What Bitcoin Did - REPRICING THE WORLD IN BITCOIN w/ Jeff Booth

Episode Date: December 12, 2024

Jeff Booth is an entrepreneur and the author of The Price of Tomorrow. In this interview, we discuss why Bitcoin is inevitable, the parallels between Bitcoin and the early internet, and the role of layers like Lightning and Fedimint in scaling Bitcoin. We also get into the challenges of maintaining decentralisation, the potential for nation-state adoption of Bitcoin, and how Bitcoin can reshape global trade, empower the underserved, and create the first true global free market. MASSIVE THANKS TO OUR SPONSORS: IREN: https://www.iren.com/ RIVER: https://river.com/wbd CASA: https://casa.io/

I want to qualify why it's inevitable. It's inevitable because we are Bitcoin. It's inscribing the best in us for the best for us. And as you get deeper and deeper into this, you're never going back. Hello there and welcome to the What Bitcoin Did Podcast. I'm your host Danny Knowles. And today we have the absolute legend Jeff Booth on the show. Jeff is one of my favorite people in Bitcoin.

I always love talking to him. And in this episode, we got into the inevitability of Bitcoin, the importance of decentralization, nation state adoption, and whether that poses any threat to the core principles of Bitcoin and how he sees Bitcoin scaling. So I really hope you enjoy this one. And again, the only thing I'm going to ask you to do is please subscribe to the new podcast feed if you haven't already. You can do that wherever you get the podcast. And if you can subscribe over at YouTube as well, that really helps.

Thanks as ever for listening. And if you do have any feedback, you can always get me on Danny at what Bitcoin did.com. Jeff, how are you doing? I am great. Great to see you. And congrats on you taking over what Bitcoin did. Thank you very much. So you're straight off a 17-hour flight directly into this interview.

It's what you do. It's what you do for Bitcoin. I appreciate it. So how was Abu Dhabi? It was good. It was good. I would say generally in a lot of places we go around the world, it feels earlier in Bitcoin and broader in crypto. But above that noise, some really interesting meetings at the,

at the government level, at the country level, so of things that are accelerating. Were you involved in any of those conversations? Yes, I was. Can you talk about any of them? No, not yet. Okay, interesting.

For a future show. Can we talk a little bit about Eric Trump's speech? Did you watch that? Yeah, I did. What did you think of it? Because, I mean, I thought it was very impressive. It was, again, a little bit sort of crypto-blockchaining. but in general I thought it was a very impressive speech.

I thought it was really impressive. I was actually surprised that it was that impressive. I thought he did an exceptional job. So the thing that I kind of took away from that was he almost acknowledged Bitcoin, I think he kind of did acknowledge Bitcoin as a real threat to the system that the Trumps have done so well from. I'd be really interesting your take on that. Yeah.

So I don't know how you want to go through this show because in my speech there too, I gave, I talked about Bitcoin as a protocol and kind of what's likely to come next. Obviously, in something is that's a quickest speech, you can't investigate or interrogate this at that level. But what I find generally is people misunderstand the protocol. They think it's a technology. And then because of that, they misunderstand the entire crypto space, and they think that there's value there because they don't understand protocols. And due to that, too, they think, I think there's certain people that think they can co-opt Bitcoin.

Yeah. And you saw an interview on Tucker recently where a whole bunch of people are talking about this. and it's because they don't understand the protocol, and neither does Roger Verr. So I don't know where you want to start here, but that seems to me a decent spot to start. Yeah, let me frame that a little bit, because the thing, I've had a question that I've asked a few people

from both like the older what Bitcoin did interviews and then going into, I spoke to Rob Hamilton very briefly about it. One of the, and again, I just want to frame this in the sense that I may be mid-curving this because not everyone agrees, but I would be slightly concerned about what's happening in Bitcoin right now and whether that is being slightly co-opted in the sense that Bitcoin was always this freedom money tool

that has been outside of the system. And now with like ETFs and the incoming Trump administration, I feel like we're moving into a period where we're kind of like integrating with the current system. And I don't know exactly what that means for Bitcoin. Do you think there's a threat that we give up some of the sort of principles of Bitcoin by opening the doors to these people, even if it's inevitable.

Yeah, so that's actually specifically why I want to dig into. So I don't think so. I don't think so primarily, but we're going to have to walk through why I don't think so. And it's going to take a little bit. So when I just start there, the base layer of Bitcoin is an open, decentralized, and secure protocol bounded by energy. So when people are talking about the base layer, so they're conflating the base layer and other things and they're wanting more things to happen on the base layer. And there's a whole bunch of people, okay, we need to do more. We need to do more in the base layer.

And then there's a fight against that expansion on the base layer because the people that understand protocols won't let this get decentralized or they won't let it get centralized and insecure. And that fight has been going on for a long time. So, so that, but, but if you just start there, and then actually before I go there, I said, when people compare the Bitcoin to the internet, they shouldn't be comparing the Bitcoin, Bitcoin to the internet yet. They should be comparing Bitcoin to TCPIP, which was 1969, right?

The internet wasn't until 1980, 20 years later, where the protocol came in layers and then gave additional functionality. And then it was another between 10 and 15 years until anything really happened that the things moved on top of it. So when people are comparing Bitcoin right now to the internet, they need to compare Bitcoin as the first layer to TCPIP. And now think about that timing. Now, the world's moving faster today, so we can expect the additional layers to come faster. But think about that in the timing where you want Bitcoin to change the world tomorrow. Right. And it's really important.

So it didn't, if you compare it to the analogy of the Internet, Bitcoin broadly didn't start. It could be used broadly in 1989. Bitcoin, we're talking about. as a base layer protocol started in 1969, if you compare that. Make sense? So we're so early, right? Like, we're extraordinarily early. And just like the internet evolving in layers,

lightning liquid, call it four or five years ago. And so comes, actually, well, I'm going to go back. And then what happens on those protocol layers is they ossify. they get harder and harder and harder. And they get, because if they break, everything above it breaks. And then through that process, there's also a whole bunch of other competing things that think, this is going to be the best, this is going to be the best, this is going to be the best. So that's just a natural part of kind of how this emerges.

And then on top of that four or five years ago, so it took, call it 10 years, just to that, And what that meant in those 10 years, if you wanted to do something else on Bitcoin, you couldn't. All you could do is hold it and get wealthy. And so there would be a massive incentive to watching these people get wealthy and saying, I have a better, I have a better, faster, better thing. Yeah. There would be a massive incentive in the free market to create that. And most people, because they didn't understand protocols, they think in technology, they would believe the new technology was faster, cheaper, better. Because they were trading off kind of that decentralization and security for something that could be centralized.

Yes. And then the next layer comes on, and it's lightning liquid. Maybe ARC helps it with that, but it's transport layer. And that transport layer does exactly the same thing as Bitcoin did. It ossifies and it gets better and better and better and it gets hard. And first it comes out, it looks like a garage project. It looks like a hobbyist project. And what that means is because it looks like a hobbyist project, not all the transactions work all the time. And even if you go back a year and a half in Lightning, you would have probably a 65% chance of a payment working.

And you laugh because we know that. We lived it. And today, and today it's over 95%. And it's increasing. But payments need to work all the time. It needs to be 99.999. And so you have this payment network now on top that people are still looking backwards and thinking it doesn't scale when it's scaling and it's ossifying and it's getting

better and better at an alarming rate where you don't have. the trade-offs of another token or anything else and the cost of something else, you have something embedded right into Bitcoin with that is going to move to 99.999 as it ossifies. So that becomes the second layer. And protocols are winner take all. There is no other thing, right? There is no other, there is no other internet protocol. You have a choice, be on it or don't be on it? like electricity, build on top of electricity, utilize electricity, or utilize manual labor, right? And proof of work, electrical work or use it. And if you're building on top of that, but you don't have a choice. It's imposing that choice. And then third layers, or it's two and a half layer, like Fetamint or Noster as another layer.

And all of these are interoperable between each other. And that means the interoperability is, well gives somebody can build onto it without having to build the entire protocol stack. They're just utilizing components of the protocol stack that they want and it's all interoperable together. So the speed of the adoption increases faster and faster and faster. Now, when you're looking from the outside and you're not inside it, right? We're inside. We're watching.

And remember, as a VC, we see everything. Yeah. We've seen a thousand companies and we've seen across all of the space and everything else. So when you're looking broadly across the space, you realize most people don't understand what I'm saying. They're looking backwards and seeing some token project that can solve something that's already been solved in this protocol stack. But because it's so early, because Noster is so early and it's ossifying, it's getting better and better and better. they're misrepresenting what's actually happening and they're looking for something else

that's already, let's say, ready, but it has different tradeoffs and centralising. So if you follow that logic... Can I actually jump in and ask a question before we move on from that part? Because I agree with what you're saying, but the question in my head there is,

while I understand that these networks, like lightning and obviously moving forward, we're going, like, e-cash is becoming more and more prevalent, there are a massive improvement in terms of payments, but we also know that the majority of use on both Lightning and like eCash by design is moving to like a more custodial version of Bitcoin. Does that concern you in any way? So again, I want to get to that.

That's the bigger question that I want to get to. But I need to go through this path first. Okay. So the answer is yes. and I've done extensive interviews on why the answer is yes. And I'm going to go through that as well in a second. But through this process, this is what ends up happening. So you have a network or protocol in layers that give all the functionality that you could ever want

without the tradeoffs to the decentralization and security at the bottom of the ledger, The decentralization and security bounded by energy is the critical part because otherwise everything else fails. So now through that lens, there's a whole bunch of people talking about the base layer, the tradeoffs, it's an open ledger. It doesn't have any privacy. Everybody can see the transactions, and that's a really bad thing. No, it isn't. That is a really good thing for the first layer. and what you just described, eCash, Fetiment, cashew, they add privacy in a different layer,

and it can be completely private and without risk of the first layer. So if you had added privacy into the base layer and it centralized, you wouldn't have decentralization and security. So that's the people conflating different things. So some of the idea, some of the ideas, some of the ideas, and some of the other coins were the right ideas, but the wrong application of technology into a protocol layer. And same thing, if you just listen to Roger Verre's talk, he couldn't be more wrong here.

The big money tried to consolidate Bitcoin, in a way that would add transactions in bigger blocks because miners would make more money. I've not actually listened to that interview yet, I'm sure there'll be people listening who haven't. Can you give like a quick TLDR of what he actually said? Yeah, so the TLDR is, he was on the big block side in 2017. And there was, and the block size wars was really about the economic power,

who had the most power, who had the most coins, who had the most economic power, just imposing rules on the decentralization to say, say this is the way it's going to work. And you could argue one of two things. You could say Bitcoin at that time couldn't scale into payments because it sacrificed the payment layer to be decentralized and secure. And it needed to offer payments. And you could take a lens of Roger Verre was right and it needed to do payments.

And you could kind of forgive what he's saying. or you could take a view of to do payments it would and this is where I am to do payments it would in big blocks

it would sacrifice the decentralization because then to run a node to run a node explodes in cost energy costs to be able to run a node and only the biggest actors could run nodes

and then the decentralization fails so at the heart of what I'm saying, was the block size worse? And what it proved, and he thinks it was the CIA that integrated Bitcoin, and it failed at that point. And it was exactly the opposite. It was the decentralized nodes.

It said, no way we're decentralizing this, right? Or no way we're centralizing this. We're not going to let that happen. And that was the fight. And that fight was largely because you had, the largest money at the time. By the way, we're going to play this forward because you're going to see what's going to happen, right?

Because you can take a hint of what happened before and see what's going to happen again to your other question. And so the largest economic actors, and Roger Verr, at that time, they called him Bitcoin Jesus. He was one of the most influential in that spot. And he just got wiped out by trying to co-opt the network. Yeah. And even more than that, he also had Ji Han Wu and his

side who controlled a vast amount of hash rate and they still lost. Yeah, exactly. And all of it, so what it proved is all of the power, all of the power players at the time got wiped out by all of the little guys who wouldn't let the decentralize, who wouldn't let this fail by centralizing it. And it's really important and it's really important to, because it proved that if you try to co-opt Bitcoin,

you're the one that gets wiped out. FTCS, same thing. We've seen a whole bunch of it. Every single person who tries to cheat Bitcoin gets wiped out. And it happens over and over and over again. And why is that? Because there's tens of thousands of nodes like you and me who know this. And there's going to be hundreds of thousands.

And there's going to be millions of nodes that know this. And we are not going to allow someone with an economic interest. or power to destroy a decentralized and secure protocol. That's why. What Bitcoin did is brought to you by our lead sponsor and massive legends, Iron, the largest NASDAQ list of Bitcoin miner using 100% renewable energy. Iron are not just powering the Bitcoin network. They're also providing cutting-edge computing resources for AI,

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Visit iron.com to learn more, which is iri-en.com. So the question I would have on that is I just recently, a couple of days ago, released an interview with Roger Burlingame, who is representing Bill in the Samurai case and Zach Shapiro. And I guess one of the concerns is that

The Trump administration, who I know are not in charge at the moment, so this summary case is slightly different. But they are obviously coming across as very pro-Bitcoin, but at the same time, there's these kind of backdoors attacks that could be sort of seen as attacking self-custody Bitcoin. Do you think that kind of game will continue? Or do you think the Trump administration will change anything? No, no. Yes, I do. I think it depends. I think there's two sides of that. there's a free market side of that, and there's certain people within any administration

who understand that this is the free market personified and want this to thrive. And then there's another part of that organization. There's another part of human beings that want to control it. So that fight is going to play out for a long time. I have a really simple premise, and it's actually the same premise and why we funded FETI in the first place. in 5,000 years we've never had a currency that has resisted the temptation to centralize and been able to withstand that attack.

And so we must be part of the thing that creates that centralization because of the tradeoffs we make. And so if you have that view, then you go to the other side. what makes this the first time that that could ever happen? And the only thing that creates that the first time, not the only thing, but the knowledge of what this means and the way this protocol is designed at its base layer. But what would have to happen for that?

Now I'm going to a different framework at the same time. We've always lived in an inflationary monetary system. Right. For short periods of time, like when the U.S. was founded, you had a free market, described, protected by the Constitution that allowed it to grow faster than any other nation. And people left their nations and moved to the U.S. and all of that idea flow produced the U.S. as a superpower of the world. it rose as everybody else failed because of the free market. But then that free market got captured with Federal Reserve, and it got more and more captured as we went on throughout time,

because money always gets captured. And so, go ahead. I was just going to say, can you explain how it was captured, like the process that it went through to become captured? So typically fear and no matter what type of fear you impose on society, they will bite on that. And so let's use a free market in banking, which was one to one to gold. Right. And if, and then one bank, let's say, let's use growth is going. And one bank says, I'm going to reserve 50% the gold because nobody comes and gets the gold all the time. And that'll be a good risk.

And then I can lend it out. And I can provide you a higher interest rate because I'm reserved at 50%. Then the competing bank says, I'm going to reserve gold at 40%. Another competing bank says I'm 20%, and another competing 10%. And what would happen is the same thing that happened on FTCS. People would go to the highest interest rate and misunderstand the risk that it imposed. And you would have a boom and bus cycle. and then when they came back for their gold, it would be gone.

They wouldn't, the bank, it wouldn't be there. So then they would all blame, they wouldn't take accountability for themselves because they did it. They would go to the government and say, how dare these banks do this and what are you going to do about it? And then you would regulate that. And you would essentially use the same boom and cycle to create regulation and frameworks to protect people while actually hurting them. And people would bite for it on it every time. By the way, the exact same thing right now is happening in AI. The companies that are trying to control AI

are trying to drive you into fear about AI so that you can regulate it so that they can make money because otherwise AI falls to free for every human on this planet. But if there's a regulatory moat, they can charge you a lot for it because of your fear. Do you think that banks will appear that try and play the sort of fractional game? with Bitcoin.

100%. And you think they will then just get wiped out because there's no one to fall back on a say, print me some more Bitcoin, we've lost it. So now we have to go into, let's go now to your other question about what would you expect if you're one of the

actors in this. And this is why I keep on saying the same thing over and over again, and I feel like it's a broken record, but it's not being told me. Right. So if the natural, so if you've lived in always a credit base system and you don't know anything different, right? And all of your assets inside that credit

base system and everything we do inside that credit base system are contingent on debt expanding forever, then if the debt, if two things, in that fractional reserve system requires increasing of debt, because if everyone paid back their debt, there'd be no money in the system. money is lent into existence. So if everyone was solvent, if everybody paid back their debt, there would be no money. There'd be no assets.

There'd be no nothing. There'd be no money. That's how the money is lent into existence. And furthermore, if you allow deflation, if you allowed the productivity of a free market to flow to people, that debt would collapse.

So that system is the system as everybody's in. And it can't allow deflation. It can't allow the productivity gains from the free market to flow to us. It has to capture them. And it has to make bigger and bigger monopolies, has to drive bigger and bigger control systems. It has to, all of the next things that happen,

loss of individual rights of freedoms, all of those things are because you live in a system. And you're making that system stronger with all of your actions within it by measuring in it. The, the, and you're yelling at it. Like, people are, how dare the federal government do this? We're going to rip out this, this.

But if you rip it out, the whole thing collapses because the debt becomes insolvent immediately. And the debt is already insolvent. So in my presentation in Mina, I gave what the total assets were, 900 trillion, backed by 323 trillion of debt, a 65 trillion, the Bank of International Settlements found two years ago that was off balance sheet, 200 trillion of derivatives that are debt against 50 trillion that are in positive and the positive balance sheet. The entire thing, all of your assets are inside that system tied to the same counterparty risk. And that counterparty risk is contingent, governments print exponential money, forever.

The only thing outside that balance sheet is Bitcoin, because it's a protocol bounded by energy. It's decentralized protocol bounded by energy. So now you have these two incompatible systems. One, the free market, one not free market, the consolidating market, misallocation to capital, all of the things that people are complaining. about. And most people are spending all of their time in this complaining about it, well, that's getting, getting stronger. And all they have to do is move their time to Bitcoin.

And they're repricing all of this. So let's use a couple of different examples and just say, and you know, because you're mostly in Bitcoin, that what I'm saying is true. Absolutely. So, but so, so every price, relative to Bitcoin is falling. you are living in the first global free market ever, ever, if you're measuring in Bitcoin. And what that means the first global free market ever tied to the acceleration of what's happening on the protocol layer and more and more people moving, that is going to reprice this system at a faster and faster rate. And the free market is going to be more competitive.

of. And so prices are going to fall relative to it forever. So it's not just when people are thinking about priced in U.S. dollars of Bitcoin, they don't have it right. Right. They, they, you have to price. So, so if you took 900 trillion divided by 21 million, you get 43 million per coin. That is the today's purchasing power of this system. Today's. And all it has to I'm not saying in time. I'm saying today is purchasing power or power because all it has to do is the that is state is centralized and secure and that's guaranteed. But if you wind forward two years, then the amount of debt is going to be exponentially more than today.

And the assets inside there will also rise. Right. But if you then divide the balance sheet by that, the purchasing power hasn't changed, right? It's just a higher number relative to the pieces of paper that have been debased. Yeah. This is like why housing just follows the monetary supply. Exactly. The purchasing power hasn't changed.

It's just your mental model of what's happening has changed. And then underneath that, that purchasing power, that $43 million. in a purchasing power, if you can hold it in self-custody and not sell it before this happens, a purchasing power of that actually rises infinitely beyond that because prices fall relative to it forever because you're living in a global free market where prices fall to you forever. So now think about where you are, where different people are, how early people are on this protocol, how early people are on even the base layer, let alone the other layers that are happening. And there's massive confusion because

they've always lived in this other world. And every history book they've ever read is in this other world. And the winners write the history books. And here's what happened. And so they're all measuring this from over here. Now, what would it look like if you were measuring Bitcoin from over here and you thought it was a Ponzi scheme. Your life would be getting worse by the rate of the manipulation. If you were one of seven billion people on the planet without assets, your life would be getting worse and worse and worse and worse by the manipulation. And you would turn to more government to help save you from that when they were the cause of it.

If you were one of, if you were one of, um, 63 million millionaires and 2750 billionaires inside that system, and all of your assets were rising for the very same reason and you thought, oh, this is easy, right? You, you wouldn't see the pain inflicted to everyone else within that system. Because for your representation, everything, because you were essentially, rent-seeking on top of that system, you wouldn't see that you were the beneficiary of the stolen money that came from other people. You wouldn't, and you wouldn't want to believe that. That would be really hard to believe.

You'd believe everything that you were creating was yours. You wouldn't, it'd be hard to see that. So these are just different perspectives in the different system. And both of these people, if you said personas in both of those, there's. their worldview would be right to them. They would totally believe their worldview. Yeah. And it would reinforce to them.

Now let's take in the kind of in the middle section. If you were in Bitcoin, but you converted your Bitcoin to a piece of paper to measure the world. Right. Then, and think about how crazy that is, right? But most people do. Mm-hmm. Right. So I'm going to, then it would look like Bitcoin's out of 45% IRA for 16 years.

And my other assets have 8.5%, 4%. Some are losing. And so Bitcoin is beating the IRA of those. And so if you had Bitcoin and you were measuring in this, you'd say, oh, I need more Bitcoin because it's as the fastest IRA and I'm going to accumulate more Bitcoin. But you'd still be measuring inside that system. And I think most people still do measure inside that system. Predominantly most Bitcoin are still measuring outside that system. Even the people who understand what I'm saying in Bitcoin, most people are still measuring inside that system. So what are they doing? And this is to your point. They are part of the centralization of Bitcoin.

They don't know it, but they think they're in Bitcoin. But they're actually, because if you're inside that system, and you're measuring in the US dollars, then you'll start to spend, you'll equate, you'll go into an ETF. You'll spend most in microsaturday. You'll start to centralize your actions

because you're actually not measuring Bitcoin. You're measuring in the derivative instrument of Bitcoin. I see. Right. And that derivative instrument of Bitcoin is contingent on an inflationary model that is exactly the opposite of a free market. market. So it has to centralize. So, and we're going to keep going here because I think the,

so now, and in your worldview, and everybody inside that worldview, they would be right too. Yeah. They wouldn't see the risk of the centralization, right? They wouldn't see, and they were making the centralization greater with what they were doing by cheering for more and more ETS, more and more companies, all those companies at the bottom, all being in Coinbase. And they wouldn't actually hold Bitcoin. They would hold a derivative instrument of Bitcoin, just like, and that's how gold was centralized over time. And then you would have a component, then you'd have a small number of people. And it's actually a large number of people, but it's a smaller percentage of people that were all the way down in the rabbit hole that really knew what Bitcoin was.

And it was the first time we ever had decentralized insecurity. We had protocol bounded by energy that freees. That essentially brings eight billion people in service of eight billion people in a global free market. And it wouldn't make these people bad or good or anything else. It would just be their view of the world. And as they went down deeper and deeper into the rapid hole, just like I have, I used to be over here. Then I was in the middle somewhere, and now what I see, and I'm somewhere maybe very far on the right-hand side of what this looks like, and investing all my time and energy to ensuring this thing stays decentralized and secure, ensuring that it's a global free market, ensuring, and I know what my note is going to vote for, and I know what that looks like. So now play these forward.

And let's say, let's say, let's say the U.S., because one of the ways the U.S. can pay back its debt or have way lower debt to GDP is by going heavy into Bitcoin. Yeah. Maybe you should lay out exactly how that works. Yeah, they almost have to do it, right? So in in in and Luke Groman did a really good podcast with Natalie on on this, which is with which is worth watching. And Luke's a friend of mine. We talk about this all the time. So but yeah. So. Um, but that's what they did with oil. Right. In 1971, they had to make oil a bigger part of the market. Then they had to inflate their currency into oil to be able to bring the debt, uh, debt burden down. And so. And that's likely what they're going to do with they could do it with gold, I guess. But if they did it with gold, they would also empower China and Russia, who have lots of gold reserves. Or they could do it with Bitcoin.

And by buying Bitcoin and taking Bitcoin to millions of dollars a coin, now they essentially reduce their debt because of the asset of Bitcoin on their, on their, on their, on their, on their, on their, on their, on. the balance sheet. Now, what would that do, and this is the next stage to what you're looking at, what that would do is for most people, Bitcoin would go parabolic in U.S. dollars, right? And if you were measuring just in Bitcoin, all prices would fall to the floor against U.S. dollars. And then a lot of people there, and then it would probably trade sideways for a long time. And a lot of people there would get used to the derivative instrument again and not see the risk in being decentralized and secure. They would just trade, oh, this is okay again. Everything's good again.

And they would just get, it would be normalized and they would get seduced into trading in the derivative instrument. And if everyone got seduce into trading in the derivative instrument, I don't think they will, but if they did, then eventually Bitcoin would fail because it wasn't used as a medium of exchange. And then it would be attacked from that layer to close the on ramps to then or an economic attack where they threatened that Bitcoin was going to fall so fast unless we change Bitcoin to be this. but just the knowledge of what I'm saying prevents that attack because more and more people start to understand what ends up happening. And I like to think about this when I go back to what happened. In 1992, the cypherpunks, you had 70 people on the original mailing list. And all of those people and all of the projects that came and all of the failures, that came to be able to get to the point in 2009 when Satoshi created Bitcoin or discovered Bitcoin.

But remember, his discovery or whoever Satoshi is came from all of the failures that happened before it. And all of these people who saw the very same thing that I'm talking about right now way before I did. All of them trying to prevent a disdain. stopian outcome of the world's centralizing to be able to free humanity and take this path. And then the discovery of Satoshi, and we celebrate Satoshi, but we don't celebrate all of the people and all the failures that created it. It's interesting because they were just as important to get to the same spot. And now if you count the tens of thousands of nodes around the world, the you, the me,

the all of the people I know that that have added our voices to those 70 people and we're part of this network, we're not going back. And soon there's going to be hundreds of thousands of people. And then there's going to be millions of people that see the same thing we do that are truly measuring a world that we've never described, who've been able to see before, where the free market is in service of 8 billion people. This episode is brought to you by River. There are many places to buy Bitcoin, but there's no exchange like River. They have innovative products, phone support, and a dedication to security that I haven't seen anywhere else.

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That's r-I-V-E-R dot com forward slash WBD. So do you think this is as much a cultural revolution as it is an economic revolution? It's everything. It has to be touched to everything. So it has to be touched. It has to touch everything. because I just wrote an article on this. I wrote a forward for a book that's coming out early next year on this by Daniela, and I think it's going to be a great book. But in that I described, where do your thoughts come from?

And it seems like an innocuous question isn't, because our thoughts are informed by everything that went before us and the people around us. And so now if you carry that forward, if your thoughts are actually informed by your environment, before I go there, where are their thoughts formed with people who don't know Bitcoin yet? All of their friends and all the main media that's involved, and they think they're right. And they're not. And so, but that has to be for us, too. Has to be. And so where do your thoughts come from?

we don't see how they're they slowly evolve from other people and other things before us and in our environment. And so what that means is we're part of it. We touch everyone with every single thing we do. We are literally all connected through that. So now if you do a thought experiment, what would your thoughts look like if they've always lived in an exploitive system? They would come from that system. They would come from that system. And so what would your thoughts of Bitcoin be and how?

could you control it, how you'd stop it? And what would the history books like look like if you've always been an exploitive system, that that's where they would come from. So some of the things that I'm describing, I understand, are really hard to see for people who've always, they don't know they've always lived in an exploitive system. They actually believe that they're in a free market. So when you talk about this, obviously there's this ginorma system, like the current system that most people live in. And then Bitcoin, minuscule in comparison to that. How do you think that that system is going to break down? Do you think it's sort of a slow trickle towards Bitcoin followed by like a flood?

And what does that look like for society? So I think that like I just described, it'll feel like a flood for people today that are on Bitcoin because the price will go, if they're measuring in US dollars, the price will go up so fast if the US decide somebody some nation is going to buy a whole bunch of a coin on their balance sheet yes no matter what and the game theory on that is going to start and then depending on that um game theory it'll rise crazy and um and then and then fall back and it'll be potentially sideways trading for a long time for so for this group of people just like the of people in, say, 2011 that kept all their Bitcoin. And now they look at, they look crazy

rich relative. For this group of people that are in it now, even with one, two, three, Bitcoin, that's what they'll look like in 10 years. And they'll probably sell their Bitcoin. And it'll further descend. And it'll further move. And so this is going to play, play out for a long, long time on both different systems. But the simplest way to describe this, I think, for me is the world is a mere reflection of your beliefs. And if you really understand what Bitcoin is, it's just a decentralized and secure protocol bounded by energy. What would the world look like in that honest protocol that's imposing that reality? And what I see, and what I see with you and what I see with Peter

and what I see with all my friends in this ecosystem is you see like a way, you know this. When people have gone down the rabbit hole this deep and you, there's no going back. They've had to rewire their brains, right? And your interactions are totally different than people over here

are still trying to fight and play in that exploitive game. You almost can't see that you can't see the things they see anymore. And so when you meet a bit coiner, a hundred percent. When you made a bitcoiner, it's like right here, right now. You go to deeper conversation. And so that's what the whole world looks like. We're just living in it first. So you think the, actually, let me take a step back first. Do you think this is inevitable? Yes. But I want to qualify why it's inevitable. It's inevitable because we are Bitcoin. It's inscribing the best in. for the best for us.

And as you understand this, and so if I, if, if, if I watch what's happening right, right now and I watch what most people can't see, like we're investing in the space and we're investing with the, it's the brightest minds that are exactly like what we're talking about, building,

building this out for the same thing we're, we're saying. And when you see that, what's coming, and most people are still, measuring what Bitcoin was five years ago, 10 years ago, and they don't really know and they're confused about crypto and blockchain and all this nonsense. And they're confused by that because the media they're looking through is trying to co-opt it potentially too and all of the

different confusion. I understand the confusion. But that's why I just described, that's why I said the 70 cyberpunks that grew and grew and grew. So yes, there's eight billion. people on the planet. And if you'd think about this giant funnel of 8 billion people, coming down that funnel slowly, slowly to where we are, right? And as you get deeper and deeper into this, you're never going back. And so there's now so many people, really small percentage compared to the 8 billion that will eventually be there. But they are all creating new ways and different ways to keep this decentralized and security. you're constantly vigilant for attacks.

Why the ecosystem can seem like people are fighting against each other? And they are because they're so vigilant against the attacks. And so that debate, that consensus mechanism, that nothing, it's really hard to get things through is actually the power of the protocol. This episode is brought to you. buy CASA. For those of you out there who want to protect your Bitcoin, I want to tell you about CASA, the leading Bitcoin self-custody solution. So if you're serious about protecting your Bitcoin, then you need a rock, a solid security plan, and CASA gives you just that. With their

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C-A-S-A.io. I love the way you see the world. Every time I talk to you, whether it's like on one of these podcasts or if it's in private, like I just wish I saw the world like you because while I understand everything you're saying, I still will go off this call and I'll go back to

measuring in the old system. I just know I will. And I'm trying. But it's hard. Like, it's hard to go full Jeff Booth. But there'll be people listening to this who will be like, this sounds like you're describing utopia. Is that realistic? What would you say to that?

Yeah. So I don't think about it in utopia or dystopia. I think about it as human beings have always, always had problems to solve. And the free market is the best resolve of those problems to solve. In fact, even if you just go into big. what Bitcoin is and what the Cypherpunks described and that was Satoshi found, why would that need to happen now, right, versus 100 years before that or 100 years later? And it would have to happen if humans were arriving at a technological singularity,

where computers could be as smart as humans are smarter, and it would change our labor environment. and it would do one of two things. It would capture us all into a control system where AI was used against us or it would free us. And so the same thing that happened with Bitcoin is what I'm describing.

It would have to happen at the same time because this threat became so great that this created an opportunity and people saw it. And that's the same thing that finding for, fertilizer when we needed fertilizer, right? And constantly, and why does that end up happening?

Because as a market consolidates and it creates so much margin or so much opportunity in this side and most people get left out, then entrepreneurs with their minds, everything comes from our mind. We create something that solves that problem. There is no such thing as a monopoly in a free market. because the monopoly expands and that's where all the margin is. And our mind, because the margins are, billions of minds go and attack it because that's where the money is. And so, and it constantly drives us. So why if you just kind of kept that going in Bitcoin, why it's inevitable to me is because

of the pain of one system, it creates the other system faster. And now play that forward instead of utopia. I just say, I just believe we will always solve problems. We'll always see problems. And the problems are the things that create the opportunity in the free market. Because that's where the margin is. We'll always, in fact, we'll solve them faster. Because instead of having seven and a half billion people trapped in a system of exploitation,

we're going to unlock those minds that are in service to us because we win when they win. So about this time last year, we were in Malawi and we saw the amazing work that Gridless doing there and how they're having a massive impact on sort of the local communities. But in this kind of future that you're describing, what I don't understand is how it lifts people, there who are living on less than a dollar a day up? So again, your relative value of that dollar a day is in a system that is exploiting it and making sure that is a dollar a day. In fact, that is a feature of the existing system.

Instead of Malawi, because there's not a lot of trade with the US in Malawi, let's use Democratic Republic of Congo, where the resources come for all our batteries. The Coalbult, the Democratic Republic of Congo has 70% of the world's cobalt. So if you had 70% of the things people need most, don't you think they would be one of the richest countries? Seems obvious. But why aren't they? Yeah, it seems obvious.

Why aren't they? It's because they're inside this extractive economy that if that coal bolt rose in price, the cars we drive would rise in price and that can't happen. So you keep them in a debt trap. You impose IMF goes in and creates them in a debt trap and you constantly revalue the currency down because then you exploit their labor. Yeah. So they're stuck. And you help a dictator stay there.

So you empower those people to extrapolate that system. That's the way the system works today. Unfortunately, it's the way the system works today. So how could you solve that problem from within? the system. So can I just clarify what you're saying now? So that is the US or whichever other Western government you want to pick.

Basically, ensuring that inflation doesn't get out of control in their country by at the expense of these other countries. Yeah, but if, and you could say, you could easily go into this is a design and

these are all terrible people, right? Or you could say it's a fee, it's just It's a construct of the system that's been created in debt. And for the U.S. to be the largest purchaser, other people have to be the exporter. It's just the global trade balance has to be zero. Somebody has to, and now for the global trade balance to be zero, somebody has to be the purchaser, somebody has to be the exporter. Their labor has to be cheaper than yours.

And that means your debt has to be way greater. You have to fund that with printed money. It has a whole bunch of negative buy products as well because what it means and you could take a side of this. But this is true from what I'm saying. That means the U.S. would be if you're buying Russian oil with a currency that's losing eight and a half. half percent a year and you're expanding NATO onto their borders, you're taking their labor and materials and raw materials with printed money to expand a military industrial complex. Now, of course, this is going to lead to division and control and people pushing back.

And this is no way of saying that I agree with Russia or anything else. And people just naturally go into there. they're so brainwashed into the system. They go into taking sides of who's right in the system. I'm talking about the structural problem. I'm talking about the structural problem that that is true. And then you could see sides, you could see,

if that's true, you could see different people in different countries, getting really mad about that. And then enabling their powers to be able to fight back and push back. And a lot of those powers are trying to create a different exploitive control system. And Bitcoin's cutting through it all. It doesn't really care. It's taking its power away from dictators.

It's taking its power. It's removing all of it. It's changing that process. And I didn't answer your question from Malawi. But the village we saw that's actually now my... mining Bitcoin. That Bitcoin is going to find its way into the village. Now they have electricity for the first time. Alex Gladstein and I donated our climber a bunch of Bitcoin and now he's in Bitcoin. There's another person that's taking, I laugh, remember when we were there and they

and World Bank goes, or I can't remember which organization, goes and says, you have to be on solar and they have and battery power and they're they funded this like the crazy one for me it was that they were going to um force malawi which is by many measures the poorest country in the world to install ev charging stations across the country yeah it's nuts and now those EV charging stations built on solar or people are going in and bitcoin mining yeah so so so so those people are gained. meaning Bitcoin. And Bitcoin relative to their currency is going to go up crazy. So they are getting wealthier. And those people are repricing all of the people that are measuring in a in a

fiat currency. And it's not just it's going up and remember, I just said the same thing, it's going up in value versus a via currency. It's also all prices will fall forever against that. So it doesn't matter where you are in the world. You have a global free market, and all you need to do is move some time to it, and you'll see it too. You don't have to wait for your government. You don't have to wait for your business.

You don't have to wait for anybody. You just need to understand it enough to self-custody and move your time to it. And you were living in the first global free market. You talked a little bit before about kind of the game theory of nation-states adopting Bitcoin. obviously the US talking about it will see whether they actually do it or not

I'd be interested in your take if you think they will follow through that plan but it seems like it's kind of you think they have to you think they have to under this Trump administration sort of right now I think they have to early in the Trump administration I think they have to because

the debt's insolvent and otherwise you're going to have a deflationary spiral they won't let that happen and so you're going to have a boatload of printing into something to reduce the debt. I think if Trump doesn't do this early in his term,

this second part of his term is going to look like a shit show. But I guess my main point, though, is it seems like we're in a big game of chicken and some country's going to move first. Do you think the impact of that is immediate and every other country or a lot of other countries are going to jump on board straight away if that happens? I think they have to. Yeah, I think they have to. It becomes a new global arms race.

Because if you don't, you're being repriced. So I think about it in every company that I'm in or every, if your cash flows are denominated in something that's going to lose value at the rate it's going to lose value at, what are you doing? Right. So Bitcoin is, this isn't going to, to happen. It's happening. For the last 16 years, you have a 45% IRA against the existing currency. And that means every different cash flow in every different business is being repriced

by that rate. And it might accelerate with what we're talking about. So if you, all of your work that you're going in, unless you're beating 45% IRA, you're, losing. And what kind of time period do you think this plays out in, in the sense of money moving from the old system to Bitcoin. I assume you think Bitcoin becomes the only system and you don't think that they can co-sive in any way. Yeah, that's what I think, but I think that it takes a long time. Maybe another 30 years. I mean, it sounds like a long time, but it's really not. I think the world will obviously change a lot in those 30 years. Yeah. Amazing. Is there anything else you want to touch on that, Jeff. I do have a couple. I want to get back to the

E-Cash Lightning thing just briefly before we close out, but is there anything else on that first? Yeah, no. In fact, one of the most exciting things is where I think what you're talking about, where we're going now and next with some of the layers that are being built. Like if you just, yeah, if you get inside some of these things and watch, it's just incredible.

I mean, I think everything that's being built on E-cash is pretty incredible. I did have, again, a very brief conversation with Rob Hamilton about this. And I do think this kind of a irony in it that we're moving again towards custodial solutions on top of Bitcoin. And I'd be really interesting in how you view that. Yeah, I don't think we are.

Okay. So let's start with Breeze at first. So there are some and there's tradeoffs and custodial. But Breeze is self-custodial, right? And the entire SDK is self-custodial. And think, on a simple way. way to understand Breeze and what's happening versus what people are thinking what's happening. So today, people pay to take payments in a currency that's losing value.

You pay somebody, whether it's a payment processor, two and a half percent in a first world nation, right? In some nations, it's like 10 percent. you pay two and a half to 10% to take a payment in a currency that's losing value at a different rate. Think about that amount of extraction. And then in Lightning and what Breeze is doing, you don't pay to take payments. And pretty soon, you might even get paid to take payments. So that creates an entirely different structure to the market because all of these people have to charge you more.

to be able to cover the margin that is being extracted. And in a different system, then they don't. And the prices can fall. And they can offer better incentives. And so the market's going to absolutely move to the most of it, most efficient. And like I said before, lightning for a while couldn't do that. But it's moving really quick. And if you look at the number of integrations on breeze and what's happening,

because now all you have to do right now is drop in a line of code and you have international payments on lightning and in the self-custodial fashion. So this is just emerging, but I think it's going to accelerate extraordinarily fast because now a lot of the complexity has been taken away and made easier to be able to integrate and integrate in a way that is self-custodial that isn't centralized.

Yeah, that's like when I say that the vast majority of people probably use lightning in a sort of custodial way right now, it's because of all that, like, running a lightning node is really hard. And I know that there's companies that are making that easier, and I'm sure that will come with time. But I guess when I was saying we're moving more towards custodial model, I was, I guess I was talking about eCash in a broader sense. Especially when, sorry, you go, you go. Yeah, no, no, keep going. And then I'll go. I was just going to say, so obviously the tradeoffs on sort of base layer of Bitcoin, we know why they exist and we know that getting everyone onto sort of base layer Bitcoin probably is not going to happen. But eCash obviously offers a solution. So do you think that that's enough for the kind of broader world?

I do. And this is why. So I'm going to use FedA Mentor Fedi as an example here. And remember, this is still early. This is still really early as far as the protocol and the hardening of the protocol and making it easier. But right now, that is already live and in use and expanding quickly. And so how does that work? And why is Fetamint important in that type of environment?

It's important for the same reason that Bitcoin is important. The way that that's designed is you could have five, seven, 12 guardians. and instead of guardians, call them nodes, but call them nodes that you would run for each federation with people that you really trusted.

And then everybody on top of that federation couldn't see any transactions, be completely private, anonymous, couldn't see any of the chats between people,

completely private, anonymous. Feddy can't see them. The guardians can't see them. So then what is the risk? What is the risk of that? The guardians, let's say you had a three of five set up of guardians. You, me, Peter, G.G. and Matt O'Dell were running one of these.

The risk is three to five, three of five of us could conspire to, to fractionalize the funds or something else. And everybody on top of that wouldn't see that risk. How is that risk mitigated? That risk is mitigated the same way we reduce risk in normal life. We trust some people, right? And so you might trust your family in a federation, and you might have most of your money in your family federation set up that way. And then you might have just a tiny bit in money in a 2 million person federations.

that you don't know the people at the bottom, right? And so then how does that scale? It scales like the free banking model did. It scales that you will, if you had one federation, then it would be a centralized thing that you just described. And that would be really dangerous for society. But if you had thousands, hundreds of thousands, or millions of federations,

with the only difference on your choice to which ones you wanted to be in, and you could be in 10 or 100 of them, and you could set up your own, then how would a government, how would anybody stop that? Because it's effectively a DDoS attack. Because all of the, it's just like Bitcoin. All of the nodes themselves become impossible to find.

And more and more of them spring up all the time. and the faster, if you tried to attack it, they would actually go faster. So in terms of kind of this future of Bitcoin that we're looking at, as long as you don't mind, as long as the base layer remains untouched, you don't mind growing custodianship of Bitcoin on top of that. As long as, that's the thing, it just has to be different tradeoffs. And the tradeoffs, you determine your tradeoff risk. So if you wanted to go under the base chain and you wanted to,

do a transaction, you want to spend the money to do the transaction, you'll be able to do the transaction, but it'll probably cost you more money. And then because it's more money, it'll move you into Lightning, and it will be way less money. And Lightning is, like I said, with Breeze, it's already solved the problem you're talking about because you are now have, now you didn't two years ago. You had mostly centralized services, right? But it's already, it's already now being decentralized and you have a different trade-off way less fees and now you have payments that are approaching 100% working so it's a scaling extraordinarily fast different layer different trade-offs right so I will still personally I

would still and I would recommend people if they're saving a whole bunch of money to to have a cold wallet off and and self-custodial. But I also am aware that for the person in Malawi, just doesn't work, saving $10 or $100, which is a lot to them, that might not work. So there needs to be a different solution

with nearly as perfect savings, and that person could do that in FETI today. So obviously the trade-off with Fetemin is that you are, in guardians. And I know that there's ways of mitigating that risk, whether it's like reputational or having tons of tons of these mints. I was talking to Eric Yakes a little bit about this. Do you think it would be possible to have like AI guardians on a Feddy Mint where they are really narrow and all they can really do is sign transactions and never collude? potentially but I I wouldn't trust that right now I would I would trust like at the bottom of so I don't know potentially at some point but but I think if if I had three of five people that and even still you could set that up or you didn't even know the other people yeah so there would be no way to collude right so I would set it up in a way that that that it was it was that way

Yeah, that makes sense. Okay, cool. I mean, I think I did have another question for you, but I think we'll save that for another time. Is there anything else you want to get into today? No, no, it's always great chatting with you. I really appreciate you, especially jumping straight off a 17-hour flight.

You're an animal. So are we going to see you in Bedford this year, or are you skipping it? I can't this year. You had me two years in a row, and I'd love to be there, but I have a different commitment this year. Okay, no, I don't know who's going to be propping up the bar at 4 a.m. this time then.

But I really appreciate you, Jeff. Thank you for coming on. Where do you want people to follow you? I'm on Noster, mostly now. But if they, jeffbooth.ca is my website. If somebody wanted to send me a note. Perfect. Thank you very much for that, Jeff. Thanks, buddy.