I think also there's this notion of we're so early that we barely understand it.
I think 300 years from now and Bitcoin has been ascendant for centuries and
everyone assumes this is how it always worked, I think our level of understanding
of all of this will be higher,
In our grandchildren's minds, us three here, this conversation
will be drooling idiots.
Yes, exactly.
Yeah.
there's no way around that.
So I hope at least has entertainment value to them so they can laugh at us.
Welcome back to the Freedom Footprint Show.
The Bitcoin Philosophy Show with Knut Svanholm and me, Luke the Pseudo Finn.
Today, we're joined by Dhruv Bansal, the co founder of Unchained Capital,
a financial services company building products for long term Bitcoin holders.
In this episode, we explore the relationship between
physics and economics.
We discover all about Unchained Capital and the relevance of collaborative
custody for long term holders.
We discuss KYC and the future of Bitcoin regulations.
And finally, we deep Dive into quantum computing and the interplanetary
horizons of the blockchain.
But before we dive in, a quick reminder that the best way to support the show
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We'll be talking a bit more about them later.
And now, without further ado, here is Dhruv Bansal on
the Freedom Footprint show.
Dhruv, welcome to the Freedom Footprint show.
Thanks for joining us.
Thanks for having me guys.
It's a pleasure to be on.
Pleasure to have you here, Dhruv.
Yeah, let's start off with a presentation of you.
Can you give us the TLDR on Dhruv Bansal?
Who are you and when did you find Bitcoin and all this stuff?
Sure.
I started out my career as a, as a physicist at the University of Texas at
Austin, like this way back in 2005 or so.
So dating myself, um, just pre Bitcoin.
my research area was, kind of focused on.
You know, big human systems, even though I was, even though I was a physicist, I
was often taking real world data sets and, you know, stock markets, school systems,
economies, whatever, looking at them from, you know, kind of a physics perspective.
There's some interesting things I felt that, you know, even physicists could say,
uh, about those complex systems, that led to like a big love of programming and data
sets and interacting online in an era that was like a little bit just pre GitHub, pre
a bunch of tools that we kind of take for granted today, before AWS, for example.
and it was just really hard to move data around, and so I kind
of fell into no, no plan at all.
This was not my life plan.
I was going to be a physicist, but I kind of fell into this startup with
Joe Kelly, my co founder here at Unchained, um, and third co founder,
Flip Cromer, the physics department.
So the three of us before Unchained started this business around data and
Cloud computing and, DevOps and all these trends that were kind of colliding
in that, you know, mid 2000s era.
Um, a lot of stuff that was coming, you know, out of Google
and sort of becoming open source.
and so I really learned a lot.
I said, we want to starting a business kind of building out infrastructure like
this to help people move data around often in the enterprise, you know, banks
and big companies and manufacturers.
That's kind of where we found success.
Ultimately, we started in a nerdier.
area of the world, but that's where we found success.
And so in this process, I learned a lot about like distributed systems
and, you know, like machine learning, but like also like how a distributed
database works and how time is a really important idea on those systems.
And of course, these are all centralized databases, right?
They're distributed, but they're all run by the same guy, often me, right?
Like setting up a large cluster of machines.
Um, somewhere in that story, I met someone, um, at a conference, open source
conference about databases and stuff, like he was talking about Bitcoin and.
In my head, I'm just like, I can't think of it as anything other than a
distributed database, you know, like, I just, I don't know anything about
money, I don't have any money, I've never heard of Austrian economics, probably
wouldn't have cared about it if I had.
This guy's talking about so much about the code, the blockchain, this,
blockchain, that, right, and I'm just like, I had enough background in these
distributed systems and database stuff to sort of, Understand that like,
okay, this is actually a real thing.
Like this could work.
I concede that this is a very clever and interesting design for a database,
but I could not understand why it should have a price, like what the
money has to do with any of it.
Like, I just, I thought it was, um, There's these esoteric programming
languages like BrainFuck and things like this that are like
designed to be hard to use.
They're like a Rube Goldberg machine and like the whole idea is like, can
you do something useful even though the machine you made was designed
to be perversely hard to use in a fun way for programmers, right?
And so I thought that, I was like, this is what this is, right?
Like, I have a, I have a Cassandra cluster over here that I'm throwing
like terabytes in every day.
you're giving me...
The blockchain, what is this for?
so I, I, I saw it as a database and then I dismissed it, right?
Also Bitcoin price, this is 2011 or so.
Bitcoin price is like less than a dollar.
So I'm like, man, it's not, who cares?
fast forward a couple of years, we sold the business.
I made some money for the first time in my life.
I bought some dumb things.
And one of the dumb things I thought I might buy would be Bitcoin,
because of course it's now 2013.
I checked in on the price.
It's like a hundred dollars or something, a coin.
And I'm like, how the hell did that happen?
Like in just two years, this thing that I thought was like an esoteric
database tool worth less than a coin is now worth hundreds of dollars.
Who is, oh, and then I, oh my God, if people are actually going to use this
thing as money, if like they actually start doing that, then it might work.
I should buy some, right?
I'm already too late.
You know, I might as well get in now and get a little bit.
And, um, so that was the beginning for me, right?
Like sort of feeling the FOMO, like oftentimes people feel, and then
making a speculative investment, um, not understanding anything
about how it actually worked.
Just looking at that number going up and being like, yeah, all right,
I'll throw some cash into this.
I'll only put a little bit in, of course, um, wish and happy
that I didn't put in more.
and then I didn't think about it for a couple of years.
Joe and I, uh, you know, got acquired.
We went and worked for Acquire for a little bit.
Quitting because it's terrible sometimes to work for large businesses and did
nothing for a year and floated joe got married i built a house like we just
did a bunch of life stuff and the whole time i'm just thinking what's the next
business what do we want to do next and then ultimately around twenty fifteen
twenty sixteen or so we're starting now.
We're like, all right, let's start another business.
Like we're doing the research.
We're thinking about problem domains.
We're supposed to be working on all these interesting applications of
data and computer science to, you to, to construction or food industry,
or, or this is our hypothesis about what we want to accomplish.
And then neither of us did the work.
We instead just read about Bitcoin and kind of were falling into the rabbit hole.
And we didn't have that expression for it at the time.
That's what was happening to us.
And so at some point around 2016, I remember we just admitted it.
We were like, I think we're really into Bitcoin and I think Bitcoin is
gonna be a giant thing in the future.
We should just start a Bitcoin company.
And it felt a little crazy because, um, there weren't a lot of Bitcoin
businesses and we felt a little bit late in some ways and a little bit early.
Bitcoin's total market cap at that era is like six to eight billion
dollars or something like this.
So.
yeah, early days.
Um, but yeah, it was a long journey from being a scientist to kind of
discovering and becoming a data person to eventually realizing that the
blockchain, despite that it's got all these data like words, is actually
really more about money and sort of building a business that makes sense.
I think hopefully, one thing I'm proud of, we didn't approach Bitcoin at
Unchained like it was a technology.
We always approached it like it was a money.
And so we built a financial services company.
And so that's something that I think we got right.
Fascinating.
This is one thing that is always, like, baffled me that, that
physicists and engineers, uh, seem to be like the, the early days
of bitcoins are data scientists, physicists, and engineers mostly.
Right.
And crypto anarchists
crypto anarchists, okay.
Like, but yeah, the, the, the crypto anarchists are there as well, of
course, as the cypherpunks, but,
know.
uh, it's only later, like in 2016, 17, that you get the safedins
and, uh, the, the, the economics, uh, branch of it, really.
So, so it seems like, like, these people, very few of them understand
anything about Austrian economics.
Uh, and as you said, you know, nothing about that.
Like, how are your, knowledge level of Austrian economics these days?
I guess it's, uh,
I'd say low to mid.
to mid.
yeah, like I think, so truthfully, something that's been exciting for me
starting Unchained and having to build a financial services business is I've
just learned tremendously more about Money, economics, like the federal
and governmental and non governmental apparatuses that like create and are
responsible for the infrastructure of money, which is then so deeply connected
to so much of the rest of the world.
So I feel like I'm, I'm learning a tremendous amount, like by starting
this business and, and that's been great, like Austrian economics as a
particular like flavor of economics as distinct from, let's say, Keynesian
or other approaches, like I'm on the outside of that discussion.
I have nothing original or new to say, you know, and so I don't go wading into it
and offer my opinion one way or the other.
I tend to be a little bit timid about talking shit about things
I don't really understand.
I, and I, I would say honestly, this is something I, I often
talk with Parker about this.
Parker, who previously worked at Unchained for a long time and, you
know, remains a close to the business and, and a close friend of mine.
And, uh, I thought Parker had a completely different background
when how he found Bitcoin.
He's not a programmer or physics guy, anything like that.
You know, he's, he's, uh, he deeply understands banking and macroeconomics
and trading and all these kinds of things.
And for him, the economic aspects of Bitcoin, and he, and I don't
know, I imagine he might describe himself as an Austrian, I don't know.
But like.
Those, these are the things he's super knowledgeable about.
Right.
And I often looked to him and I'd be like, well, I think you could have made Bitcoin
with a, you know, with tail emission.
I think that would have worked like mechanically, like tell
me why that's a bad idea.
And then he would give me answers.
He'd be like, Oh, this is why.
And so I'm like, I don't know, man.
Like, I'm not going to accept his word on it.
But I, but I, I like his reasoning.
It's a hypothesis.
It's a, it's a theory.
It makes sense.
But then, you know, he would flip it on to me and be like, So why
is it true that like this thing actually can't be like decrypt or
like, how does that work in the code?
You know, and I like, oh, that part I totally get, this is how that works.
Like, that's why I have complete confidence in that aspect of how
this system, so what I, what I, what I've loved about Bitcoin, for me
personally as well as for like the community around it, is you cannot
be like the master of all the fields.
It's, impossible You come to it because of something that, that draws you in,
uh, and I think, I think you're right for in the super early days, like you have
to be one of a few different kinds of people, because there was no other way
you were going to hear about Bitcoin, and there wasn't educational material about
it for you to easily digest, so you had to kind of do the work to understand it
yourself, and you're only going to do that if you had some in the background, right?
For me, It wasn't the economics that drew me in, it was the technology, right, which
is a sort of later on, I've realized it's not that important, um, and it's actually
much more economics that drives everything in Bitcoin, but it was initially that that
hooked me in, and also the whole energy thing, Bitcoin, physics, energy, time,
that's a very sexy triangle of thoughts to
It is.
so like these kinds of things brought me in, um, and I think in those areas,
I still feel strongest and I feel like strongest to talk about, well, what
do I think about Bitcoin and energy or time and did it all these ideas.
And I'm still a little bit relying on the rest of the community to represent,
from the economic side, this is why Bitcoin makes the best argument.
Like I sort of need them to, to talk about that part, you know?
It reminds me of one of my father's favorite sayings, which was, it's
better to be a complete idiot than to be a complete, an idiot in a specific
field that only knows one thing.
There's a Swedish expression, so I have a hard time translating it,
but like, the thing was, yeah, it's better to know a little about a lot
of stuff than to just specialize.
And there's some truth to that, even though I believe in the division of
labor as well, so you should, you should specialize, uh, but you should
also don't trust and verify, so you should know a little about everything.
the thing with the physicists and the engineers, the thing I find so fascinating
is that physicists and engineers often get Austrian economics, um, more so than, than
traditional economists, like in Keynesian, uh, whoever's read economics in school,
they don't get it, but a physicist or an engineer knows what, what you can and
what you cannot do with mathematics and what works and what, what doesn't work.
And I think that's very closely related to economics, because you can pretty
easily see when you, when you accept that valuations are subjective, it's.
Kind of easy to draw the conclusion that you can't really do anything with
mathematics and economics, like, except, you know, whatever a price signal says,
and you can add up the cost of stuff, but you can't really predict the future
using mathematics, all, all your models are destroyed, the type of thing,
like, because it's all subjective.
So,
definitely, I think, um, people definitely talk about physics envy, you know,
and coming from like microeconomics or other places where like there are these
big equations and, and like, there's definitely a massive degree of skepticism
from actual physicists about Like work that looks a little too mathematical,
but that doesn't actually have like natural laws or like hard things that
we've experimentally measured that we can like, you know, build all that
mathematics and drape it all over.
Right?
Because, um, it definitely makes people a little nervous.
Are you saying that this equation on my t shirt here is wrong?
Well,
From
a physics perspective?
Yeah,
I think we can accept metaphor, right?
But I think the point is that it's, it's not meant to be metaphorical, right?
Those, those, those equations are meant to be real equations, right?
That
physics they are, yeah.
I'm talking about even in folks who try to physicize economics, right?
They're not saying it's just a metaphor.
It's not just a T shirt slogan.
It's supposedly a model for the real world that we should then, in fact,
make policy decisions on, right?
So it's meant to be very real.
And I don't think, oftentimes, I don't think it is.
Yes.
And I think I think physicists often see that.
There's, um, I'll give you a quick story of, uh, so my graduate school advisor,
a physicist, like, works nothing, like, works, um, in a lot of broad areas,
and part of the reason I think I found myself studying all these crazy systems
is because he was just very naive.
He has broad ranging interests and encouraged me to do so, and when I
talk to him about Bitcoin, because of course, you know, I'm trying to orange
pill everybody in my life, and I say, you know, Bitcoin, economics, energy,
da da da, turns out, like, he's been following another sort of, physics person
who kind of went into economics and really talked about energy, and, like,
in some sense, right, like, if you think about Democracy 모들의 경험을 이야기를 하셨으면 좋겠다.
Whole human economies is just, you know, statistical systems.
Shouldn't they obey things like the law of large numbers, and the equal
partition, like, theorem, and like all these statistical mechanics ideas?
Um, it's a very different approach to bringing math into economics than...
Um, perhaps, traditional economists might have done, like, you know, for example,
he has interesting theorems, like, can you kind of figure out, based on the
distribution of wealth or something like that, uh, what kind of, whether the
system is in equilibrium or not, right?
Like, the way that physicists might approach, I don't know, a box of gas
in an oven or something like this.
Um, it's pretty interesting stuff, but I think, uh, At least according to my
advisor, and I later met with this, with this guy, his name is Viktor Yakubenko,
he does a lot of interesting work, so I actually wound up meeting with him and
talking with him a whole bunch about Bitcoin, I gave a presentation to his
research group at the University of Maryland, about like why Bitcoin is
super, should be super interesting for people that think the way that he does,
But according to him, he's like often struggled bringing deep concepts of
energy into like, you know, macroeconomic discourse and, and sort of saying, Hey,
no, you really need to like, our entire worldview as economists needs to be
built around the notion of energy being scarce, and thinking about the economy as
a machine that like moves energy around.
And that's not like, I think, the overwhelming way that
economists approach their field.
But it's a really interesting, I think, way, at least to someone like me, who
again, is a physicist and a Bitcoiner.
I'm like, yeah, that makes more sense than a lot of the other stuff I hear.
So I don't know.
I would say it's a dangerous path though, uh, like if, if an idea like that gets
the attention of some wannabe central planner, that it's a good, uh, you know,
hierarchy ladder climber, then it may be tested on real humans and that's always
a bad idea in economics to, to, to try to, you know, supervise an economy.
Yeah, so, um, Bitcoin is often said to be backed by energy and by that
people mean that the, the, the mining computers, um, sacrifice energy in
order to secure the network and find the next block and thereby be paid
in Bitcoin for doing so by the users.
Right?
So, my latest stick, if you will, or stick, if it's stick or stick,
No, I think it's shtick, shtick, you got it right.
right?
Uh, it's, it's not backed by energy, it's backed by human action because
behind all those, um, ASICs is always, a human actor choosing to buy them and
choosing to run the software and choosing to plug them in and do the thing.
so everything in Bitcoin requires a human being to act.
It does nothing by itself.
It still needs human beings acting on their, acting on incentives to function.
And the funny thing is, when you really boil that idea down to what it actually
means, it's like, uh, It's just an agreement on a fixed set of rules, and
the reason we agree on these rules is that these rules, we see, by understanding
the system, we can tell that these rules are more expensive to try to cheat
than to follow, that if we just follow the rules, it's more profitable for us
than to try to cheat them, if we do, we can get this finite number worth.
Uh, which you can divide everything by, uh, and you get into this wonderful
world of hyperbitcoinization, at least in the back of your head, when you
imagine what the future might hold.
And, and then you think, holy shit.
And then you just follow along.
And if you think about all the, all the machines and all the physics
that are involved in Bitcoin and all the mathematics, all of that is just
extensions of our minds, really.
all the ASICs are doing are, Speeding up the rate of calculation that we
can do with our heads, because running the code is just solving the equation
and doing a hash, like you might as well do it by hand, it will take you
a lot more time and it won't be very efficient, but at the end of the
day, the ASIC is just a fancy abacus.
Uh, so, so that's, that's a lot of what I talk about, uh, these days and how
everything in Bitcoin is, it's just information, which, which means that it's,
it's just us and all the computers used in it are just tools to make us better.
but Bitcoin itself, it's not like other things on computers, uh, which
may or may not be us, but Bitcoin is definitely us because it's us agreeing
on a fixed set of rules and it's.
Totally voluntary.
So Bitcoin is the Bitcoiners, the way I see it.
But what do you say to that?
I think, this is coming back to maybe your prior question around being an Austrian
or, or knowing much about Austrian economics, like, I think some of the
language around human action and this kind of stuff is, it, that, I'm, I'm not
trying to disagree or say it's wrong or anything, I, I think, I think I understand
those words and the way you mean them, it sort of makes sense to me, but the
language that I choose to use to describe, I think, the same idea is it's just Right.
And I don't believe that Bitcoin is made of energy, even though I think
I've said things like that, like, you know, either earlier in my life or
while drinking or whatever, it's, it's a poetic, it's a poetic way to think
Digital energy, you know, yeah.
yeah, it's much like, it's much like your, do you hear this slogan?
It's a little bit of a metaphor, right?
Like, um, I think if I want to be more precise, I would say
that Bitcoin is sold for energy.
And that doesn't mean it is energy, right?
That's, that's a very different statement.
Just because something is exchanged for something doesn't make it that thing.
And so I think Bitcoin is a market in which we exchange energy for
Oh, you mean it's bought, it's bought for energy, right?
Bitcoin.
Yeah, and of course an exchange can be looked at as a buy or a
sell depending on which asset you
Yeah, yeah.
But I mean, I mean, the process of mining is really buying Bitcoins
for energy, in a way, since you sacrifice energy to get the Bitcoin.
Yeah, it's from the miner's perspective, I would say that you are
buying the Bitcoin with this energy.
And I would say from the network's perspective, they are selling
the Bitcoin for that energy.
Yeah.
Uh, uh, which implies the, the somewhat vulgar word, word
monetary energy, which is...
It's like this cross between physics and praxeology that can't
really, they don't really mix.
Yeah, it's, it's, it's a metaphor.
And that's, that's fine.
Yeah.
Like, but that's, that's, that's not a real thing.
Like it's just, there's actual energy.
I mean, real energy is, is used to make, and if you will, if you would like the
human choices that go into that decision, like someone has to make the choice to
use that energy to create hash rate.
And then they sell that hash rate for Bitcoin.
And so I think sometimes I think about like, Bitcoin uses energy that like,
it doesn't really even use energy.
people use energy to buy Bitcoin.
And That's just a market phenomenon, and it's so much of what we find compelling
about Bitcoin, in my view, and so many of its strengths, and I think perhaps
you would agree with this, this corollary to your earlier statement, is like,
because of the freedom, or the human action, or in my words, the market
that underlies Bitcoin, that's really what creates the properties we want.
So the uncensorability, the robustness, the scalability, like, these all come
from the fact that, like, someone is being paid, To provide this service,
and the mechanism of paying them is robust, and hard to stop, and so the
market is just hard to stop, and grows tremendously quickly, has no barriers
to entry, no regulations, other than the very, simple, clear regulations
that exist in the code base, right?
Those are part of the contract, if you like, of the market, and how it must work.
Thank you.
um, build and settle goods.
So like there are regulations, they're just not regulations that are like,
you know, by fiat in a parliamentary or legislative machine, right?
They're just sitting there in the code, and everyone has these really strong
protections, and the barriers to entry are extremely low, and the rewards are real,
and so It grows tremendously quickly, and that's an amazing thing, and I think
that I often, like my shtick, if you like, right now is, um, we need to stop
thinking about blockchains and technology and anything that Drew, you know, found
interesting in 2011 about Bitcoin.
Like, that's not the point.
Like, we need to think about the economic incentives and the markets,
and we need to think, how do we build markets to do other things that are as
robust as the market we have at layer one, that allows Bitcoin to operate.
And of course, that market is going to have to use Bitcoin because the strength
of the currency is going to help define the strength of those incentives.
And for me, a lot of the discourse that Bitcoiners and altcoiners are
sort of having in between them is like they're talking across purposes, right?
Like, altcoiners have decided the blockchain is the thing that matters
and they want to invest in the technology of the blockchain and make
it more capable and da da da da da.
And of course, leads to centralization because they're not really
thinking about it as a market.
Whereas Bitcoiners...
I hope are more thinking about it as a market because, frankly, their
blockchain is not a very powerful one from a computing perspective.
A bitcoin blockchain can't do certain things that other
people's blockchains can.
And so we're actually protecting ourselves from a whole swath of bad
ideas, and we're forced into, therefore, thinking about Things like Layer 2,
right, which are separate, they're not a block, like Lightning is not a
blockchain in any way, it's just a peer to peer application that offers market
incentives to use Bitcoin to solve certain problems for other Bitcoiners.
That's a very healthy way, I think, to engineer solutions
to problems, um, using Bitcoin.
Yes, yes, we agree completely.
And this is also why we use the, we don't use the term altcoins
here on the Freedom Footprint show.
We, we use the term, uh, what we in Spain would call monedas de mierda or something.
Uh huh.
Shitcoins.
Got you.
exactly.
So, um, that's the preferable term here.
All right, from one thing to another, um, tell us about Unchained Capital.
I mean, uh, there's a lot of, a lot of things going on.
Just recently started collaborating with the, uh, the Bitcoin
advisor in Australia, right?
Yes.
Yes, we did.
Yeah, I think a little bit more publicly and formally, but yeah, it's been
a long relationship for many years.
I think just in general, this concept of working with advisors is something that
is, that is really interesting to me.
Um, I've often spoken personally that, You know, I think I have an incredible
financial advisor, but they really don't like Bitcoin, or they don't
get it, or they think I'm too heavily invested in Bitcoin, and that's not a
perspective that really resonates with me.
Um, I think I'm the right, I think I'm the right amount of invested in
Bitcoin, which is, I have about as few dollars as I can tolerate having.
That's my, that's my life.
and...
I think my advisor performing their fiduciary duty towards me, and they
don't agree with some of my worldview around this stuff, they kind of think
I'm making a mistake, and they're like always trying to steer me towards, I
think you should sell some bitcoin, you have a lot of wealth locked up in
bitcoin and an unchained capital, which is actually just a More Bitcoin, right?
Um, so like, sell some of that, go buy ETFs and hold on to those, and that's
very good advice, like, like I think, um, on some level, and I think my advisor
has to give me that advice, but it's not advice that, that, that I'm gonna
ever take, and so there's a, there's a
So, so it's not good advice then.
Well, I mean, I guess what's good in this case, right?
It's like, depending on if it turns out he's right, it's good.
It's going to be good advice, right?
I should have done that.
But if it turns out I'm right, then of course, it's bad advice on a level, right?
There's also knowing oneself and so on.
So it's like, I've come to accept that there's a big gap a lot of times between
a person who is like, gone into Bitcoin and then and gone far and then any
traditional form of financial advice.
But at the same time, like I really value my financial advice.
They solve a lot of problems for me and like many of the areas
of my life that aren't directly sitting related to Bitcoin.
Um, so I think it's generically very useful.
Person to have, not, not everybody needs one, you know, like I think
I'll speak for Joe when we both sold our business and we made some money.
I immediately went and got a financial advisor.
Joe immediately started reading S1s and managing his own investments, right?
And it's like, I'm not going to do that.
So like I hired an investor, an advisor, right?
So different strokes, different people.
I get it.
Like not everybody needs it, but I need it.
Like I'm not great with money and I need a person to tell me what to do
sometimes and give me good advice.
But when that person has a completely different worldview
about what's happening with money, suddenly it becomes hard again.
Right?
And so I, I love the idea that there exists now a brave population of
financial advisors who are willing to like, experience ridicule, take
on personal risk, perhaps like be one of the first people in their
country or their jurisdiction talking about how actually no, my fiduciary
responsibility is to tell you to buy Bitcoin in some appropriate amount.
To help you do that securely, right?
To help you learn about keys, to help you think about inheritance.
This is a new asset class.
And, um, I've come to believe truthfully that, you know, I think
a financial advisor has a investment management mandate typically
when they are managing dollars.
They're part of what they have to do is they have to grow those dollars.
That's like part of what you expect from, from them in a world that's
ever in like sort of hyperbitcoinizing like that, that requirement,
that mandate is, is minimized.
if they're helping you manage your Bitcoin, right?
Like they're not, they don't need to invest it.
It's going to grow.
It's, it's deflationary.
Like that's, uh, they don't need to do that work.
So, in a sense, like, what replaces that work?
And I think there's a lot to replace it.
Like, there's a lot of things to learn now about key management and
sort of inheritance and security and all sorts of other aspects of Bitcoin
ownership that are totally unique and different than, Traditional financial
planning and investment management.
But I do think that these are the remit of advisors.
And so I'm seeing with our partnership in Australia and hopefully more
coming partnerships with other advisors and other firms, like people
who are taking on that challenge.
They're saying, okay, it's not just my job to tell you that Bitcoin
is good or educate you about it or help you decide on an allocation.
It's actually, I have to go further.
I can't just say, go buy 10 percent of your net worth in Bitcoin
and let you go use Coinbase.
I need to help you actually come up with a real solution.
So are you thinking about self custody?
Maybe collaborative custody is the right model for you.
Maybe I need to hold a key as your advisor in a quorum that
you also still have control.
Like, there are lots of interesting structures right
there that get to be created.
And I think the best advisors are already thinking about those issues.
Yes, and, and, you know, there's no, uh, one size fits all solution for this.
Every, every Bitcoiner needs their own solution to all of these problems, really.
It's so, so personal, since it's just information at the end of the day.
It's, it becomes part of you, and it's very, very personal.
And I always joke around with...
Peter Dunnworth, the Bitcoin advisor about these things and say, I tell him
that, like, you have the easiest job in the world for the next hundred years.
Like all you need to tell your customers is buy as much Bitcoin as you can.
Like, and he, he has this thesis that as long as you have one Satoshi more
every year, you're a total winner.
Like there's no way you can lose if you have one Satoshi more this
year than what you had last year.
And there's something to that.
You know, that's an interesting framing, but I think you know this, but just to say
it out loud, like, it is not an easy job.
It is not easy to be one of the first people in your industry to
come out and say, Bitcoin is good.
Like, trust me.
Hey, all regulators come and look at me and, you know, inspect every
little thing that I do, because you think I'm somehow now doing something
untoward with my clients, right?
Like, there's a lot of costs to deciding to be public about
supporting Bitcoin in that industry.
Absolutely you have, you have to go to El Salvador to be a, a, a
financial advisor properly these
Or, or you, or you got to be brave and you got to be willing to do it on
your own and you don't get a lot of the protections of a massive firm that
is too timid to endorse your strategy.
Yeah,
ahead of the curb,
Exactly.
So, so what else is going on at the on chain?
What, what are you working with at the moment?
So, uh, the advisory is just, you know, one of the leaf nodes of a, of a big tree
of value that we're trying to create here.
You know, I feel like the core, the trunk of that is just the
concept of collaborative custody.
You know, something that we came to very, very early in our business's history.
Just, there's multisig, which is, you know, built in a Bitcoin.
Anybody can use multisig through free tools and wallets, some of
which we've created, like Caravan.
But there's collaborative custody, which is the notion that multiple parties
should be holding those multiple keys.
And come up as you say with a bespoke like model that fits the
situation and sometimes different quorum sizes, different, allocation
of keys to different parties that is appropriate or not appropriate
depending on the person and the product.
And so I think the way to think about Unchained is we couple the custodial
solution to the financial product.
And we don't agree that they should be separate.
We think they have to be together in this early stage of, um,
you know, Bitcoin adoption.
And so when you get a vault at Unchained, it's a multi sig vault.
It's two of three.
And because of collaborative custody, you as the vault owner,
the depositor, the funds holder, you're going to have two keys.
And Unchained's going to have the third.
So this makes you sovereign, right?
Like, you have two out of the three keys.
Two keys are necessary.
You can move the funds at any time.
If you lose a key, Then you can always work with Unchained and now
we'll have the second key and we can recover and sweep the funds, but of
course, because we only have one key, we can never move them on our own.
This is a beautiful compromise between the strength of self custody, uh, and without
the dangers, right, of being singularly responsible yourself for doing all this.
Some people can do that, not everybody can, and so this is a great solution.
the same exact multi sig structure, two of three, is what Unchain also
uses to power our lending program.
So you can borrow against Bitcoin, you can collateralize the value of
your Bitcoin and get dollars out.
Um, you don't have to sell it, which is almost always economically the
right decision because Bitcoin grows so quickly, you definitely don't
want to sell it if you can avoid it.
So we still use a 2 of 3 multisig for our loans, but we choose to distribute
the keys in a different quorum.
So instead of you as the borrower holding two keys, which would allow you
to just, you know, walk away with the collateral, you only get to have one.
And Unchained will have a second key, and we'll have a third key
held by an independent third party.
It's still a 2 of 3, and each party has one key, so no single party can
now move the funds on their own.
This is a very stable structure.
If we want to liquidate your loan or we need to return it to you or whatever it
is, we're going to have to collaborate either with you as the borrower or
with that independent third party.
And so this is a really nice conceit because it gives us a lot of safety
around collateral management.
Um, You know, as the borrower, we're not rehypothecating your
assets on the back end, right?
Like these are very powerful protections and they're delivered to all the
participants in the, in the custody through a cryptographic channel.
So you don't even have to trust that we're doing this.
You can verify that the product works the way that we're describing.
And I think part of the reason that Unchained is one of the few lenders
in the Bitcoin collateralized world left, at least, you know, in the world
and in the United States, is because of these constraints and protections.
You know, I'm a big believer that.
Almost everything that, that is allowed is, you know, mandatory
almost, um, or will happen.
And so if you put in hard constraints in your business, like we can never
do this, it prevents whole like, like modes of behavior and malfeasance and
whatever else, you know, Unchained has never had to, um, ask ourselves, should
we rehypothecate our client's assets?
Should we make an investment in this dangerous thing to make a
bunch of money for our own business?
We can't do it.
Right?
I would like to believe we never would do it, even if we had the ability,
but we don't have the ability.
And that means we never have to ask the question.
So we don't have to rely on our moral character, or our strength, or like
the alignment of our executives.
We just built it into the product that it's just fucking impossible to do it.
I love that.
And it means that I don't have to constantly be the cultural, you
know, watchdog making sure everybody is doing all the right things.
It's just built in.
And I think that's super powerful.
And this is like in line with the Bitcoin ethos, I guess, in a sense,
then is that, is that why you make the moral choices you make or is
It's, it's, it's a mix, you know, truthfully, like, I think I'm, I would
say today in 2023, I can say truthfully that I think this aligns better with
the Bitcoin ethos just overall, but I would say that in 2017, 18, when this
was all being built out, I don't know that that was the reason I was building.
Like, the biggest reason I was building it was security.
Because I looked at, okay, what is my budget?
I am a seven person startup.
You know, I have this much money.
How will I protect my clients funds?
Am I really going to be able to do a better job than, these giant
exchanges that literally were hacked you know, last week or whatever?
I know I'm scratching my head being like, man, there's no way Big
companies get hacked all the time.
I will never be able to keep the stuff safe on my own.
And so, what do I do?
Do I just not solve the problem and make it BitGo's problem or Coinbase's problem?
Or give it to a custodian?
Like, that is almost the rational choice.
Because you say, this is very hard, I don't have the budget to do this, I'll
pay somebody else to solve the problem.
That's just great economics, right?
That's specialization at work.
But in my head, I was like, fuck that.
I don't trust those people.
Right?
Because isn't the notion of centralizing custody part of
what leads to these bad outcomes?
Like, you know, Mt.
Gox and Bifinex and all these things.
So I kind of just convinced myself, dude, I have another option.
Multi sig exists.
we were already using multi sig internally at Unchained.
We had all the keys and we were just using an internal multi sig
quorum like most custodians who do custody will have something like
that internally to their systems.
And I realized we should just share the keys.
If I just spread the keys out, like, between me and all the customers, then
I'll have keys around the planet, and to attack, the Bitcoin, you'll have to
hack me and 10, 000 separate customers?
That's not going to work.
Like, you'll just hack somebody else.
And so I started to think to myself, like, okay, I got to do this, like,
and it's because At this point, then I can live in a world where Unchained's
private key, like the loss of that private key, does not mean the loss of Bitcoin.
Now, obviously, we have never lost our private key, we've never been hacked in
that way, I never intend to be, it'll be a huge pain in my ass if that happens.
But if it happens, it's not the end of the Bitcoin.
And that was very important to me.
I had to live in that world, otherwise I couldn't go to bed at night.
choice?
So, so how KYC does this, like
how much KYC?
Yeah.
Oh, very, very.
We are a US financial institution, we are regulated, so we know who our
So you need to follow, follow,
need...
Yeah, we do.
And now, to be fair, we're not zealots about it.
I think we collect the minimum data that we need in order to
legally and safely, like, be able to offer our financial products.
I'll also go further and say, though, part of what I've realized is, even
without KYC, right, as a regulation, as a practice, I completely endorse it.
I need to know who my customer is.
I'm in collaborative custody with them.
They're going to ask me to sign a transaction.
I need to be able to verify their identity.
So there's this notion of, like, of privacy versus anonymity, you know,
and I think I'm, like, Unchained lives in a world where we cannot offer you
anonymity, one, because of regulations and compliance reasons, two, because we
must know who you are in the real world so that we can verify your identity.
We're constantly under attack, and our clients are constantly under attack,
and the fact that we know what they look like, that we can, Reach out to
them in the real world, that we can use non, you know, application web based
channels to just have that conversation is really important to serving them well.
I wish that there was no government connection to this.
I wish that only, only we needed to know.
We never would be in a position to have to share that information ever.
But as a regulated financial institution, like, we have to comply with subpoenas,
like, like we have to do other things.
So it's like, I take a little bit more of a nuanced view that us
knowing who our customers are is really, really valuable and important.
and it helps protect them.
And so when you work with Unchained, you are saying, I am okay losing
anonymity, but I still demand privacy.
And so we work incredibly hard to make sure that we don't
leak customer data, right?
We build a lot of things in house when we use third party services.
We minimize absolutely the amount of data that's going to those systems.
We've been largely successful, if not perfectly successful in our business's
history at accomplishing this.
It's a, it's a very much a trade off.
Now, with that said, I think there's a huge space for anonymous,
versions of collaborative custody.
And eventually, anonymous financial services as well.
Um, it's just harder to build those things.
and I think where I'm sitting, like, we're building the thing that
I think comes first know, like, I love, like, the BISC guys and, like,
a lot of the other approaches to being able to do truly anonymous.
Exactly, man, that stuff is great, and I think it has to grow.
But I also live in the United States.
I'm building a business in the United States.
My investors and employees live in the United States.
I'm trying to be...
I'm trying to build a thing that makes sense here.
And
You're building a bridge, aren't
yeah, very much like, and bridges, bridges are, were thematically all
over our website for the first three years of our existence, because we
saw that too, where like, we need to figure out, like, it's going to take
time for us to make Bitcoin Bitcoin.
replace the internet, and like, the impossible to be surveilled, and like,
that's gonna take a couple decades, like, and between here and there,
dollars are still gonna exist and be important, so like, let's be the
bridge that like, allows Bitcoin to be more useful, to like, gives Bitcoiners
more options, and then eventually, hopefully, we ourselves are putting
certain product lines out of business.
You know, in 30 years, if Unchain is around, are we still gonna be around?
Doing US dollar loans, like I hope not, you know, like I
hope no one wants those loans.
I hope the dollars doesn't exist anymore by then.
So,
So there's a certain sense in which I understand that like there's a
now and then there's a later, and I'm trying to build for now, but
still in a way that is principled.
I don't want to make short term decisions, for example, well eventually
people want to have their own keys, but right now it's hard to screw
it, I'll just have all the bitcoin, I'll rehypothecate it, and I'll do
whatever, like that's, that's not right.
Um, so I don't know.
A little bit of nuance, I
so as a specific question about the KYC process, like, is, is
the Bitcoin public address?
do the, do like regulators ever ask for that?
Or is it just like this person bought Bitcoin Bitcoin for
these men, this many dollars?
does it ever include the actual Bitcoin address and, and,
uh, the amount of Bitcoins?
You're starting to ask questions that are at the boundary of what I actually
literally know about the business.
But in general, they're not so interested in the addresses and stuff like, I
don't think of the world that way.
You know what I mean?
Like in some cases, for example, if we've had like an attacker, like, like
attack one of our clients, and we've had to therefore file a suspicious activity
report, like we may So thank you.
We want to include certain information in that situation.
We might want to report certain address information to law enforcement, right?
In the cases where we've had clients who are being attacked and in the
physical world and like there's all sorts of, you know, as a bank,
we wind up in that situation.
But in general, no, I, we, we seldom get like requests to be like, Hey, I
need the addresses of these people.
That's just not a thing that gets asked for.
Right.
Yeah, the, the, the reason I ask is because I've, I've heard the same
story from a lot of companies in a lot of countries that like, uh, the
KYC thing is one thing, but it's always only on the Fiat side, really.
And the Bitcoin side, uh, the people who make these laws and the people
who are supposed to look into the, they know nothing about this stuff.
So it's, it's, it's hard for them to,
And, and ironically, the fiat side almost solves itself sometimes because.
Like, we're not required to do AML, stuff, like, when we get a deposit of
dollars coming in, because it's coming from a US bank, and the assumption is,
oh, it's already in the network, and therefore, like, they're doing that
work, and whatever else, like, there are, like, the requirements can be a little
bit more onerous on the Bitcoin side, but at the same time, like, because,
like, what are they supposed to say?
Like, there's no requirement that we must chain analysis everything,
like, that's not a real law, you know, they might say, okay.
For example, for a lending against Bitcoin collateral, they might say, well, you
need to know where the Bitcoin came from.
Like, where did this person get the Bitcoin from?
So we'll ask them, where'd you get it from?
They'll say, I bought it in 2017.
And we'll say, great requirement met, you know, like,
The thing I, the thing I hope will happen in the future is
that more and more people.
writing laws, and thinking about laws and, and, uh, regulations, uh, that,
you know, ownership of a Bitcoin is so different from ownership of anything
else because it's just keeping a secret and there's no way to tell if
someone else also has that secret.
So there's, there's really no way to tell who used a Bitcoin.
because what does using a Bitcoin even mean?
Like you move a number in a database that is shared by everyone
and there's a likelihood that's.
Someone else knew the secret, like, there's like, no real connection,
the connection to the number is so personal, so it makes all of
these legalities, if you will, very strange, They feel outdated somehow.
It's, it's, it's like intellectual property that
like, it doesn't really work.
Then again, we're we still live in a world where we have to follow rules,
but, but I hope that more and more people will start thinking about these things.
I mean, it's a process.
And unfortunately, I don't know that Bitcoin companies have done
the best, have the best track record in educating legislators yet.
You know, I think the shitcoin land spends a lot of time and
money because maybe they have money to burn on lobbying and whatnot.
Like, we're not, we're less successful.
I think there's concepts like custodial, like, what does it mean
to be a custodian when there's multiple keys and multiple parties?
Like, who is the custodian now?
Like, what is, what do you, what do you even mean anymore?
Like, that's not possible.
You can't have dollars in a multi sig arrangement.
You can't put real estate in a multi sig arrangement, altcoins
for real estate, notwithstanding.
It's like those ideas really need to be rethought.
You know,
Yeah, and unhosted wallet, what the EU is calling it now.
Like, what is that?
What even is that?
Like, so,
so it's forbidden to remember 12 words now?
Because that's an unhosted wallet, right?
If I, if I say the word bacon
12 times.
Yeah.
a criminal.
No, no.
I, if I remember the word bacon 12 times, I'm a criminal, because
that's a valid Bitcoin address.
and, and I definitely believe that, like, however you might, if you wanna
give people as much credit as you can, and you might say that their
intentions were good in the sense of wanting to prevent bad behavior that
is destructive to society, but the implementation of centralized businesses,
tracking everything about each person.
Never.
That's not a good solution.
Like that just causes more problems.
It causes the centralization of consumer data, which inevitably leaks and causes
problems for every single person that had to participate in that process.
It slows down my business, makes me implement and or use services I don't
want to use and I think are dangerous.
it's an anti pattern and I'd like I just think it would be much healthier
if there was a different philosophy here in place about how to try to affect the
same outcomes, nobody wants terrorists lives to be easier because of Bitcoin,
but the solution is not make everyone's lives impoverished and worse by having
it all be tracked by some government agency or whatever it is, right?
Like, whatever you think the problem is, right?
don't solution a worse problem.
Right?
But then, then again, if people's lives were easier, they might not
want to be terrorists as much.
So, like, it's,
that's this, uh, the road to hell is paved with good intentions thing,
Yes.
uh, going on.
Very much.
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Alright back to it.
Don't forget to like, subscribe, and brush your teeth.
Drew, maybe you can tell, tell us a little bit more about, um, cause, cause you've
taken the conversation a few different ways here so far and, and the, a couple
of things that were interesting to me before, um, this conversation, you've
covered a lot about the collaborative custody, but maybe kind of from the, the
ideas side of it, what do you hope that the, the role of Unchained looks like?
this 30 years, 50 years into the future and maybe a little
bit along the road to there.
Have you thought about that?
Yeah.
I mean, a little bit, I'll give you an answer maybe in two stages or generations.
You know, there's, there's what, what I like to.
to accomplish in the shorter term of that very long time period.
And obviously, you know, I would like Brunchain to become a
profitable, best in class bank and private wealth management business.
I think the model that we have is extremely, compelling for our clients.
I think we give them more control and transparency into their finances than they
would ever get from a traditional bank.
I mean, consider this, we ourselves make open source software and
train our clients on how, if we were to disappear as a business.
Or even if we're still around, for that matter, they can, in a simple
transaction, use their own keys to extract all the Bitcoin in our
platform, wherever else they need to go.
we work really hard on educating them, that like, this is your coin, you're the
one responsible, we're helping you, but really, you're in charge, and if you don't
like us, you don't like what we're doing, we disappear, we fail, we try to rug pull
you or whatever, like, you can get out.
on your own, independent of us.
And it's such an important point.
think for a lot of clients, they'll never do it, but they just
like to know that it's possible.
but because it is possible, we're then put in the position of, it's very hard
for us to, like, lock in our clients.
If we give them bad service, Or our product degrades, or they have a bad
experience, like they're 25 minutes away from moving millions of dollars
in one bitcoin transaction out of here back to somewhere else, right?
And in a world like that, like, how are we then incentivized?
Like, what, what, what is the behavior you expect from us as a business that
seeks to, like, grow and earn revenues?
We work really hard to retain those clients.
We have incredible customer service.
You call us, you get a human being on the phone.
we have to work hard to keep those deposits in our system.
And I love that.
I love that for us, because it makes us a better business.
It makes us what I wish banking were, which is value added custodianship
and help and financial services.
Not, I just got a mortgage recently for a new home, It was a disaster.
It was a terrible experience.
I was treated like shadow by the bank.
Um, I was prodded and asked for questions and they weren't listening to me and
they don't understand my business and they don't treat me as a human being.
I didn't even get a good deal out of it.
and I wish they were on chain gate mortgages because I know I
would have gotten a better deal.
I, they would have recognized my Bitcoin wealth a little bit more, right?
Like I would have not felt like such a commodified human being.
Sorry for interrupting, uh, but it feels like banks have been becoming worse and
worse these last couple of years, that something really crucial has shifted
when they can, you know, just shut off accounts and maybe they could that all
along, but they've been doing it for real, like, and it's, it's pretty scary.
What they're capable of.
Yeah, and I would like to operate a bank that has a different calculus
for what they think that they are.
Like, banks are all about, let us get as many of your assets in place,
and let us rehypothecate them, and there's this question, like,
how does the rehypothecation of a depositor's assets help the depositor?
Yeah, exactly.
Like, I have examples from my own life.
I tried to withdraw a quite large amount of cash a while
Mm hmm, that's suspicious, man.
What are you doing with that money?
the cash for?
none of your business.
It's my money, isn't it?
but no, they need to know.
no, it's, and, and it's like...
We're trying to work in a different mentality, which is instead of our
revenue model being like, we give you everything for free, we take all your
money, and then we expose the risk, um, and we don't even tell you about it,
and you have no transparency into what's happening, and then we hassle you as
you try to take money out of the system.
We want to invert a lot of that.
What if you just pay us directly for the value that we provide to you?
And then what if we give you freedom and control to walk away
at any time and stop paying us?
This is a better set of incentives for us to operate on, like it aligns
our interests with our clients.
And the reason banks can't operate this way is because the banking industry is
is predicated upon the notion of reation.
That's how banking works, man.
And every time we go to traditional organizations, they look at our business
and they're like, I don't know why you don't just rehab, ate this stuff
doesn't make a lot of sense to me.
You guys would be making more money in the short term if you did that.
And my answer was always like, yeah, but that's not.
That is not, I don't think what banking is in the Bitcoin world.
And I don't want to build some hybrid yahoo.
com.
Uh, I want to build like the real thing.
and I think that requires having some courage and putting some constraints in
place and risking short term revenue in order to build something really sticky.
And I am proud to say, I think what we've built is incredibly sticky.
Like unshamed clients do, do not leave.
Like we have incredibly low churn.
Where are they going to go?
who has a better set of incentives to serve them and who has a better product?
so, yeah, so what differs you from other, uh, similar services
such as Casa, for instance?
Well,
so I'll first say like, it can be tempting if you're an entrepreneur to hate the
businesses that are closest to you.
yeah, yeah, I, I mean, I, I don't want you to talk shit about
No, I no, my point is that I never would because that's not
the way that I approach my work.
I hate when this Bitcoin wallet has beef with this Bitcoin wallet.
I'm like, you guys are idiots.
Like, you're in the same industry.
You need to support each other.
You should be fighting altcoins and apathy.
Like, those are the biggest competitors.
And what I always will say, if you're not going to use Unchained, please use Casa.
Like, they have an incredibly good product.
Like, I love their team.
I've learned so much from Jameson in time.
It's like, I, I think my product is better.
That's why I work here.
And that's why I built this.
I think the fact that we bundle financial services and lending and buying Bitcoin
and inheritance, and this is makes our product and our platform more valuable.
I think we're going to grow faster as a business as a result of those
real understandings of what Bitcoin is and where the value comes from.
I think ultimately custody is going to be commodified.
And a lot of people are going to offer multi sig collaborative custody.
And that's a good thing, not a bad thing.
I'm excited about that.
That creates more options for consumers in the marketplace.
So in general, I like to believe that it's us and Casa and other
Bitcoin oriented companies against everyone else who doesn't get it yet.
but I do think there are things that distinguish Unchained above
those businesses at the same time.
I'm very happy to hear this because this is, this is a thing that we,
uh, me and Luke talk about a lot and, and, uh, with our guests on the pod
as well, because we strongly believe that, A Bitcoin company is a Bitcoin
is a company who realizes that, we're all incentivized to collaborate.
So, so free market competition is a different thing on a Bitcoin standard.
in the fiat world, you fight each other and, and you, whoever
provides the best, well, you.
engage in catalactic competition is the correct term.
So whoever can make the best product to the cheapest price is supposed to win.
But in Bitcoin, it's even better than that because like Bitcoiners are incentivized
to help other Bitcoiners succeed.
Because when we do, we help Bitcoin succeed.
So we all, we're all incentivized to help one another.
And so, so to me, that's very reassuring to hear that you want Casa to succeed
because that's, That's what I want to hear from Bitcoin companies because we
should want our competitors to succeed because this thing is, is not about us.
It's
about us.
You know, and I, I still wanna, I still wanna win.
I still wanna be the best Bitcoin company, et cetera, et cetera.
Like, of course, but truthfully, I, I, I don't want it to be just me that wins.
I want there to be real competitors out there because they make me better.
Like, it is easy to get lazy and to take for granted the service you
provide to your users if you're the only place they can get it from.
If you know that there's another competitor that actually has a
really pretty good product, it forces you to always be your best.
And frankly, I have had so many competitors that are so terrible.
they're liars, they're frauds, they're people that I think their product is
toxic and it hurts people and they use it.
I welcome competitors who I actually respect, who I think produce good product
and actually care about their clients.
I want more of those.
And every time, a new player enters the arena that I think has good intentions
and has the same worldview and vision that I have and is trying to build a
good product, like, I'm just happy.
That's good.
That's good for consumers.
I'm a consumer.
I mean, I feel like on some level, like, I'm not sure.
I think, I think I might think of myself as like just a person first, like when
I, when I approach my business, because like, I am a client of my business as
are so many of my friends and family.
And it's very hard for me to make decisions that are like good for
my business, but like bad for me as a client and bad for my
parents or my, family and friends.
Like it's doesn't, it's hard to behave that way.
Right.
Like, I don't know.
But do you think, like, do you agree with the, that companies that are run
by actual Bitcoiners have a different approach to free market competition than,
than You know, Bitcoin companies run by fiat minded people, because I see a
difference there where the fiat minded people just want to, you know, shut the
competition out and fight the competition in a way that Bitcoiners true Bitcoiners
at heart, they don't do that in the same
We're caught in the no true Scotsman fallacy almost here, right, because
there are many examples of people who ostensibly are Bitcoiners and
operate Bitcoin companies who behave like asshats all the time and are
wouldn't call them Bitcoiners though.
exactly right.
So at that point you say, well, you've lost the mantle,
like because of your behavior.
So like, to a degree, I do agree with you, but at the same time, like, I
think there are examples of people who like, maybe they talk the talk,
but they haven't really got it right.
They haven't understood that, that, like, okay, fine.
I understand you compete with that business, but they're
such a great business.
Like, focus your negative attentions on some other problem, right?
It's like,
But that's what I view as a fiat mine.
Like they're in it for the fiat gains and not for the, not for the Bitcoin.
so they're in for the short term gains rather than the generational wealth
and building, building something robust for generations to come.
they're acting like a bitcoiner superficially, but they kind of
caught in a fiat mindset, perhaps.
Yeah, exactly.
yes, there was one other thing that I thought, uh, before this interview, I
stumbled on a video on your, on your Twitter page from BitBlockBoom, where
you talk about the, and I had to retweet it because I thought it was an amazing,
uh, explanation of Nakamoto Consensus, uh, do you remember what you said there?
Yes.
Can you give us the, the TLDR here?
Because, I just loved it, and I love every good framing of
whatever Satoshi stumbled upon.
Yeah, for sure.
No, I feel the same way.
I feel like, uh, there's room for a lot of people's books and
attitudes and explanations because there's, it's such a rich idea.
So I'm like you, every time someone says like, here's another way
to look at why that's valuable.
I'm like, yes, write that down.
That's great.
Um, so that was my attempt, perhaps that for myself, like coming up with how I was
feeling at the time after having done a sort of last year or so, I've been doing
a lot of, Reading and research on like the white paper and the references it
contains and kind of doing that proof of work for myself, like that I hadn't
really ever done before, like at that level of depth, um, because I've been
trying to write a little bit more of a historical piece and also a future looking
piece on kind of these ideas around markets and incentives and, it forced
me to want to like really check my work.
So in so doing, I kind of like, it changed the way I was actually
thinking about what was innovative, um, about what Satoshi accomplished,
because I think I didn't realize.
Until I did this work, like how much of Bitcoin had already been conceived of by
many other thinkers in the space, like Nick Szabo and Wei Dai and a bunch of
other players, like so many of the ideas, including things like a blockchain or
proof of work to create money supply or chains of, public key signatures as a way
to think about transactions, like all of these ideas are like old and existed, for
in fact a decade or more, and so I kind of found myself being like, well, what
did Satoshi do that was new and unique?
And for a while I assumed that it was the difficulty adjustment, because that's
a very sexy, cool, new idea in Bitcoin.
But after this work, I kind of came to the conclusion that even the difficulty
adjustment is actually the consequence of an earlier thing that Satoshi brought to
Bitcoin, and I was able to put it, when it sort of hit me, like, oh, obviously
this is the thing, like, Satoshi is the first person or entity or group, I always
force myself to like, try to remember, we don't know who they are, is the first time
that someone brought a monetary policy.
Into a digital currency that be money and bit gold and a bunch of these
projects that existed in the past.
Like they had made all these links between money and proof of work and all these
notions, but anybody could create money.
there was no rule to prevent that from happening.
If you did the work, you could create the money.
and I think what's remarkable is Satoshi decided, I don't like that.
I want there to be a finite supply of money.
That was a, that was a monetary goal, many people, I think, saw the
value of a digital currency, like to solve problems of censorship or,
you know, transaction utility or whatever, like those ideas were there.
Right?
and I think there was a thread of stronger monetary policy throughout
some of that, but it was a little bit more focused on the cypherpunk ethos
of like freedom and uncensorability.
Thank you.
Satoshi was the first to really bring, no, there has to be strong monetary policy.
and my claim is, I'm not making an Austrian claim about economics.
I'm not saying that Bitcoin won because of its strong monetary policy and
finite supply for economic reasons.
That might be true.
I'm not debating that point.
That, I think that is true.
I'm making a stronger claim, which is literally the technical underpinning.
Like, how do you get the code to do the thing?
Right?
Like, once you decide, I want there to be a finite money supply,
everything else falls out of that.
And it's my claim that if you were to be given B money, like the
proposal that was created by Wayguy for how to have an auction for the
creation of B money, etc, etc, etc.
In which anybody can create the money supplies.
If I gave you that paper and I said, hey, take this idea of Wayguy's and eliminate
the freedom of users to create money.
make the money created on this fixed schedule.
Because I want it to be that way.
If I gave you that goal, I think you would invent Bitcoin.
And I think that was like the path that Satoshi took.
And b money is the first reference in the white paper.
And Bitcoin is b money with the freedom for users to create money eliminated.
that's my one liner about what I, what I now think and in that clip that you
posted, I made the claim that it turns out that you get, Nakamoto consensus
and double spend protection and all these magical things like they just
fall out of the code as soon as you decide you want this monetary goal.
And that's the reason that it was Satoshi, this weird cypherpunk guy
who thought about money, who came up with Nakamoto Consensus and made that
breakthrough, and it wasn't a computer scientist working at the cutting edge
of distributed systems theory, because that person's goal, they didn't, they
weren't thinking about monetary policy, even if they knew about B money and they
thought about Byzantine problems, like, they wouldn't have made this, this leap.
It was Satoshi's, like, First desire for a monetary policy goal that then became
the essential technical simplification that caused everything else to show up.
That's, that's my claim.
Yeah, that's so cool.
and it's all because of this internal limits of the thing
that makes like the longest chain actually be the most valuable chain.
It's beautiful.
So to that point, was Bitcoin the first cryptocurrency or
is it the last cryptocurrency?
Both.
Why not?
I would say it's more of the last than the first, but okay, uh, is it
an invention or a discovery then?
Oh, definitely a discovery.
Yes, we agree 100 percent on that as well then.
And I think I've written about that.
I think fucking aliens have Bitcoin and it works the same way.
Maybe they don't have the different shah, you know, or hashing algorithm.
Maybe it's a different, you know, total supply curve, who
cares that those are details.
But I think the idea that you build a market that Has proof of work to, uh, to
record, you know, in a, in a, in a, uh, append only log, like the transactions
of a society in a way that solves these coordination problems is a discovery.
It's like discovering fusion.
It's like discovering So, uh, to You know, DNA.
It's like, it's like part of the world around us.
And we, we, we discovered it.
Okay, so friendly aliens come to our planet, you know, like the aliens in
boxes in Mexico, they were probably friendly, they look friendly.
They come here and they have their own version of Bitcoin, Bitcoin
called Bitcoin or something.
And their, their chain is longer than ours.
More proof of work.
What do we do?
what money wins?
Theirs or ours?
Would we, would we exchange it for theirs?
I mean, I've written a huge amount about this.
I thought about this question way too much.
I think for a person who lives in an era where humanity can barely
make it off the planet, like I thought about this too much.
It's quite an unlikely scenario.
Yes.
Uh, I would say it depends, right?
Like, so a conclusion I also came to in, in those ponderings, which I,
if you Google Bitcoin astronomy, you will find the whole ridiculous series.
I think there's two ideas to play with.
One is that like blockchains like Bitcoin can exist or monetary systems, if you
like, or whatever, they can exist at separate points in space and that it's
kind of a stable concept that like, there's no reason to build another Bitcoin
blockchain here on earth, like for your special reason, like it makes no sense.
But if you go very, very far away, like there are challenges in using
Bitcoin or mining Bitcoin specifically, if you go very, very far away.
So it actually may make sense.
if you get, you know, light minutes or light years away from
Earth, like, yeah, you're going to need to build your own money.
Okay, I get that.
That makes sense.
And then there's the second idea of, well, actually, even in the same
place, it can kind of make sense, I think, to have a second kind of money,
but one that is, like, much larger.
So instead of having a block time of like 10 minutes like Bitcoin has, which is kind
of good for a planetary scale currency, what if you had a block time of 30 days?
now suddenly the scope or scale and energy budget and concerns and
time scale of this currency starts to look a little bit different.
It's not very practical anymore for A human economy of today, like on a planet,
but maybe it is perfect for a solar system wide economy where, you know, transactions
typically take centuries to confirm and that's okay because that's about how
long it takes to deliver, a gigaton of carbon, like around the solar system.
So there's these two ideas of chains that can exist simultaneously that
are far away, but also larger.
So coming back to your question, they show up and they have more hashrate than us.
Well, I guess it would depend which kind of blockchain we're talking about.
Is it their home planet's blockchain, which is infinitely far away
from us and has higher hashrate?
Okay, we don't give a shit.
they're here on Bitcoin land.
Now they're playing by our rules because hashrate is suppressed
exponentially as you get further away.
That's like one of the first results that I share in that series.
Conversely, If their blockchain is a galactic blockchain or some ridiculous
idea, and we're actually inside of it right now, and we didn't realize that,
and it has a higher hash rate than we do, well then yeah, you're going
to start to expect to see our guys starting to mine that, you know, parent
chain that we're sitting inside of.
Bitcoin
I absolutely love that answer because like, that's one of the
concepts that the people don't think about is the hash horizon.
And for instance, Bitcoin could not work on Mars.
and therefore They would need their own, their own blockchain, and
that can't function because they're basically creating a shitcoin.
So the way I put it in one of the books was the one short
principle, like the, maybe we've heard it, absolute mathematical
scarcity achieved by consensus.
in a sufficiently decentralized distributed network was a
discovery rather than an invention.
It cannot be achieved again by a network made up of participants aware of this
discovery, since the very thing discovered was resistance to replicability itself.
So in my mind, it's the awareness of the original thing.
That prevents it from happening again, because all of the, all of the people
aware of Bitcoin have insider information as to how, how this would play out.
So that's why it can't play out again.
That's the immaculate conception.
And everything in Bitcoin plays, like it's, if you take
a shower and use a towel.
You get one result, you get dry.
If you use the towel first and take a shower afterwards,
you get a different result.
So, like, the chain of events that actually played out
play a huge part in Bitcoin.
And we don't know if it would have existed at all if we just
changed the tiniest parameter.
So, in my mind, it's just like the universe and the
constants of the universe.
We don't know if we destroy the entire thing, if the model
have been just like in a...
infinitesimally small, digit of pi or something.
If that was changed, there might not have been a universe at all.
And I think the same is true for, for Bitcoin, that if one of the
parameters, if, what, The target was 12 minutes between blocks.
The whole thing might, might have fallen apart.
And Yeah, and if Satoshi hadn't waited for the second miner to come online
for two weeks before he started mining, it might not have worked at all.
We don't know any of this.
All we know is that it works now and we can observe it and, uh, yeah, and
that's why it's so insanely fascinating.
But I think, I think also there's this notion of like, We're so early that
we barely understand it, you know, I think, like, 300 years from now and
Bitcoin has been ascendant for centuries and everyone assumes this is how it
always worked, it's so fucking obvious that Bitcoin, da da da da da, like,
I think our level of understanding of All of this will be higher, right?
To the point where, potentially we will have an engineering discipline
of like, okay, how do you launch a completely market driven,
decentralized system to solve a problem?
Like, you follow this methodology, right?
it's just engineering at that point.
in our grandchildren's minds, us three here, this conversation
will be drooling idiots.
Like,
yes, exactly.
Yeah.
there's no way around that.
So I hope at least has entertainment value to them so they can laugh at us.
But the thing about the awareness, if we go back to the alien thing, uh,
That's why I think you couldn't really bootstrap, a galactic blockchain after
you found it for your own planet.
And you probably couldn't build a galactic civilization before
you found it on your planet.
Right?
So it might not work at all on a galactic scale.
Who knows, man?
Who has any idea?
I think in my suppositions, what I took to be a path was, like, we would, through
this engineering discipline, like, if there are problems that that thing solves,
that we couldn't solve with Bitcoin, because Bitcoin is inherently finite and
a certain size and built for a certain scale, which is to say the scale of
planet Earth, um, um, Maybe it solves a problem and then maybe we would build it.
And so I spent a lot of time trying to justify to myself why, if you're
sufficiently far away, you struggle to use Bitcoin and therefore you have
a real problem that you can solve by replicating a new version of Bitcoin.
And to me, this is, this is a fun experiment at work because when
I first had these ideas and I was like tossing around to my, you
know, my Bitcoin maxi colleagues.
They're like, fuck you, dude, you shit coiner.
Like, what are you talking about?
Like, but then it took a little while to say, well, no, there's one, there's
one difference, which is I'm talking about doing this so far away that
like, that's a meaningful new idea.
Right.
That like, it's not like, it's not like, oh, Bitcoin is
imperfect in this one tiny way.
I want to change this one thing about it.
And that's why I'm going to succeed.
It's like, that's not, that's never
No, no.
But that, But that, is the awareness part.
That is the awareness because it has to be far, far away enough for, for
there to not be an awareness about it.
Like, uh, so, so that's part of the hash horizon in that stance in my mind.
Uh, and, uh, Why, why it can't be, This is one of those abstract concepts that
I just, simply just love because it's so bizarre and yet so fun to think about.
It's
it was a fun argument that we, I think we did a poll was like.
You know, if you were to live on Mars, would you prefer, like, would you
join the Mars new coin revolution?
Like, yeah, whatever, like, would you, I think I called it a must coin revolution,
which I'm unhappy about now, but whatever.
Um, it's like, would you be a Bitcoin, like, Tory, or would you go support
must coin and be a revolutionary?
That was the, that was the question we asked, and it was fun, man.
People argued about it for a while, because it's interesting, right?
Like, you, you feel like a shit coiner saying, well, no, I wouldn't want to
use Bitcoin in that situation, but it's an interesting, I think, Litmus
test of are you the kind of person that believes Bitcoin is the solution
to literally the entire universe's needs to exchange economic value?
Or do you accept that there actually may be some limitations potentially?
It's an interesting question.
But the thing, the answer I would give to that is like, I wouldn't use Bitcoin
because I couldn't trust it, because I couldn't verify it, blah, blah, blah.
Uh, but I definitely wouldn't use fucking musk coin or any other, any other shit
coin, even if it was newly minted and created on Mars, because everyone on
Mars using that cryptocurrency, for lack of a better word, Would be aware
of Bitcoin and therefore they would have insider information and there would
be a mining cabal and everything would be fucked from the get go, probably.
Yeah, it's, it's a fun, it's a fun thing to hypothesize over.
I like it.
Yes, we have to continue that conversation at one point.
Luke, do you have any final questions for Dhruv?
Because I think this is a good end point.
Sure.
Well, then I won't take us down any completely new rabbit holes.
Uh, do you see any threats to Bitcoin?
And I'm talking long term because we take the philosophical long view here.
Do you see anything that would prevent Bitcoin from fulfilling its mission?
Yeah.
I mean, I see, I think there's always A worry due to the nature of computing
and so on, it's really hard to eradicate this worry that there is some sort of
weird ass bug somewhere in Bitcoin.
Like, this is something I've always worried about, right?
And I think the more time that passes, the less likely that is.
in 2013, Like there, we know now there were bugs in Bitcoin and
we removed some of them, right?
Um, and that's good.
As time goes on, I think that's less and less likely, but
it's always sort of present.
And it's always one of those, like, I bet there'll be science fiction
movies in like 30, 40 years, like a flaw was discovered in Bitcoin.
Oh my God.
Like now it's, it's an interesting, fun thing to play about, but I don't actually
assign that a high degree of likelihood.
It would be catastrophic, but, but low likelihood.
I think.
Um, and this next one I'll answer in two parts.
I think things like quantum computing, they're not an existential threat
to Bitcoin itself, but they're a change that Bitcoin will have to
adapt to in some meaningful way.
And it's hard to change Bitcoin, like where anytime anybody talks about, hey,
I want to make this change in Bitcoin or whatever else, like, it's very
hard to get through that discussion.
And I think that's a good thing.
I don't think it should be easy to get through that discussion, but I
also, as much as I might believe in ossification, on some timeline, it's
not today or yesterday that we've also like, we still need to make some changes.
And I'm not the expert, I'm not expert enough to say exactly which ones, but I do
know that some things will need to change.
Um, hopefully minor, like smaller and smaller and smaller things over time.
There's a concept of Kelvin numbering, which I think informs a
lot of my thinking on this topic.
Um, But with that said, it's like, okay, how does Bitcoin adapt to
the sudden creation of real quantum computers, which are totally happening.
I think there's a lot of Bitcoiners who have their head in the sand about this and
refuse to accept that it's a real thing because they don't like the consequences,
which is we have to then come up with.
Decisions about what we're going to do.
We could do nothing and let Satoshi's P2PK coins be a giant bounty for
the world's first quantum computer.
That is an option.
That is, in fact, what's going to happen if we take no action.
Totally fine.
And then now transactions are, are, um, potentially stealable by quantum computers
while they've been broadcast because, we've broken the hash open and now
public key cryptography can be changed.
Like we have to move to some post quantum, um, Uh, public key encryption scheme,
if we really want to be, have strength, against resisting quantum computations.
Frankly, I think bitcoiners will be the ones to like actually promote things like
lattice computations or other current, like, post quantum algorithms that
are, Not in widespread usage, because truthfully, there's not a lot to be gained
from actually building quantum resistant anything today, because quantum computers
aren't that powerful, and no one gives a shit, credit cards have like 30 percent
fraud all the time anyway, so I think it's actually bitcoiners who are going
to solve this post quantum computing like problem, because we have the most to lose,
but it is something we're going to have to solve, and if you think about Thank okay,
again, how do we make changes in Bitcoin?
We're not good at it.
And that's probably a good thing that we're not good at it.
Like, these are some of the things I worry about.
I don't, again, I don't think this is an existential problem.
I think we will figure this out cause we will have to figure it out.
And we're good at solving problems when we have to as a community.
Like it sort of creates that pressure to just figure it out and get it done.
so those are modest worries.
I, it's hard for me to really think of something that is like an existential
risk to Bitcoin And then I don't think the community has already talked about or
thought about or has some kinds of plans.
And even if it's like, oh, the government's going to
fight, it's like, they're not.
They might try a little bit, but like, the government is just people, man.
They own Bitcoin, some of them, like, and more of them every day.
So I, I don't tend not to worry about those kinds of, Failure modes very much.
like to me, there's, have it.
It's not like, it's not like, it's like, it's like a struggle.
Let's put it that way.
Like, I, I don't, I'm not claiming that there's some like existential problem that
we need to worry about that like causes Bitcoin as a project not to succeed.
I am articulating that there will be some monstrous struggles still in front of
us, as a community before we're going, before we're going to, before Bitcoin
can be the thing that we need it to be at a global scale, et cetera, et cetera.
So, uh, but with the quantum computing thing, uh, that attack vector, the way
I see it, like in Bitcoin, at least we have 10 minutes to fix the problem, but
the traditional banking sector is just
No, they're, they're screwed.
They're screwed.
So, so we have, if it happens anytime soon, the world has way bigger problems
than Bitcoin to worry about at that point, because everything, everything is fucked.
well, yeah, yeah, I totally, totally agree with that, but I
would also put it oppositely.
I would say, yet, whoever has quantum computers and seeks to behave
adversarially will come for Bitcoin first.
even though other things might be easier to attack, Bitcoin is more valuable.
Well, not if it's not quantum resistant though.
So it's sort of a catch 22, because it's sort of why, like, miners can't
act in their own self interest, because it's like alchemy, if alchemists had
been successful and found a cheap way to produce no gold, which in a
way central bankers did, you know.
So, yeah.
They destroyed the value of gold, so the central bank has destroyed
the value of the fiat currencies.
this idea might be hard to follow, but if you can cheat the rules in
Bitcoin, you destroy its value, because it's not valuable anymore
if someone can hack it, right?
Then it would instantly drop to zero, so you would have to pull it off
without revealing that you pulled it
No, I think it's a little bit more complex, right, because
there's a timeline there.
Like, I think there's an attacker in the future who values Bitcoin, who
understands that Bitcoiners are working on solutions for post quantum computing,
but they've underestimated the rate of progress, and this person can steal
some Bitcoin, they're gonna do it.
And even if it causes a market crash, They might have confidence that eventually
Bitcoin will figure out post quantum shit or take the post quantum forks
that are brewing or conversations and make those real, and I can make a little
bit of money here in the middle, right?
Yeah, but what I'm saying is that they couldn't steal very much, because if they,
if they stole like a million coins, then, then, then everyone would abandon ship.
Like, this
pause there.
I in general agree, right, that they wouldn't do that, but then the question
to me is what about Satoshi's P2PK coins?
Like, they're just sitting there.
oh yeah, yeah, yeah, yeah.
They would probably go for those first.
But, oh, so here's, here's an interesting follow up question.
Is there a, A game theoretical way to figure out what the, what the amount of
coins they could actually steal without destroying the value is, like, is there,
like, could they steal a hundred coins?
Is it 0.
1 coins?
Is it a million coins?
Well, it depends.
I guess it's all subjective and Bitcoiners would react differently to it.
Some, some would abandon ship.
Others would say, no, I still believe in Bitcoin.
If they target someone who won't notice if, if they, if they steal from someone
who won't notice for a while, then
No, but other people might notice, like, there are a lot of people
monitoring the blockchain, and if they see something odd, they may
Well that's why you don't steal Satoshi's keys though.
If you steal, if you, if you steal Satoshi's coins, right?
Everyone knows who those are, but if you just steal some random coin.
Yeah, but that's sort of my point.
In that case, it would have to be a small amount,
Well
the further
Yeah.
yeah, the further you get into Bitcoin's history, the smaller the amounts become.
Inevitably.
But I think, but that's, that's kind of what worries me about this whole
scenario is because say we as a community do nothing, eventually someone
will have quantum computers powerful enough to steal Satoshi's P2PK coins.
And I don't trust that no one will do it because it would ruin the
value of the thing that they stole.
I think people like to poke buttons and break things and.
We need to understand as a community, like what, what are we
prepared to do in this situation?
I think the most conservative and minimal thing is do nothing, let
them steal the coins, let it happen.
We don't care.
Isn't the denial of the SegWit2x hard fork a proof against that?
That people do not break things if they stand to lose a lot of money from it?
Sort of, except because hard fork is a thing that the whole
community has to do, right?
Issuing one transaction to steal a bunch of UTXOs into your own
wallet is something one person can do if they have a quantum computer.
Now, maybe the argument is that no, no one person will have that quantum computer,
but eventually someone will, right?
If we change absolutely nothing, and quantum computing keeps accelerating,
and qubits become cheaper and cheaper, someone will eventually have that ability.
And that actor might not even be aware of the risk of destroying
the value of Bitcoin in the
This might not give a shit, right?
Like, I, who knows, right?
Like, and so part of me is like, I don't know what the right answer is.
On some level, I would like to live in a world where it was easy to do
something akin to, okay, look, where as of this date, you have, One year
or this many blocks, you have 200, 000 blocks to get rid of your P2PK outputs.
And as of this date, they will no longer be real outputs or like,
we'll have some philosophy around it, but that's, that's a change.
And that's, I think, I think that's a hard fork that's backwards incompatible, dah.
So it would be incredibly controversial to do something like that.
And I'm not necessarily proposing that we do that.
I'm just pointing out that would be one strategy to avoid this pool
of P2PK coins just sitting there waiting for quantum computer.
But at the same time, What an incredibly, hard conversation that will be, right,
is to tell all the Bitcoin owners of the world, Hey, you can no longer
use this script type that has been in existence since the very beginning.
you must now do this other thing, and in fact, existing coins on the chain,
like Satoshis, that are unlikely to move, will be dealt with somehow.
Those UTXOs will be dealt with in some way that I don't know.
Like, that's a very hard conversation to even begin to have.
No one wants to have that conversation.
I'm, I'm not very technical, but, but hear me out.
Like, uh, is this, is this something that could be solved by Bitcoin
migrating the, the source code migrating to another programming language?
Does that,
Not, not, not, not, uh, not really.
I think maybe what more what you're searching for is could we, could we
add quantum resistant encryption into Bitcoin so that all new transactions
are resistant to quantum computers?
I think that is possible.
It's not really a programming language question.
It's an algorithms question.
Basically, ECDSA, elliptic curve cryptography is not quantum resistant.
We have to replace it with something else eventually.
Right, and so that's very doable, I think, without soft, with just
soft forks and just with new code, because we're not making a claim about
historical UTXOs and historical scripts.
We're just giving you the option to get into quantum resistant stuff.
Like, I think that should be an easier conversation, and I think
it's one we'll eventually have.
And we actually have the tools to do that, right?
We have, we have segwit, so we can add little segwit versions,
and we can add post quantum stuff.
Like, that's actually going to be pretty easy.
The hard part is going to be, what should we do as a community?
What is our monetary policy towards existing UTXOs that are going
to be stolen if we do nothing?
It's just a hard question.
I don't know
It is.
Still, they would have to break more than just SHA 256, right?
think the argument is that they can't break.
There's no, there's not an argument right now that says that quantum
computers can break those algorithms.
Those are hashing algorithms.
So the idea is that like P2PKH should be safe against quantum computers because
they can't crack open the hashes to see the public keys that they need to break.
They can break the public key cryptography part, but they can't
break the hash part right now.
That's the belief.
And that's why Satoshi's P2PK coins are like a potential concern because
they aren't protected with that hash.
Now how many coins is that?
Hard to know.
It's estimated at near a million coins.
It's hard to know.
It's a treasure for future pirates to
It's just sitting there.
Yeah.
And part of me almost thinks that like right now the market's understood.
Business use case for quantum computing is drug discovery, more or less, like
the idea is like, we often think of like quantum computing as, oh, it solves the
traveling salesman problem, he visits all the stores at once, or some metaphor
that people have in their minds for how it works, but I think a lot of people
who are in the industry don't think of quantum computing's chief application
as being those kinds of arbitrary optimization problems, they think of
it as the chief purpose of quantum computing will be to simulate quantum
systems, which is to say molecules.
Uh, and why do you want to simulate molecules?
Because you're doing material science where you're doing drug discovery.
And so like, that's the understanding that like, this is where money will
come from, and like the funding for quantum computing comes from people who
want to use it to solve those problems.
But at some point...
Like, these curves cross, right?
And the value of a million bitcoins sitting in a P2PK address, set
of addresses is larger than the, than the revenue you would get by
new drugs or whatever it is that you would seek to bring to market.
This is just a terrifying, like, mix of things for me, right?
I
So you're saying that at some point, uh, Quantum computing and the idea
that it even has a chance of, of, hacking those million, supposed million
coins, that idea alone will be enough to fund quantum computing research?
don't know.
It really depends on the rates of all these curves, but like, I
Yeah, but given, given,
regime, yes.
given a high enough Bitcoin price,
yes, like, there's, if progress on drug discovery and other things is slower
than we expect, and Bitcoin's price rises higher than we expect, and the Bitcoin
community takes no actions to protect existing P2PK coins, that's a perfect
storm for someone to realize, wait a minute, like, if I spend a billion dollars
on Bitcoin, Or $10 billion or even a hundred billion dollars to figure out how
to build a quantum computer of that scale.
I can steal $3 trillion in Bitcoin.
Now, maybe that tanks the network and that's why they don't do it, but
eventually, like it's just curves, right?
Eventually that cost will get lower and lower and Bitcoin
keep getting higher and higher.
So the community of Bitcoiners, we're gonna have to confront
this issue at some point and decide what we wanna do about it.
I mean, there's so much to unpack here because, like, to a certain
extent, like, as we move further into hyperbitcoinization, I think consumerism
is, On its way out, like, uh, you know, Bitcoiners have a lower time preference or
they adopt a lower time preference because they see that delayed gratification is
better because Bitcoin is deflationary.
So it goes up in purchasing power over time.
So you're not incentivized to spend, spend and spend all the time.
And if I extrapolate that thought vector far enough into the future,
Uh, my conclusion is that we will prioritize quality over quantity so
much so that this whole consumerist culture is going away and we're getting
into a state where people only make really, really sound investments.
They only buy really, things that they really, really need.
And we might even get to a state where, you know, materialism isn't
such a big thing in the world anymore.
I mean, people, of course, are still going to crave stuff.
But not if they know the opportunity cost of missing out on the increased
purchasing power of Bitcoin, which will like 10x every decade into forever.
Say if that thesis is true, and if it plays out over a couple of hundred
years that it actually does that, then people will slowly but surely learn.
And if that is the case.
Then having a hundred billion dollars in Bitcoin or having three trillion makes
very little difference, like, because you're not going to use them anyway, even
a fraction of a Bitcoin is enough to last for you and your descendants forever.
So, so like, these are the, the real, when I really go bonkers
with the philosophy thing.
Uh, these are the points I end up with, like, everyone says they didn't,
they don't have enough bitcoins.
But the opposite is true, everyone has enough bitcoins, even no
coiners have enough bitcoin given a long enough time frame, you know.
Uh, because as long as they have something to sell, at some point.
They have generational wealth.
If you have Satoshis, you have generational wealth.
There are not enough Satoshis around.
Like, uh...
Kudu, buddy, I'd love to believe in that.
I'd love to believe in that story you just told me.
I really would.
But that does not jive with my understanding of human beings.
I think if Bitcoin, if Bitcoin becomes like a global everything and it is
the money of the world or whatever, whatever, whatever, maybe there
will be a decrease in consumerism.
I would like to see that.
But I think people are, people are just people and there's going to be
people, there's going to be socialists and communists and fascists and people
of all kinds who use Bitcoin every day and never think at all about how
maybe their day to day behaviors is discordant with the principles that
underlie the money that they use.
I think there's absolutely no connection between those things for most people.
I think the founders and the early members of the community of Bitcoin, like people
who are on this call, we have a very different attitude and relationship.
To this system of things, then an average person 50 years from now is going to
feel like, like you get reversion to the mean, you just get everything.
And I think even if, even if there were meaningful trends towards the
reduction in consumerism or whatever else it is, like this particular
quantum computing P2PK thing that I'm talking about, it's sort of like, it
just takes one person to fuck this up.
even if almost all of us behave responsibly and would never do this thing
to harm the rest of us, one of us might.
And so, Bitcoiners are not about trust, right?
We don't want to trust that none of us will engage in this bad activity.
We want to do the thing that you opened with, which is we want to
make it so incredibly expensive for you to attempt to do that, that you
just won't, and you'd rather put that energy into something else.
Touché, touché, absolute
But I don't know how to affect that.
I have no idea.
I'm, I'm just a guy being like, guys, this is a problem.
Eventually one day we should, we should be thinking about it, but I'm not,
I'm not advocating any actual actions because I don't know what's best.
And also I'm terrible at organizing.
So I have no idea how to convince the Bitcoin community of anything.
And I'm not even trying to, I'm just maybe trying to say like, one day, this
thing is going to be a decision that we're going to have to come and make.
And
touché, and this is a very good point.
I don't know what the decision should be.
No, but raising awareness is, you know, crucial.
If people are not aware of the problem, they can't fix the problem.
So like,
I think there's a perversely, uh, you know, again, Bitcoiners like to pretend
that we are some sort of, like, holier than thou, better than other tribes.
But truthfully, a lot of us are afraid to talk about this because
it requires some kind of change somewhere or it requires being okay
with near 10 percent of the supply just disappearing or whatever at some point.
which which in a way is fine.
Like on a long enough timeframe, it is an acceptable option.
maybe, maybe, maybe it is, maybe it isn't, like, because
at that point, what do you get?
You get probably, if it were, if that were the choice, I think the outcome
is eventually an incredibly powerful organization, whichever is the one
that has the world's largest quantum computing resources, now becomes the
world's wealthiest entity because they stole 10 percent of the world's money.
Yes, but...
That entity has only one way of getting something out of actual value for that
stack of money, because Bitcoin is not fiat, so the only way that they
can leverage that is by spending the
Bitcoin.
They can't, they can't fuck with people like you can with fiat.
And so, so maybe, maybe it's acceptable, right?
Like, maybe that's completely acceptable.
And I, it's not, it's, I'm not trying to decide the question.
I'm just trying to ask it.
Who knows, man?
Who knows?
I love to think about these things, it's fantastic, fantastic stuff.
And, yeah, but the thing is, the thing I Getting into this, uh, that which
you can do without your own, uh, uh, type of mindset is that I've seen it in
Bitcoin, like people discover Bitcoin for the, the gains and the money.
And they're, they, they, they stay for the money, like, and they stay
for, for philosophical reasons.
Sooner or later, when you really, I mean, tumble down the rabbit
hole, that's the inevitable.
Path you take because you, you realize all these other things about life and that
you don't need a ton of shit and stuff.
and yeah, I guess what, what you said, like the hard part is to, is to see
if it's this applicable to everyone, or is it just to like really, really
curious people who are willing to, to give up on their own beliefs,
even just 99 percent of us, maybe 99 percent of us experience that
change long term as a species.
Yeah, there's still that one asshole that might steal the coins.
It reminds me of, uh, have you seen a Gary Larson cartoon?
Uh, it's just a picture, four frames.
It says the four personality types, and there's a glass
of water in front of the guy.
Uh, so the, you know, those Gary Larson fat guys.
so there's a, a glass of water.
It's filled, half of the, uh, the glass is, it's filled.
50%.
So the first personality type says the glass is half full.
The second personality type says the glass is half empty.
The third personality type says the glass is half full, half empty, I
don't really know, can't decide.
And the fourth personality type, this would be the guy that would
steal the million bitcoins, says, hey, I ordered a cheeseburger.
Mm hmm.
And there's always the, hey, I ordered a cheeseburger personality type
that just want to destroy things.
So that's That's unfortunate, I guess.
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Drew, before we, yeah, uh, sorry for stealing the show there for a while.
Uh, any last, last words, uh, before we, uh, end this, uh, show?
For me, no, this has been awesome.
Thanks for just a wide ranging, you know, fun conversation.
Um, it's early, it's a little, it's in the morning for me, so
this is a great way to open my day.
I'm just going to be buzzing with all sorts of fun ideas while I go
through the rest of my meetings.
Oh, lovely to hear.
I'm gonna, I'm gonna have a long walk after this and, uh, my brain
is full with new ideas as well.
I love getting into these, you know, nerdy philosophical stuff.
don't know for me, it's heating up right now.
uh, can, can, uh, can you tell our, uh, our listeners and viewers where to
find you and follow what you're doing?
Yeah, absolutely.
So I work at Unchained and you can check our business out at unchained.
com.
Come learn about better collaborative custody, security, and financial services.
I blog on an Unchained's blog.
So that's unchained.
com slash blog.
You can find a lot of my articles about Bitcoin, astronomy, and space and these
market ideas kind of sitting there.
Um, and then I do tweet, um, Drew, uh, just my first and last
name, Drew Fansel, um, at Twitter.
I'm doing that less and less these days.
I'm getting less value out of Twitter.
I can't decide if it's me or if it's the network, but.
Yeah.
Um, I am there.
Fantastic.
Thank you so much for joining us on the Freedom Footprint show.
Thank you, Drew.
Uh, have a great day.
See you next time.
So what did you think of that episode with Dhruv?
He has some really interesting thoughts about the future of Bitcoin.
What was your favorite moment?
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