We Study Billionaires - The Investor’s Podcast Network - BTC094: The Book of Satoshi w/ Phil Champagne (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey everyone, welcome to this Wednesday's release of the podcast where we're talking about Bitcoin. On today's show, we have the author and curator of one of my favorite books on the space, and that's Mr. Phil Champagne. Phil's book titled The Book of Satoshi is a comprehensive overview of all the writings, forum posts, and teachings of Satoshi Nakamoto. In almost 100 episodes of doing the Bitcoin Fundamental Show, I don't think I've ever covered anything on Satoshi Nakamoto, so this ought to be a fun episode.

Starting point is 00:00:30 So without further delay, here's my chat with Phil. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. Hey, everyone, welcome to the show. I'm here with Phil. And Phil, I am a huge fan of your book. In fact, I might go as far as saying, this is my favorite Bitcoin book on the market. And I am thrilled to talk to you.

Starting point is 00:01:10 I'm a little upset that we have. done this sooner or have gotten together sooner to have the conversation? Yes, it'll be interesting. I'm very honored by what you said. My first question for you is just what inspired you to curate all this information and all this. I mean, there's so much that you piece through with this book in the forms and everything.

Starting point is 00:01:35 What led to this? So I learned about Bitcoin in 2012. And somewhere around 2013, I wanted to dig deeper. I mean, at some point in late 2012, I can remember in 2012, I decided to read the white paper, go a little bit more in-death. And after that, I wanted to learn a little bit more about Sadushi Nakamoto himself. And so I started reading a little bit of the blog posts here, the post that he's done, and so on. And it really struck me.

Starting point is 00:02:06 This is an amazing discovery. and the fact that this guy left after two years, you know, and nobody know where he is. Just imagine if, Linus Torval, for example, who created Linux kernel, was an anonymous person. We don't know really who, you know, it'll be not as impactful because, you know, Linux kernel is still amazing, but not as impactful as something that can revolutionize, make central banking out of, completely out of business. But considering that he left, and I could see that eventually it was still early, but I could see, you know, 10 years down the line, which happens to be this decade. It'll be history. It'll be now, I mean, this will be the only thing that we have of this, because I could foresee that, okay, I guess he wasn't involved at all.

Starting point is 00:02:58 In 2014 is when the book came out and he didn't come up, except for at the moment I was going, into the editorial process. I am not Dorian, Satushi Dorian Nakamoto. Yeah, yeah. That is the only thing that came up and already it was a controversy. Is it really, really him? Or is my email account got, I mean, it was so funny to see already there was some sort of controversy about if it was really him after pausing for two years. So imagine if there was just a little bit of a controversy with an email that is existing. And then you've got this guy, Craig Wright. comes up and it offers nothing at all in terms of proof, you know. So it's, but the controversy is that dial it 12 now, you know,

Starting point is 00:03:43 because the more time passes, the more proof someone who's going to come up and make that claim really is going to have to come up with some strong claim. At this point, I mean, I don't see how this will ever happen. I mean, it's pretty clear that this intention was to get out. And by making this, a really decentralized ownership of Bitcoin.

Starting point is 00:04:06 And I could see that the impact from a historical perspective was amazing, that eventually everybody will be interested to learn more about this guy and who created it. No more this get mainstream, the more interesting. And just like we're interested about knowing about Ford Model T and that kind of, or, you know, the Wright brothers and that kind of thing, this is the only thing that we really have about him. So yeah. And you know, for me, anytime I'm trying to understand how something works, you know, a lot of people know I started off as a value investor. It was like, let me study Buffett. Let me study

Starting point is 00:04:43 everything the guy has said. Let me study every book he's read. And so I guess for me on my Bitcoin journey, this book has been like security analysis for a value investor where you can tap into all of what he had said. And he said a lot. And I think that's the thing that a lot of people, familiar with the white paper, but they're not as intimately familiar with all the forum posts. And there was a lot of forum posts. I'm curious, did you include everything that he ever wrote in the book? Or did you curate only certain things that you thought were worthwhile? In terms of all these posts, almost, I skip a few that was just release, Bitcoin release,

Starting point is 00:05:24 zero one, something. No, or too many of them. I mean, too many. But I mean, a few of them where they're just that. I could have included those, but I wanted to, or I could, you know, it would have been a little bit redundant and so I didn't want to extend. But that's the only exception for, in terms of bugposts. The other thing, obviously, is private email exchange. I wish I had been in contact, for example, with others that came up and claim that they did have had conversation and those things.

Starting point is 00:05:55 But at that time, there was not that much controversy. And it would have, you know, there was no Bitcoin cash, Bitcoin, anything where they could push for Bitcoin cash versus Bitcoin, the traditional Bitcoin that we know. If there's any kind of post email exchange, private email exchange with Satushi regarding this, already gets into a controversy where he's really, real email from Satuishi or whatever. I mean, it's not that much as important as people think in the sense that he's not here anymore. And obviously all the changes that have happened You think about Lightning Network, you think of what's coming up with a coin pool, which is going to be even better than Lightning Network. So you've got those things, we're not even in the front seat or in the thinking on the whiteboard of anywhere regarding the Bitcoin conversation at the time of Satu Kyi.

Starting point is 00:06:48 So to think about what you would think at that time without all these notions of the major discoveries that we have is missing the point. Although the book is called the book of Satushi, he's not a god or, I mean, I couldn't escape naming, calling it this way because it's almost like the nerds equivalent of a religion, you know, he comes and saves us from central bankers, and then he goes away, and then you have to get that religion that takes in, you know, and so, yeah. I mean, he was obviously a savant in many different fields of study. Yeah. But yeah, just being able to go back and kind of read exactly what it was he was saying or not saying is just such a powerful thing.

Starting point is 00:07:33 Yeah. When you talk about, and I hope you don't mind, I plan on reading a couple things from the book that I just find quite fascinating. And you brought up this idea of like Bitcoin cash and him forking. This was things that he wrote about. I mean, I think that's the other thing I kind of took away was like there was so much foresight. in what was to come in eight years. You know, he talks about mining and how it would turn into... You're talking about BidDNS, right?

Starting point is 00:08:05 Yes, yes. Yeah. Explain to the folks. So basically, I mean, there was already the concept of a starting... Well, there was something eventually it came up. It was called Naincoin, but he was... I can't remember if BidDNS was how much traction it was with that. But it's basically name coin was eventually what became of it.

Starting point is 00:08:27 It's to record domain name using the blockchain. And you record, you buy, and then it will make a record. Basically, it will be a special transaction, a recorded domain name with IP address and so on. So therefore, completely decentralizing those things. Obviously, you've got that with those small contracts on Ethereum and all that. But at that time, you could have that with, well, the DNS. He didn't want to alter Bitcoin for that.

Starting point is 00:08:55 But you understood that with proof of work, if you had two competing currencies using proof of work, one will be having one of the two will be the dominant one and the other will be subject to 51% attack. If a few miners should jump on it and then moves things around. And so there will be more of a danger. I mean, you've got this problem with that Bitcoin gold or whatever. it takes two weeks of transaction confirmation before in certain places exchange will accept a withdrawal, that kind of thing. That's what I heard anyway.

Starting point is 00:09:29 So it shows you the danger of a weak proof of work. And so he understood that what would be best is if there was some sort of a way of combining both of them so that the miners will be able to mine both together or in some way, you know, there will be some sort of a soft fork or fork. I'm not sure exactly how the detail. but, you know, he talks about that. And so he understood exactly the challenge, but it didn't sound like what we will call the Bitcoin maximalist

Starting point is 00:09:58 because, you know, we're considering this side version of thing with its own blockchain, with its own little tokens to, for this very specific, but the core saving platform will still be Bitcoin. So, Phil, I found the spot in here that was talking a little bit about forking and things like that. So Satoshi wrote, The nature of Bitcoin is that such once version 0.1 was released, the core design was set in stone for the rest of its lifetime.

Starting point is 00:10:28 There's some more that he writes here, but then he goes to this paragraph. He says, I don't believe a second compatible implementation of Bitcoin will ever be a good idea. So much of the design depends on all nodes getting exactly identical results in lockstep that a second implementation would be a menace to the network. And he says the MIT license would be compatible with all other licenses and commercial uses. So there's no need to rewrite it from a licensing standpoint. And so then at the very end of that post, he says, I know most developers don't like their software forked, but I have real technical reasons in this case. Crazy. Like to be writing this.

Starting point is 00:11:07 And I think that post was from 2010, June of 2010. Yeah, just a few months before he left. Yeah. It is mostly in the latter in the last six months is where we see a lot of samples of his foresight. Because things are starting to be much more mature in Bitcoin at that time. It was not like the very first six months of every first year, the conversation mostly about hiccops or conversation about the expending the throughput or what will be what will be the situation one day regarding the throughput and all that. And while in the last six months were a couple of things like concept like this that were more starting to be dominant because now we're talking to, okay, now we've resolved all those little hiccups in some way for, you know, the conversation about the software, making sure it's stable and all that. They can afford to spend some times into philosophically speaking for how to go from there and what will be eventually the challenge that will need to be avoided or could face it.

Starting point is 00:12:14 with. So this is the question I was dying to ask you. Okay. For a while now, what do you think was the most interesting thing that you uncovered as you were reading all of this in depth and trying to piece it together and organize it for everybody to digest? What was the one thing that you just kind of walked away from and were like, wow? Well, I could see just the value. And knowing the mindset of this guy who came up. I mean, simple. He was still around here. He would be getting the Nobel Peace price and the Nobel Prize of mathematics. Obviously, central banking is about war. So if eliminate central banking, I guess he could have the Nobel Peace Prize as well. Anything else that stood out to you other than just his sheer, like, breadth? Well, the conversation,

Starting point is 00:13:06 a couple of blog posts were fascinating. One of them is, I mean, the two that I found astonishing about, you know, the level of tweaking of his mind is, one is about on the software side when he's talking about the Byzantine challenge, you know, chapter 13, I think. Yeah, the Byzantine general's problem. Yeah. I actually, even though I was networking and all that, and it's more like PG side of things, theoretical things, and I wasn't much aware of that, But I was fascinated about this aspect of, okay, yeah, well, a problem that they thought in the 70s, there was no solution to it. And yeah, I mean, in some way, you've got finally a solution. That was one thing where in the 80s and 90s never won and nobody would have believed you did you would have a decentralized currency that will be satisfying, no doubles pending and a fixed 21 million Bitcoin.

Starting point is 00:14:02 Nobody would have believed it in the 80s, you know? And here we are. Just like in 2009, 2010, you would come up as, yeah, there'll be a layer two network where you're going to have millions of transactions per second if you want to. And we'll be able to support over Bitcoin and it will be, they'll avoid the problem. Now we're at this level where lightning network is out and people are picking on, okay, well, it's complicated, it's awkward, it's not ideal. But again, people are forgetting that this is.

Starting point is 00:14:34 all constantly being worked on and we're going to have something even better and better or improving it. So I'm sorry. The original question was... No, no, no, no. You covered it. Yeah, yeah, that's right. Actually, the second part, the second was the economic side of things. And that's where he makes that comparison to a gray metal, you know, the... I think I know which section you're talking about. You're talking about... He was talking about how to value it, right? Is that what you're getting at? No, it says, imagine, as I thought experiment, imagine there was a base metal as scarce as gold, but with the following priorities. Boring, great in color, not a good conductor of electricity, not particularly strong, but not doctile or easily malleable either, not useful for any practical or ornamental purpose. Basically, a metal life is like, all right, nobody cares about it.

Starting point is 00:15:25 But with one special magical property can be transferred over a communication channel. And it's in sight, it's exactly the reason why a Bitcoin has value. You know, it's one of the reason why gold bugs don't get it. You know, and the thing that is funny, because all they see is like, oh, it's digital air. They always say things like that. But they're missing the point because, first of all, like Peter Schiff, now they're referring to this first Austrian in School of Economics. I'm sorry. I had those names. I forgot them. He was the first one to elaborate in the book why a certain metal or a certain thing will become money eventually naturally, you know, and it's basically there's some sort of a utility for it. Eventually it comes up, you know, that was his claim. You know, there was some utility in the beginning and or it's ornaments or, you know, something like in a case of gold, it's jewelry. And eventually it leads to, well, I'm going to exchange it.

Starting point is 00:16:29 because I know somebody is going to use it for a utility purpose. And eventually it takes into more a medium of money more than actually for its utility. But there was another guy later on in the Austrian school who actually went beyond. He says, no, actually all it is is the market as to believe there will be a value in it. If someone see that there was value for it yesterday and today and it's still maintaining it, then an expectation will be that tomorrow is still going to have. some value. And this can be transported into the 200-day moving average for the price of Bitcoin, for example. Because you see, okay, yeah, it is maintaining. It's not going back to $10, $100 or $1,000.

Starting point is 00:17:13 You know, pretty much confidence is high that we're reaching the bottom at $20,000 or something around there. And eventually, you know, at the most, it's going to go up. And it's the expectation that it's going to maintain this value. And that is actually the basic of what money is, is that when the market knows, there'll be always a demand for it, whatever if it has an inerrantly and utility or not. Well, in the case of Bitcoins, obviously, can be transported over the communication, something that gold needs a third party, a trusted agent. A derivative in the forms of a third party that you need to trust to be able to do any

Starting point is 00:17:55 transaction over the electronically regarding goal. While Bitcoin is totally the opposite, you would need a third party for physical Bitcoin, you know, a coin or where you have to trust, you know, like a check, someone gives you a paper wallet, for example, that while he knows the private key for it, you know, and there's no yet mechanism for maybe it's going to happen one day, but in terms of on the physical side, Bitcoin right now requires a third party while in the electronic world, it's a natural medium where it stopped is for gold. Phil, I get the impression that you were just, like your background in software engineering and

Starting point is 00:18:38 networking kind of made this to just be really obvious when you saw it. And I'm assuming you were a gold, believed in gold in order to store value. And so is that how your Bitcoin story kind of emerged? Is those paths crossing? Yes. Yeah. I mean, because I know a lot of software engineers, obviously, and many are, yeah, and definitely not Austrian school. They're more like socialists or oriented and that kind of thing.

Starting point is 00:19:07 And so central banking is just great, you know, for them. So even though I can explain to them, I told them about Bitcoin, how it works and all that, it's, you know, it's just like, okay, mostly in the beginning. So what, you know, it's no interest was there. Now the interest is there because you see the price moving up, but now it's more like, okay, should I buy? And now it's more about the known appreciation that it got, not for their core believe that, oh, wow, this has a purpose beyond just making money is really to challenge the perception of central banking today and how things are. I mean, this is the one thing that I found is the most valuable. It's not Bitcoin itself.

Starting point is 00:19:54 as the, it's actually the idea because the number of people that converted to Austrian school, learning more about the central banking and through reading more about Bitcoin is much higher than what would have happened if Bitcoin was not created. And so to those who think that, for example, Bitcoin might have been a deep state job or something like that, or it's a the Tushis behind it, the CIA, whatever. I don't see how they would shoot themselves in the foot like this by releasing something, a concept like this that not only wakes up to people about what it is

Starting point is 00:20:33 when there's something that is not controlled by central bank. And the second thing is that actually, now that the idea is out there, even if they destroy Bitcoin, it's just in some way, whatever they, you know, everybody's attached to the idea, and they're going to push for it to come back. So it's either through legislation or voting, voting them out, or whatever, the cat is out of the

Starting point is 00:20:57 idea. Yeah. And it's the most powerful to me. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord. And every conversation you have is with people who are actually. shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year bringing together activists, technologists, journalists, investors, and builders from all over the world, many of them

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Starting point is 00:25:09 All right. Back to the show. Yeah, I think most Bitcoiners would agree with you that it's kind of not that important to try to understand whether this was an individual person or a group or whatever. But I'm curious what Phil thinks, do you? Just because it's fun. It's not because, and I think we actually do a better service of not even talking about it, to be quite honest with you. But it is a little fun to try to speculate. No, I don't think it's a problem.

Starting point is 00:25:44 I think it's an individual person. It is hilarious to see. I mean, I think the peak of, I could see, you know, in 2013 to 2016, I think. That was the peak of the number of articles and New York Times or pick a place. Who might be Satushin Akamoto and including the Newsweek article in 2014 that was just released at the same time or just before I released the book. And these are, you know, that was really at a peak time. Now people set up, you know, the mainstream media and all that. They're settled in the idea, okay, yes, we're never going to find out who he was.

Starting point is 00:26:23 It's useless to repeat again, who might be it or whatever. I mean, everybody went there. So, and there's no more clues. And I guess it'll remain like this. And so therefore, there's nothing shaking up in this area for that. But what do I think? I would say that he's probably human. He's not from an extra one.

Starting point is 00:26:46 I don't know if it's just a single person or more than one. I would suspect it's just a single person. Yeah. And I think that it's some of the kind of people that were involved in the cyberpunk, you know, grope's kind of thing, you know, that same kind of mentality as those folks, whether it's one of them or not, or with silently observing things or I don't know. But that's where I would focus.

Starting point is 00:27:13 There's a couple specific questions people had online with respect to the first one is, he, she, they, I have no idea. They wrote in a way that it seemed like they were from the UK. And they also wrote in a way that made them seem like they were American. Yeah, yeah, yeah. What's your take on that? Yeah. And some people have done analysis of,

Starting point is 00:27:39 there's a bunch of tidbits like it is funny. Some I've studied the time zone at the time. Yeah, I've seen that too. And it's, yeah, it was dominant. And I forgot. I think it might have been dominant in, in some way, leaning to, no, actually, I don't remember. But to me, it's, no, it's just a one clue,

Starting point is 00:27:59 but is it, was it doing this on purpose or not? And again, with VPN on top of that, for whatever access or emails that he was saying privately, There were emails that there were some clues about VPN issues that might be indicated in those things. So he probably wanted to try to make things more fuzzy. So mixing things with English and American English will make sense. How about his coins? So I believe the number is there's a million that he has still in his address.

Starting point is 00:28:34 They've never moved. What do you think is going on? Do you see these coins ever coming back on the market? Do you see, what do you think he's doing with that or she's doing with that? It is the one thing that is very curious to is why. I have a theory. I want to hear yours. Okay, okay.

Starting point is 00:28:52 My first question I'm asking is like, okay, why did he left? And, you know, you did all that mining and all that. And by the way, the mining that he's done, he was on purpose trying always mining in the late past 10 minutes. So the first 10 minutes, he was allowing others to miners to get them. To pick up, to pick them up. So then was only starting his mining to in the late after 10 minutes so that, okay, at least it'll be moving ahead, you know.

Starting point is 00:29:21 And so it's like the opposite of pre-mining. The concept was, I want to give as much possibility to the others. So it was cool. But what, sorry, your question is. Well, no, so I guess my theory is a person who, who already has significant wealth, they don't need this to be successful. They're already wealthy. And especially if it's a person who lives a fairly humble life and they have plenty of means

Starting point is 00:29:49 to do whatever it is they want to do, they don't need to have a billion dollars in buying power as we know it today. So I guess I kind of suspect that this person is well off. They're extremely, extremely intellectual and smart and have a grasp just. on so many different fields of study. They seem to be an academic based on the writing, right? Yeah. It is, but the question then is what is interesting, no matter what, is, why did he

Starting point is 00:30:22 decided not to, for example, when he decided to leave in November of 2010. It's like, okay, what I'm going to do is I'll take all Bitcoin that I had that in mind, and now I'm going to send that to an invalid Bitcoin address, you know, to make it obvious to anyone that I'm gone. This is not about to move. And this is obviously a fake address because, you know, you write down instead of something hash, you know,

Starting point is 00:30:52 you've got a long message as you're as your as your Bitcoin address. So that is also an interesting aspect. Because now there's always those conspiracies that, oh, eventually it's going to come up, it's going to drop the price and or you've got, Mostly these stories are coming from critics of Bitcoin. The subject of that is never is more often used in a negative way. So that's the only thing I'm wondering why he didn't kill that story right up from by making that move.

Starting point is 00:31:21 If his intention was never to use those. So Satoshi's a master of game theory. I think that that comes out in so much of his writing and just so much of the way he thinks about things. So what about the idea that, you know, initial coins that were mined are maybe a final incentive scheme or a final incentive for maybe putting forth additional lines of code to do something. Yeah, some reward. It might be that, you know. Who knows? It's fun, though. That's the thing. Yeah, I mean, it's the one whole team we're wondering, says those things like, okay, in 10 years from now or 20 years from now,

Starting point is 00:32:07 30 years from now. The question we're going to be asking ourselves is, okay, did Satuishi move is Bitcoin in 30 years from now? Will we return to the moon in 30 years from now? You know, these are the kind of guys. Oh, I know. So it's those kind of things that are interesting on the forward aspect. And he says, okay, it'll be fun to see the result of that. Obviously, there's more, but everyone's got an opinion. Yeah. Any good orange-pilling stories that you have from using the book or talking to people and being able to use the book and reference them to certain things in the book. Do you have any cool stories like that?

Starting point is 00:32:49 Of people that I talk to. Yeah, that you just talked to at a conference or whatever. I mean. Yeah. Yeah, I had a dentist when I was in North Carolina. A very cool guy. And so I told him, I mean, I told him I wrote the book and I gave him a copy and all that. But, you know, it was more like interesting for him.

Starting point is 00:33:11 And when he had a young daughter, so we sent a gift, you know, and one of those was a paper wallet or at the time was the equivalent of $20 or $50 in Bitcoin. Yeah. In a paper wallet, you know, so we send that by mail. And so recently, I think just a year or two ago, he called, he just being me and he wanted to learn more. No, because now it's just at this rate, you'll be able to pay. Others can be able to pay for college. But, I mean, it is just that he see that, wow, okay, you know, appreciated that 20 or 50 bucks to $1,000. I can't remember how much I gave and I would have to track that.

Starting point is 00:33:59 but a big amount. So he was asking me, okay, I'm curious to know. And I saw him, then I told him a little bit more information about how we can do those things and give him. So, yeah, that was interesting because the fact that he received, well, his daughter received Bitcoin, no, it's more like, okay, indirectly, Orange Bill, basically, because now he realize, wow, okay, this thing is,

Starting point is 00:34:26 you've got in direct involvement with it. And sometimes, you know, I also gave a five bucks to somebody else at some place. And I wonder today what happened, you know, if he actually kept it or, you know, and then realized, I'm just to that five boxes, $50 today or not actually 500 bucks. It gets everyone's attention. And I think that that's, that's part of the game theory that I think he knew he was designed. is if I can just get it into a few people's hands up front, time, and, you know, because if a person says, okay, here's $20 worth or they get it for free, especially there at the beginning, and people start

Starting point is 00:35:10 trading it for a couple pennies, like if it goes from 10 cents to 40 cents, that starts to create quite the buzz and, yeah, yeah. But the thing that is the other side of, coin is a lot of people saw the kind of move it did, you know, in the last five, 10 years and so on. And there, the expectation is it will be the same kind of multiplication factor in the same time growth, which is not going to mean. We're talking about the curve, you know, a log scale, a curve. And so the growth, well, yes and no, because if we measure that in dollars, no, we're

Starting point is 00:35:51 going to have a net curve like this and then hyperinflation is going to come back up, you Yeah. But for, in terms of comparison, for example, if we put it the gold Bitcoin ratio, at some point, it's going to be a subject of conversation because now it's going to be almost irrelevant to talk about the Bitcoin price and dollars when the dollar is fluctuating and getting so much beaten up with the bond market, lushing into the toilet and prices of everything going up that you're going to be more like looking at the price of gold versus Bitcoin and how much traction Bitcoin is gatching to goal and that kind of is going to get the traction. Because we're talking about what a factor of is it a factor of 10.

Starting point is 00:36:40 Hey, I forgot the numbers. It's on my pin tweet for on Twitter. I think I did that there. Well, you're pulling that up, Phil. I wanted to just highlight one of the things that I personally found fascinating also in your book here. This was back in February of 2010. There was a person, and this is just when they started to have market prices for Bitcoin. And this is what Satoshi wrote.

Starting point is 00:37:11 He said, in the absence of a market to establish a price, new Liberty standard estimates based on production cost is a good guess. helpful service. The price of any commodity tends to gravitate towards the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty pushing the cost of generating towards the price. In the later years, when new price generation is a small percentage of the existing supply, market price will dictate the cost of production more than the other way around, which I don't know if we're in that latter category or the former category.

Starting point is 00:37:59 I kind of think we're still in the former. And then his final thing that he wrote, he said, at the moment, generating effort is rapidly increasing, suggesting people are estimating the present value to be higher than the current cost of production. That was back in 2010. So this is basically the labor theory of value that he's talking about. This is, you know, like anybody who's a commodity. trader who's trying to figure out the price of any commodity would say this is the model.

Starting point is 00:38:26 And I guess for me, I find it crazy that a guy or a girl who wrote all this code and designed all of this game theory is quoting things that, I mean, you'd have to be a commodities trader to be able to, right? It is, it's not ordinary background. Yeah, it's not definitely interesting. You're dealing with a person who's just covering so many. fronts, right? Yeah.

Starting point is 00:38:51 And what I think is really fascinating about this, that people maybe that aren't intimately familiar with Bitcoin. So he's talking about commodities. He's talking about how when the price runs, everybody who's trying to harvest it or trying to capture it or mine it or whatever, they're highly incentivized to try to capture that profitability. But what's so fascinating about Bitcoin is because of the difficulty adjustment, no matter how hard they try or how many miners come online, it's only going to extract a certain

Starting point is 00:39:20 rate based on where you're at in the four-year cycle. The big distinction with goal is that the supply is fixed. Now it's just the hashing power that will vary depending on market. It's the hashing power. It will fluctuate depending on the market, but the supply is fixed. While the goal, it's going to be the supply is going to come up and will adjust the price. And so it is quite of a difference. and it is one of the distinction that people are spinning their heads into those in the commodity sectors.

Starting point is 00:39:56 Yeah. They have to adjust their mindset when it comes to that. Tremendously, because you can't do this in the physical realm. This is only possible in a quasi-physical slash digital realm. Yeah, with set of rules. Yeah, fascinating, fascinating stuff. All right. Let's see what else I got here for you.

Starting point is 00:40:19 What are arguments that never seem to end that Satoshi has already addressed in the writing that just make you roll your eyes when you see the arguments online? Actually, yeah, not, I don't have any specific that situation. What I will be rolling my eyes is when someone comes up and say that Bitcoin is not scarce because it's divisible. It's like, okay. The pizza argument. I mean, I would say, yeah, okay, Bitcoin is scars, but the Satu Shis are less scars. And Phil, the crazy part is some of these people making these arguments are academic economists. I think it's the concept that suddenly they have to deal with something else and this goal that they kept fighting for against.

Starting point is 00:41:14 Now, they have to turn around. And just like what we talk about, the supply of Bitcoin is static in terms of the rate of supply is static. Regardless of how many people are mining and all that. And then the traders have to adjust that to this mindset. In their case, you know, they're actually lose their mind because now it's something that they have not recognized before in their academic paper and something like that. And now it's showing how crazy the fundamentals they've been taught in terms of economics makes that their pillars of thoughts is weak on their structure of central banking and paper money and all that.

Starting point is 00:41:58 It's based on a weak structure that when they are facing with something else completely different, they're not able to actually make reasonable adjustment to make appropriate content, you know, discussion to make this statement about, oh, if you can divide it, then billions of billions of Bitcoin, therefore it's infinity. It's just like the stock split, you know, they don't get it. It's like, okay, it's just like everybody's going to have twice as much share, but nothing has changed. Yeah.

Starting point is 00:42:30 Market caps the same. Yeah. Yeah. So it is mind-boggling that the... Crazy. Yeah. Kind of people that fall to me in that trap. Big difference between adding numbers to the right of the decimal point versus to the left.

Starting point is 00:42:45 Yeah. Yeah. Yeah. Yeah. And I think Peter Schiff said something like that too. And that's where I lost my mind. It's like, what? No, I mean, they're so stuck on, I need to find something, some dirt about Bitcoin that they actually lose their mind.

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Starting point is 00:46:57 paper, you know, compared to, what, 10 pages for Bitcoin? The white paper for Coinpool is something like eight or nine pages. So it sounds like, wow, okay. The benefit of that is that suddenly, okay, so the Lightning Network is where you and I, we can create a channel and now we can, we just make a transaction using a multi-sig on Bitcoin channel, and this opens up the channel between the two of us, say we put one Bitcoin each. So there's two Bitcoin in that Bitcoin multi-sig. Now the output, the rule for how we're going to allow withdrawal from this, from this and the output section of this transaction, where

Starting point is 00:47:39 we put those two Bitcoins, will be set onto a commitment transaction that we establish. So if you go away, I'll have a transaction that I can publish to close a channel and get my funds back. So it's all sufficient in a way that no matter what happens, and now we're able to, either one of the two goes away, we're fine. And if we change that balance between the two of us, you know, I send you 1.5 Bitcoin. Now you have 1.5.5. Now there's the new commitments and there's ways for you, you should not be able to transmit the old. Actually, I should not be able to transmit the old where I had one Bitcoin and you had one Bitcoin. Those old commitments, to be fair apart, you know, made invalid.

Starting point is 00:48:27 Well, now what it is is a mechanism for penalizing where you would penalize me by grabbing all of the Bitcoin, the two Bitcoin to you if I ever published the old commitment. So it's a little bit complex, but it's, well, 48, 55 pages of white paper for, I'm giving you the quick handle, but it allows a bunch of transaction. And if you have a connection with a guy named Charlie, then I can, I can pay Charlie via you where we exchange and all that. It's just fascinating and now the network is big and all that.

Starting point is 00:49:02 But it always requires channels to be open between two people. Now, the coin pool is where you are 10 people. We're all going to be joining into a single pool. And I can withdraw at any time without closing or I know I can vanish and get my withdrawal without having to make a non-rength. and on-chain transaction. And those coin pool also can be used to connect to with the Lightning network or another CoinPool. So the impact is amazing. The benefit we saw with Lightning, this is going to be even better, just amazing. Is this the same as Fedomint? Is that what you're

Starting point is 00:49:43 referring to with the CoinPool? No, I can send you. Actually, white paper is, there's an article on Bitcoin Magazine, coinpool.com. Okay, we'll have a link to that in the show news for folks to check out. And that is where the white paper is located. And it shows, you know, and there's article. I mean, it's being published in February of this year. So it's recent and it's quite amazing. The only thing is just like Lightning Network required a software to introduce the Segwit.

Starting point is 00:50:19 Seguidwit was required for Lightning Network function. Now, this coin pool requires three different new features, but upcode to be introduced in Bitcoin. And so again, there was a lot of, there's tap fruit that just got introduced recently. It's so conservative to feel of Bitcoin that it takes a while before something else will be introduced. So it's probably going to be maybe another year or two before we see any traction in regards to coin pool, those features be introduced.

Starting point is 00:50:51 I mean, they mentioned it in the white paper. And I didn't feel what in the details. As the expert on studying Satoshi, what do you think he would think of all of this activity that's happening and the second layers? You know, from the writings that I've read, he seemed well versed on a lot of the traditional protocols and how the internet functioned. and was well aware of building in layers on top as you continued to move out of the base protocols. What do you think he would think of Bitcoin specifically? And then what do you think he would think of all these other protocols that are competing, quote unquote, competing against Bitcoin and maybe their culture and whatnot?

Starting point is 00:51:39 Yeah. Do blockchain? Yeah. Other, you call it Ethereum or whatever. Or that kind of thing. Yeah. I actually don't know. It'll be, so the only exist reference we have is Bit DNS, and that was very limited in terms of what it was doing. All it did was storing information about in the blockchain as a database of this domain name, this IP address. So very limited in terms of what

Starting point is 00:52:05 it was doing. So it was not something that you expect that will be bloated in size. It will not be used as to make transaction of payments to one or another, but strictly to transact domain. name. So in terms of requirements for was not, it would not have been based up. So in terms of a transaction per seconds and that kind of thing. So what would you think about things like Ethereum who's got a terabytes of terabytes of size in terms of blockchain size and that kind of thing? I don't know. I mean, he had the calculations in the white paper to keep it so that you could run as many nodes. He talks about that in his writing is about. The importance of everybody being able to run nodes.

Starting point is 00:52:49 Yeah, I know. But again, it's a matter of perspective. His perspective was 2009 and there's no Lightning Network. And we do have compared to in 2000, the bandwidth is much higher today. We're able to do video easily without thinking. And so from that perspective as, okay, I guess in the next 10, 20 years, we could be able to afford more bandwidth. That will be our ways, but obviously it might be a challenge in terms of how fast the technology

Starting point is 00:53:23 will adjust to the Bitcoin's transaction or that kind of thing. But I'm thinking it's like all the, he didn't have the full perspective that we have today. So there was a different perspective. So how to imagine how you would think based on what it's dangerous in some way? I love that response. And I love how guarded you are to not try to, because it's important. It's, you know, I tell my son, it's like, it's way more important to define what it is you don't know than what you do know. Yeah.

Starting point is 00:53:53 And I think that's your on full display demonstrating that right now, Phil and I don't know. I really respect that. No, I do. I really respect that. What do you think, when you go through his writings, what do you think Satoshi was most worried about? Well, the main part that we know is the very, you know, in the part where he talks about WikiLeaks. that is almost his last post. You know, the last post is about Bitcoin release something,

Starting point is 00:54:20 and the one before that is about WikiLeaks, you know, suggested that being used using Bitcoin, and he was a little bit afraid of that. So I wonder sometimes we keep forgetting that. What are the other reason why he was anonymous? Would it be, for example, I was so surprised to see that there's that guy, and I think in the UK got arrested because he coded. I'm not sure if you saw that. He coded something.

Starting point is 00:54:45 I forgot the name of that thing. I think it's on Ethereum. It's some sort of a pool thing. Yeah. That's like a mixer. Yeah. Tornado. He just created the thing.

Starting point is 00:54:55 So it's a smart contract that allowed for all of that. It happened and they arrested them just for coding this. Yeah. That's like. That's crazy. So is this the kind of thing in the beginning that was in the mindset of Satu Shido avoids? Like if I stay anonymous, at least I'm avoiding any other. I mean, today.

Starting point is 00:55:15 We're not thinking. Eva was still around today. Nobody would think he would get arrested because, you know, it's dominance, it's used, it's decentralized. But at the time, you don't know the reactions and so on. And so I actually wonder if that was part of the thing that was a little bit afraid of. And one of the reason why he decided to leave after, okay, WikiLeaks starting to, and we know what happened with WikiLeaks.

Starting point is 00:55:42 and there's, if I keep going, staying around, there's more chances that, the powers that shouldn't be eventually detect who I really am or, you know, that kind of thing. I don't know. Again, I'm speculating here, but. One of the things in the book, it's in there that we're talking about here with the WikiLeaks is when WikiLeaks, their financing was basically taken offline by the government. There was folks on the forum that were saying, hey, this is our huge chance for Bitcoin to basically step up into this. void and Satoshi had a response that filled, you know, highlights in the book. And Satoshi was like, no, we're nowhere near ready for this. And trust me, you don't want this type of attention. We have a whole lot more that we've got to work on and we've got to get right before we step into the limelight like this. And, yeah. Yeah, I'm actually curious to know if you would consider this,

Starting point is 00:56:36 obviously, eventually it has been used with a silk row with that kind of thing for projects. that would be totally against beyond Wikileaks. So I wonder what do you think of the readiness level of Bitcoin today? Yeah, yeah, yeah. The challenge will still remain in the sense that where they are in control, the governments and banking system is the exit and entry points, for those who wants to go back in dollars for whatever reason. So that is still where they have control and they will always,

Starting point is 00:57:11 because now that's, but itself, the protocol itself, you know, they would need to control the entire planet to be able to satisfy a shutdown of Bitcoin, that kind of thing. Yeah. For a person who's just coming into Bitcoin and trying to learn more, it's overwhelming. And I'm kind of curious where you would have them start. So actually, you know, I don't refer my book as a starting point. I think it depends on that person, actually, the background. Yeah.

Starting point is 00:57:46 If it's a person that is with a software background but doesn't have any economic background, then the Bitcoin standard will be a good suggestion. So if they have, so the Bitcoin standard is for someone who has an economic background. It doesn't need to read the Bitcoin standard as much because it covers mostly the economic side of things. Yeah. So for someone who wants to understand more about the functioning and all that, then, well, obviously, chapter two covers a little bit, I give a little bit of insight on that. So that at least they have an idea. And as well as, well, there are some that are a little bit more technical. So Jimmy Song has a good one. And I know Andreas has another good one that's pretty technical for people that want to get on that path. Yeah, yeah. It depends on their level of, because if it's a, come one with.

Starting point is 00:58:37 an economic background who doesn't have much expertise in, I don't want to throw them into something highly technical. Yeah. Yeah, because then they'll help you, you know. So that's why. So, and that's where I actually mostly felt with people that were lacking in the economic side. So that's why I had this reference book mostly. But when I think about the people that have an economic background, but not a big software background, then it's a little bit more complex. But I will refer them to all the white paper. Definitely the white paper.

Starting point is 00:59:16 Yeah. I think it's always a good thing because it's not that complex too much, you know. There are terms that they're not completely familiar with, but at least it will give them an idea. Well, since you don't promote your book in those recommendations, I'm going to do it right now. I think for people that have been in the space for a little while and I have heard a lot of the different talking points, I think that your book does such a good job because there's so much breadth in a lot of different topics that I think for a person who's not familiar with the forum posts and how much Satoshi actually wrote and put out there, they're going to be blown away at the depth of his writings and how much is out there from him. you know, the guy or her.

Starting point is 01:00:08 Yeah. And I just, I find it to be such a baseline, like, important thing for a person to read and go through to fully understand what it is that they're participating in. Well, thank you. I think I got one more for you here, Phil. Oh, yeah. You have a new book you're working on. You told me this in passing. I want you to talk about this until, and it's not coming out for a couple months.

Starting point is 01:00:32 Is that right? Yeah. I still have 80% done, so about 20% left of writing to do. Yeah. About two and a half chapters. What is it on? Well, it covers Bitcoin and all the other coins as well. Okay.

Starting point is 01:00:50 So, and all the technologies are, you know, proof of sake, proof of work and so on. And basically putting them and analyzing them in terms of the decentralized aspect, what their fairness. And I try to be as unbiased as possible. Yeah. But I at the end of believe that I'm going to be getting tomatoes from both sides. The old coiners will say that I'm a Bitcoin Maximilist in disguise, while the Bitcoin maximalists will say that I'm promoting the shitcoins, no, in some way. So it's just by talking about them, basically.

Starting point is 01:01:31 And so. But what I do, I mean, what I did love just because I almost go over a debate with myself because I need to want to write those things. I'm trying to look at it from both angles and so on. But I'm trying to pick the negative side and the positive side of both sides and to make them obviously as much as possible all the points I could think of, that the arguments that are topics of value so that people can actually understand, oh, okay, now I have a little bit more understanding of the whole spectrum.

Starting point is 01:02:09 What is actually important to look for? And I shouldn't be looking at the proof of word coin that is using shot of five, six that just started like this. Now I have to be familiar with this impact of the ash power or even if it's not using shot to five six, whatever hash it's using, how many other coins are using, they've exact same hash. Because now all the miners are going to be competing against with that specific ash power, no, specialized hardware. They could all move around and play with those things and fight each other and destroy

Starting point is 01:02:44 one chain that is using this weak, it has weaker hash power on that same. So even if you're not using shot 5, 6, you might have a problem anyway. Now, we're in between all those. And there's just an example of those that are using. the same, you know, and multiple, they're not shot to five, six, they want to differentiate, but there are many that are using the same anyway, you know, so it's a problem and that this has to be aware of, you know. So anyway, I cover many topics. I talk about also the zero knowledge proof, how it is, and I hired a guy for making some images, so at least he'll be cute.

Starting point is 01:03:25 And so because I find zero knowledge proof fascinating too and itself as a, and I could see whatever those things that are happening in Alcoin, there are technology, pieces of technologies that eventually they'll be back in some way in layer two Bitcoin or in some other way through even possibly through the Bitcoin, new upcodes for Bitcoin in the future. once because it's very conservative of Bitcoin, and that's the pure thing of it. Once those things have been established enough, you would have those features. Eventually, things are not done for Bitcoin. R&D. Yeah. Yeah. Definitely.

Starting point is 01:04:08 Phil, what a pleasure having you on. I know we've mentioned the name of the book here quite a few times. The book is called The Book of Satoshi. You'll have another one coming out, but we'll have a link to the book of Satoshi and the show notes. We'll have a link to your Twitter feed. Is there anything else that you wanted to highlight to the audience? No, that's pretty much it. I think we covered pretty much. It was great talking to you. Awesome talking to you, Phil.

Starting point is 01:04:33 I mean, this is, I'm kind of blown away. I think I've almost done close to like 100 episodes of this Bitcoin Fundamentals. And I have no idea how I've waited this long to bring you on the show for how often I reference your book. It's a pleasure talking with you. Thank you so much for making time. No problem. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use.

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We Study Billionaires - The Investor’s Podcast Network - BTC094: The Book of Satoshi w/ Phil Champagne (Bitcoin Podcast)

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