losing control over the world. If Germany defies on Nord Stream 2, and if sanctions don't affect Germany anymore, it doesn't affect India, if El Salvador can go Bitcoin, some states will have Bitcoin be legal, as well as within the US. So the federal government doesn't have the veto. So finally, really the technical attack. Is there some possibility of some zero day that can like inflate a lot of coins and be hard to patch? That's possible. It is still something where there's like one client that is very popular, one Bitcoin client. It's not a multi-client thing. So that's the main weakness

Starting point is 03:23:57 right now. Is it possible there's some supply chain attack where some library is included and it hasn't been audited sufficiently? Yes. Also, quantum cryptography, that's kind of an unknown, but is it possible that, say, quantum decryption becomes something that is out there before quantum encryption, that quantum decryption is highly centralized and some governments can do it or some centralized actor can do it, but quantum encryption is not something everybody has access to? Those are all possibilities, but the risk factor is relatively low. So that's on the economics. On the ideological, kind of the way I think about it is if you go item by item, probably I agree with Maximus on many things. I understand where they're coming from. Exit the Fed, check. Stop the bailouts,

Starting point is 03:24:36 check. Return to sound money, check. Build a voluntary society, check. End the welfare warfare state, check. Bitcoin is a global reserve currency, check. Bitcoin as an epochal technological breakthrough, check. But Bitcoin as the only digital asset ever and everything else is evil, that's where they lose me. And that's X. And buy Bitcoin, sell maximalism is the economic slash ideological thing because I'm not a monotheist. You might say from my cultural background or something like that, India is polytheistic. It's plastic. It's pluralist. I believe in the value of immutability, but I also believe in the value of programmability. And I think it's good that those are two separate things. If it's highly immutable, like Bitcoin or gold, it's not going

Starting point is 03:25:21 to be highly mutable and programmable. Those are two valuable things, but they're two almost necessarily separate things. So the thing about it is that's on the ideology. Again, though, the reason I think maximalists are going to have amazing traction or huge traction over the coming years, I think Bitcoin maximalism is in a sense the most important political movement in the world that people don't understand about today. Because essentially their argument is it's all a scam. That is to say, the Fed is a scam, but actually all the printed money means many of the corporations are a scam, the censorship is a scam, lots of things that the state is saying are false. Everybody who's rich, they're all cantillionaires, because have you heard that term, the Cantillon effect? Do you

Starting point is 03:25:57 know what that is? I do not. The Cantillon effect is some people get the printed money first, so it's not uniform in terms of its application of society. There's some truth to that. That's bidding up assets. That is causing something where it's like dunking on Mars. Actually, I think Mars has lower gravity than the US. It's like Space Jam. Dunking on the moon. Yeah, dunking on the moon. That's right. Actually, Mars, 38% of the gravity. So yeah, like basically dunking in a lower gravity environment, you might still need to be athletic, but less so. That's sort of what it's like doing tech or VC in this highly inflationary environment, at least for now. It's possible that all gains are just wiped out because things go totally vertical. That's what

Starting point is 03:26:34 happened in Weimar. Everybody thought they were... Have you read When Money Dies? I have not. Okay. That's a good book that actually Joe Colangelo had a good clip from. I'll just kind of read that clip. This is by Adam Ferguson. He had a great quote. Currently reading When Money Dies, The History of Hyperinflation and Viomart Journey. One of the wildest aspects I never knew was that early on, people all thought they were getting rich. They were selling hard assets for what they thought were insanely high prices and marks. And so essentially, because the printed

Starting point is 03:27:00 money flowed to some first rather than others, there's this cantaloupe effect. And my banker congratulates, here's some quotes, my banker congratulates me on every new rise, but he does not dispel the secret uneasiness which my growing wealth arouses in me. It already amounts to millions. Speculation on the stock exchange is spread to all ranks of the population and shares rise like air balloons to limitless heights. The value of my industrial investments is rising to an extent which seems to be incomprehensible and always makes me uneasy. This thing is something, of course, then the hyperinflation comes because everybody's rich, they all spend, and all the prices suddenly rise because more money is chasing fewer goods.

Starting point is 03:27:33 In the US, it's nonlinear, actually. One aspect of it that I hadn't fully understood is the printed money is in some ways contributing to the great resignation. So for whatever reason, you're having strikes, you're having people who are not working as truck drivers or working as dock workers anymore, maybe more power to them. They've gotten this printed money. But what that does is actually it non-linearly depresses supply, not just of labor, but of goods because the ports aren't being unpacked. That's why the administration is talking about bringing the National Guard to go and man the docks.

Starting point is 03:28:04 But that concept is it's not more money chasing the same goods. It's more money chasing fewer supply of both goods and services, less labor and less stuff because people are not being paid to unload things or build things. So I think there's a nonlinear inflation effect that might be coming. Oh, yeah. Well, you can look at lumber and a number of other things that I think are a byproduct of multiple factors. It's a byproduct of multiple factors. Lumber in particular, I think it went up and then it crashed. And overall, inflation is definitely here. It's now no longer being denied as some conspiracy theory. They're no longer saying it's transitory. They're admitting it's bad. Oh, I'm confused as to why it happened. Eventually, they're going to

Starting point is 03:28:41 say it's good because it's wiping out all of the fortunes. It's like a jubilee. All your debts are gone. Why are you mad about it? And then they might move to seizures, unfortunately. And so I know I'm saying this in a chipper tone, but let me give some good aspect of this. One of my macro theses we've kind of talked about before is that peak centralization was 1950.

Starting point is 03:29:01 One telephone company, AT&T, and two superpowers, the US and USSR, and three TV stations, ABC, CBS, and NBC. And so we're kind of running history in reverse, at least in the West. And I have this essay on this at satonye.substack.com. He gave this very flattering title to it, which I would not have chosen. But if you Google S-O-T-O-N-Y-E, Biologist's Room of Austin, you'll see it. And we'll put it in the show notes as well. Put it in the show notes, right? This goes into more detail. But basically, if you go backwards from 1950 to 1890, the Western frontier closes. But you go forwards from 1950 to 1991, the internet frontier reopens. And you can actually map these things. Backwards in time, you get the Spanish flu. Forwards, you get COVID-19. Backwards, you get the robber barons. Forwards, the tech billionaires. Backwards, you get the private

Starting point is 03:29:48 banking era. Forwards, you get the crypto era. Backwards, you get the cross of gold speech by William Jennings Bryan. Today, forwards, you get digital gold. Backwards, you have right and left fighting in the streets. And today, you have right and left fighting in the streets. Backwards, you get Weimar Germany. Today, we have Weimar America, where there's both the inflation and the cultural stuff that was very common. If you see Babylon Berlin, it's a lot of similarities to modern America. There's this book called Voluptuous Panic that documents what Weimar Germany was like, similar to America today culturally as well. It's not just the when money dies gives the economic aspect, Voluptuous Panic or Babylon Berlin will give the cultural aspects similar. You also have the conflict between the state and capitalism where the centralized states, you know, FDR was doing

Starting point is 03:30:29 the brain trust is packing the courts, national industrial recovery act. He was doing the entire alphabet soup was set up at that time. And of course the gold seizure. And you also have something, if you go even further back in time, sort of antebellum polarization. The thing is the attentive listener will say, well, Bob, you just mix things from like the 1920s with the 1800s and so on. And I say, yes, but that's because it's sort of ABCD, but it's not exactly DCBA. It's not exactly happening in exactly the same reverse order. I think the common symptom is the centralized fist clenching in 1950 is now

Starting point is 03:31:06 losing control. And so similar events are recurring in a different order because centralized control is dropping off. For example, that centralized control allowed for public health and also censorship. That's why the Spanish flu, I'm not sure if it was solved, but you just didn't hear about it because censorship was actually effective. That was part of the arc up of the centralized state. And now we have the the order of 10 million dead. So it's pretty severe. We're lucky that it wasn't Spanish flu. It might, who knows, could mutate. And the thing about this is when you have this worldview, at least in the West, and I'll come back to China, a lot of these things are happening, but we're seeing the alternative outcome. So for example, you're getting the cross of gold speech and he's like, you know, we will not be tortured or murdered.

Starting point is 03:32:06 It's like impaled, crucified, I think on a cross of gold. And now we're getting digital gold. People want gold back. So the populist movement is not against gold. It's for it. So you're seeing a lot of these things happening in reverse, not the frontier closing, but the frontier opening. And one of them that I think is pretty important is the stuff that FDR had the brain trust.

Starting point is 03:32:23 He had the brains on his side. And so executive order 6102, the seizure, they were able to implement it. important is the stuff that FDR had the brain trust, he had the brains on his side. And so Executive Order 6102, the seizure, they were able to implement it. But I think if they try it this time, it's not going to work because history is running in reverse and the IQ is not part of the state. Apologies, may I interrupt? Go ahead. Could we pause that and leave the audience wanting more on this particular thread? And may I ask a number of

Starting point is 03:32:45 new questions? Sure. But let me say one last thing, and then let's go to that. Okay. Now I'm going to say something that sounds sci-fi. Basically, the modern US, the whole thing is the entire mythology is beating the Nazis and beating the Confederates. So beating the ethno-nationalists abroad and the secessionists or what have you at home. And what may happen over the next 10 to 15 years is the regime may lose to the ethno-nationalists abroad, namely CCP, and they may lose to the maximalists at home and secessionists at home. And the breakup may happen. And the difference is, of course, that the Chinese communists are non-white and they're communists. They're not white Nazis, so they're different ethno-nationalists. It's different enough. And the secessionists,

Starting point is 03:33:29 or whatever you want to call them this time, are absolutely not for slavery. They're for freedom. In fact, you could argue they're anti-slavery activists because they don't want to submit. So I think that it's quite possible that we see the reverse outcome of a lot of things. And then at that point, what we want to do is if the CCP wins and if we have American anarchy, we need to figure out some way to rebuild civilization or guard civilization. Because in that world, the thing is anything good can massively overcorrect. You have to have some limiting principle because otherwise too much is not enough. This is why I would not call myself a maximalist. I call myself an optimalist. That is to say, I want to figure out what the optimum is across many variables and set an

Starting point is 03:34:09 explicit objective function rather than simply maximize something where too much is never enough. Maximalism just leads, you can call it fundamentalism, you can call it extreme. It just leads to a certain variety there. And again, I'm not trying to beat anybody up on this. I'm just trying to say that, yeah, okay, retire the current system. Whatever you do or I do, it seems destined for that retirement. We have to think about what the next system looks like after that. How do we ensure that we don't have crypto-anarchy but crypto-civilization? Yes, I think that the Chinese are going to rise, but what does an unchecked China look like? The US unchecked after 1991 behaved quite badly in some ways. All the invasions, the unchecked China look like? The US unchecked after 1991 behaved quite badly in some ways,

Starting point is 03:34:46 you know, all the invasions. The unchecked China might be quite mean. And so how do we defend civil liberties? How do we defend privacy? How do we defend civilization in this environment where we have sort of the reverse outcome? I know that's provocative. Call that a sci-fi scenario. You are once again outlasting me and the battery in my headset. And I know I can't change my audio source with the software we're using. So I may lose audio altogether. So I want to ask a couple of remaining questions. I'm going to just throw a number of them out there at once, because I think this will make the most sense. And then you can pick and choose which you want to go after. Here are some of them. If you had to be bullish on one US-based big tech company, which would you choose? And then

Starting point is 03:35:30 if you're still doing angel investing, or if you were doing angel investing, which categories or areas would you find most interesting? And then any predictions for the next 12 months, or are there any things you're preparing for in the next 12 months with contingency plans of different types? Either one. The one thing I want to say is, before we get into that, just on the topic of secession for a second, just to make sure I clarify what my position is. I believe in voluntarism. And so I think rather than fighting over land, I have zero interest in doing that personally. Instead, I think you should try to crowdfund territory in no man's land so nobody else has a claim on it,

Starting point is 03:36:10 and you've got it fair and square, and it's in the middle of nowhere. Basically, the equivalent of Burning Man because fighting is stupid, and there's plenty of territory out there, and I'd rather build it from scratch without a fight. I would not call myself a secessionist. I do think that if you look at some of the conversation around national divorce, that is happening on both sides. That is happening in NYMAG published something on this a few years ago, which is American breakup. I think maybe it's time for America to split up. Sarah Silverman has talked about this and folks on the right have talked about so-called national divorce. So it's definitely in the air. And one last thing I'll say is that all of this stuff, the language is super important

Starting point is 03:36:49 because secession, of course, sounds bad, but independence sounds good. It gets back to that concept of Russell conjugation. The American Revolution was secession of the colonies from the British, but that was independence from the American perspective. So this also gets that earlier concept of our winner's writing history. So the adjectives I chose were as neutral as possible. I want to make clear that I don't support any kind of physical conflict, peace-loving, and I'd want to basically buy territory outside of this. However, what I want or what you want, there's some forces that might be greater than us. So in this sci-fi scenario, this is how I sort of see the Harry Seldon-like psychohistory happening. Clarification accepted. Thank you.

Starting point is 03:37:31 And you know what psychohistory is? It's like the prediction of the future. This is scenario analysis. So why is that scenario analysis important? Well, I assigned some probability to that scenario. There's also other possible scenarios. Another possible scenario is it's just a lot of disagreement and just a lot of migration and yelling online for many, many years. And then it's something like what happened with the Soviet Union, where it does break up, but it breaks up in almost basically peaceful slash bloodless way. And that's a good outcome. And I think that's likely. That might be the most likely. It's much better than civil conflict. And there's things like with interstate unions, for example, where maybe that's what happens.

Starting point is 03:38:08 But we'll see. Obviously, hope for the best, plan for the worst. To your points on, this actually relates to big tech goes and bullish and bearish and whatnot. The US big tech companies that I'm the most bullish on, I don't think actually, I don't know if I actually hold any shares in these companies. I might in some entity of an entity, but it's certainly not to my knowledge, a large holding.

Starting point is 03:38:28 I'm actually most bullish on Twitter slash Square and Facebook. And the reason is Twitter slash Square, the reason I put them is they're going to become probably merged into something like with Square's Bitcoin support and the fact that Jack is CEO of both. Of course, they're two separate entities, but he can figure it out and probably offer Bitcoin payments on Twitter for many things and basically build like a Bitcoin Ethereum into Twitter. What do I mean by that? Like a Bitcoin Ethereum meaning it's like a lot of the functionality or copied functionality of Ethereum, like Rootstock sort of, I think, cloned the Ethereum EVM. So it might have a lot of the functionality of Ethereum or

Starting point is 03:39:04 Salon or some of these other chains, but that is sort of Bitcoin-backed. And there's different ways of doing that. There could be basically essentially a centralized version that has a minimal decentralized component, which is one way of doing it. And you just load Bitcoin onto it and the rest of it is centralized. There's ways of doing it with zero

Starting point is 03:39:20 knowledge. There's a number of different engineering trade-offs that could be made, but essentially I think that's one direction, like Twitter slash Square. Then Facebook, because Zuck is also a founder, and I do respect him. I really do. The reason I do is the number of hits that he's taken over the years to start as a 21-year-old kid in his dorm to build what he's built, and from that to this 3 billion person network, I mean, a lesser founder would have backed down after the mistake on Libra. But Libra and then Diem, and now he's doing Novi, which I actually think is a much better chance of working because it's

Starting point is 03:39:55 natively crypto. I did actually say this at the time, that what they should have done is start with Bitcoin and Ethereum payments and WhatsApp and do remittance corridors rather than doing this. I think there might be some public record of it, but I definitely talked about it. Rather than doing a new coin, start with the existing ones, build up experience on that rather than doing Libra. And that wasn't their first shot, but you know what? That looks like what they're doing now with Novi. And very, very few people would have had the conviction to persist with something in the face of that level of resistance. And we're talking congressional hearings. Most people would have quailed. Same with all the

Starting point is 03:40:31 negative press. Same with the Oculus bet. That's $2 billion for something where they had to go through multiple iterations to get the product to work. But now they're going to rebrand the company around the metaverse. Or Instagram, I made this comment. Basically, Instagram was not an easy call. This is something where it's being retrospectively litigated because it's worth a lot. But just to bullet point this, Instagram raised it 500 million valuation the day before Zuck offered a billion for the company. One billion was like 25% of their cash in hand, about like 4 billion at the time. So it's actually a lot of money. It was weeks before the Facebook IPO. The board wasn't consulted. They were just informed and Instagram had no revenue. Yeah, that's not, that's not an easy call.

Starting point is 03:41:12 That's not an easy call that, you know, and in fact, John Stewart mocked at the time, he's like a billion dollars for Instagram. The only thing that's worth that is something that instantly gets me a gram of cocaine, right? Everybody mocked it, made fun of it. They said, oh, this is such a bubble purchase. They're so stupid. It endangered the IPO potentially. I mean, there were so many aspects to that where that was a highly, highly non-consensus call that has now been turned into, oh, it was an obvious buy. And the thing about this, the problem is that people who are wrong will not admit they are wrong. The only way to show that you were not 2x righter than somebody, but 10,000x righter than somebody else is an investment where you're 10,000x righter,

Starting point is 03:42:00 10,000x more correct. And by the way, this is very common. Google's tough as searches for a business model, or the internet is not going to be a thing. So many articles on the early internet were like this. Or of course, Bitcoin is going to zero, or COVID-19 is not going to be a thing. These journos are not off by like 50%. You can't just read their article and think you're being sophisticated by discounting it. Their mental model of the world is often off by 10,000 or 100,000x. Now, in fairness, just to set a counterpoint, there are some journalists who are incredibly prescient. There are good and bad and ugly within the world of journalism, just to be fair. Sure, sure. But many of them are becoming VCs and angel investors or going to Substack.

Starting point is 03:42:41 Yeah, a lot of them are defecting because the ecosystem is just full of vitriol. It's like everyone's pissing in the pool, so a lot of people are getting out of the pool. Yeah, because the thing is, what I'm talking about is really, I should preface it with the corporate journalist, the one who's employed by a legacy media corporation. And that legacy media corporation will, Salzberger's company, the New York Times, will literally run billboards advertising itself as the truth. Fox will run billboards advertising itself as fair and balanced. The Washington Post will literally equate itself to democracy itself. Now, Facebook doesn't do that. No tech company has the balls to do that, say that you're equivalent to truth or fairness or democracy

Starting point is 03:43:17 itself. But yet that's a for-profit corporation that has the arrogance or the lack of self-awareness or something to come out and say, I determine what is true for the world. I am the paper of record. I am the first draft of history. Whoa. The monopoly of truth is upstream of the monopoly of violence. The monopoly of truth, you say that WMDs are in rock and then people go and invade. You say that somebody is guilty, you prosecute them in the court of public opinion and then they get prosecuted. And so that's a super important power that some privately held media corporations shouldn't have. And so what's happening now, fortunately, is that power is being decentralized. First, in the most important way, which is on-chain truth, cryptographic truth, not argument from authority, but argument from cryptography, not NYT, but BTC. So that power

Starting point is 03:44:00 is being taken away. And what's funny is, as you know, I'm not the kind of person who thinks white is an insult, but these folks are. And for some rich white nepotist like Salzberger to be determining what is true for the whole world is simply not applicable. One might even say it's, quote, white privilege. And so instead, what we should have is something that is a global decentralized network where people of every group, including, of course, white Americans, can participate and determine what is true through a mathematical process that starts with figuring out who has what Bitcoin, and then it goes to who has what asset, and then

Starting point is 03:44:32 it goes to who made what assertion. And that's like the ledger of record concept that we talked about before. So there's a root and branch thing where corporate journalism has also lost, though they don't understand it. Just like CCP is hard power and BTC is hard money, cryptography is hard truth. And corporate journalism has actually lost control over hard truth. Just to give you one example of this from earlier this year, Vitalik Buterin made a large donation to India for COVID. And do you know how people knew that it was real?

Starting point is 03:44:58 Look at the blockchain? They looked at the blockchain. That was ground truth. That's really important because what is the other thing that you tend to do nowadays? If something is real, let me see if it's on Twitter. Did that guy actually say that? And the thing is, that's actually not perfect nowadays because Twitter deplatforms a lot of people, so their record is gone. Or last year, Twitter was hacked, if you remember that, and Bezos and other people were posting things. So while it's imperfect, in the not-too-distant future, there's things like Deeso, there's various kinds of decentralized social networks out there, Capsule, all these things that are coming or out there.

Starting point is 03:45:33 In the not-too-distant future, that backend is also on-chain. So to show that somebody said something, you won't link to Twitter, you'll link to the crypto Twitter version, the on-chain record, that shows they posted this or said this. And because it's protected by proof-of of work or a similar consensus algorithm, you can compute how much money would be required to falsify that, how much computation, how much energy would have to go into falsify that. That is really interesting because you also have multiple confirmations. It's not just one source. The thing is, I don't care if something has a thousand retweets. What I care about is if it has two or three independent confirmations from economically disaligned actors. This is the same as academia, by the way.

Starting point is 03:46:08 Everybody's optimizing citations. What you actually want to optimize is independent replication. That's what true science is. It's not peer review. It is physical test. This leads to kind of worldview stuff. What am I interested in? So the reason I was interested in, I said, Twitter Square and Facebook is they're still founder-led. Because they're founder-led, they're getting into, respectively, Bitcoin and Web3. Whereas Google, for example, I respect Sundar, and it's very hard to run an organization like the one that he does. But with the big exception of AI under DeepMind, thanks to DeepMind acquisition, Google really hasn't innovated that much. There were some promising things like trying to integrate robotics. That was taken down by Scandal. But basically, conceptually, technologically, economically, it was sound to kind of put that all under one roof and actually advance the state of the art of robotics. They had Boston Dynamics. They acquired all these companies. They're going to knit them all together. Unfortunately, Scandal took that down. They had all these messaging apps. Basically, there's kind of been a drift. They've kind of got too much money, and they don't have enough focus or what have you. It's all the same big company stuff. That thing, remember I said before about how if there's a lot of money within a company, people can do the off diagonal, they can loot. They form those coalitions. Right. The win-loss and loss-win as opposed to everybody wins.

Starting point is 03:47:14 So that's definitely happening there. And just to show why I'm not bullish on them, I mean, it's 2021. You know what they don't have? You know, it's a core thing for search that they would have had seven years ago if probably Larry Page was still in charge. I do not. What is that? Block explorers. Why don't they have blockchain.info and Etherscan? People don't get this, but block explorers are actually the stealth threat to search. That is to say, we're not used to thinking of them as a threat to search because financial data of the blockchain type being indexed on a website like blockchain.com or Etherscan, where you're looking through smart contracts and so on, that seems like categorically distinct from text and media information that's on the internet of information eventually merged together because

Starting point is 03:48:05 with something like Deeso, with what was called BitClap at Deeso, if you go to their block explorer, you can see that every post and like and so on is on chain. And that shows that actually more than just financial data can be represented on chain. Social data can as well. And if social data can, pretty much everything else can because social networks include media and all this other type of stuff. So it's all going to go on chain eventually. And some of the zero knowledge stuff, like what Starkware has done is solving some of the scalability issues. So if it all goes on chain, that actually is a threat, not just Google, but also Facebook and Twitter, because indexing the web is hard. Indexing a social media company's database is even harder because it's closed and

Starting point is 03:48:43 corporate, but indexing a public blockchain is easier than both. Just to give one example, with indexing the web, you have to go and have a crawler that has to guess when to recrawl one of a million sites. When is it going to refresh? You don't know. They're not going to ping you. So you have to guess and you have to do a whole Cisco model on this kind of thing. That's just like one piece of the whole web crawling problem. With a blockchain, it's the opposite. Every update is pushed to you. You just subscribe to it and you just get a block pushed to you and then you re-index it.

Starting point is 03:49:08 So like enormous parts of like the entire infrastructure are solved by different abstractions that take millions of lines of code and like reduce it to nothing. And then the question is, can blockchains themselves scale? And why would people put everything on chain?

Starting point is 03:49:21 Well, it would seem insane in 1990 to say you're going to stream movies over the internet. That was crazy. And people thought it wouldn't scale. But it did. And one of the other reasons, by the way, that we're going to get blockchains as a back-end for everything, do you know who sucks at information security? I can think of a lot of people, but what is your answer? Government IT developers. Do you know who's actually awesome at security? Tell me. Bology. No, I'm okay. Whatever. But crypto developers. Do you know who's actually awesome at security? Tell me. Bology. No, I'm okay. Whatever. But crypto developers.

Starting point is 03:49:49 Yeah. So most people don't understand this, right? There's a website called rekt.news, and it essentially documents every major hack in crypto. Yeah, it's like the fuck company of crypto, right? Yeah. So millions of dollars get stolen. But here's the thing. That's why people are like, what are you talking about? Crypto? It's secure. There's all these. But here's the thing. That's why people are like, what are you talking about? Crypto is secure. There's all these hacks. Here's the thing. We're churning out the equivalent of combat veterans.

Starting point is 03:50:09 This is a live fire environment because, see, the thing is in Web 2, your systems can get hacked without you knowing about them. Someone can just get onto your computer and they'll just hang out there, slurp up information, sit there. And the reason is it's not a negotiable instrument. The data in your database, they don't know what the price is on the open market. They might want to sit there and slurp in more information. They might want to escalate their privileges and so on and so forth. If, however, there are cryptocurrency private keys in every directory, you've now given that

Starting point is 03:50:37 attacker an incentive to just take the money right now because, who knows, you might move it in 10 minutes. That suddenly makes intrusions tangible. Now, you might still have a politically or ideologically motivated attacker. But once intrusions become tangible, and you can see the damage that is done, it's like capture the flag on everything in security. One of the hardest things about computer security is it's like, oh, my data was hacked. All right, guess that happened again. There's this website called Have I Been Pwned, where you can type in your email address and find how many different hacks you were subject to. Go ahead. I'm just wondering who owns that site. Just enter your email address. It's a good guy. Troy, I forget his last name, but he's a good guy. He's

Starting point is 03:51:18 like a security guy who's legit. But yeah, it's a good question, right? So, but have I been pwned? Like the thing is companies now subscribe to have I been pwned to run their users emails through to make sure that they're not reusing a password that was already hacked. Now think about what's going on there. That's like a shared database between companies that they're using. So like your login to X site depends on your login to Y and Z and W site. That's kind of like the concept I have this post, Yes, You Made It Into Blockchain, on how blockchains are a primitive for shared state between companies, where I can write to it and read from it in such a way that I can't interfere with your reads and writes. But the point is, that kind of gives a shadow of what a shared login

Starting point is 03:51:59 kind of system looks like. The point is this. The current hacks of crypto things obscure the fact that in Web2, you can set security to zero and just focus on utility because if you have utility, you have customers, and if you don't have utility, you don't. But security is sort of orthogonal to that, at least at the beginning. In Web3, that's not the case. if you don't do an audit of your contract, if you don't think about formal verification, if you don't use a type safe language, if you don't really think through all of your error modes and maybe use audited contracts and be extremely defensive in what you're doing, your contract gets hacked on the first day. So minimum necessary security is much higher. It is a requirement for making money. And they sweat it. People sweat it for real. They know that one compromise, you lose the money.

Starting point is 03:52:48 And people do die in the digital realm. And best practices come about. And new tooling is coming about. What do you mean by people die? You mean initiatives, projects, companies? Yes, exactly. In virtual war, in this virtual cyber war, companies do die. They just get all their funds back.

Starting point is 03:53:04 They're dead. Reputation killed. In virtual war, in this virtual cyber war, companies do die. They just get all their funds back. They're dead, right? Reputation killed. So the thing about this is when people look at ransomware and so on, ransomware is actually, you know, how that works, right? Like basically there's a security hole, undetected security hole on something like an Epic software. And then there's a thing that appears and it says, pay me some Bitcoin or pay me some Monero in order to unlock your computer. Yep.

Starting point is 03:53:25 Now, if this is not yet feasible, but it's going to happen, do you know where that would be actually extremely hard to do would be to run that ransomware on the Bitcoin or Ethereum blockchain itself. Yep. Why? Because if they could have hacked it, they could have awarded themselves a billion dollars. They don't need somebody else to do it. So the thing is that blockchains will become, by dint of their built-in bug bounty, by dint of the fact that they're not just open source but open state, the most secure backend platforms in the

Starting point is 03:53:56 world. Now, don't you think that's also going to be a Cambrian explosion of social engineering? I mean, I would imagine that all sorts of sort of Kevin Mitnick, the art of deception type social engineering will explode to sort of not skirt, but on some level, circumvent very tight technological precautions. And we're seeing that in discords. Certainly, I mean, I have to imagine this is happening, although I haven't read any accounts. But one of the crazy things in the NFT world is if someone gets hacked because they accidentally give someone a QR code or, God forbid, their passphrase, they can see exactly where their stolen stuff is, right? They can look at an unidentified wallet holding their stuff and watch someone

Starting point is 03:54:46 selling their stuff. It might not be plausible or sensible now, but at some point in the future, I could foresee there being greater value of some NFTs to the person who had them stolen than the person who did the stealing, in which case you would have sort of ransom-like circumstances. I don't know. Every crime we can possibly think of will happen in that sense. Might already have. Jameson Lopp has this GitHub of, I think, Bitcoin physical attacks. So physical plus virtual would be combined social engineering. But I think in some ways, there's good and bad. The bad is with the state receding, with decentralization winning, the American anarchy that may follow. Remember the thing we were talking about with

Starting point is 03:55:30 tensegrity and the rubber band? So right now we're in this weird phase of anarcho-tyranny where there's a crazy guy who is smashing windows or pooping on the street in San Francisco. That's the anarchy. But the tyranny is that the Uber driver who parks next to him gets a $200 ticket for being on the wrong side of the road. So the guy who smashes the window of the car, nothing happens to them. The poor working class guy who parks inside a road gets whatever $100 ticket. So it's a combination of anarchy and tyranny. That I think is, so the new information to me over the last eight or nine months is I think that the tyranny doesn't have enough state capacity to sustain for long. And that's different than the Soviet tyranny.

Starting point is 03:56:11 That's different than the 20th century top-down states. What I've sort of realized is if in the 20th century, the big problem was tyranny because you had sort of left authoritarian and right authoritarian extremists. And what was precious was freedom and equality in the sense of being treated as an equal member of society rather than the equal protection under law, all that stuff. In this century, I think after that rubber band snap happens, which I think is going to happen, and the tyranny vanishes and we just have anarchy, what is scarce is not freedom, but leadership. That is to say, in a time of tyranny, what's scarce is freedom. In a time of anarchy, what's scarce is leadership. And what happens, I think, is like Russia in the 90s, there's this book, I think like-

Starting point is 03:56:59 May I posit something while you're looking for that? And that is, I would imagine human nature being human nature being human nature doesn't seem to have changed all that much over the last few millennia, that if we have, say, decentralized social networks, while it may be true that no central authority can de-platform you, you will have Lord of the Flies dynamics whereby someone accrues incredible reputation slash power societal sway and can effectively force exile by just causing so much vitriol and acid to be thrown at any individual player so in the sense that I expect that we'll see deplatforming by other means than some central order.

Starting point is 03:57:49 Yes. So, well, I think what happens is you get re-centralization. So yes, I do agree with that. For example, what's happened in the US is if China has centralized censorship by the state, in the US, because the First Amendment prevents that, you have decentralized censorship by corporations, where it's technically compatible with the First Amendment, but it's spiritually not compatible. And then the response that is the third order, which is decentralized censorship resistance. See, because the sort of Western form of censorship is this retrofit,

Starting point is 03:58:20 it's not like the Chinese where they set out and they're like, you know, we're going to take the hit, we're going to take the PR hit, the reputational hit, whatever, international hit, just going to censor. Because this was a retrofit on the system, it is retrofitting this tyranny on top of a previously free system when Twitter was, you know, the free speech wing and the free speech party, you know, and started out with that is a bad fit. And there's still enough people with living memory of what that freedom looked like. It is now becoming apparent, which was not to me, I think, a year ago, that the state capacity for really exercising that in a coordinated way is not there. That is to say, if the Chinese state, do you know what lawful evil versus chaotic evil are? From Dungeons and Dragons? From Dungeons and Dragons, yes, exactly. I do. You should probably describe what

Starting point is 03:59:06 they mean but yes lawful evil is methodical careful evil and in some ways i think it's a caricature to say this in some ways but in some ways the chinese state you can think of it as lawful evil when they set out to censor you or every switch is flipped, every, you know, the guys all fan out like Bitcoin mining band, boom, they actually just go and execute on it like ruthlessly like a corporation. The top guy gives the order and they all go and do it. If you watch like the Chinese military parades under Xi Jinping, they don't even salute the seven person CCP standing committee more.

Starting point is 03:59:43 It's not a salute of an oligarchy. It's a salute of one guy. And that one guy gives an order, and all these guys go, like, they're a little, like, robotic like this. That's the whole point of the military parade, by the way, is to show that in peacetime, if they can do this, and in wartime, there's this completely coordinated ballet of violence, basically. That's the whole point of a military parade. They're, like, lawful evil, whereas the American state, in in many ways is chaotic evil. Afghanistan is just like this total catastrophe, and we have stores being burned down, and people storming the Capitol, and states doing this, and money being printed. And look, they're a butterfly. I'm on Twitter yelling at this person, and there's no coordination of any kind. There's no strategy.

Starting point is 04:00:22 This AUKUS thing is a great example. Did you follow this at all? I did not. By the way, as a sidelight, some people will be like, oh, why are these crypto bros, tech bros, like, you know, getting into foreign policy or politics? On the other hand, they'll also say, why don't these tech bros or crypto bros, why don't they learn some history and humanities? Like, you know, these are mutually contradictory criticisms, of course, right? But my response to that is twofold.

Starting point is 04:00:43 First is, as I mentioned before, just like after the 2008 crisis, it was obvious that the Federal Reserve, the bankers, didn't have it under control. In fact, Bernanke in 2004 had given the speech at Jackson Hole, Wyoming, I believe, on the great moderation on how macroeconomic volatility had been solved, and they had it all under control, and no big deal, meaning no more depressions, nothing. Of course, a few years later, financial crisis happened. So they obviously didn't know what they were doing, even if they had control of the system, hence fintech, hence crypto, because of that distrust. And now what we're seeing in 2021, if it wasn't apparent before, but it's really apparent now, is that the foreign policy establishment of the US,

Starting point is 04:01:23 the national security, the military establishment, didn't just blow COVID, they blew Afghanistan. Despite $2 trillion and 20 years, they basically blew the largest lead in human history, arguably, over the last 30 years. An empire at its absolute zenith is now losing to the Taliban. And by the way, it's not even like Vietnam. You know why? The Vietnam defeat was actually more excusable, because they had a superpower sponsor. The Soviets were on the other side. The Chinese were on the other side, supplying arms. Those were serious states. Who's backing the Taliban? China isn't putting in weapons. To my knowledge, Russia isn't, maybe Pakistan. It's not like Vietnam. It's actually much worse than that as a defeat. So the point is, just like the bankers obviously didn't know

Starting point is 04:02:02 what they were doing, so time for other people to come in, new fresh blood. If you take a look at my fellow tech bros in finance and VR, Palantir and Anduril, Teal and Palmer Lucky waltzed in with no background and advanced the state of the art of the intelligence and military communities. That kind of shows a shade, I think, of what is possible if we do decide to get involved in this. And obviously, in cryptocurrency, guys like Vitalik, people who are running these coins, are running economies. They are running monetary policies of large countries. It is a step up from simply running a company.

Starting point is 04:02:36 You're running a community. You have to think about things. You can't control people's actions. You can nudge maybe by pushing through an update, but even that update may be pushed back on. It is actually like the executive, legislative, and judiciary, the president and the lawyer congressman who edit text, and then the judiciary that enforces it, that fallible and highly unreliable and irregular judiciary. Rather than that, you have the executive of the CEO or the founder. You have the legislative, which are the coders that propose the edits and changes.

Starting point is 04:03:04 And you have the judiciary or the nodes that interpret the code, but do so in an extremely faithful way. In a sense, it's a violation of equal protection every time somebody with the same facts walks into a Wyoming court and gets different justice, for example, than a Milwaukee court or Minnesota court, whatever, right? Like every time that happens on something that's supposed to be uniform, the same input should give the same output. That's what rule of law should mean. And I'm not saying, I'm not beating up, I'm just using Wyoming, Minnesota as an example. I'm not beating up any particular state. I'm saying that the concept of a judge changing their decision making based on anything other than the raw inputs, judicial discretion in many ways is actually often bad because you have things where

Starting point is 04:03:45 people start going jurisdiction shopping not because the law is different which is fine but because the judge likes this or likes that and has a certain attitude towards this it's like there's that apocryphal israeli study where people get lighter sentences after the judges have eaten something and their blood sugar is up so they're're more merciful. That's bad. Instead, you should have this alternative. So my point is, though, that founders are now getting into rule of law, currency, with Palantir and Andril into military and foreign policy stuff. So this preface is kind of why we're starting to think about all of this stuff. Another preface, I know a preface is a preface. Well, actually, let me talk about France-Aukus

Starting point is 04:04:22 and then come back to that. So with France-Aukus, that is this amazing thing that shows, talk about chaotic evil. They just don't know what they're doing. So here is the sequence of events. Basically, after the whole Afghanistan withdrawal thing, where it was just so televised, everybody saw the images of this catastrophe. And it wasn't just, obviously, people within the US who saw it. All American partners saw it. And they were like, whoa, that military that we saw in Hollywood beating up aliens and so on is unable to manage a withdrawal without any gunfire. The Taliban wasn't even shooting at them. I do support, I think the withdrawal overall probably was a good idea in the sense of, or at least necessary. it's complicated, but the execution was catastrophic.

Starting point is 04:05:05 That's kind of the conventional wisdom. It is, however, the second-order consequences I think are important. One is that the admin wanted to, I believe, turn the page on this from a PR standpoint, and that's why this AUKUS announcement was teed up. And the thing about it is it's very unusual. When is the last time you've seen the president and the prime minister of the uk and the prime minister of australia in a simulcast can't remember can't remember right the thing is it could have been something that was like signed to some deal of like a million things that happen in government that are not a prime time announcement this was intentionally the goal was

Starting point is 04:05:39 hey turn the page yeah i know you thought we screwed up in afghanistan but we're pivoting to asia and we're totally serious about it. Ha ha, China, right? And so the problem is, though, that it actually revealed a bunch of issues. First is the fact that it is Australia, the UK, and the US. Well, there's something called the Five Eyes, and that is Australia, UK, US, New Zealand, Canada. So there's this Canadian newspaper that said, what, is it the three eyes now? Because why were the other two excluded? Well, New Zealand, because they don't have some nuclear, there's something about nuclear subs can't operate in their territory or their maritime region. And Canada, because evidently there's such wimps militarily, they don't have anything. But the thing about that is it showed to the external world something they'd never seen

Starting point is 04:06:22 before, which is internal division among the five eyes, number one. Similarly, the Quad, which was this much ballyhooed thing of India, Japan, Australia, and the US, which actually did make some sense in the sense of India, Japan are, I think, serious countries versus China. If you wanted to make an alliance, that would make sense. India and Japan were left out of this. And the UK, which is on the other side of the world, was brought in. Now, who has more concern with China than India and Japan were left out of this. And the UK, which is on the other side of the world, was brought in. Now, who has more concern with China than India and Japan, which are real countries that border them? They're not going anywhere. The UK doesn't really have an empire anymore. It doesn't really have stuff in the Pacific. Hong Kong went away. So what the heck? It also, just like it showed the five eyes, really the three eyes, it showed internal division in the quad. India and Japan

Starting point is 04:07:00 made polite murmurings in public, but within India, within Japan, if you read the newspapers there, they're like WTF. And then France itself, because they had this sub deal with Australia that evidently by all reports wasn't going that great. It was taking a long time, et cetera, but Australia had recommitted to their relationship. Now all this stuff is being aired in the public because here's what happened. France got annoyed and France isn't just France. France is basically one half of the EU with Germany. And so they got the EU to denounce this and they pulled their ambassadors. And part of it is that their pride was wounded because they actually have islands in the Pacific. They have actually a significant, I think, million plus population of actual French citizens in the Pacific near Australia, more than the UK does. They still think of themselves, because they're on the UN Security Council, as like a great power.

Starting point is 04:07:47 And now they were just sort of lied to and backhanded. That's how they think about it, even if they were screwing up on the sub aspect. But the thing about it is they got really mad, pulled their ambassador. The EU and the US are now actually largely split on China, because they said France isn't just France, France is the EU. And even if I think the EU is declining, and Britain has broken off from it, of course, but Scotland might break off from Britain and Catalonia and the vice grad countries, they may all break off from the EU. Still, the EU is like a thing, even if it's declining. And so the EU is now kind of split. And they're like, you know what, you ask, why don't you go and do your thing on China and we'll

Starting point is 04:08:22 do our own thing. South China Monarch Post had actually something on this. And then what did Australia get? Australia got subs, but you know what the fine print is? Do you know when the first nuclear submarine that Australia builds is going to appear? Do you know what the date that they've got is? What is that? 20 years. 20 years. So the thing is, this is not a serious thing. It reminds me of the San Francisco $300 million bus lane that took almost two decades. Patrick Collison has a website called FAST. I'll me of the San Francisco $300 million bus lane that took almost two decades. Patrick Collison has a website called FAST. I'll give you the exact URL. It is patrickcollison.com front slash FAST. And he shows that stuff in the past was built way faster. Oh, he gave an example of a nuclear reactor.

Starting point is 04:09:01 Yeah, exactly. The first nuclear submarine was built faster in like a few years relative to this one, which will take 20. So how is that possible? The first sub that was built 40 years ago is faster than this one. Or like the Empire State Building, we started and finished in 410 days. The Eiffel Tower was built in two years and two months. This type of stuff. The thing about this is we know that it is physically possible to do that today because China does it. China built a hospital in 10 days during COVID. There's videos you can see of them building a subway station in nine hours or a building in 10 days. Then, of course, what people say is, oh, and this is Coke, by the way. They'll be like, oh, that's all Chinese construction. It sucks. It's just going to fall down. It's plastic crap.

Starting point is 04:09:38 We have good stuff. I'm like, have you seen the Millennium Tower in SF? Have you seen the SF Transit Center in SF? Those are also cracking and going to fall over. Even NYT actually did a thing on how SF isn't actually earthquake-proofed. And all the building codes don't mean anything. So I don't think the US is getting high-quality structures for all of that money and time. And moreover, even if you granted, and people have seen the photo of like a building in China, the filler,

Starting point is 04:10:07 even if like some tiny, tiny percentage of the time, you have some structural issue. When you go from many years to being able to build a hospital in 10 days or being able to build a subway station in nine hours, it's like a hundred or thousand X. Like the amount of money you save is so dramatic that you can slash rents and crucially also enable military victories because the military is about the physical world.

Starting point is 04:10:30 And if China as a subroutine can contemplate building a hospital in 10 days, they can also contemplate building a blockade or a bridge or something else in the physical world. And if the U S can only build a sub in 20 years, it's like an older man whose bones don't heal as fast anymore, who can't do the things that they used to do anymore, and yet still think of themselves. That's the dangerous part. If you're 80 and you think of yourself as 20, okay, young at heart is one thing, but going and trying to knock out 300 for reps, you might hurt yourself if you're trying to bench that much after not doing something in a while. And you might never be able to get there again as that man. You might need your son to be able to do it. That

Starting point is 04:11:08 might be the last time you bench that amount of weight. So it might need a new nation to be able to do these things, like a rebirth of some kind. So then going a little further, with China, the AUKUS thing, that just made them mad. It didn't give any results. The US is acting, China is taking actions, because do you see this like recent hypersonic missile launch? I did actually see the news. I haven't read the coverage, but. Have no worries. The US government is on it. That was basically a fuck you very much, show of power response. And you can argue, why are we hearing about this stuff? You can argue, oh,

Starting point is 04:11:42 the military industrial complex is leaking it to get more money for hypersonic weapons oh the military industrial complex you know wants us to know think we're losing to china so therefore we'll buy more weapons that may be true but it's actually also true that the u.s is weaker militarily than china in the south china sea on the specific issue that china cares about which is taiwan it may be possible for someone to have an interest in it but but it also being true. It was like, we welcome the competition. This is what we're saying. I'm like, you welcome the competition when it comes to, you don't welcome military competition.

Starting point is 04:12:16 That is exactly the kind of competition you do not welcome. You welcome economic competition, that might be fine. I mean, you don't really welcome that, but okay, you can tolerate it. The thing is that it's a generalization, but a lot of Chinese people have said Chinese culture generally trusts actions over words. And political culture today, at least, is 100% verbal. It's just all signifying and hashtags and so on on Twitter and almost zero offline accountability for actually doing anything.

Starting point is 04:12:42 Tech culture, I would say, is something of a hybrid, at least the pre-2019 tech culture. You might call it crypto culture or Web3 culture now, where absolutely there's a story that you're telling in a slide deck, but the numbers really, really, really matter, especially once numbers exist. Once you're at series A or series B or beyond, another investment of money doesn't come that easily. It requires you to actually deliver results. It's not simply like an election. An investment is much more diligence on it. And the thing is that what happened was this AUKUS thing made China mad without getting any results. Now, I saw this joke, hypersonic missiles, well, which is a separate thing, but the US government is on it. They've just banned gifted and talented education in New York. Take that, China. That's going to crank out tons of

Starting point is 04:13:24 people who understand how to fly something past Mach 5 and know how to deal with ultralight materials. Look at that. What a chess move, right? And by the way, it's not like the federal government doesn't care about education. They do. They're actually saying the FBI to stop people from protesting school boards, but not to stop them from banning gifted and talented ed, right? And then, of course, India and Japan were like, why aren't we part of this quad discussion india also is kind of having it a little bit both ways where they're also as part of something called the seo don't that is and do not it's the shanghai cooperation organization it's sort of like the it's a little bit like a nato-ish eu thing that

Starting point is 04:13:58 most people in the west don't know about but it's pretty important becoming more important it's china russia iran just became a member kaz Kazakhstan, like the Central Asian countries. And actually, India and Pakistan were admitted at the same time, which made me kind of quizzical because, first, India being in anything with Pakistan other than like the UN is pretty unusual. And second, India and China being clear is unusual. But India seems to be taking a balancing role. It's almost the opposite of its Cold War role, where it was closer to the Soviet Union than it was to the US, but it wasn't in the Soviet camp. It wasn't like fielding troops of the Warsaw Pact. This time, it is closer to the US and the West than it is to China, but it's not going to be like the UK, which is like America's poodle, as people would say,

Starting point is 04:14:40 after the Tony Blair thing. So it's going to actually take its own independent thing. So SEO, people believe maybe that's just a way for India to kind of hedge a little bit. But being in both the Quad and the SEO meeting is kind of, it's like, you know, you put both the Knicks and the Lakers or whatever. And then of course, Taiwan saw this and was like, oh boy, because China got more annoyed. So the point is, why do I go into this example in detail? This is just pure chaotic evil, or at least just chaotic, even if not evil. It's something that pissed off the French, pissed off the Chinese, showed that the three eyes and the quad were internally disaligned, pissed off the EU and

Starting point is 04:15:14 split them versus China, basically did it all for a photo op after another military disaster, and essentially achieved the exact opposite of what they even wanted to achieve, which is a pure optical thing. And there's no military gain whatsoever. And this is being done at the most senior levels. There was a choice to do this at the leadership of these three countries. This is just one event, but as you can see, it had ripple effects and so on. But it was like the anti-alliance. It broke apart alliances rather than putting them together. So because of this, that's like at the foreign level. In domestic, you can give similar examples. For example, like 17 states are now protesting

Starting point is 04:15:50 this thing of sending the FBI to local school boards to be mad about protests. And so the rubber band snap that I think is going to happen is that that control of the US, the federal government over locals and internationals is just going to contract until only those jurisdictions that elected the current president listen to the federal government. And those that didn't just nullify everything and just take it to court and don't abide by it. And then the question is, how does that actually play out? Is that purely legal? Is there like National guard stuff involved who's actually if anybody is prepared to actually shoot somebody over this and i don't know it's hard to say but i can see the conflict kind of brewing all right so that was lawful evil yes this is chaotic so let me how do we get on that topic let me hop in i don't know

Starting point is 04:16:40 but we're at five hours plus now so i think i would like to bring this to a close, if I may. And we can also continue offline on a lot of these subjects. But I'll skip the angel investing or hypothetical angel investing, unless there's a fast answer for it. I'll give you my fast answer on it. Ready? So my fast answer is is I'm broadly interested in obviously crypto, obviously startup cities and network states, which I've talked about.

Starting point is 04:17:13 But if I was going to cut into areas, I'd say crypto, info, bio, robo, astro, and actually politico. So crypto is obvious. Info, actually, I think that thanks to wokeness, basically, media corporations have abandoned many niches. Sports Illustrated is not Sports Illustrated. Teen Vogue is not Teen Vogue. In fact, if you took these articles, they basically all sound like the same, I can't even type stuff. And if you just strip the branding and you just had an AI try to distinguish it, I'm not sure you could. Because they're essentially all on Twitter, and they're all part of the same conformist group. Now, though, with Substack and with Ghost and with decentralized media like Mirror,

Starting point is 04:17:54 I'm a small investor in Mirror, what you're seeing is independents have the means to go and effectively start their own media company. But they also have an incentive to give a different message than the mainstream. So you're seeing Matt Iglesias and Glenn Greenwald and Taibbi and Barry Weiss and Jesse Singel. And so this huge IQ drain of some of the best writers from these old outlets, leaving them only with those who were incapable of writing originally enough to become founders. For example, in academia, several years ago, there was a new level above professor, and that was founder or investor, because you can scrape for a whatever $100,000 grant from some stupid bureaucratic committee, or you can make a $100 million company, exit it,

Starting point is 04:18:44 and then you're basically able to investigate whatever the heck you want for the rest of your life. You can build a lab out of spare parts or you can build a future that you want. Like Vijay Pandey, for example, left Stanford and was running the BioFund. I recruited him to ASIC and Z's, a friend of mine. So the level above professor is founder.

Starting point is 04:19:00 The level above journal, corporate journal is now founder. And so info is very interesting because all these niches are going to be recolonized by independents that started from the beginning with a better brand because they've been abandoned. The Sports Illustrated, the Teen Vogue, et cetera. So media, I'm actually much more interested in. And I think you can make a profit in it. The Athletic, for example, shows you can. It's just that you can't say the same thing as everybody else. You need to have the people who are independently minded. That's like the new thesis, the new wrinkle. I also actually think that India could become

Starting point is 04:19:31 a media superpower. And I know I say that, and immediately people think, oh, what do you mean, Bollywood? Bollywood's going to become really popular? I'm not so sure about it. Look, Bollywood is fine. But what I mean by that is a lot of animation is done in India. Like if you look at the end of Tenet, a lot of the visual effects were done there is a lot of animation is done in India. Like if you look at the end of tenant, a lot of the visual effects were done there. A lot of the computer graphics, there's something called Saja South Asian journalists association. Obviously there is Bollywood.

Starting point is 04:19:52 So a lot of talent exists there. And the same way that China ascended the ladder from making plastic stuff and iPhones to doing first party stuff like drones with DJI or WeChat. I think if China's a tech and manufacturing superpower, I think India becomes a tech and media superpower and can potentially be like the bright sun to the West's black mirror. Because Western media is sort of declining in revenue with technology. That's why they have this black mirror attitude towards it. Oh, everything is so bad. Whereas India is ascending with technology. All this stuff

Starting point is 04:20:24 has just gotten better over their lifespan. The smartphone has coincided with a huge improvement in living standards rather than a collapse in their old media model. And so India, I think, is very underrated in terms of where that replacement media is going to come from. All the folks I just mentioned, Single and Barry, I like all of them, but they're like defectors from the old. I think we're also going to get a lot of fresh blood from overseas and genuinely internationalized media because it shouldn't just be a bunch of randos in New York. It should be globally representative. And people should be able to tell their own stories without being intermediated by some New York media corporation, right? So, okay, so that's info. Then that's media, but it's also movies and our stuff. So I mentioned crypto, info,

Starting point is 04:21:01 bio. So telemedicine is now legal in the US thanks to actually some of the things passed during COVID. What I mean by legal is doctors can do telemedicine across state lines. That opens up the market in a big way. And it is possible now to use that to unlock medical tourism and start actually unlocking fee-for-service medicine, which is actually way better than insurance. In general, you only want insurance for catastrophic things. You don't want it for routine things. You don't pull out your car insurance to pay for gas or a floor mat. It's only for emergency things. And same with healthcare. You're basically going to lose money on everything other than emergency insurance. So it's telemedicine, it's medical tourism, but it's also quantified self. It's all

Starting point is 04:21:42 the true transhumanism, which is brain-machine interface and genetic engineering and all that stuff. And then with robo, I think that's also underestimated because being done on the industrial side of things, that's robotic agriculture, manufacturing, farming, retail, supply chain, all of the recent supply chain stress, I think is going to cause an acceleration of that. And it's also actually the way to erode China's manufacturing advantage in the medium to long term. Just like everybody has a smartphone, you have a bunch of robots that start making things for you. And I think one thing I linked was $100 robot arms. You can start learning this at home and just learning how a six degree of freedom arm works and grasping and all this stuff. Build your own robot overlord.

Starting point is 04:22:24 Astro, I think that's actually, it's funny, right? Astro, I think that's coming down way in cost. It's not just SpaceX. There's a whole industry that's building out there. And then Politico is kind of the startup cities and network states and the media and crypto stuff. But what does the next post-war order look like? And I think it looks like national stacks and neutral protocols. So neutral protocols are the crypto stuff, but national stacks are not just an American internet, a Facebook and Twitter and Instagram and so on, not just a Chinese internet of WeChat and ByteDance, but a Indian internet and a Brazilian

Starting point is 04:22:56 and a Russian and a Japanese. And there's pieces of this already, like Korea has Naver and Russia has Yandex. But going further with that and having kind of equivalents, national equivalents, so that local leaders are going to basically demand this so they can't get deplatformed. And it might be that, you know, some countries have the scale to do it themselves, like the US and China, probably India or Russia. Others might be in groups, like it might be a bunch of Spanish

Starting point is 04:23:19 speaking countries that do it together. But national stacks, I think, will be important. And in collaboration with neutral protocols, that's sort of like domestic travel versus foreign travel, domestic transaction and communication versus foreign. So that's the type of stuff I'm thinking about in terms of angel investments. And the thing that's there that I could probably talk more about is the transhuman stuff, but that's under bio. That's very important. That's reversing aging. That's bionics. That's brain-machine interface, limber generation, and bioelectricity. I think that is, if in the 2010s, what was underrated were crypto and China, I think

Starting point is 04:23:50 in the 2020s, what's underrated are India and transhumanism. And it'll be more obvious by the end of the decade, but that's kind of how I think about things. I have, offline, we can talk about some scientific studies that you may be interested in supporting, so we should talk about that. studies that you may be interested in supporting. So we

Starting point is 04:24:05 should talk about that. Lest we forget, 1729. Do you want to tell us what the latest and greatest is with respect to 1729? I've been kind of running it in like alpha-ish over the last few months, not posting that much recently because I've been kind of working on some new stuff. But on November 1st, I'm going to be announcing a lecture series with weekly VR lectures and having them recorded. So if you can't attend, and the goal is to basically build a community and audience in VR and start putting out the polished versions of what I've been working on. And so just go to my Twitter and you'll see the announce over there or subscribe at 1729.com. Perfect. Beautiful. And for those who don't know, just briefly, the origin story, 1729. Oh, sure. So it refers to the,

Starting point is 04:24:56 it's sort of like the E equals MC squared of India, just like equals MC squared came from Einstein, a genius Western physicist. 1729 comes from Ramanujan, who's a genius Indian mathematician. And what it represents is the first number that's the sum of two cubes in two different ways. It's one cube plus 12 cubed, and it's also nine cubed plus 10 cubed. And it's famous because when Ramanujan was very ill on his deathbed, a mathematician who's a friend was trying to cheer him up. And he came by and he said, hey, you know, this taxi that I came in on has a very boring license plate. It's

Starting point is 04:25:29 1729. And Rangin said, oh, no, you know, it's actually a very interesting number. It is, you know, the sum of two cubes in two different ways. And so it's something that everybody can understand, you know, cubes and sums are. But it also illustrates that Ramanujan was on, you know, cubes and sums are. But it also illustrates that Ramanujan was on a first name basis with every number. And it has a couple of other kind of things, which is, it's both Indian and international, and it's spending a lot of time in India now, but it's also universal. So like Google was both an American company and a global company. It's also something that has a number theoretic connotation because Ramanujan studied prime numbers and number

Starting point is 04:26:05 theory and that underpins cryptography and crypto which is also something i think about so yeah it's kind of a fun thing it's a nice tie-in so 1729.com people can check that out they can follow you on twitter at balaji s if i remember correctly b as in boy a as in alpha l as in lambda a as in boy, A as in alpha, L as in lambda, A as in alpha, G as in joy, I as in India, S as in Sam. See? Nailed it. No one can get it wrong. I'm not sure those are all the call signs. I should have said like Bravo, Foxtrot or something.

Starting point is 04:26:34 I usually just make it up as I go if I need to spell it out in that type of way. Balaji, once again, I don't know how you sustain this level of output. It is remarkable. And I appreciate you taking so much time on the other side of the planet to have a very wide-ranging conversation. So thank you very much. Is there anything else that you would like to add in brief or requests that you'd like to make of the audience?

Starting point is 04:27:01 Anything at all before we close out this conversation? I think that was great. I think that I'd like to see you all in VR, so come by. That's right. That's right. 1729.com. Lots of exciting things ahead. Well, thank you, Balaji, for everybody listening. We will have copious, copious show notes. I will need a small stadium of my own full of show notes experts to help assemble everything. But we will have lists to all of the books and people and so on mentioned in this episode. You can find that at tim.blog slash podcast. And I'll probably create a short redirect. So you can just go to Tim.blogs.b2. B as in Bravo, number two. And that stands for Bology, second episode, of course. So Tim.blogs.b2 will take you to all of the show notes. And until next time, thank you for tuning

Starting point is 04:28:00 in. Be safe out there. Hey guys, this is Tim again. Just one more thing before you take off and that is Five Bullet Friday. Would you enjoy getting a short email from me every Friday that provides a little fun before the weekend? Between one and a half and two million people subscribe to my free newsletter, my super short newsletter called Five Bullet Friday. Easy to sign up, easy to cancel. It is basically a half page that I send out every Friday to share the coolest things I've found or discovered or have started exploring over that week. It's kind of like my diary of cool things. It often includes articles I'm reading, books I'm reading, albums perhaps, gadgets, gizmos, all sorts of tech tricks and so on that get sent

Starting point is 04:28:42 to me by my friends, including a lot of podcast guests. And these strange esoteric things end up in my field, and then I test them, and then I share them with you. So if that sounds fun, again, it's very short, a little tiny bite of goodness before you head off for the weekend, something to think about. If you'd like to try it out, just go to Tim.blog slash Friday, type that into your browser, Tim.blog slash Friday, drop in your email and you'll get the very next one. Thanks for listening. This episode is brought to you by BlockFi. BlockFi is building a bridge between cryptocurrencies and traditional financial and wealth management products. They're creating innovative products to advance the digital asset ecosystem for both

Starting point is 04:29:25 individual and institutional investors, and its platform now manages more than $12 billion in assets. Full disclosure, I became excited enough about this company that I ended up becoming an investor. Moving on. BlockFi, that's B-L-O-C-K-F-I, offers a wide spectrum of services, and I'll mention just a few here. First, their BlockFi Rewards Visa Signature Credit Card provides an easy way to earn more Bitcoin because you can earn 3.5% in Bitcoin back on all purchases in your first three months and 1.5% forever after with no annual fee. Second, BlockFi also lets clients, that would be you, easily buy or sell cryptocurrencies, including, but not limited to, they have a wide selection, Bitcoin,

Starting point is 04:30:10 Ether, Litecoin, and PaxG, as well as USD, that's United States dollars, based stable coins, including USDC, GUSD, and Pax. BlockFi aggregates liquidity to offer seamless trade execution and pricing. BlockFi also offers instant ACH, so you can move funds onto the platform and immediately start trading. On their platform, you will soon be able to trade with ACH, meaning can move funds onto the platform and immediately start trading. On their platform, you will soon be able to trade with ACH, meaning you'll be able to buy cryptocurrencies directly with your bank account. And there's a lot more coming. So check it out. For a limited time, you can earn a crypto bonus of $15 to $250 in value. Again, for a limited time, you can earn a crypto bonus of $15 to $250 in value when you open a new account. Get started today at blockfi.com slash Tim and use code Tim at signup. That's blockfi.com, B-L-O-C-K-F-I.com slash Tim and code Tim. This episode is brought to you by Eight Sleep. My God, am I in love with

Starting point is 04:31:01 Eight Sleep. Good sleep is the ultimate game changer. More than 30% of Americans struggle with sleep. And I'm a member of that sad group. Temperature is one of the main causes of poor sleep and heat has always been my nemesis. I've suffered for decades, tossing and turning, throwing blankets off, putting them back on and repeating ad nauseum. But now I am falling asleep in record time,

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The Tim Ferriss Show - #547: Balaji Srinivasan — Centralized China vs Decentralized World, The DeFi Matrix, Ascending vs Descending Trends, Bitcoin Mining as Energy Storage, Reputational Civil War, and Maximalism vs. Optimalism

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The Tim Ferriss Show - #547: Balaji Srinivasan — Centralized China vs Decentralized World, The DeFi Matrix, Ascending vs Descending Trends, Bitcoin Mining as Energy Storage, Reputational Civil War, and Maximalism vs. Optimalism

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