Go outside, get sun, touch grass, meet people in real life.
Try to try to act online, how you act in real life.
Try to be conscious of the algorithm in a similar way that we're trying to be
conscious about food more and more.
I think a conscious life can be a hopeful life.
Greetings and salutations, my fellow plebs.
My name is Walker and this is the Bitcoin podcast.
Bitcoin time chain is 855-822 and the value of one Bitcoin is still one Bitcoin.
Today's episode is Bitcoin Talk where I talk with my guest about Bitcoin and whatever else comes up.
Today, that guest is the one and only Lin Alden.
Lin is my go-to resource for logical and nuanced takes on all the insanity in our world.
And she is also one of the best memers in the business.
Now, usually Lin's podcast appearances focus on macro and obviously she's an expert in that.
And they often also get spun into some sort of doom and gloom YouTube thumbnails later on.
So for this show today, I decided to go a completely different route with Lin.
And we talk about freedom technology and reasons to be hopeful about the future.
We dig into FETI, Noster, Lightning, Bitcoin more generally and discuss Bitcoin adoption
by corporations and nation states.
We also talk about what she and EgoDeath Capital look for when investing in Bitcoin companies
and what makes her excited about all the development going on in the open source space.
I also ask one macro question at the very end about the Fed because I just couldn't help myself.
I think you're going to enjoy the heck out of this show and I hope it gives you a lot of hope for the future.
Before we dive into me, favor and subscribe to the Bitcoin podcast wherever you're watching or listening
and check out my sponsor Bitbox in the show notes or you can go directly to bitbox.swiss
slash walker and use the promo code Walker for 5% off the fully open source Bitcoin only
Bitbox 02 hardware wallet. You can also grab links to protect yourself from sim swap attacks
using a Fani and cloaked wireless. You can pick which one you'd like. I am a one man show.
So when you use my partner links, it genuinely helps me keep the show running and I really appreciate it.
If you'd rather watch this show than listen, head to the show notes for links to watch on
YouTube, rumble and now on Noster via highlighter. But if you're like me and you prefer just listen
to your podcast while doing something else, I highly recommend you check out fountain.fm.
Not only can you send Bitcoin to your favorite podcasters to give value for value,
but you can earn Bitcoin just for listening to this show. Finally, if you are a Bitcoin only
company interested in sponsoring the Bitcoin podcast, hit me up on social media or through the
website Bitcoin podcast.net. Without further ado, let's get into this Bitcoin talk with Lynn Alden.
Lynn, thanks so much for joining me. It's a pleasure to have you on here.
Thanks for having me. I usually start these out by asking who you are, how you got here today.
I know that everybody probably at this point knows who you are. You're one of you've been on,
I just saw today, 4.4% of Peter McCormack's podcasts, which is an impressive stat. You are
the queen of ratios on X, chancellor of Nothing Stops This Train memes. I do have to ask,
even though folks know you, how did you get here today? How did this all shake out? Did it just
fall into your lap because of who you are and how you operate? Or was this any sort of a conscious
effort? How did you arrive at this point? A lot of it was an accident. Basically, the intentional
part was that I always wanted to have a side hustle or do more than I'm doing at my job.
I started a first blog back in 2010, just talking about stocks. I was working as engineered,
coming out of college, talking about stocks. It's kind of like my passion. I made a little
bit of money on the side. I eventually sold that one. Then I decided, okay, I'm going to go a little
bit broader, talk about kind of financial assets in general. I started the Nolten Investment Strategy.
I expected it to be successful, like a secondary source of income, but then it just blew up so
much. Part, first what I did was I followed, I would actually read other blogs about how to
kind of make a successful blog. There was this kind of circular thing back then of good information
online. It took me, so I actually was intentional in the sense that I was like, what makes a blog
successful? One of the strategies was basically, if you're going to write about something,
write the 10x better article on that thing, like write the go to. Don't just add to the noise out
there. I'd go for quality over quantity. I did a little bit of search engine optimization,
nothing crazy, but just make sure I rank well back when that was a big deal in the 2010s.
Combination of those intentional things made it fairly successful. Then at first, I was not very
good at social media. I would just kind of post links to my articles on social media. I was kind
of not really present, but financial Twitter was so interesting that I got pulled into it. I never
really expected to be good at social media or like, I certainly didn't expect that like,
I'm an introvert. Talking is, I'm like shocked people want to listen to my interviews and stuff.
It kind of just kept snowballing. I eventually had to leave my engineering profession because
all my research and media became so big. It's a good problem to have, I suppose,
to have that side hustle become the, in fact, the main hustle. Yeah, as far as people wanting to hear
you talk, I think that much is clear. I think perhaps besides sailor, you have to be, and maybe
you've eclipsed them at this point, I'm not sure, but your podcast appearances are prolific.
Yeah, it's quite impressive. Just again, as we were talking before this, I'd listened to the
one you had with Peter earlier today. It was great. As always, again, 4.4% of his total episodes is
quite impressive because he's put out a lot of episodes. Because you have all these appearances,
you get asked these macro questions a lot. I really want to try and take this in a little bit
of a different direction so that folks, if they'd like to hear about the yen and all of that,
go check out what Bitcoin did because you just recorded a fantastic episode on it today that
really breaks it down well. But here on this little show, I'd love to take it in the direction of
Bitcoin, technology, freedom tech in general, open source projects that are coming out right now,
Noester, to talk about FETI a little bit too, which just launched yesterday. I know you as part
of Ego Death Capital, you guys are an early investor in FETI. So I'd love to just start there.
But maybe before we get into that, I could ask you a more general question to set the stage,
which is it's something I try to think about a lot and I struggle with a little bit to put
these in the correct order. And the things I'm trying to order are money, technology, culture,
politics, law, and which is upstream and which is downstream of which, which is the forcing
function on the other, which is the prime catalyst and which is just being affected by the other.
Do you have any sense of, or I guess what in your opinion, if you had to order money, technology,
culture, politics, law, where do you put those in the upstream versus downstream flow of things?
That's a really good question. That would require more thought than on the spot. I would say I certainly
rank technology very high because technology basically changes things permanently and everywhere.
That's a point that I made in my book is that people focus on monetary decisions like in a
given country or something. And of course, they impact that country. They can have broader
implications. But if you invent refrigeration, that's a one directional thing unless we were
like wiped out civilization, that is a permanent achievement that spreads everywhere.
And so we accumulate those technological growth for the most part. And it doesn't stay in one area.
It just becomes a permanent change. And then one of the things I focus on in broken money is that
technology changes how we interact with money and what we use as money. So to some extent,
I would put technology upstream of money. I do think law can impact technology in the sense that
there's a reason why so much innovation comes out of the United States. We have a
basically a legal hub, a capital, all of our laws are really good for startups. And there's this whole
kind of ecosystem in place for making sure that they get funding and a culture of support for that.
So that can accelerate technology that happens. There's more technology coming out of
certain legal structures than others. But in the grand scheme of things, if some country's not
doing it, some other country eventually will anyway. So ultimately, I kind of put technology
near the top. And then money would also be pretty near the top because money has a big impact on
laws. It has a big impact on society as a whole. A lot of times you'll see social revolutions happen
and it's often something happened with the money or something happened economically.
They might not be mad about it. They might be mad about that, but they might even be taking it out
on something else, something more social perhaps. But what they're really angry about is their
economic situation, which is harder to quantify or put into words. So I would put technology
probably near the top and then money and law kind of goes down from there.
I think that's a very fair characterization. And the reason I ask is to just sort of
to set the stage for some of these topics I want to explore with you next, which is
and something you talk about in broken money, just this idea that money as a technology has not
meaningfully improved in a very long time, even though technology itself very much has. But money
really was lagging behind that in terms of how we were using it, how it was created, I suppose. We
got very accustomed to just typing in a keyboard to create new units of this currency digitally. So
we did catch up in that regard. But now we're at this really cool inflection point where we have
Bitcoin. We have other technologies like eCash and federated eCash and the Lightning Network on
top of Bitcoin. We have companies like Feddy who are using all of these solutions, lumped into one
to create this super app, which they have now just made open source. And I'd love to just kind of,
I guess, get your take a little bit on how you see maybe from the investor standpoint at ego
death, but then also from kind of just the you as an individual, as a human engaging in action here.
How do you see this sort of shifting the tide in terms of what cultural and political changes
may actually be possible? Because we finally have a money that is caught up with where we are
as a global, I don't want to say global society, but as humanity.
Yeah, so technology can change what we have like available or and kind of where sources of power
reside. And so in the era where we have fast transactions, thanks to starting from the telegraph
and extending to the internet, but we had slow settlements because we didn't really have a way
to do fast digital settlements, we became reliant on these big centralized ledgers which inherently
became captured and controlled by nation states. And that's a that's a valley that was very hard
to get out of. You can't, there really wasn't that many good solutions for it. And in over 100
countries worldwide, you never really saw any country actually change that not like there's
no other way that it's really been done in this era. It shows how hard the problem is,
it's more than just human decisions, it's kind of like the technology we have to work with,
and how that tilts power very strongly to likely come out in a certain direction.
And the invention of Bitcoin is basically the invention of fast settlements. So we finally
have closed that speed gap, which means it's possible to have money in the telecommunication
era that does not reside on someone's credit based ledger. And that's powerful. And then,
you know, it wasn't and it didn't just come out of nowhere. I mean, the Bitcoin prehistory,
you know, for over about 40 years, all the puzzle pieces were generally falling into place.
So I would describe digital scarcity as a discovery. It's something that if we were to
rerun civilization over and over again, we would eventually come across it. Obviously,
the details of the implementation are an invention, but it's based on essentially discovery.
And so this is something that exists now, and there's plenty of tools that either are new
or they're resurrected because of this technology. And what that can do is that really changes power
structures. Basically, it gives people wherever they are, as long as they have some connection
to the rest of the world, some internet connection, for example, so it's a fairly low bar. It's not
ubiquitous, but as long as they have some connection, it's possible to, you know,
choose money that's different from what their environment offers them. Banks are, you know,
like central bank ledgers are these permission closed systems. And then, you know, for a bank to
build on top of it, you need permission in that country. But Bitcoin is this open source foundation,
is permissionless, so communities can come along and pool their resources and build effectively,
you know, like a full reserve bank on top of it and basically give themselves all these tools to
work with. And they can, you know, they can pool the resources with people online from other
jurisdictions or in their own jurisdiction. There's really good private state technology. So
in this era of kind of, you know, central ledgers, authorities got really accustomed to surveillance.
You know, there's a, if you go back far enough, they didn't really even have the technology for
surveillance. Like even if you were a malevolent king centuries ago, the thought that you could
just surveil everyone's transactions wasn't even, wouldn't even occur to you because it's like,
you're people are just exchanging bear assets. There's really, there's minimal ways to do that
other than, you know, when you started doing banking. And when all of us started using banking,
and like we're all getting a regular paycheck and everything kind of throughout the 20th century,
they had this, they could just attach this really big surveillance apparatus to it. And that became
normalized. So we went from privacy being normal to surveillance being normal. And if someone wants
privacy, they're kind of viewed as like a weirdo or, you know, they're up to no good or, you know,
what do you have to hide? And I think that some of these technologies can reassert privacy as normal,
which, which of course can have frictions, you know, as, as you kind of impact with regulators,
and then people have to kind of come to terms that there's a new technological reality here.
But that goes back to the earlier point of how technology is upstream of things. Like people
can complain about financial surveillance, but that's just kind of how things were until there's
technologies that can from a bottom up perspective, in a decentralized perspective, so it's like a
hydra, where is it just, you know, you can you can chop one head off, like you can go after
tornado cash or, you know, samurai, you know, wallet, and you can, you know, I would defend
those people if possible. But the better thing you can do is kind of give them tools so that
anyone can can have privacy for their own community. And of course, process law against people that
actually break laws rather than just privacy for its own sake. So I think it's a really exciting
time because here in 2024, some of the things are really coming together to make this ecosystem
really workable compared to even how it was a few years ago. Yeah. And I think one of those key
examples, just to go back to, to FETI is FETI, they just launched yesterday. And speaking of the
kind of hydra, and I think it's such a great analogy for open source technology in general,
you know, you cut off one head, two more pop up in its place, like you're, you're not going to kill
this thing, you're just going to make it adapt, right. And FETI made the announcement there,
already source available, and then going fully open source with their whole combined technology
stack, the underlying components were already open source, Bitcoin is open source, the Lightning
Network, Noster, Matrix, FETI Mint, the federated eCash protocol. But nobody had put all of that
together into one super app yet, which is what FETI has done. And I'm really just, there's a
couple of threads here from what you just said that I think we've right into FETI, which is,
one is just the centralization of money in general on these big ledgers, fractional reserving out
these systems. With FETI, it seems to me, and correct me if I'm wrong, but it seems like this
could be almost a move back towards an even more decentralized free banking style era. But with a
better reserve asset, with more auditability, with more, I guess, with more capability, certainly,
but also with so much more privacy. And I'm wondering if you can, as ego death, you guys are
investors in FETI, and you've obviously been very supportive of this tech. And as investors,
usually you don't want your companies you're investing in to make their solution completely
open source. Usually you want to keep that IP. Can you talk a little bit about that and why
you guys as investors in this technology, in this putting these together, were okay with them going
open source and why that's really kind of so important as we move forward? So when we invest
in Bitcoin companies, obviously, we want to do well financially, but we also invest in things
that we think are good for Bitcoin, because that makes all the investments better, it makes Bitcoin
more valuable, it makes the companies, they can all they can work together. And now they're more
valuable because of it, Bitcoin companies are a fairly collaborative space. Even sometimes
Bitcoin companies are technically competitors. But for the most part, there's a lot of collaboration
because it's like we're all in this together. And open sourcing this technology makes it,
especially when you're talking about a fairly sophisticated piece of software, you want to
be able to audit it. And then also, you want to just have it out there so that people can do
it differently if they want to. We don't want to have one company have like a monopoly over
federated mints. There's plenty of different implementations that people can do. And I think
that strengthens it long term. It makes people trust it more. It makes people
kind of really feel confident that the technology is out there. Even when there could, of course,
be frictions with regulators and things like that over privacy technology in general,
is something I think is going to be a battleground for a long time. I think that Bitcoin has been
doing very well in terms of store value. I think governments are coming around increasingly to
like viewing that as credible. But as a payment tool, and especially as a private payment tool,
that's where I think this took me a lot more frictions. So certainly open sourcing it
kind of gives it to the world. But then of course, there's still a lot that goes into a company.
It's not just your idea. It's not just your software. It's all the operation.
It's all the on the ground work they do. So there are a lot more than just code on a computer,
on a phone. And it's funny. I remember in 2022, when I was just hearing about this idea of FETI,
and there's certain ideas that I hear that are just so interesting, and I know that idea is
going to have likes to it. And so that it's certainly been one of the more exciting investments,
I would say. Yeah, it's I was loving watching the launch and got a chance to talk to Obi just
the night before and was itching to share that because it's just, I had taken a little bit of a
deep dive into it, but there's nothing quite like having someone like Obi explain really the
rationale behind these things. And I think that that's such a, the focus of FETI really is on
enabling communities to have the tools to be able to operate as they normally would, but just way
more efficiently, way more productively, and just to ultimately be able to save a heck of a lot of
time by giving them a much better solution than what they currently have. And I think that the,
as we go forward here, I think perhaps a lot of people from the outside looking and say, oh,
this is a neat tool for people in the so called developing world. But it seems to me that this
is technology, especially on the privacy, near perfect privacy side, which is enabled by Chami
and E-cash, that this is something that people in the so called developed world will also have
a great need for. Do you have any sense of just kind of where you see this going, how you see this
technology expanding, not just in the, okay, high trust communities, but as a more generalized tool
for people, especially as we get into an era of, it seems to be never stop, or you know, nothing
stops this censorship train. Nothing stops this surveillance train. How do you look at all that?
And so not just as a tool for communities, but it's really a true freedom technology tool.
So I think you described it earlier well, in the sense that it's kind of like the free banking
era, but in the digital age, which makes it more auditable and more private and basically just
gives a lot of freedoms back to communities. When we talk about Bitcoin scaling in general,
or Bitcoin usability, there are different levers you can pull to have a much better experience.
And one of them is to realize that, you know, of the 8 billion people in the world,
we're not all lone wolves, you know, we might not trust the government, we might not trust some other
entities, but there are people we do trust. And so being able to choose who you trust, and then
even decide to trust them the minimal way, like you might trust them with custody, but not surveillance,
for example. And that's what these types of tools enable. They allow people to have more control
and pull their resources together in a way that's scalable, that's private, that's actually easy to
use. It feels like Wallet of Satoshi, except instead of everyone's, you know, I like Wallet of
Satoshi, but it's like instead of everyone, Bitcoin in one big honeypot that can be surveilled and
rugged, it's like you distribute it, you know, more broadly, hopefully, and in more private
context. I mean, basically, in a developing country, where banking access is not super high,
and the monies they have available are usually worse. And, you know, in Africa, there are over 40
currencies, in Latin America, there are over 30 currencies. So imagine all of the cross-border
frictions, right? There's a lot of international trade that happens, and all of those are friction
points. Imagine if in the United States, if every state had its own currency, and like you're trying
to buy something from this other thing, or you're running a business in that environment, and you
have parts from all these different places, and it's all different currencies, that's what they
find themselves in. And this is cross-border, you know, good uniform money, and then different
interoperable communities building on top of it. And they can customize their own, you know, community
federation the way that they want. It's an open source, and there's mods to it. So you can have
a really simple one that just has chat and money. There's other ones, you can do it for data storage,
so you're not just pooling your resources for money, you're pooling your resources, things like
data storage and compute. You can access AI through it and pay it with lightning, for example, in some
of these communities. And I think that's really powerful. And there's certain milestones that
Bitcoin went through. Like first it's invented, then it kind of gets bigger over time, more liquid,
more credible. Then the lighting network gets developed. And for the first few years, it's not
really usable in practice. It's, you know, it's low liquidity, a lot of payments fail, but then it
builds more and more connections. And, you know, by like late 2020, early 2021, I kind of recognized,
okay, this is actually becoming an inflection point, a usable medium of exchange, then a couple,
you know, more liquidity, more technology building on top of it. And then when you take 40 year,
40 year old Chalmy and Mint technology, and you realize, okay, it was applied to the dollar.
So it was like building on sand. It didn't really work in that environment. But if you can apply it
on, on granite, basically Bitcoin, it's actually a profoundly useful technology. And, you know,
even if you're in a developed country, so you don't really have too many payment frictions,
for the most part, it's nice not to have every, everything you do surveilled. I mean, people,
when they talk about privacy, they often think of the government, but it's just corporation spying
on you. You know, like, all these social media companies, all these financial companies, they
want to spy on every one of your transactions and have a big data profile for you. So they know how
to advertise to you, and know how to kind of influence you in ways that can extract value from
you. And so often you're not that you're not their customer, you're their product. And what this does
is kind of gives you more control. You know, if I want to spend on something or spend on this other
thing, I don't really want someone over my shoulder watching everything I'm spending on. And this,
this gives that capability to people, hopefully, you know, worldwide. I mean, this obviously,
some places might have more frictions than others. And the cool thing is you can join a federation
that's not in your area. I mean, I think that ideally it's, it's community based, but they're
also online communities. And so people can kind of reach around and access it however they can.
Like Lynn points out, open source companies make the Bitcoin ecosystem better for everyone. So if
you want to support a based open source company and get a fantastic piece of hardware in the same
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to bitbox's GitHub and verify that for yourself. There's no need to trust me or to trust Bitbox.
When you go to bitbox.swiss slash Walker and use promo code Walker, not only do you get 5% off,
but you also help support this podcast. So thank you. I think it's, it's a really powerful idea,
but it's not just an idea anymore. It's in practice now they are live globally, you can go to
fetty.xyz and download this. And it's really cool. And it is, it's a beautiful UI. It's a really
easy experience to wrap your head around for a non-technical person. You don't need to worry
about any of kind of like, this isn't like setting up a raspy blitz in 2020 to use the
Lightning network. This is made it very easy. And there's trade-offs with everything, right?
And I think that that's something that perhaps a lot of Bitcoiners you say, oh,
it's got to be Bitcoin on chain self custody or nothing. This idea that you've got this pristine
digital asset, this, you know, with, with absolute scarcity. It is just a perfect store of value.
Why would you risk any of its beautiful store of value properties to try and mess around with it
as a medium of exchange? That's just kind of like, yeah, we'll get there eventually,
but it's really not important now. Do you have a, I guess, where do you sit in that kind of
nonstop and ongoing debate between we need to focus on Bitcoin as a pristine store of value,
or we need to focus on Bitcoin as a medium of exchange because that's what's necessary as well?
Or, you know, are you somewhere in the middle? How do you, how do you wrap your head around all that?
So I think it's both. And there's, there's obviously discussion points there around both
custody and around store of value versus medium of exchange. So for the broader topic of store
of value versus medium of exchange, the order that this has kind of gone so far as first it was
like a digital collectible, then it was like a niche medium of exchange. So like in a WikiLeaks,
for example, that's something that really before it had material value, it was already
serving that purpose. Then it starts gravitating toward more towards store of value. And then,
you know, basically the order of operations there is that you have a network effect issue where
if not many people hold an asset, then not many people want to receive an asset unless
there are other things get cut off, right? So as people have larger cash balances in Bitcoin,
they're more likely to accept Bitcoin. And then the medium of exchange, I think, comes over time.
But you do want to look out a little bit and make sure the tools are available to help that
process come more smoothly and come more efficiently because that can then circle back and make the
store of value concept stronger, right? I mean, basically, you know, when you look at billions
of people around the world living in trouble jurisdictions, every time someone in Venezuela
is able to leave their country with some of their networks intact, that's been a success for Bitcoin,
it helped them and it also advertises why this does have value. It's not just people playing
with their Bitcoin's magical internet money, it's actually helping people in different countries
in either oppressive environments or inflationary environments. It's helping companies, you know,
be able to store value in something that doesn't melt away over time. And so I think that that
comes organically. And I think the store of value reaches scale before broad medium of exchange.
Like, you know, when we wake up, we don't look around and think like, I mean, I have so many
payment frictions, right? Now, in certain environments, they do, but it's not really a top 10 thing
we're worried about. Whereas, so for like people in developed countries, usually the store of value
is a much bigger thing that people are worried about. How does how does build wealth and store it
into the future for their children? That's a really big deal. And then some some people do have the
more immediate payment frictions, and then they might gravitate toward medium exchange earlier.
Also, obviously, tax burdens are huge impact. You know, if Bitcoin is legal tender, I would
I would have my Bitcoin would have much higher velocity, certainly, if I didn't have to have
an accounting overhead of that whole situation. And so I think that that's like realistically
going to hold it back for a period of time. But there's, you know, 200 countries in the world,
there's plenty of jurisdictions, we want the tools to be available. And that helps that happens.
And then as far as custody in general, I tend to view it through the lens of optionality,
in the sense that people should have the option to, you know, opt out if they need to or want to
into whatever kind of as much as much self custody and as they want. But it doesn't mean
that we're trying to optimize necessarily to always be in that state. It's kind of like,
for example, if I have a bulletproof vest, why wouldn't I wear it every day? Right? In case,
right? But of course, there's there's frictions and expense to do that. It's uncomfortable.
There's a cost to it. So I don't want to walk around in a bulletproof vest every day. If I was
on, if I was a reporter on a war zone, then that's an environment where I might want to do that. And
so for example, you know, for long term savings, I think self custody is a very important thing for
a lot of people and it should be. But for working capital, like the amount of money that you'd walk
around in your wallet, for example, your physical cash in your wallet, or maybe to a bigger extent,
how much you have in your checking account, kind of like your your months worth of liquidity,
for example, or a couple months worth of liquidity. There's layers of how much security
that are appropriate for different contexts like that. And there's a because there's a cost to
higher security. And there's there's frictions there. That has to be offset by the risk of things.
So for example, you I don't think people should put themselves in an environment where their
life savings can be rugged, you know, by someone else. But if your, if your wallet cash is rugged
by someone you trust, you know, that's that's a that's a whole that's a that's a different level
of a problem. And there's potentially recourse against that. And so I think there's different
solutions for different risk models. And one of the powerful things you can do is trust people
in your own community that enables you to pool resources. And everything gets easier, it's
kind of it's division of labor. Right. So instead of everybody being their own like techie and,
and, you know, managing everything, you can say, well, there are certain people that want to do
this, they live and breathe this stuff. So let's let's have them run something and then we can make
use of it. And if they show signs of breaking that trust, we can go elsewhere, we can diversify our
trust. And then if we have a lot of the line, that's when we, you know, ideally want to pull it into
other forms of self custody, you know, it could be your own lightning channel or it could be
cold storage on chain multi-sig with distributed keys, depending on on how much we're talking here.
So that just it just made me think, what was that meme you had the other day? It was like,
you're worried about Bitcoin price volatility? Like I've got geo distributed and multi, you know,
wallets and different keys in different countries. So it just made me think of it. It was a, it was
a great meme. Well done there. I try. You know, I think such an interesting thing about e-cash
generally, and especially in this federated model that is difficult for people to wrap their minds
around a little bit is, okay, people think, okay, they hear e-cash. And I think there's a misconception
that this is like, you're creating some shitcoin, basically, like this is, this is some sort of
tokenized Bitcoin, but it's more nuanced than that. You're creating a bearer instrument because
e-cash is actually a true physical digital physical bearer instrument that you can actually exchange
offline even with those animated QR codes that, that FETI has, which is just kind of mind blowing
that that that can work like that. But you have this thing that is really actually, I mean,
as the name implies, functioning as cash, like it really does function as cash, also in terms of
that privacy preserving nature of cash, like cash is still just about, I mean, it's as private as
you can get, right? If I hand you a $5 bill and nobody's looking, nobody knows that that $5 bill
has changed hands. And basically these federated mints, as I understand them, are essentially the
same way. Not even the guardians of these mints have the ability to see what is, you know, who is
sending what to whom. It's just bearer assets changing hands. And I think that that's a really,
I don't think the majority of people even within Bitcoin yet who are actually tuned into this
have fully appreciated that. I'm just coming to fully appreciate it. And so that means that
probably still 99. Whatever percent of the world who is not as tuned in really has no idea that
even something like this is possible. Do you see outside of, I guess the current
implementation of FETI, it is an extensible solution, right? You can build basically layers on
top of this. Do you see other kind of really high value use cases, maybe as it relates to
the integration with Noster, as it relates to, you know, where eCash can be used for these
private instant truly lightning fast settlements that nobody from the outside can see and that are
completely bearer in their nature. Like that is just money changing hands and nobody else's,
you know, any the wiser do. How do you see that, I guess, expanding out or kind of changing the
dynamic in these other realms like Noster, for instance? So I think eCash and lightning as a
combination is super powerful. It's one of the most effortless ways to move value around.
And in practice, it's not as complicated as it sounds because you have your wallet,
it's got a balance in it as far as the UX is concerned. It feels like wallet is a tosia in
that sense. Now under the hood, it's a bunch of eCash tokens, but you just view it as a balance
and you have all these extra capabilities that a normal custodial balance does not have. Like
you mentioned offline transfer, there's obviously there's trust trade-offs when you do that, but
it's an option for spotty internet areas and other frictions. And so I think that that's
a pretty revolutionary building block, all these things coming together. And I just,
in a digital age, it's just the nicest way to send around money. Like literally like, you know,
on this call, we could literally bounce that back and forth, which we can't do with our dollar
payment systems. We can't do it with anything else. We can only do it with this type of open
source, super fast, super easy technology. I think Nostra and Bitcoin kind of benefit each other
because I, and I mentioned this in my Nostra article, Nostra's a really good payment discovery tool
for wallets. It gives Bitcoin wallets Venmo-like capability where like I could just look you up
and pay you rather than being like, hey, what's your address? Or like, how can I, you know,
it's a big public payment directory with kind of own built-in like fraud detection because you
can look at followers, you can look at the whole web of trust. And so it's like this organically
building payment directory that makes all wallets better. I think that's super powerful. So even if
even if Nostra takes a long time to take off is like, you know, a serious rival to big centralized
social media, the fact that it's there as this like alt media with its own payment directory,
it's already super relevant. It's already making my wallets better and it's already like a fun
place to post and really positive environment. And so, and then I think what we're seeing recently
is that eCash can also make Nostra better. I mean, basically we already know that payments make
social media better because it's less about engagement, it's less about views, and it's
actually more about value being transferred. So whether it's lightning or whether it's eCash
exchanging hands, you know, it's just super valuable. And then we're seeing that people are
finding ways where you can just like put eCash on someone's like public key and then they can
claim it with their private key. I just think that this is a really useful parallel ecosystem.
You know, Nostra is not as like bulletproof as Bitcoin where it's like, you know, fully consensus
state, but there's this, you know, set of relays out there and all these clients connecting to
relays. And so we have this kind of data availability matrix out there that makes Bitcoin better and
then is better because Bitcoin exists. So I think that's a super symbiotic healthy,
intertwining ecosystems that go really well together. And I would encourage people that are
into Bitcoin that aren't on Nostra. Like I get, you know, it's not as active as Twitter, for example,
I can see why some of them wouldn't want to post every day. But having an account there,
understanding how it works, understand the technology, and then, you know, maybe using
wallets that either make use of it or can make use of it is just super powerful. So I would
encourage people to really try out Nostra. And you've been a super vocal proponent
of Nostra. And by the way, I say Nostra. I also say hodl instead of hodl. So these are just
hills that I'll die on, but I just wanted to throw that out there. But that's the beauty of things
that are open source in nature, right? You can kind of somewhat make up your own rules, I don't know.
But I digress. But you've been a super vocal proponent of Nostra for quite some time now.
You've been incredibly active on there. You've also gone the route of saying, look, I post some more
unfiltered types of thoughts on Nostra than I will on X or then you will on your website.
And, you know, I'm kind of curious because you made a very compelling pitch to Bitcoiners. I think
Bitcoiners right now are the majority of folks who are on Nostra. Not only talking about Bitcoin,
talking about many things, but for people that perhaps have somehow stumbled upon a podcast
called the Bitcoin Podcast, but are not Bitcoiners yet. What is kind of your value proposition to
folks from, okay, I'm not into all this Bitcoin stuff yet. Maybe I'm interested in it, but why
would I try out this new social media thing that only has a couple of users? And I've already
gotten my Instagram. I already have my X. I already spend hours a day on TikTok. I don't need another
social media. Why would I bother? I think there's a couple answers to that. One is it's backup,
right? It's a broadcast medium that only you control. As long as there are some relays out
there and then anyone can run a relay. But as long as this interconnected ecosystem is functioning
in some way, you have this like unstoppable broadcast voice that can't be corrupted. It can't
be stopped. And not only is it permissionless, but it's self-verifying because your client is
using your key to sign that it actually is from you. People don't really think that Twitter could
literally just send out tweets from my account. Even if it's not a hacker, obviously people get
hacked, but even just Twitter as a company could start tweeting in my name or Instagram could do
this. It's hard to prove that I actually authorized a tweet going out. Whereas Nostar, if you control
your own key, there's really no way to send out unauthorized content. So it's especially in a world
of AI and bots that are probably only going to get more sophisticated. It's a pretty big deal.
So one is backup. And two would be you want to be on the right side of technology. So I think it's
at a right time where it's good to familiarize yourself with this. It's kind of like how everyone
should just know how Bitcoin works, even if you don't like it. It's just something you kind of should
know how it works and know roughly how banks work and how this is different. I think it's good to know
basically how it works because I think that we're probably gravitating in that type of direction.
And so you might as well be a little ahead of the curve. Another thing that's I think going to get
more attention over time is the algorithms. So people increasingly know that social media is not
great for our mental health in general as a species. And some of that is just being online,
but another part is like we get stuck in these big centralized algorithms and they want to advertise,
they want volume, they want a lot of activity and negativity tends to sell. So the more that we're
online arguing with each other and engaging with each other, the more we're drawn to it.
Some of the times I post most of the day is when we're having a debate with someone.
And that's what pulls people in. And a cool thing about Nostar is that there's no
central authority like setting the algorithm for that ecosystem. Different clients can have
different ways of helping you discover content and what content will be prioritized. And in
the future, I think we'll see marketplaces for algorithms. So even on one client, you could
choose to have different types of algorithms to help you discover and manage and sort through
content. And I think that that in addition to being useful on Nostar, I think that that could
give ideas to other ecosystems to basically say, well, if that's on Nostar, why can't Twitter have
that too? Why can't there be different algorithms to choose from or Facebook or Instagram? Why is it
only a couple options? Like on Twitter, they did a thing where you can just like turn off the algorithm
and you can kind of do the for you feed or just your followers feed. So some of them have some
options. But imagine if you had a whole multitude of options for how content is prioritized for you.
So I think that in addition to being a tech stack, it's an idea. And I think that idea is
going to gain traction. Yeah, and I think people really don't fully understand what these
just rage bait algorithms are really doing to them. And you get a feeling of it when you
find yourself suddenly you've been on X for however long. And you realize, I've just been
looking at a stream of things that kind of like make me low level, a little irritated either
because it's really, it's a really dumb opinion I don't agree with. And then I engage with it.
And then it feeds me more dumb opinions I don't agree with. And you're kind of at the mercy
of these algorithms, you really, if you're conscious of it that it's happening, then okay,
you can be a conscious user of this product and find your way around it a little bit better.
But I think the vast majority of people have just become so accustomed to it.
So accustomed to these algorithms that it just it feels like, well, there,
what's there is no alternative. This is just how it is, it just it feeds me this and I digest it.
And I'm kind of curious of your thoughts as it relates to the NoSTER tech stack more generally.
What what sorts of applications use cases are you really excited for as NoSTER progresses more?
Because yes, right now it's kind of like a build what you know thing. Social media is a really
natural kind of first step for this protocol, but it is just an open protocol. You can build
anything you want on it. It's a protocol for communication, you know, it's notes and other
stuff transmitted by relays. So what are what are you looking at in the next few years, maybe it's
the next five, 10 years that you think are things that will really be massively beneficial that can
be built on top of this open source stack? So I think technology always goes in directions. We
don't really, it can be really hard to foresee what directions it might be that the killer app
is something that no one's really even talking about yet. And we didn't really put the puzzle
pieces together. So I would have kind of low confidence in my own opinion about what gets
built on NoSTER over the next five, 10 years. At least for now, I think that the fact that
like any type of social media, like whether it's Twitter or Pinterest basically, or anything in
between, you can have that kind of front end with a big interoperable back end to all the other
ecosystems, which is really cool. So I think that that's, I mean, that's already that's a massive
idea. And then I've been really prioritizing that payment discovery, payment directory
aspect, because it already makes wallets better. And now I feel like, and actually it was the
initial kind of alpha version of FETI, where I realized how important communication is inside
your own wallet. I mean, commerce involves communicating with someone and trading that
value with someone. And so when you have communication and money transferred together,
that's super powerful. And NoSTER can add that to any wallet. And so it's like, I don't, I kind of
look now at any wallet and think, why does this have a communication element to it? I'm like,
I'm just in this wallet alone. How am I going to use it? And so having that in-built communication
is super valuable. It makes wallets better. Basically, everything becomes international,
open source, Venmo. And you can still have privacy elements to it, right? I mean, it's not like you
want all your payments to be zaps, but just like you can just look, you can look up their payment
information in NoSTER and then send a non-zap lightning payment to them. And wallets can do that for
you. And so I think that's, that's still low key. Like, I don't think people have appreciated that
yet. Obviously some have, but I think that that idea is just huge. I would like to see how it changes
long form content. I mean, it's not just short stuff. It's like basically sub-stack too.
You know, the highlighter project, for example. We can still, I guess, lump that into social media,
but it's a more longer form substantive type of social media. So those are already just massive
revolutionary concepts. I think that having just relays out there is just, it's useful for data
availability. It's useful for potentially data backup. I mean, we already saw, for example,
eCash making use of the fact that there's, you know, relays out there kind of holding information
until we kind of get back and claim the eCash. And so I'm hesitant to kind of think out further than
that. It's got inherent protection against forgery because you're signing all the content, which I
think is going to be increasingly relevant. I think that reviews could be a lot better,
because imagine every time you go to a review site, you know, you see all the numbers, but then
imagine if like your friends reviews are at the top. And, you know, you, like, we don't really
social weight reviews right now. Like we used to, like in the age of movie critics, we kind of did
that. Like, you know, if Roger Ebert says this is a really good movie and you generally like his
hit rate as it ties in your taste, that you're socially weighting his review higher. Now,
in the internet age, we really look at like rotten tomatoes and think, okay, this, you know,
we look at the critics score, the audience score, you look at IMDb, you know, you kind of get some,
like, metrics for, is this thing popular or not? But imagine if I'm looking at this, like, show,
and it's like, you know, Walker says this is awesome. He rated it 10 out of 10. I would think,
well, maybe I should check that out. And I, like, I was posting the day about Blue-Eye Samurai on
Nostar. And literally one person's review just said, this is amazing. And I was like, I didn't
even hear about that. I'll watch that. So it's like one review was, and then I looked it up and
they had really good reviews. So it's like this kind of, both the quantifiable and someone who,
they, like, they like this other show I like, and they just said, this is the best thing they
watched in a while. So I'm going to wait that review. That's like 20,000 reviews in my book,
right? That one review. And I, so I think reviews and any sort of, like, like,
anything that kind of just sorts things, basically, is adding, adding your own web of trust
to quantifiable metrics and having them together, I think, super powerful.
I think it's such an interesting thing that we're using these technologies that are basically,
in, like, the whole idea is to remove the intermediaries, right, to remove these ideas of
trust. But in so doing, we enable ourselves to actually build trust within the smaller communities
within these protocols or the develop around these protocols. Like, because you don't ultimately
want to live in a society where there is no trust, like you want to live in a high trust community,
there's going to be, you know, in a physical sense, you're going to have less crime,
you know, less littering on the streets, things like very tangible things.
Yeah. And in an online community, you have much more, I guess you have a much higher sense of,
okay, the information that I'm getting is of much higher value because I have a much higher level
of trust, not only in the people that are giving me that information, but in the fact that, yes,
those people are actually those people. Like, there are so many different, I mean, you have,
I don't even, I shudder to think how many different imposters across so many different platforms.
And yeah, you're, you, I think you have imposters on Nostra too. But it's very easy for me to see
which one is Lin Alden, because I know I'm following Lin Alden, I can check your, I can check your
NIPO five, I can look at all these different things, oh, who's following, and I can make sure,
yes, that is in fact, Lin Alden. The protocol enables me to have more trust in the people and
to build greater trust in these online and physical communities. And I just think that's such a,
such a beautiful thing. I'm curious if, you know, what your thoughts are and just kind of
the idea of like confrontational truth, it's something I talked to Pablo F7Z about and he's
saying that Nostra, because it is truly free and open, it really enables like through his,
like Wikipedia project, this idea of confrontational truth. Whereas when you have these
centralized gatekeepers to any source of information, like Wikipedia, for example, you're
still very much relying that that centralized organization and also assure some, some more
decentralized contributors to it, but ultimately there's, you know, there's a central organization
running it. You're putting a lot of trust in them to curate proper information and there is not
very much confrontational truth. There's almost no confrontational truth or search for it in
legacy media. So in this time where, I mean, we're in an election year here in the US and in many
countries around the world, censorship, we all got a very, very strong taste of how that can look
during the COVID times for things that, you know, were not supposed to be said at the time, that
later turned out to be actually okay to say once the truth came out. But in an era where
confrontational truth seems to be under threat, how do you see this playing out? Like do you see,
I mean, is Nostra just still far too small to actually make any sort of a meaningful impact in
that? Or are we going to see in this next kind of election cycle? Are we going to see more people
start to look for alternate sources to communicate ways where they can still have that real confrontational
exchange of ideas that is so necessary for actually trying to ascertain what the truth is?
So I think that it's so it's not too small for the people that use it, right? So everything
starts at the individual level. If someone's using Nostra and getting value from it, it doesn't
matter how big it is. I mean, right now it's like, you know, so you have tens of thousands of active
daily users, it's valuable for them. You know, I guess it wouldn't be valuable if it was like five
people, but as long as there's some sort of community there, and it's certainly big enough
to be a community and multiple overlapping communities, it's already big enough for those
people. Obviously, in order to have a broader scale, it's got to be bigger and the idea has
got to spread. And like I said, even some of the ideas could spread to other non Nostra ecosystems,
like algorithm choice, like Bitcoin as software, in addition to providing us the like, like actual
physical, like it's a working network, but it's also an idea, right? It's an idea that we have now
of like open source money and our own, we can be controller on money moved around. It does not get
inflated, right? It's unstoppable. That's something that we all like appreciate now. And I think
Nostra can have a similar thing where the software is making it happen. But then also it's changing
our idea of what should be normal. And it's also an emphasis of how important technology is because
I mean, you have people debating how much should we censor. And one way to just end that debate
is just make things uncensorable. Like this doesn't matter what they think, because it's just
if there's enough people using Nostra and it's a working kind of freedom web of communication.
And then of course, you know, algorithms to help you sort it, you know, to make sure it's usable.
Then that's it just kind of ends the debate. It doesn't matter what people think about
censorship. If you have good enough technology to make it really hard to censor. And so I think
that that over time can shape things. I think that one of the things we as a species are going to
have to come to grips with is like just dealing online in general, because it's kind of like how
we went through this with our food, like we're very detached, like we're eating things that
we're not really evolved to eat. And therefore we have health issues because of it. And so people
over time have had to make more conscious decisions, you know, kind of the whole rise of like paleo
or paleo adjacent diets. The idea of going back to something is in semblance of what we used to
eat, like real food. And I think we're going to have to do that at some point with our online
interactions, which is that we're not really evolved for that environment, you know, we're
like someone in another country, you can say you suck and then you feel bad for the rest of the day.
Because it's like, you know, when I walk outside my front door, it's like it's a high trust
aside is no one saying like, Hey, you suck. Like I hate your work. And like, even if people online
that say you suck, if you actually meet them in person, they will rarely say you suck. It's like
the instincts are off. We don't have that is it's communication without the social cues.
And I think that over time, we're going to like, we're going to hit kind of a rock bottom in terms
of like mental health and just unproactivity because of that, and pull back in another direction.
And I think Nostra kind of like Nostra is like the kind of like, how paleo was like a movement in
like real eating. I think Nostra is kind of a movement toward taking back that control,
you know, being conscious of the algorithm, constant, constant, like a conscious of attention,
maybe not being the best currency and maybe actual currency is a better currency than attention.
And I think that that's it is going to take a long time. But I think that's an initial foothold
that's both a technology, but then also a broader idea and awareness of what social media is doing
to us, not just on an individual level, but like on a national level, like now affects like, like
mobs and stuff, because you can rile people up in, you know, like all sorts of ways. And I think
that that's it's healthy to hopefully have the pendulum swift back a little bit. And people
not only have the capability, like the technology gives us the capability, but then the mindset
of treating online environments more like real life and constructing them with that in mind.
I think that's really beautifully put. And I like the, I like the getting back to the paleo
analogy, but for our online discourse, I think that's, that's fantastic. And, you know, if you go
on X these days, you will see a more tweets or I guess just posts now, then you could ever imagine
discussing the problems that we have in our society, in our politics, with how expensive things are,
with how much unrest there is, you see so many problems discussed. I find that you also see very
few legitimate solutions put forward. And when there are quote solutions put forward, they're
typically political solutions. Some form of the solution is ceding control to a central authority
to, Hey, you know, fix this, please. And there's less of addressing the underlying problem. And I
think part of that is that maybe most of the time, as systems get more centralized and also just more
complex, it's difficult to fit fix a massive entrenched broken system from within that system.
There you need to force change from the outside from a parallel system and force that change in
the current system through external pressures. And I, you know, you're the title of your book,
Broken Money, you know, you, you get out a lot this idea, and we talked about this earlier,
this broken money being at the root of a lot of different things. Now, I'm curious, this is
sort of a slight gear switch here. But we can all acknowledge that our money is broken. You
know this far better than the vast majority of the world, but luckily you wrote a book to help
people understand it and a great shorter YouTube video, which I'll also link in the show notes,
because it's fantastic for anyone hasn't seen it. But we've seen now a little bit of a tide shift
where there's more, it seems, public acknowledgement, even from politicians that, yes, something is
really broken here with our money. You've got the Federal Reserve Chair Jerome Powell saying,
this is, you know, unsustainable. And now you have even politicians proposing things like a
Bitcoin strategic reserve. I'm really curious of your thoughts on this whole Bitcoin strategic
reserve for a country like the US as an idea. Do you think, do you like this? Do you think this
is good for some folks, bad for others? You know, will this actually happen? Do you think that
furthermore, there's a chance that something like this actually entrenched some of the broken
elements of our system or aids in the rise of private stablecoins that function as de facto
CBDCs? I know that I just threw a lot of different things out there. So apologies for that. But
maybe just to start, what's your read on the whole Bitcoin strategic reserve as an idea? Do you
think it has merit? And what holes do you pick in it?
So I think it's natural that any large pool of capital that understands Bitcoin is going to
want to accumulate it, whether it's individuals, whether it's organizations or whether it's
governments. All of us being equal, I'd rather smaller entities get there first,
which is generally the direction you go in because, you know, when you're making a decision for yourself,
your family, it only takes one or two people to make that decision. If you're making decisions for
a small company or a company that's like still run by the founder, there's a few more checks
involved, but still it's a fairly quick decision. Very large publicly traded companies
and governments are inherently slower actors for the most part. And so kind of the natural order
of things is that it starts small. In addition, I mean, the liquidity wasn't really there until
the past few years. It just wasn't a big enough network to be interesting to corporations and
governments. Now it is. And even then, Germany can move the market, for example. They would have
a tougher time moving the market for bigger assets. So when Bitcoin is 10 times bigger than
now, it'll be even more interesting at the nation-state level. And so I think it's, although I
prefer, and the general direction is smaller entities first, it's just inevitable that if large
pools of capital figure it out, they're going to get there. And so, and I also think that it provides,
like one of the risks people fear about when you think, okay, what's the next five, 10 years look
like? It's governments say, for example, going after Bitcoin. And I think that the network's very
resilient to that, but it doesn't mean Bitcoiners are. Most people don't want to have to move to
build a play with their Bitcoins. And it's like you want to have political cover. You want to have
support. Ideally, you don't want to have a hostile environment around it. And so I think that that
government interaction is important. I don't really have a strong opinion on the strategic reserve.
I think if my job was to run a corporate treasury or run a national treasury of some sort, I would
add Bitcoin. And it's like I would put it in a certain amount. So it's like the volatility is not
a problem for what I'm trying to do. But so it depends on what perspective you're looking at.
Obviously, if you're a cypherpunk, that's not like you're probably your top focus. You're more,
like you want to build technology to make it move around between individuals easier and more private.
So I think that it's natural that some people are going to focus on that. That's what politicians
and that's what big pools of capital, Wall Street, they're going to focus on that store
of value element. And other people can focus elsewhere. Part of why I like the venture work
is that in some ways it brings back my engineering days, because first I was building stuff,
and then I had to increasingly delegate that. And so instead more like allocate capital to
engineers building stuff internally. And now instead of just complaining about how things work or just
saying end the Fed, or if you only had this one political leader in charge, it can fix everything.
Instead of doing all that, we can actually go and build things or help other people build things
in parallel, because we have a lot of really powerful building blocks now. And so whether it's
donating to open source development on things that might not be return-based, that might not
be economic, but it's more like you think it should exist, that's absolutely a really good path.
Or there are some things that are really good in company form, that that scale is important.
And so you can invest there. And it becomes helping people build things. So that's what
interests me more than say something like a reserve. But the reserve is like a useful idea,
the fact that politicians are talking about it. That means they're not talking about banning it.
They're talking about whether or not they should buy it, whether it's a bad idea, a good idea.
Let them keep talking about that, so that we can build all the minimum exchange and community
elements and really good user experience and payment discovery. Let them keep talking about
how big or not big the reserve should be. I think that's a good thing that's happening.
I would agree with that wholeheartedly. The fact that the Overton window has shifted that much
to where the discussion is primarily about who has the more bullish Bitcoin strategic reserve
strategy from the politicians that are running for it. It's just kind of insane that it's at
that state. And I actually want to dig into a little bit more just the venture work that you
do because you guys, in terms of the companies that are publicly listed on your site, you've got
FETI, you've got Breeze, Relay, Wolf, Sonoda, and Ellen Markets, I think are the ones that are public.
Can you talk about any of those or maybe just the... You talked a little bit earlier about
why you guys are supportive of open source development because it's rising tide,
lifting all boats. What do you look for in companies in the Bitcoin ecosystem? And maybe
for other venture firms who may be looking to get into this, how do you see this developing?
Do you think that this is really a seriously undervalued investable segment right now?
Or is it fairly valued at the moment? How do you guys look at this? How do you choose what
companies to pick and what are you really excited about for those? There's a pretty big range of
valuations because there's different types of money that pours in. So right now, for example,
a lot of the roll-up type research, I would say the valuations are high there. There's like crypto
money kind of coming in. Whereas some of these more traditional Bitcoin companies, I think that
there's pretty reasonable valuations on the market and that there are a lot of ideas that are worthy
of capital. I think that it's kind of at a place where I wouldn't say there's a deluge of too much
capital and not enough ideas. And it's not like there's a ton of ideas that probably should get
capital that aren't. I think there's a decent amount of balance to it. And what EgoDeth focuses on
is leading deals. So rather than just passively writing a check, we help a whole round come
together. We organize other investors. We do kind of this really deep diligence on it. And then we
more directly work with founders. So one is we look, okay, is the company, is it scalable? Is
it likely to provide good returns? Is it good for Bitcoin? Do we wake up feeling good that we're
a part of what they're doing? And then it's, can we add value to them? Are we the right partner
for them? And are they receptive to the type of help we can provide? There are some companies
that maybe we're not the right fit. Maybe they want help from other people or maybe they don't
really want much external help. And there's not really much we can do besides capital. There are
other times where they want those other inputs besides just capital. And then there's also a
pacing thing. So this goes back to a medium exchange versus to a value and unit of account and all
that. Like what is the kind of expected order of operations here? What gets big enough to have a
venture backed company before other things? So for example, it could be actually challenging to
have a venture backed company built around cypherpunk stuff because historically the market's not been
super big for that, whereas like store values, that's a really big market. And so I think it's
not just saying, okay, this is a great idea I want it to exist. But it's like, is this a big enough
market over the next five years to have a company really kind of building it out? Or is it so small
or uneconomic such that it's better with donations? So I mean, I like to donate to open source
development as well for ideas that might not be right for a business. But then there are other
things that are right for a business. So yeah, we look for companies that are pretty geographically
spread out. We even have more companies and a couple more that are not listed there yet.
And looking at all of it together, there's many different countries and continents involved.
And it's basically is just making Bitcoin easier for people to use, either dealing with consumers
or beat business to business or kind of infrastructure that kind of ties other companies
and other users together. It's basically trying to help create the vision we want instead of
just complaining about the Fed. Let's put capital to work and build this really powerful ecosystem.
And so whether it's FETI, whether it's Breeze, whether it's Ellen Markets, they're all kind
of providing value to different parts of the market. And again, I guess it's back to this idea of
sort of just complaining about the entrenched system. It's actively building the parallel system
and trying to effect change there where it's much easier to do. And let's say your sats go
along quite a long way. But there are still obviously, there are a lot of Bitcoin companies
now. I think one day there will be perhaps every company is in some way a Bitcoin company. And you
sort of wrote a recent piece, I think either just today or yesterday, you released it, a new look
at corporate treasury strategy. I'll link this in the show notes as well for anyone who wants to
read the whole thing. But I thought this was quite interesting. And you have an excellent way of
a very, let's say, engineer's mindset in terms of how you structure things. Because it always,
by the time you get through it, you're like, well, I don't know how you argue with that.
But can you talk through that a little bit? Because it seems that this is obviously,
you guys invest in Bitcoin companies. But this is direct advice for any sort of company.
You started off with just this idea that, okay, the balance sheet versus the income statement
and how the balance sheet has sort of lost some of its importance in recent years. Can you talk
a little bit about that idea and actually why that happened, why that did lose so much importance
versus the income statement? Right. So basically, corporations both legally and just what's
available to them, they don't have really good savings assets. They hold like T-bills basically
in money markets and basically cash like instruments as their savings. And there's really
not that many good other options. And so the problem is that in that environment,
they're not incentivized to save. Because if a company is holding a lot of cash,
that cash is not doing as well as what we expect from equity returns. So instead of
good for the company, it's actually like an anchor on the company. You'd rather have them
pay it out in dividends or put it in the buybacks so you have a bigger share of the company. You
want them to put that capital to work, which is a shame because it creates risk. A company
without a balance sheet, if it's got no savings or limited savings, the company is entirely
valued on its future earnings, which can fluctuate wildly. And the problem is it can be nonlinear.
So if the company runs into a problem that impairs their earnings and then they're trying to raise
capital to fix the problem, well, now that capital is going to be very expensive because they didn't
have any savings. The balance sheet doesn't matter. And all that matters is their future cash flows,
which are now impaired, but whatever they're trying to fix by raising capital. And so we generally see
universities last centuries, and they have these big endowments that you never really see like,
oh, this university went bankrupt because they have really big savings stacks. They have capital
that can last them for a long time, whereas companies on average have shorter timeframes,
partially because they're not incentivized or allowed to really save. And even gold is not
really good enough because it gets diluted over time by more creation. So if you had to hold
gold or dollars for five decades, you probably should pick gold. But it's still not enticing
for corporations because it doesn't keep up with equity returns. It doesn't keep up with
broad money supply growth. And so having something that's even harder than gold, but that's also
easier to hold and move around and things like that, really gives us a super powerful tool for
treasuries. And that even goes back to the nation state question, which is, there are nation states
that are holding trillions of dollars of US treasuries. And so we're basically all slowly
rug pulling the national savings of basically every country. And they can hold gold as an option,
and many of them do. That means no one can literally rug pull. No one can take their assets
unless they go in there and get them. But then also, they don't really get diluted as quickly.
And Bitcoin is basically that on steroids. It's the type of gold that doesn't get diluted at all
in the long run. And it's basically gold in the 21st century. So in addition to being a really
powerful payment network and all those features, it fixes corporate balance sheets. It fixes national
savings. It fixes household balance sheets. As long as someone has a thesis that there's a high
probability that the technology continues to function, the incentives work, the network gets
stronger. And so I think it's powerful. The biggest downside to that all is its volatility. But
in order for Bitcoin to become relevant, it has to get bigger. We like upward volatility. We like
number go up. And we don't want it to take a century. So it's got to have upward volatility.
And anytime any asset with upward volatility is going to have downside volatility. If it only had
upward volatility, people would just lever it and it would just go to the moon. And it has to shake
off that leverage from time to time. And so whenever there's upside volatility, there's euphoria,
there's leverage, and then there's downside volatility, there's fear. And so you can't really,
that's an inescapable part of the system until we reach a scale that's closer to its total
addressable market. I would say right now we're in a tiny fraction of its total addressable market.
And so it trades like an option. It trades like this, what is the chance this becomes relevant
decade from now is how many big pools of capital view it. And so the downside of that volatility
is you can't, most companies or individuals can't use it as their only savings asset,
because what you don't want to have is like a 70% drawdown. And then you have to spend it while
it's drawn down. So it's like, there's a fortune, a little bit of a privilege there in the sense that
that generally the wealthier you are, the more volatility tolerance you have. And so that's
like kind of an unfortunate reality. But basically it gives it so that at least for a portion of
your savings is that you don't intend to spend for the next four years. It's one of the best assets
that someone could hold. And people, a lot of my readers would think, well, why can't they just hold
the S&P 500 or why can't they hold XYZ? But I don't get that question in Egypt. When I go to
Egypt every year, their options are real estate, which is now overbuilt because everybody picks
real estate, gold or physical cash dollars that are melting ice cubes. The local stock market's
not very good. It's very volatile and not as well returning as S&P 500. And it can be hard for people
to invest overseas if they're like in the middle class or working class. Wealthy investors can
always move capital around, but normal person often has trouble. And then do you really want to
invest in another nation's stock market? Do you want to have all your, is that your primary savings?
You're technically now you're ruggable by an international entity. And so Bitcoin is just
this really powerful savings technology for literally every level of society from the household to
the nation's state. I think that's such a powerful thing that this isn't just something for rich
people in rich countries or something just for poor people in poor countries. This is something that
goes across that spectrum. And I'm kind of curious just on the corporate side of things,
do you foresee that there is, in the US, for example, we've had a lot of focus obviously on
companies like MicroStrategy who was quite pioneering in this effort in terms of a big
publicly traded company making this move. We've also seen a few other publicly traded companies
like a similar scientific. They recently announced you got a meta planet in Japan. There were a
couple others whose names I'm now forgetting in the US more recently. Block's been, they've been
doing it for a while as well. Yeah. And so do you think, is there a profile of the type of
company that is going to try this type of strategy first? MicroStrategy got Sailor who was the CEO
and one of the founder. Obviously had a little bit more leverage perhaps even though it's a
publicly traded company. Is there a culture that needs to be present for this to even be a possibility
or is there an industry that's particularly well suited to this because of the dynamics of that
industry and how their money moves around? So I think that the profile is basically
companies that are still run like a smaller business, which is to say, like the founder is
still there or a super long time CEO that can just kind of make decisive action.
That is not worried about their quarterly bonus. They own a lot of their own equity.
They care about what that equity is going to be priced at 10 years from now. They don't care about
what it's going to be priced even next year or next two years. And because career risk is a really
big thing whether you work in governments or finance, no one wants to be the one that puts
Bitcoin on the balance sheet and then it gets cut in half because they're mainly thinking about
their own career. They think about their family, they think about their career. The organization
they work at is like a third priority. But if it's the thing you founded and you have a massive
amount of equity in it, you really care about what that organization looks like in 10 years.
That's what small businesses are like. One person or a handful of people
own a private business. And so there's already been a lot of adoption of Bitcoin among small
businesses. There's a lot of them that have done it and just fewer in the public trade it because
most of them are run by the CEO is not a big owner. He or she cares about the next several
years but that's really the all their visibility. So it's been held back by accounting issues.
There's also banking issues. Only recently did really these big institutional custodians
become around. It's not like years ago, imagine if a corporation put their treasury in and
try to have Mt. Gox holder or something. There just wasn't really institutional capacity until
Fidelity got involved and then just NIDIG and Coinbase institutional is kind of like more
serious type of security. And then there's even banking relationships that are hard. You can't
just wire money through. They all use these big banks. These big public trade companies use a
handful of really big banks. And those banks are often not very friendly to Bitcoins. It's like
you have to go around them through a smaller bank which a big corporation doesn't usually love. So
it's basically frictions. And so I think the key profile is the CEO has to get it and be high
conviction and be able to incentivize to think 10 years instead of one or two years.
It's probably the main set of things. Another thing I would point out is that
if it's not the CEO, then what happens is there's a critical mass that doesn't matter until it
matters. If a board of directors is like nine people and three of them are like quiet Bitcoin
enthusiasts, it doesn't matter. It doesn't matter if it's zero or three. It only really matters when
you get to five. And so all throughout corporate America, there are individual directors or vice
presidents that are really into Bitcoin. I was giving a talk at a technology company,
really big one, the other day. And the vice president is super-base. He's running his own
lighting node. He's way into Bitcoin. And the company has, there's people like him throughout
corporate America and they're just like a minority. So either basically what happens is the CEO gets
it and then they're super high conviction. So that's fidelity or micro strategy, things like that.
Or I think the longer route is just gradual critical mass until it's normalized. So it really
comes down to does the company want to be a leader or does it want to be a follower? And then the other
kind of incentive is like, if you're super big and successful, why change what's already going
amazing? They're not really thinking in that capacity. Whereas if you're like a kind of a stagnant,
cashflow positive value stock, like this, that's what micro strategy was. They weren't really growing.
They were profitable, kind of a niche software business at that point against really big competition.
I mean, the fact that they actually made it that far compared to all the other business intelligence
firms, but it still just wasn't great for their forward future. And there are like thousands
of companies in that state where they sell widgets and the widget market isn't getting bigger.
It's not going away anytime soon. But so they're not really building toward anything.
They're not really going to go outside of the circle of confidence and compete elsewhere.
And so one of the things you can do is just dominate the widget industry by adding Bitcoin
to your balance sheet. And then you get way more attention. You get, if Bitcoin is successful,
your balance sheet goes up and you can really buy your competition at that point. And so I think
it's kind of like the ones that are struggling, not in terms of like acute struggle. If you're
not profitable, you probably shouldn't be buying Bitcoin. But if you're profitable and stagnant
and don't really have this super competitive moat, that's a really good profile for companies to buy
Bitcoin and say, well, we can't really do much about the income side of our company. It is what
it is. That's the market. But we can do something about the balance sheet side instead of holding
a bunch of melting ice cube T-bills or instead of decapitizing ourselves so that we set ourselves
up for failure if we ever have a big problem in our industry. We can buy something that has
the best performing asset, really. It's kind of competing with the Nvidia as the best thing
you could have bought over the past 10 years. And you can just have that. And it can dramatically
change the kind of the trajectory of your company. Do you think just on that note of early adopters
of this corporate Bitcoin strategy, do you think this as the, you talked about maybe these types
of companies, they're performing well, but they're not really growing. But then over a few years,
that they have Bitcoin and their balance sheet, they end up being able to just acquire their
competition. Do you think that has, I mean, are we going to see a large reshuffling in the years
to come, both at the corporate level and perhaps at the nation state level, the have Bitcoins and
the have nots? And does that ultimately lead towards more consolidation and centralization,
as some companies just, they just have far more capital to deploy because their capital has actually
been, it has been growing its purchasing power dramatically since, while the competitions,
whatever they're holding, it hasn't been growing at nearly even close to that rate.
So I think, I mean, Silicon Valley is kind of an interesting example because,
you know, wealth compounded in the tech sector faster than elsewhere. And so in say the United
States, the power used to be really in like the Northeast, you know, kind of media finance. And then
all this tech created tens of trillion dollars of wealth, large on the West Coast. And so you
had kind of competing nodes of power. And I think that, you know, Bitcoin right now, it's
something like a trillion dollar asset. I mean, if it's a 10 trillion dollar asset or a 20 trillion
dollar asset, that's a comparable rise. And yeah, we created a lot of new billionaires,
a lot of new millionaires that can, you know, but it wouldn't be as physically concentrated to be
around the world, fortunately, kind of like in their own communities. And so I generally view
that as a positive. I don't really view it as centralizing because already, it's hard to get
more centralized that things are in the sense that right now, the bigger company you are,
the lower cost capital you have, your stock literally becomes monetized, like literally people
just stuff money into their 401k, usually in market cap weighted passive indices. So you just
every day, every week, you blindly just give Apple more money and make their equity more valuable
so that when they pay their employees partially with their equity, they just have a really strong
position that they can they can borrow money for like as low cost as the US government can.
And so that's already very centralized. And that's part of why big companies have eaten
smaller companies is because in addition to economies of scale, they've got that capital
advantage, which is absolutely huge. And in a long enough timeline, if Bitcoin is money,
Aver moves that right. So being bigger often does have advantages. But if you're not like
competitive, and you're not still stacking sats, then you're going to start losing your treasure
over time. And so I don't really view it as centralizing. I do view it as over time,
re like not destabilizing, but restabilizing, like in the sense that it just reshuffles,
you know, power, kind of like how the rise of Silicon Valley, you know, change power structure
in the US, I think the rise of Bitcoin can change power structures globally and it gives little like,
you know, places like El Salvador, because they're like on the front of that train,
you know, they can get disproportionate benefits as long as they manage that pretty well,
but basically saying, look, we're going to hold Bitcoin, we want Bitcoin based companies to be
here. And then they can really benefit from that. And like, I think the UAE is figuring that out.
There are a handful of countries around the world that are like,
I think Singapore is kind of figuring that out. There are a number of places that are
saying like, what's there to lose compared to what's there to gain from having a foothold here?
I think it's that idea that ultimately Bitcoin will flow from net consumers to net producers. And
they're the only way to stop that flow is to become a net producer yourself and to continue
creating value in a competitive way. And, you know, when I said I wasn't going to ask any macro
questions, but if you have time, I do have one kind of, we don't have to go super deep on it, but
just with it's been a heck of a year we've had this week. And you now see all of these calls for
emergency rate cuts, you know, to talk of the ultimate net producer of government paper or
private bank cartel paper, the Federal Reserve, they are a small group of people who basically
control the price of money. Yes, in the US, but that ripples throughout the entire world.
What is your read on kind of what happens next? We're also in an election year where typically,
well, I guess it depends on who's in power, but typically they don't like people getting too
angry before the election because they don't like people to see everything, the cracks in the system
right as they're about to elect somebody. Do you have a sense of what the, where we go from here
in terms of are the feds hands tied at this point and do they need to just start cutting these
rates even though they, and do we see an adjustment to the, you know, the perfect level of inflation
of 2% as folks like Paul Krugman have called for? So I think that the calls for an emergency
emergency rate cut don't really make a lot of sense. They don't really care about the stock market
going up or down by a few percentage points. That's just not their focus. I think people
over index how much the Fed cares about the stock market in the immediate sense where you would get
more immediate action is something hits the core, like the core financial plumbing, banks, repo,
treasuries. When a problem is there, that's when like they're in there in like 24 hours, you know,
that's where all hands on deck, they will not let destabilization be sustained. Whereas stock
market flailing around for a while and let's think it's bad enough they starts hitting those core markets.
You know, emergency rate cuts are not a good look. They, that's not something they want to do unless
they, you know, really had to like during COVID or something. They were like, obviously, it's an
issue. So I think we're probably going to get rate cuts in September. You know, it's, it's,
there's a lot of kind of market issues with rates where they are. It's making the deficit even worse.
I think they're probably going to go down. I think that they're going to be in a situation where
eventually their hands get tied right now. They're so like in Japan, for example, the central bank
is really limited to what it can do because the government debt is so big, the deficits are so
structural. If you raise rates meaningfully, the deficit gets absolutely silly. And then the one
that would have to buy it is them. So the more they raise rates, probably the more QE they have to do.
And so it's, they have a limited option. The United States is like entering that phase.
But it's not as far along as Japan. So they, there's like periods of time
where they have options, they seem like they're in control. But when you run the math out
a handful of years, you can see whether not really in control. Like the New York Fed has
already projecting that by the end of 2025, they're probably going to go up to back to balance sheet
growth again. Now they wouldn't view it as QE because they wouldn't be viewing it as economic
stimulus. They'd be viewing it instead as growing the balance sheet in line with nominal GDP and
kind of maintaining this like higher reserve environment that we've had ever, ever since the
global financial crisis. And so I think that it gets awkward when they go back to structural equity
adding if inflation is still officially above their target. Because then there's not really
good answers right now that whenever there's like inflation data points or something, the market
says, well, now the Fed's got to be tighter that they're going to handle this. Whereas if they kind
of get shown is like they literally just they don't really have control of their balance sheet
anymore or issues like that, I think then you can get a pretty radical shift in how people approach
their view. I think people are still in the mindset of a lot of stuff happened after COVID,
it's normalizing now, but I think there'll be increasing awareness of how structural this is.
So I think that in the coming months, probably see some rate cuts, no emergency cuts unless
something really deteriorates, something has to hit those core markets to do some sort of like
kind of either liquidity addition or rate changes. And I think that in the future, the
balance sheet might be as big of a component of all this is the interest rates. And a lot of
like, if you look at like Egypt's base money, it's like high inflation, look at their base money,
it's going up substantially. And it's like they don't really, it's hard to get that
it's hard to get that that the wheels to slow down there. And I think the United States could find
itself in a similar situation in the years ahead where the deficits are too big. The more they
raise rates, the more it blows out the deficit, which they end up partially having to buy. And so
their their overall ability to put out fire starts to get like worse, it's kind of like putting a
kitchen fire out with water, you know, doesn't really work ironically, I think that they could
find themselves in that situation. Does anything stop that train? Nothing stops that train. And
part of why that's the case, one is its political polarization. So it's locked in. You know, one
of the things they commented on a recent research report is that in the Republican Party, they
on their platform, they said, we're not going to cut Social Security or change the the Social
Security retirement age. That used to be a Democrat position, right? It used to be that the Republicans
kind of wanted to trim and cut that to some extent the Democrats didn't. Now it's like we've we've
moved past that era. This isn't like the Paul Ryan Republican Party anymore. So both sides,
the few things they agree on are don't cut the military, don't cut Social Security, don't cut
Medicare. And that's and you can't cut interest unless you default. So and that's that's already
that that is like roughly equal to the tax receipts. And everything else is like marginal. So
that's, you know, not going to change for a while. And then two, the United States is our tax receipts
are more tied to asset prices than most other countries. It's part of like tax changes we did
in the 90s, we're like a lot of executive compensation. It's gets a better tax treatment
when it's like equity based rather than cash based. In addition, we have just more wealth
concentration in general, which means there's more wealth and income tied to asset prices.
And so when our if we try to do austerity, and like the stock market, you know, struggles under
that environment, ironically, that that hurts tax receipts and blows out the deficit, which makes
austerity very hard to do. So the reason why nothing stops at trade is it's such like our
is not just pulling a couple levers, it's a restructuring that would have to happen. So I
don't think that train stops until there's like a significant significant overhaul
to the way the financial system works and to the value of the dollar.
Well, I appreciate the analysis. And, you know, I had to ask at least at least one macro question.
So I appreciate that. I want to be conscious of your time. So I just the last question I would
ask is just more of a general one. You get doom and gloomed a lot, as we talked about earlier in
the YouTube thumbnails and things. And I think today we've stayed very, very positive. And I
really appreciate your take on just all the incredible development that's happening in this
space, how you see it personally, and then also as an investor. And I just want to know, you know,
more generally, just what makes you hopeful for the future? What makes you really excited about
the years to come? So certainly, the technology plays a big role, like liking the work you do,
being able to get up every day, and either write and educate about a topic, which involves
educating myself first. I mean, one of the best ways to learn is to teach. So it's that component.
And then it's basically saying, you know, I want this thing to exist. Therefore, I'm going to help
it exist. I'm going to help, you know, find people who can make it exist and see if they're, if they
well capitalized, right? I mean, it's just like, or bring more attention to it so that other people
might, might help capitalize it. So basically, the fact that what gives me hope is that we have
some degree of control of our future, that we, you know, we can build things rather than just
ask for things to change around us. And also, you know, it's funny, because I will talk about like
inflation or fiscal issues. And people in the West will often say like, Oh, that's like a mad
max scenario. Like, that's awful. That's the end of the world. And it's like, you know, when I was
in Egypt, and there's like 30% inflation, you know, my relatives are still taking their kid to
childcare. They're still running their small business. They're still serving as a doctor in,
in a hospital. There's, it's like, life gets messier. But it, it's goes on, right? So it's like,
you know, people often think end the world scenarios for fairly small things. Like if you
mentioned 9% inflation, like that's, that's insane. Or what do you mean the Fed would like go back to
balance sheet increases while inflation is above their target? Or, you know, it's like, that's not
even remotely comparable to what other countries are dealing with on a regular basis. And they're
still going through normal life in, for the most part, outside of like really dark places of the
world. And so life can get messy, but it goes on. So we have the tools. Things are rarely as bad as
long as you don't like fire the nukes, we should be okay here. We don't build like a super virus
because now like AI can, you know, that's those are the kind of things I guess I worry about is like,
if, if, if everyone has like a, an AI that can build viruses or, or, you know, kind of things
like that, we've kind of distributed power. That's, you know, it's not, it's one of the downsides,
I guess, but, you know, a warning tail risk like that, life goes on and there's plenty to do.
So we're all going to be okay. Well, not all of us maybe, but if we, if we pay attention and try
to educate ourselves and to teach others, there, there is a lot of hope, I think, for the future,
despite how, you know, certain the algorithm may have you believe otherwise, but there's a lot
of reasons to be hopeful. I think so. I think basically, you know, go outside, get sun, touch
grass, meet people in real life, try to, try to act online, how you act in real life, try to be
conscious of the algorithm in a similar way that we're trying to be conscious about food
more and more. I think a conscious life can be a hopeful life. That's a wonderful note to end on.
Last, last question I promised, but very quick one. Are you reading anything right now?
Besides, you know, I would recommend broken money. I'll link that in the show notes. Is there
anything that you are reading that you're really enjoying?
Not right now. I'm looking forward to an upcoming Brandon Sanderson book, which I'll be probably
diving into. Lately, I've actually been kind of looking through technical stuff. Like I was looking
through the Nostra GitHub, you know, things like that. I've been a little bit more on the technical
side recently than the literature side. I had a little bit of a lull in terms of literature,
but I plan on getting back to that probably in the year ahead.
Oh, just a little light reading on GitHub. I love it. Where should people go? Linaldin.com,
Linaldin Contact on Twitter. I think you're primal.net slash Lin. I'll double check that,
but I'm pretty sure. Anywhere else you want to send people?
That's it. Yeah, check out broken money wherever books are sold.
Awesome. Well, Lin, thank you so much for your time. This was extremely
enjoyable and I'm glad we got to talk some white pills here today.
Yeah. Thank you.
Bitcoin is scarce. There will only ever be 21 million, but Bitcoin podcasts are abundant.
So thank you for spending your scarce time to listen to another fucking Bitcoin podcast.
Until next time, stay free.