Episode 33: Bitcoin Protects Human Rights with Alex Gladstein - The Network State Podcast

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Alex, welcome to the Network State Podcast. Thanks for being here. Thanks for having me man. Awesome. So we've been friends for a while and it's good. I think it's your first time out here in Singapore. So you have a new book out, check your financial privilege, right? Why don't you tell us about that? Yeah, so I've got a couple books over the last couple years and working on a continual theme, which is why are people turning to Bitcoin? Yep. Why is the fiat system broken? So started with check your financial privilege, which is an exploration of mainly people in collapsing economies and in police states. Why are they adopting Bitcoin and interviewing them, travelling, meeting them and learning about how absolutely shattered the monetary system is for so many people? And you know, I don't know exactly what the situation here

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is like in Singapore, but in America and in Europe, we have this immense financial privilege where it's easy to use money, it doesn't hyperinflate. It's easy to send money to our relatives and families. You know, you can take your money out of your country if you have it in your pocket and it, it works like I've been using U.S. dollars to, to people here. If you live in a place like Togo or Bhutan, etcetera, and you take your money out of the country, it's worthless. So as the Bitcoin evolution is happening, it's been a lot harder for a lot of people in rich economies basically to understand why, because their money system works relatively well. But only about a billion people live in a country with property rights, free speech and open capital markets and some kind of elections.

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The other 7 billion people live in a country that either has essentially collapsing economy or an authoritarian regime. So for about 7 billion people, money's broken every day and it really sucks to deal with. And, and a lot of them are starting to turn to Bitcoin. So that's that's the sort of narrative I explored in that book. So I agree with about 70% of that, but the 30% I disagree with this, I think you know the golden billion, right? Have you heard that term right? That's what I'm referring to, yeah. Yeah, so the golden billion, Putin has also used that term. Others have used that term. I mean, it's like neutral or whatever, but it's like, let's say the US, Western Europe, Japan, Korea, Australia, New Zealand, what people sometimes. Reserve currencies. Yeah, exactly. It's what people refer to as,

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quote, the international community. They're aligned with the Fed. They're basically often used military bases are there. They're kind of people who will be at the G7 or whatever, this overlapping list of countries. I think my disagreement with you, partial disagreement is that if if you look at China, if you look at the Southeast Asia, you look at Riyadh or Dubai or even India, Russia. And so it's over Eastern Europe. And then places like El Salvador are, they're really not as third world as people think they are. They've actually improved in some cases. They're not third world at all in the sense of like, they have modern infrastructure and they have cars. You might disagree with, you might say, collapsing economies or authoritarian governments in the. World or capture it right? Exactly right.

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So, so maybe just as a qualifier, many of those economies are not collapsing, but you might disagree with the government, fine, OK, great. So which is different, but it's also it's it's just an important distinction, right? Like, it's not like only like wealth is distinct from government, if that makes any sense, right? Right. And if you think about Bitcoin as digital cash and digital gold, you know, depending on your country, one use case stands out over the other. In a place like China, the digital cash part where you can get on capital controls and you can have money that's not tied to your identity, is really important. Whereas in a country like maybe Venezuela, the gold part's really important because you want to escape inflation. And, you know, look, a lot of countries have both. But essentially my point was only a very small percentage of

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humans live in a country that's sort of protected from both. And that's, again, where you see most of the world's media's based there, right? So the narratives that governments have been saying for almost 15 years now that Bitcoin is wasteful and dangerous and useless, it's just a complete lie. It's, it's the opposite. It's actually been dangerous to not use Bitcoin. Yeah. And I think I, I basically agree with you in the sense of especially in some place like Venezuela or like Lebanon where the currency basically went to zero and Bitcoin went vertical, right, Nigeria, places like this Turkey, right. Turkey is an interesting one. Where so, so the other three I feel are very unambiguous. Turkey, you know, like the thing about like politics being Byzantine in the Byzantines. You know, I can't, I, I can't figure out Turkey myself. I probably want to have someone

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from Turkey explain it to me because when I fly through the airport there, it's actually very nice, right? And yet their currency is being like wrecked and so on. So that's an interesting edge case that I feel Bitcoiners should understand better that I don't understand fully at the current moment, right? Something about it, it's able to somehow seemingly operate even as it's got these crazy inflation rates. So I don't know what's going on there, right? Or maybe maybe it's actually going to bust or what have you. But something is something interesting is happening there. But other places like certainly Venezuela, certainly Lebanon, certainly Nigeria, certainly many countries. Now a related thing that's happening is we have, you know, stablecoins being legalized, right? And my thesis and maybe you you

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have some thoughts on this just like local papers all went online and then they kind of lost against the New York Times, Wall Street Journal, Washington Post, which then lost to social media. Basically in terms of where do people check first, they check X or they check social media first for news and then this and then this like SECond and third tier. And that took that was a huge fight over 10 years because once these guys saw they were losing the social media, they pushed but fought, fought, fought to try to censor and then the, you know, push back happened yes. So I think something similar will happen with lots of local currencies will essentially lose to USD and potentially other stablecoins or basically USD backed stablecoins and other stablecoins. And then USD itself is not as good as Bitcoin because you know USD is devalued by 100 million X

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against Bitcoin since inception, right? So very similar kind of dynamic where locals lose to global and the global loses to the Internet first. Do you agree with that as a general? Concept, I mean, look, I'm I'm a very focused on Bitcoin, but I think Bitcoiners need to acknowledge probably at least two use cases that come out of the wider crypto market and one is obviously staple coins. The other one I really I mean polymarket is the other interesting. Those would be the two that I I think are smash hits. I guess now I would, I don't know if they're technologically innovative. I think they both are successful because of regulatory arbitrage. But the point being that I empathize with stablecoins as a humanitarian technology. I would want, I would want them if I lived in Lebanon or if I lived in Turkey, or I mean, just think about Egypt and Nigeria are the largest country in Africa and the largest country

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in the Arab world. And they both have lost the currency has lost 75% of its value against the US dollar in the last three years. That's almost 350 million people. So I, I empathize with why people want stablecoins. But ultimately what's really interesting if you think about it is that stablecoins kind of do the opposite of Bitcoin the end. Like they kind of enhance state power, they enhance dollar hegemony, they enhance dollar network effect, and they create almost like a new petrodollar effect where the stablecoin issuers are becoming the largest buyers of U.S. debt in the world. So last year, the only people, the only institutions to buy more debt than stablecoin issuers together where JP Morgan and China. And this year it's probably, they're probably going to be #2 and #1 So they're really helpful for U.S. government.

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And Bitcoin is just solving a different problem. Like they, they don't ultimately solve the same problem. Like Bitcoin is unconfiscatable, unstoppable. It's going to have improving privacy over time. It's 21 million, it's scarce. And stablecoins are guaranteed lose money. Coins, like, as you pointed out, like they're losing money every year. And the ones that have dominated the market are centralized and they, they get frozen all the time. So while stablecoins, I would argue are humanitarian technology, Bitcoin is freedom technology. And I think there's a big distinction. Totally. I totally agree with you. But just just to talk about that, just for a SECond, I actually think of stablecoins. You can separate them into fiat coins and flat coins, of which a fiat coin is just a mirror of an

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on chain. You know, like basically it's an on chain version of an off chain, you know, fiat dollar. And then in theory, you could have a flat coin, which was an asset, which was stable against other assets. But in practice, it's very hard to have that because let's say there's a scarcity of tomatoes, the price of this will rise against that, right? So it's very difficult. You're going to have to sacrifice like in theory, you could do some balancing whatever against a basket of goods and keep the price table. In practice, it's very, very difficult to do so because those those goods could, you know, could fly away. OK. But so when we think of it as a fiat coin, though, then you're right. It's just a projection of these governments on chain. The question is what is the medium term consequence of that? I think it is on net beneficial for freedom, OK. And my argument is once it's on

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chain, it's swappable. And when it's swappable, then you can exit and because you can exit, you have greater jurisdictional choice. No argument with that, but that's that's that's because they haven't done shotgun KYC yet. The moment and I just did like what Tether and what Circle do fundamentally are at odds with the world's financial system as it stands, which is built on control and surveillance. And there's going to be a moment in the near future. Who knows, maybe something doesn't some of the something terrible with stablecoins that's all over the news. But as soon as there you start to get KYC on chain with the big centralized issuers, which I just think is a matter of time. Then, you know, things get very complicated and, and I don't, they lose the, the value like the, the main value that I care about with stablecoins is

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someone in Lebanon who, or in Turkey or wherever Argentina who doesn't have AUS bank account can have AUS dollar on their phone. It's like a euro dollar in your pocket really. I mean, it's amazing. As soon as that's taken away, you know, the whole system changes that. I guess the one thing that you could bank on maybe is that if you take that away, the whole stablecoin machine slows down and the US government needs the stablecoin machine to grow. So this kind of interesting, right? So. So I actually, you know, CTO of Coinbase, I actually launched USTC on the Coinbase site. Yeah. And one of the big things was, you know, do you have whitelist or blacklist on chain? And just to explain what that is, basically whitelist would mean every single address has to be KYC before you can send or receive to it, which is

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essentially the same as the wire transfer system off chain. Right. That's the fear with Bitcoin also, right? The, the alternative to that was you just have KYC at the entry and exit points where you're trading USD for, for USDC or vice versa. And in exigency, you have the ability to freeze or seize if there's like a lawful court order. And so, and so it's like a terrorist group or something like that, right? That was, that was, that was at least theory of it, right? And now obviously the ability to freeze and seize is not something that exists in Bitcoin, right? But on balance, I think that did. Then there's other aspects where you can program with it. You can send much smaller quantities and so on and so forth. So on balance, I think it was an improvement from a technological and freedom perspective, yes. Given, you know, I'm, I maybe

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relative to most people, I'm an ideologue. Relative to you, I'm a pragmatist. Well. But you're actually fairly pragmatic, even in your own way. Yeah, I'd say, well, but how, how would you look at this? So we have like let's say stablecoins 1.0 which are Tether and Circle. Let's just say as as a approximation of 95% of. Well, USDC center and Tether, yes, go ahead. Yeah. USDC and USDT. Yeah, All right. Now we're going to have the SECond wave, which are going to be made by large corporations that are much more, you know, like Stripes. I don't think they're going to succeed. You don't think they're going to succeed. So tell me what? Why not? Because they're trying to do look nothing. By the way, I, I, if Stripe people are watching this. I like them different people, nice people. They they're very competent of what they do. But there's several reasons I am without calling out Stripes thing or whatever you know there's.

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Several companies trying to do this. So we'll come and try to do this. Why am I very skeptical is whether they'll succeed 1st is they just don't understand crypto. They understand Bitcoin. And what that means is from a DNA standpoint, for example, you need incentives for people to adopt. These things are already at huge scale, like there's a technical adoption, there's a programmer adoption, so on and so forth. For example, if you have like, OK, let's talk to Libra, right? Why one of the reasons Libra didn't work? There's many reasons, but one reason is it was like a bank chain, right? So it didn't have the transformative upside of adopting a new financial network that was critical to get millions and millions of nodes around the world to adopt it, right? If there's no asset, there's no adoption. That's like 1 premise. The SECond premise is that these latecomers usually don't

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viscerally get crypto in a deep way. Yeah. So they'll always nerf it in some way to make it more compliant and think that's a feature. To me that's the key is the openness wins, yes. And look, say what you want about Tron, which is the main blockchain that USDTUSDT runs on around the world and ironically is the main blockchain that I think most value goes over every day with stablecoins. If you say what you want about that blockchain, it's it's it's relatively open, meaning you don't have to provide your passport to use it. Exactly as. Soon as you cross that Rubicon it just I would agree with you like I don't know where these are going if you have to like put your ID in the. The thing is that essentially from a cultural standpoint, the late adopter is selected to be a late adopter because they're a late adopter. They're going to be more

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cautious. They're going to nerf it. They're not using assets for adoption. I mean, when I, when people tell me they're doing a stablecoin, because a lot of people say this, it's like I look at them and I say, OK, I'm interested Only if it's taking some non off chain, like a, let's say, you know, some random country that doesn't yet have its fiat currency on chain. That could be worth doing a stablecoin with potentially, right? Because that bridges those people into crypto And so it's fine. And then they can get into Bitcoin and so on from there, right. So that could be worth doing. But most other people, like stablecoins only make sense from a revenue standpoint when you have huge deposits, and even then. Taylor's the most profitable company in the world. Well, per cAPIta, yes. Yes. But then the question is like,

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are you making real returns right now, Taylor? Actually, see, The thing is most other people who are buying U.S. Treasuries are doing it with their own money. You know, Tether is taking deposits from people and then they're able to get the returns. And so like, you know, would it, would you, let's say you have a million USD of value, would you actually hold it in USD today? I don't think you would. You'd want to hold it in. Something else to be clear, Tether's portfolio is much larger than the 160 billion. I, I know, I know, I know. but I'm saying though, is that Tethers interesting where they're actually making returns on treasuries. The most other people who are treasury buyers are not making returns on treasuries because they're using their own capital to go and buy treasuries, whereas Tether is using customer capital in a sense. So I guess one way to tie that part of the conversation up is

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just long term. I'm in this because I think Bitcoin separates money from state. And I talk about Bitcoin, yeah. And I really think it's important that we separate money from state because states have totally destroyed everything they got their hands on when it comes to fiat currency technology. And just to finish the thought, like if you want to read an awesome scientific history of money, Lynn Alden's Broken Money really breaks this down. And the 1st 2/3 of the book don't even mention Bitcoin or cryptocurrency, but they basically talk about how money has become, has been on a track evolving from a tool of relative freedom where, where you can kind of do what you want and commerce with each other. And over the last 150 years, it's evolved into a tool of control and surveillance. AnDeFinally we have a new track where we're evolving the money and making it better and, and moving away from that towards freedom.

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And you know, I, that's what I'm here for. And you know, when I go to a country like Malawi, I went two years ago and 16 days after a overnight 44% currency devaluation, it was just so horrifying to think about the fact that the government could just press a red button in a in a democracy and just immediately steal from everyone at mass. And that's just, I think it's a crime against humanity. But. It's crazy. It's funny, like, you know, military treatment has this line. inflation is taxation without legislation. Have you heard that one before? Yeah, I mean, but you know, the overnight devaluation of such magnitude, Americans are relatively unfamiliar with. The last time we had that was FDR. Yes, yes. And that was the 60 that was going from it was like $35 per oz to $20.67. Exactly. Yeah, 20 to 35. That's right. And so that's a lot.

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That's a lot. And actually. Within a few months. Within a few months. That's right. McReynolds, who is the one of the dissenting justices on the Supreme Court. Yeah, he said, you know, today a dollar is $0.60. Tomorrow might be $0.30, the day after might be 1 cent. He was completely right. That's actually what did happen, you know, But good. but no, I mean, but I mean, again, the average person this planet has lived through something like that much more recently, whether they be in Peru or Hungary or so. Many different countries have had crazy hyperinflations over the last 50 years and one of the cable coins don't really fix that because ultimately these stablecoin issues going bankrupt. I agree. I agree. Like the dollar is, at least. I think the stablecoins as a bridge to the future and from a pragmatic standpoint, I think it's good that they exist, but then we want to. Get to So do you think they hasten the evolution towards a world where Bitcoin is a more dominant currency or do you

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think they slow that? Hasten absolutely. Interesting. Absolutely. Hasten it. And for example, I mean, first of all, lots of people buy Bitcoin, would see a coin. Yeah, just that alone is a huge thing. Right, that's the. And it like almost every crypto exchange for crypto, crypto trades is denominated in stablecoins or in Bitcoin. And so like just just that alone out there is basically everything, you know, much of the crypto economy. And this basically why I would call myself a Bitcoin polytheist rather than Bitcoin maximalist, because I do believe that whole crypto economy eventually leads people back into Bitcoin. OK, right. In the sense of they'll try XY and Z and they'll say, you know what, let me save in BTC. That's actually hard currency. That's right. And so there's something to that.

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And from a pragmatic standpoint, go ahead. I'd like to believe that the one area where we might encounter some problems is laid out in a book called The Bitcoin Dollar by a guy he used to edit Bitcoin Magazine and Mark Goodwin. Interesting, I was going to write a post on exactly this. I didn't know there's a book that come. Out. Yeah, it's interesting. So the idea is he looks at the Petro dollar and how the US was floundering with the dollar in the early 70s. We, the dollar lost more than half of its value versus the German mark in just a couple years. And then we, we found a way to tie the dollar to energy purchases, right? So you need oil. Guess what? You got to eat U.S. dollars. So he looks at that and how that's really helped prop up the dollar. And now he's looking at stablecoins as essentially the infrastructural on ramp to Bitcoin. You want a Bitcoin, maybe you need these, maybe you need dollars.

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I mean, it's, it's kind of true, right? Like a lot of people around the world who have who want Bitcoin, a lot of them have to get some kind of dollar banking or neo bank relationship first. Yeah, but. But Tethers location in El Salvador may turn out to be I am ultra bold but like you see. Just before we move on, that's that's a little scary. Like if they're tying, if they found a way to harness Bitcoin to power the dollar, the way to defeat that is very simple. Pay me in Bitcoin just to finish, like we just went to Thailand Thailand's installing this new system where they're going to try and harvest Bitcoin. When you arrive, like if you're a Russian tourist, you'll be able to give them Bitcoin or I think a couple other different cryptocurrencies.

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And then you get like essentially the CBDC, which you can buy anything in the country with. So that's kind of. the fear as we move in that direction, the solution is merchants in Thailand except Bitcoin and then you can just sidestep that whole process. So for me, Bitcoin's all about, I understand Bitcoin's a great savings thing. It's the best savings technology we've ever seen, etcetera, etcetera. I get it. I've no issue you want to buy an ETF, but I think how how it's ultimate value for humans is as payments. So that's kind of what I'm most interested in down the road. Sure. So right now Bitcoin can do about the transaction volume of Fedwire right on chain, on chain, yes, right. So my view is basically that it is infrequently you have infrequent on chain transactions and I know we'll probably

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disagree on how functional lightning is and so it's our fine, but I think that the scenario that you described is actually a victory in the sense that. Which scenario? Well, basically Bitcoin is accepted everywhere and you can everybody, I mean we're kind of already there because already in a sense the global reserve currency, because it is like for many people in many places, they would want one BTC more than the equivalent in a block of gold. And that's going to just expedite from. Here, that's going to expedite from here, right? Yeah, I think gold is gold is also being a comeback by the way, if you seen the charts right. Yeah, I think. Gold is the currency. Is becoming the currency of the state and Bitcoin's the currency of the network. Yeah, just for the listeners,

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like we just mentioned that gold used to be worth $35.00 an ounce. Yeah, it's now $3500 an ounce. So let's just to see that's a great way to measure the actual value of the dollar for time, so. So Justice Reynolds was completely right, yes, where he said it'll be worth $0.01 because it's like 100, like a 99% devaluation, right, over less than 100 years, right. So the OK, so coming back. So yes, now one thing I want to talk to you about is so on check your financial privilege. Yes, what your take on your intended market for it? Yeah, are people who are in relatively wealthy countries who just don't understand the problem Bitcoin solves because they are right. Yeah, and I also wrote a book called Hidden Repression, which is about basically how the IMF and World Bank loot poorer countries for the.

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Purposes. Yeah, I mean, well, basically in a nutshell, the IMF and World Bank were set up as part of the Bretton Woods system and the late 1940s, as the US and its allies prepared for a new economy that they would control. And in the same meetings in New Hampshire that it was decided that the dollar would play the role of the global reserve currency instead of the Bancorp, which is what Keynes and the others wanted. They decided that the US would also house headquarter and control by different means of the world's lender of last resort, which is the IMF, which is intended essentially to bail out countries that can't meet their trade requirements anymore to keep the machine going. They didn't want to see the autarky of the 1930s. The World Bank was supposed to fund development work that

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private capital didn't have an appetite for. So at the beginning these two institutions were benign and arguably did really well in digging out Japan and Europe from from a lot of infrastructural disaster. The problem is once they started get getting going, what you have is the end of colonialism essentially in name at least, and the birth of a new kind of colonialism, which is debt colonialism, which is what I talk about in my book, which is what kind of World Bank do they create debt traps for these countries? And how that works is because you need dollars for everything. Paying back your debt, getting oil, getting fertilizer, buying planes from Boeing, if you're going to the CD doesn't do any of that. You cannot use the CD to pay back debt to the IMF or to buy oil or to buy an airplane. So the only way to get dollars for many of these countries has been to borrow them at a high

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interest rate. And then what happens is they can't pay it back. And the IMF, who's, who's essentially whose assets at the end of the day are on the balance sheets of, of Western banks would rather just make another loan then shrink their balance sheet. So this the mechanism we've seen over the last 70 years. And it's why a country like Bangladesh has gone from in the 1970s, an average, a foreign debt of something like 100 million today 100 billion. That doesn't track with the population growth. It's become completely unTethered. So if you look at the debt of developing countries, even though that might be a misnomer, many of them are actually deindustrializing. What you see is a debt trap. and in dollar terms, it just keeps going up and up and up and up. So what I was looking at basically is from a human point

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of view. So there was no escape in the 70s and 80s, like when Volcker ripped up interest rates to near 20% and then proceeded to essentially destroy a lot of the, of the what was then called the third world, third world debt crisis, where maybe 20 million people were killed as a result of the structural adjustment policies. In the 80s, you know, there was no escape. If you were in Peru, what, what were you going to do? What's really interesting today is like in an individual level, you can escape. You can go into Bitcoin like no matter where you are and you know, interviewing people in all these different countries and learning that they're starting to turn to this very inspiring. At at the beginning of the book, I have a little saying that says for the victims of development, they may never get the justice they deserve, but they make it a way out. And I think that's the exploration of that book.

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So I'm going. To ask you a question of that because that's that's interesting it's interesting frame. So to roughly kind of you, you, I'll play it back. And so, so let's say the IMF is for in theory bailing and the World Bank is for building, right? So IMF is for bailouts, right? In theory, right, for bailing people out and the World Bank is for building. So the World Bank is almost like, well it's debt, but in almost kind of like equity investment in the sense of it's supposed to. Build a dam or something. It's. Supposed to build a dam? Exactly. Then you have more tax revenue and then you can do things with it and so on and so forth. And the Marshall Plan, which was at least one of the conceptual precursors to World Bank, you can argue that it did work or what have you, right? And because it did rebuild Western Europe and you know, the German economic miracle and so on.

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So do you think these were good institutions that went bad or is? OK. I mean a good, I mean, I think even in a Bitcoin standard, you could have these institutions. It's just because the West can create money much more cheaply than than other countries it to become predatory. But that's a very useful way of thinking about the reason is like what the US did post World War 2. I think is still underappreciated in the sense of the relative mercy. I mean, because you had to control experiment. The Soviet side was incredibly vengeful and the Western side was, you know, relatively, you know, like like positive towards, especially towards Japan and so on and so forth. And Germany, many countries that had been conquered were just turned into like basically total slaves, like by the, you know, by the Soviets. But so the Western system, like

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Japan did come back, you know, West Germany did come back. So there was like, you know, South Korealso got built up. Vietnam, you know, well, Vietnam, you can argue they did it more on their own, right. So there's some version of this. And even actually after the end of the Cold War, Eastern Europe did get rebuilt, right? And it did it's economies did improve. That's why I'm I'm poking is one question is. It's shifted. So what you see is in the 60s it starts to shift. So I'll give you 2 examples of projects that are very stereotypical of the World Bank in the IMF since the 60s. On the World Bank side, they would do something like this. They would make a loan to a country, maybe Mauritania for a bauxite mine and they would make a loan to build a, a, a, a trainfrastructure, the mine itself and, and that's about it.

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Meaning like they would the, the local government would get the money to build all this, which by the way, they would hire companies from the, the creditor nation. It's called the double loan. So it's a France loans a million francs at the time to the Mauritanian government. What does the Mauritanian government do? They immediately spend a million francs hiring French companies. So you watch the money go out and the Mauritanians still owe principal plus interest. It's called the double loan. So this was happening all over the world. So, you know, every loan that would go out, in many cases, you know, 80% of the money would come right back to the to the, to the lending nation or more. So this kind of thing was happening and that infrastructure wasn't helping the people of that country. It was just helping us get that box that are the grounded into our economy and maybe the local

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nation would get a cut. So that became like a stereotypical World Bank loan throughout 70s, eighties, 90s. At the same time, the IMF, who likes to say they, they aren't political and they don't get involved in politics. I mean, they backed the worst dictators you can imagine. I mean, it's like a laundry list. Mobutu, Portillo, Marcos, Mengistu, the CCP, we just, you know, just think Saddam. So I mean, you could go 50 dictators wide on a giant mosaic and they backed them all. And, you know, this undermines their their argument that they're out there to like bring stability and good to the world. So, you know, I have that's where I started my journey. And I was like, why are they bailing out all these crazy dictators? Like, why is CC, who's responsible for the biggest massacre basically in the last

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10 years of unarmed civilians, Why did he get 3 billion? Why did he get $3 billion bailout? And, and guess what he does as a, as a condition for taking that money? He imposes a massive currency devaluation and raises taxes on Egyptians and cuts key subsidies. It's just, again, this what's been happening for the last seven years. So now they've got something new that they're doing in Egypt, for example. Yeah, deal with with the UE for. Ross, right now that now the sands are shifting because you have China doing something similar with its own credit and the Gulf countries. But guess what, they don't print the reserve currency. So it's a very different different dynamic but in any event. But they seem to be doing well, right? Like in the sense of, or rather somehow. Getting a return on their investment.

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Yeah, that's right. China, I would say definitely the Middle East, definitely the Middle Eastern countries. Yes. So what's interesting about that is I think this part of the broader and interesting phenomenon, which is in theory the US and more generally the West has the greatest business model of all time because it can just from one standpoint, you can hit a button and literally print a trillion dollars, which is like selling, as I've said before, like $1000 iPhone to a billion people is very hard to do. And it's trillion in revenue. Forget about in profit and forget about how much effort it would take you to get that. And you know how many, like you know how many factories you need to turn out a billion phones and so on. So the despite having or perhaps because of having the greatest missile of all time, they are out competed by others because they're very poor at allocating

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the capital, because they the energy required to actually go and build a productive world. it, it's gradually, gradually dissipated. Like all of that printed money could in theory be used to build bridges and do productive things and so sort, but in practice, because there was an effort that led to the results didn't build the sinews and so and so forth. I, I, I think over the last couple years, I think you're on to something. But like generally speaking, going back 50 years, it would be a mistake to think that they're like useless or corrupt or inefficient. If you look at the capital flow of the world, it's really amazing actually. So starting in 1982, capital has drained, has been drained from poor countries to the golden billion.

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And it started small and now it's several trillion a year. So despite this idea that we help poor countries or we give them aid, it's the opposite. We're draining tons of capital out and that's that's Dec colonialism. And my hope with Bitcoin is like that individuals can escape from that. And I just don't see stablecoins fixing that. Just a question are are? You know, like during the mortgage crisis, there were a bunch of bad loans that were made, right? And many of them were made on the basis of, oh, we will help these poor people discriminate against people or what have you. And actually turned out to be bad for both parties and for everybody else because a lender would make a loan to somebody who couldn't repay it. That person would default ruined their financial livelihood, but it also in bulk break the bank.

32:17
And then everybody who is a bystander to that transaction, who let's say it was, you know, I don't know, selling services to that bank was doing so in part on the bank having gooDeFinancial condition which was based on these transactions or material. So that guy also got wrecked, right? And so it was something where the bad loans were in some sense predatory, but also stupid and self-destructive because they couldn't be paid back. Everybody was trying to consume or earn more than their means in a sense, right? Like where these people were buying a house that they couldn't afford and the lender was trying to juice their numbers of. Revenue. But what happened to those? The US government ended up subsidizing the market, Yes, which is the same thing it does with all these crazy loans to

33:03
dictators. You're right. So, so the, the government came, the US government came and printed 787 billion and bailed out a lot and which was at the time this insane thing that was like, Oh my God, now they just hit a button and do it every day 6. Plus trillion dollars of government and mortgage debt on the balance sheet. From, from, from OA exactly right but and so this side got bailed out and this side really kind of didn't right. But in the thing about it is, OK, so maybe you can't analyze it in the absence of the backstop, right? But it was so the 4th party, the government came in and diluted everybody down with with dollar inflation to bail these guys out. I guess an interesting question is, I guess, remember gay I was, was that evil or was it stupid? And here's my distinction, right? The distinction is like, I think of good as helping somebody else without concern for oneself.

33:50
Smart is helping somebody else while also helping oneself. OK, evil is harming somebody else while helping oneself, and stupid is harming somebody else while also harming oneself. And are their actions actually evil or are? They, well, there's, first of all, who's they, right. So most people who work at the IMF and World Bank or even whatever the Chinese development banks, they're not evil. They don't, they think they're doing good. They don't even know the full outcome. I would almost argue that these are outcomes of our way of life in our system as opposed to like evil conspiracy plans. I don't think a bunch of people got together and said, oh, let's create debt colonialism. No, it just was sort of an outcome of what we were doing over time. And that's why we need has. It worked out. Has it worked out for anybody in your view besides Western Europe, Japan, South Korea? Yeah, There's like a couple of

34:36
examples of a country that takes this kind of debt and is able to pay it back, get out. I mean, I mean, India is a good example of one that was kind of tried to stay away and has done. Reasonably well. Whatever, you know, your view of India, like, you know, a lot of the work they did at least post 1990, you know, has been done without that. Previous to that, there was crazy World Bank, yes, to India that did insane things like unspeakable things. That's a great graph. Syringali Coalfields, yeah, stuff. Look that up. It's insane so. That's a great graph to make. What were the other examples that you thought were worked out well? Or reasonably well. Well, I mean I'm saying it didn't work out well. I mean we literally the IMF ones to India in the 70s were premised on the sterilization of men. So no, no, no I'm not. Saying that like I, I agree. With more pre 19, yes, they've been doing OK. I mean, Korea is a famous one

35:22
and there's very little, I mean, most of them have been catastrophic in my view, in terms of yes, yes, it's true. I want to, I want to, I want to just steel man the other side of it. And so, well, the steel man would be like, OK, well, like Indonesia is richer, generally speaking, than it was, you know, 40 years ago, which is true. My argument would be it'd be a hell of a lot richer if it's currency had been devalued by 99%, which is what has happened. Interesting. It's like the, the, I was just there, the rupiah was, was, was worth like, you know, $40.40 rupiah to a dollar in the 60s today, if because they've chopped off a bunch of zeros, it's 60 million per dollar. Think we got that. So yes, it's true. They've done decently well. But guess what, if they're, if all their resources weren't being drained to Japan and to,

36:07
and to Europe and America in that way, they, they'd probably be as rich as we are. You know, it's just something I think about a lot. And I'm like, look, now we have a peaceful way for people to get out. So what I want to get to two things. What am I doing personally and HRF on this? And, and what does this mean for America? So just very briefly, HRF's getting involved because, you know, we help people under difficult political climates who don't have the same access to court systems and NGOs and media outlets like I do in America. And you know what, like they're never going to have a good CBDC in those countries. It's just like maybe in America you could have one, but like, not, not, not in Togo, right? So they need open, permissionless, open source money that's decentralized that their government can't control. So we promote education,

36:52
infrastructure, tooling and community building across all of the world for that. And we deploy about $1,000,000 in Bitcoin every quarter to do that. And we've done more than 300 grants to different organizations and individuals since 2020. And we're we're going from there. It's really exciting and it's amazing to see the impact. I just visited sites that we've been supporting in, in Bali and in Chiang Mai and in Bangkok. And it is so cool what people are doing with Bitcoin out here. I mean, from there, there's a system in, in Thailand, for example, where like basically you can pay any merchant with Bitcoin. Like you can just have a moon wallet, like a totally, you know, non KYC wallet on your phone and you can have some Bitcoin. And what you do is you scan the code of the merchant and you what's happening is you're sending a lightning payment and there's a literal person the

37:39
back end who's paying the fiat and taking the lightning and it works. It's really amazing. So there's all these cool systems that are now allowing people to live in Bitcoin. And like in Kenya, there's one called Tendo. You live in Bitcoin and you can pay any invoice in the country, including a cab driver and they get and PESA immediately. So we're you're seeing people design these really cool ways to get people to get out. So that's what we're focusing on is like the pay me in Bitcoin element, like how can we make Bitcoin freedom money around the world? And then like the SECond part and we can then react to that is, and what I really want to talk about is America, like I really think that the dollar system, the fiat system is not ideal. I think it's done some good things like dollar hegemonies. Obviously it's great to have one common language for the world of money, but it's got a lot of downsides and it's been very

38:26
predatory. And I really think that a Bitcoin standard would be awesome for America because it would, it would serve a lot of the good things that the dollar does, global network effect for, for money, etcetera, etcetera. But it would also not be so predatory. And it would be great for us vis A vis our, our quote UN quote rivals, right? Because at the end of the day, I think that if you have money that provides you free speech, private property and open capital markets, guess what? That's what America's DNA is. But the Chinese Communist Party, for example, or North Korea or whatever, they're based on confiscation, censorship in close capital markets, like they're, they're fundamentally incompatible, I would argue, with Bitcoin from that point of view. So I think just to conclude that I think the founders of America would have loved Bitcoin, like Jefferson Washington didn't even

39:13
want a central bank. I think it is patriotic to want to improve our money. I think it's patriotic to be critical of the dollar, and I think we should head towards the Bitcoin standard. And I think it'd be great for America. And it'll be a real struggle for more centralized regimes because if you live in a country where the people have power over the government, you should have nothing to fear from money that's giving power to the people. So that's kind of the rest of what I want to lay out. Interesting. SO I do agree that like in a sense BTC and CCP are at 2 opposite ends of the spectrum like in a sense total freedom, total control yeah, they would pose it probably as total anarchy and total order or something like that right. Just I always try to at least give you know their. Yeah, they tried to ban mining because it wasn't harmonious on

39:59
the 100th anniversary of the CCP. That's right. That's right. So the my one question I have for you is one of the things I'm most interested in, and this what I work on all the time, is bring the Internet into the physical world, right? So the same like ultimately what Bitcoin is, is volunteerism. It's consent, right? And it's in a sense, it's in the deepest sense, you know, democracy is about the consent of the governed and all of the superstructure of election this and poll that and so on and so forth is just a way of sort of quantifying, measuring and channelling that consent of the governed into something, right? And so the withdrawal of consent is exit, you know, or it can be voice and so on and so forth. And so Bitcoin reflects digital consent. Like do I consent to be here or not?

40:48
Do I, you know, like if you if you disagree with this fiat currency or this policy now? Exactly right. OK, so bring that consent into the physical world to me means voluntary opt in societies, communities, cities and perhaps eventually countries, star societies and potentially network states, right? I think we have Internet companies like, you know, Netscape was arguably the first modern Internet company. We now have an Internet currency, Bitcoin. And what I think about a lot are Internet communities, for example, Bitcoin beach in El Salvador, right? Or some of the things you're talking about, like the shops here and there. So like to know your thoughts on that, like, you know, bring this stuff into the physical world. What? What do you think about that? Yeah, we need more than just Bitcoin. So the Bitcoin communities are really cool. I mean, I've visited a ton of them. They tend to pop up where there's been a difficult history.

41:34
fiat currency. That's interesting. OK. Yeah, yeah. Like they tend to be in places where the money doesn't work very well or where, you know, like Bitcoin. Chiang Mai is a community that's built in many ways because of Burmese refugees who don't have a bank account in Thailand. So they've learned how to use Bitcoin. And when the earthquake happened earlier this year, it was impossible to use the US dollar to help people who are trapped and starving. We were able to run a Bitcoin fundraiser and help people. I mean, so it's just so frustrating. You know, we get again and again this Bitcoin's useless. I mean, it's the stupidest thing. I mean, it does things that the dollar just cannot do so many things. I had a big piece coming out in the journal of democracy in about 10 days, 8000 words on a blow by blow of human rights defenders adopting Bitcoin around the world because it's the only thing that'll work. So I'm I'm I'm bullish and I'm

42:20
following that. But ultimately we need other systems to help Bitcoin achieve its its its goals. and two, I have two that I'll posit to you. Maybe 3-1 is for sure Noster, which I understand is like not getting the adoption speed that a lot of people would hope, but it's not there's. A client damus for a nostril. Yeah, there's just a lot of great ones. And look, I would argue to you that it's not having a lot of adoption maybe. I mean, I think it's great. I there's a couple 100,000 people on it, like I have 50,000 followers. It's great. I get there's no algorithm. I choose the algorithm, you know, it's cool, but the, the reason it's not doing what Farcaster or Blue Sky is doing is because it's not like AVC product. It's it's an open network and it doesn't have a company. So it's like the early days of

43:06
Bitcoin. It's hard. It's like hard if you have no one who's willing to give you 50 million or 100 million to do growth. Right, Jack, in theory. Well, Jack is kind of, he's doing bit chat now, right? Right. So Jack invested, but invested is the wrong word. He gave a lot of money to open source developers working on Noster, right? But they're, they're not like coordinated necessarily. They're all just working on the project. But if you have Noster, like for example, like if the people look me up on Noster, they can permissionlessly ZAP me, which is like just instead of reposting my stuff or liking it, they can send me Bitcoin immediately. Boom. And it's so cool to think about this from a, from an activism perspective, from a political perspective. I mean, it just means that it's just completely different when you can send micro amounts of money to people. I think it's really what the Internet was designed to do.

43:52
But we need something better than Bitcoin and Lightning. I mean, even in Lightning's wildest dreams is not going to be what you buy coffee within 20 years in the Bitcoin world. That's where E cash comes in. Look, it was created in the 80s. It's an awesome technology that does full private payments that are instant and they can work offline, but it didn't work very well with fiat money as the base. People figured out, though, that it works really well with Bitcoin as the base. So you have two implementations now. Xiaomi and E Cash with. Bitcoin yeah you have cashew anDeFiddy mint and they both are awesome so when I shop now abroad like just. Explain that with that as basically it's like you deposit some BTC effectively and then you essentially. Have into a neo bank, yeah. And then you essentially it's it's hub and spoke. Architect you get an IOU that's fully private that the bank can't selectively censor and doesn't know what's happening until you go to redeem it. And the way they're connected is all these mints basically

44:40
lightnings like the central nervous system for what's going to happen. So you have all these mints and custodians, you know, say you have exchanges, you have E cash mints. So that is potentially scalable because basically you have one on chain Bitcoin transaction. Yeah, you store it up at a bank that's then issuing IO us that are backed by Bitcoin. They're not IO us, but they say digital IO us they. Are I mean they're credits. Yeah, they're credits. That's right. But basically you have, let's say, mints, you have exchanges, you have custodians. And the difference is in the modern era you can actually sum up those visual IDs and compare them to the proof reserve, for example. You can cryptographically make it so that people know that they're going to get rugged, yeah. So the reason that's Go? Ahead, but yeah, just and then you also have payment pools. So like people are coming out with new stuff for Bitcoin like Spark that David Marcus is working on Arc you're going to see a lot more and Lightning is the central nervous system. It's the clearing layer for all

45:28
that stuff. So it's not what I used like I'm I was wrong. I thought lightning was going to be like 5-6 years ago. I thought lightning was just going to be like what we would buy coffee with. You could do it today. It works well but not in 20 years because lightning ultimately is tied to on chain opens and closes of channels. This. Interesting new stuff. OK, yeah, I've changed my mind. I try to be Bayesian, yeah, but what I'm I? Didn't want to poke you on it. That's why I wanted, yeah. But I could, I mean, I think I'm much more bullish on lightning than I was because now I figured out what it's going to do, OK, It's going to be this clearing layer for all the different pools. So let's say you have a cypherpunk mint and then you also have a Coinbase account was KYC, but then you also have like an arc payment pool or a spark address. Guess what? They all talk to each other instantly by doing a swap over lightning. That's how it works today. Like so when I when I went shopping in Bali at the

46:13
Indonesia Bitcoin conference, I bought a T-shirt. I used E cash that was on my phone. The merchant didn't get E cash. They were paid in lightning, but like it left my phone and it was swapped by a lightning service provider instantly and there's money to be made there. So there's all this infrastructure being built and it's just cool that I can go around the world and I can spend fully fully private money and the merchant gets Bitcoin. We're seeing some cool stuff. So that's really interesting. And then the last piece would be so if you have Bitcoin noster E cash bit chat. And Pam pools and then bit chat OK. Right. Well, I mean, basically the E cash piece is what's needed for ultimately I think like buying coffee like you're not going to be on chain or lightning was my point. Maybe the other stuff pans out, but we'll see. But bit chat's also really interesting because now we can

47:00
do offline communications that are connected. So for example, like if we fire up bit chat right here, whoever's in this building basically can can be, can all all of a sudden we can we can talk to each other and we can trade ecash notes. So. The hard thing the hard thing, that bitch head is cool just to explain. It's like. It's like a grid of the world network. Thing, yeah, it's a grid of the world, I think where if I get it right, it's, I don't know the exact grid size, things like 10 kilometers by 10 kilometers or something along. Those Oh no, it's way smaller because it mainly uses Bluetooth. OK, so it's like a couple 100 feet fine, but then they can Daisy chain. Fine, so so you have Bluetooth to Bluetooth totally local on Internet chat. The hard part about something like this to me is you need to have a very large critical mass in one location for that to work.

47:51
Like it actually has to be like within a building, for example. But normally what happens with any Internet app is it signs people up around the world like this, which are all very distributed. So they log on to the app, open it, they don't see anybody to talk to. So they've got a critical mass problem where they need to be launched at a conference or launched at an event or something like. That would work. So 3 days and it's still buggy. And I mean, Jack Vibe coded it a month and a half ago. So it's like and then a friend of mine named Kale, Vibe coded the Android version like we are. We are doing this because we have Vibe coding now. I'm not, I'm not, I'm not being critical. I'm just saying but. I'm just admitting that it's that they're buggy and it's early, but last week I think it was Thursday, 50,000 people downloaded Bitchat in Nepal and that's interesting. Because it might give like some

48:41
offline kind. Of yeah, let's say you're in a protest and all of a sudden internet's gone. I mean, I guess it's useful. The SECond country, 10,000 deadlines indonesia, that was that day. And then the US was like 7000 downloads, just to give some sense. Yeah, this thing is moving. So it's like it's very interesting. And my my it's. It's interesting backup plan, yeah. Like like it's like a flashlight when the power goes out kind. Of it took me a while to see what Jack was doing here. It's not just a backup plan, it's that it connects via Noster basically like and when you have Internet, all of a sudden you have this global censorship resistant network. It's an interesting vision. It is. The thing about it, which is funny, it's kind of a merger between the old physical carry a message to. Somebody and the new and the new, right? And the last piece I'll say is

49:26
what's cool is, for example, you fire up bit chat, you can then take your E cash wallet. Let's say I have some money on my E cash wallet. I can create an offline invoice and paste it into bit chat and then you can claim it. And we don't have to have any Internet for that. And that's really neat. Like you can send money with no Internet. That's cool. I mean, and I guess it's not that crazy because just now I had no cell phone service here and I bought something at Starbucks because I just used tap pay and really all that is it's my phone giving a number to the other person. Ecash works the same way like the payer doesn't need Internet and E cash. So you can do some really cool stuff. So my point is there's like a constellation of technologies growing around Bitcoin that are making it very powerful. Now. It doesn't compete right away with like maybe the ease of stablecoins for some people, but it's it's growing man. It's very exciting to see and we're, we're doing what we can

50:12
to push that out because ultimately, you know, I, I just think again, having experienced and talked to people who lived through these insane devaluations, I just think that's one of the world's thing, worst things that happens in the world today. It's actually kind of already happening. The dollar is devalued 50% against. Gold. It's like, it's like COVID, yeah. And it's valued 75% against Bitcoin since 23 and three. And it's devalued 50% against gold since I think in the last two. Years, right? Yeah, so. That's actually all I mean, it's happening. One of the weird things is this thing it's it's happening in front of us. It's happening in front of our eyes. and yet it's like a train that's accelerating and you just don't perceive it because you're in it, you know, So what? Are we? The last thing I'll just say is just like a lot of people again, Bitcoin's useless. I can't understand why you why you'd use it, right?

50:58
So I was interviewing these Cubans in 2020. They were using Bitcoin. They were converting their pesos, which were at the time trading about 30 to a dollar into Bitcoin. OK, So since then Bitcoin's gone from $5000 to $120,000. OK, amazing. The peso, the Cuban peso has gone from 24 per dollar to more than 400 per dollar. So when people say Bitcoin saved my life, it's real and it's happening all over the world. And, and I just, it's funny to me that a lot of people we probably know in our social circles would say that's nonsense and it's true. So some people just kind of have to open their eyes. I just want to check their financial privilege. Amazing. So get your two books, we'll put them on. Screen, Yeah, Awesome. Thank you.

51:43
Welcome and let's work GR for freedom. Amazing. Thank you. Thank you for your support for Bitcoin. It's been important. Great. Thank you. Yeah, 10 years together. I know. Right. Yeah, it's been a while. Good, good stuff. OK, talk soon. Talk soon.