FFS062 - Giacomo Zucco

[00:00:00] Tether

[00:00:00]

Luke: giacomo, welcome

Giacomo: to the Freedom Footprint show again. My pleasure. Thank you for having me.

Knut: Yeah, today we have our dear friend, the king of Swiss cheese, uh, Giacomo Socco on. Uh, great to be here in Lugano. I mean, you're a big part of this, uh, event. You're like speaking all the time.

Giacomo: Yes, six speeches and you can probably tell

Knut: from my voice right now.

So, and we enjoy being here a lot. I mean, this place is beautiful, or at least I, I, I assume it is if it wasn't for the rain. So you can actually

Giacomo: see that. We scammed people last year. It was very sunny in October. So everybody was eager to come back to this sunny Lugano in October and then we ragpulled the climate.

Knut: Yeah. All right. So first question, uh, this is going to be a controversial one. Is Tether retarded?

Giacomo: That's a, that's a good question. I think it's not necessarily retarded for a very, uh, for a very nuanced reason. There are two things you can do with blockchains [00:01:00] that are not Bitcoin. Uh, well, there's one thing, scamming people.

But the two things that you can do is, they depend on which people are you going to scam. If you're going to scam your investors, Because you just issue some kind of, uh, stupid, uh, share of a stupid enterprise, but you put a blockchain on that so that investor will be duped into, into investing. I think that's bad.

That's like, that's a bad use of the power we have to scam people. But if you do scam only regulators. So if you want, if some people want to trade stuff and they really want to do that for innocent reasons and you cannot provide them a service because regulators are going to stop you from that with violence and you scam the regulators with some blockchain magic, I think that's a noble use of our ability to scam people.

Tether is interesting because they are scamming the regulators with blockchain magic. Basically, they are not doing anything different from PayPal. But PayPal is heavily regulated in the secondary market that there is not because blockchain. So as long as it works, it's great. And [00:02:00] can they, uh, dupe investors?

Not really because the price of their product cannot go up by definition if the, because there is a blockchain on top of it. It can just not go down maybe as a credit denominated in dollars. So they are doing a dollar service, which is very Bitcoin friendly, which basically it's a Bitcoin friendly PayPal that uses blockchain magic thinking Two scam regulators into being more free on the secondary market.

So overall, I think it's a good deal as long as it

Knut: lasts. So it's not more of a scam than the US dollar

Giacomo: is a scam? Well, it's more of a risk in a way because the underlying, uh, basically the underlying counterparty, the underlying, uh, collateral is already scam is dollar. So it's inflated, they could collapse.

On top of that, you have, uh, on top of the base dollar, You also have the fact that these banks that Tether use, I must be trusted not to do excess fractional reserves and stuff. And on top of that, you have to trust the company [00:03:00] itself, which of course could do additional fractional reserves. So it is increased risk.

I don't think it's increasingly scammy. It's quite honest, especially in the latest. Communication, everything you can read from the CEO, Paolo, and we discussed here Lugano as well, it's pretty straightforward. He cannot put it exactly how I did for obvious legal reasons, otherwise the operation will be over.

But I think that if you talk with him, the, the, the purpose of the operation is very simple. It's a company which is very Bitcoin first, and they just want a tool that can help people to move fiat into Bitcoin basically. Sometimes also For a realistic consideration that many people are not, are still scared of short term volatility, and they are still very, uh, cold on brand recognizement for Bitcoin.

The dollar has the universal, uh, recognition that Bitcoin will have, but it's still missing. And Bitcoin, and the dollar will probably lose that. So eventually, I think that other things that is [00:04:00] interesting is that the Tether, the company, It was born over this product that I just described, but then it went beyond it.

One exception was Bitcoin, was TetherGold. I think it's very, very cool. TetherGold is just e gold with, uh, it's basically they have physical gold in a vault here in Switzerland, and the issue is TetherGold. This is just like e gold, but it's not in the U. S. So it's probably more resilient to regulatory aggression because Switzerland is a little bit more serious.

And it is, uh, it is done after Bitcoin. So there is the, the blockchain magical thinking on top of it, which is making, increasing the plausible deniability for the secondary market. So Tetra Gold, I mean, I will make this classification. Bitcoin is the best and it's the final solution. And we have to go Bitcoin.

There is no way around it. And. Tether people would agree. You can find it every interview that they would agree. The second best would be physical gold, but it's still hard to try to, to, uh, basically the reason gold is not as good as Bitcoin is that it's not digital. You cannot transfer it. [00:05:00] Then there is this digital gold, which is tether gold that is basically.

Um, trusted, but with probably good enough guarantees. It's like an eagle that will not be likely shut down. Then there is the theta dollar, which is worse because the dollar is going to be inflated into nothing eventually. And because While Tether can hold the gold themselves in a, in a mountain, it's a very cool mountain base in Switzerland, they cannot do that with physical dollar cash.

There's no bank that does many billions in physical cash, so it's more risky, but it's still a useful tool for some people to approach Bitcoin eventually. I think we don't need. stablecoin. But I think that if done honestly, they can help somebody and not hurt Bitcoin because eventually, I mean, they're not stable.

They're just back into something which

Knut: is very oxymoronic name. Right. Well,

Giacomo: I hate that name. Those are basically blockchain marketed fiat credits.

Knut: So, so could [00:06:00] the like, tether gold, could they potentially do a fractional reserve on

Giacomo: that? Like legally they have a, they have a contract that's, uh, that says that they don't, and they have auditors.

And auditors say that they can, so technically for the Bitcoin mindset, where it is not like you, uh, don't be evil, but can be evil. Oh yeah. Uh, they can physically, uh, but they will have to, uh, scam or bribe the auditor. So it's hard. While with dollars, you mean, uh, there is probably more, uh, even if I didn't trust the detector guy, dollar is more complex as a topic because they cannot have the cash.

They will have commercial paper that will, a lot of nuances. With gold, there is no nuances. There are physical, uh, gold bullions

Knut: inside the Lord of the Rings or something.

Giacomo: If you, if you, I mean, if you are very nice with it, there may be some day you will

Knut: see it. We'll see. All right.

[00:06:58] Risks of Fractional Reserve

Knut: So, so this leads us [00:07:00] into risks of fractional reserve. So So you Custodial lightning wallets, we had this conversation with Obi yesterday, uh, uh, is there a risk, do you see a risk in that, that, uh, wallets of Satoshi will all of a sudden start, you know, handing out more bitcoins than they actually have?

Like

Giacomo: what? There is. I think that the reason that, uh, it will be quite evident is that what fractional reserve banking does is to reduce the custody, uh, the custody fee. And to increase, uh, uh, interest, uh, uh, give away to the user. So when you get to the Satoshi is paying you to use it, probably you should start being concerned.

So it's technically possible. What you use when you use, well, the Satoshi is you are basically asking a friend to use Lighting Network for you in your name. Which, I mean, if the friend is reliable and the money is not that much, I, frankly, I don't think that Volato Satoshi or Albi, the Custodian version, will be censored very soon.

And I don't think they [00:08:00] will rug pull very soon for the simple reason that the money is not much. So it's not enough money to rug pull, not enough money to censor yet. If it became the cornerstone of Bitcoin, like some exchanges are, then the incentives will change completely.

Knut: Bill, they're very useful tools, I mean, that you can do a ton of things with them.

Giacomo: I was very critical before, because my point was, if you want to do custody at the margin, so Alfini said, Bitcoin base chain doesn't scale. But it's still cool. We have the asset. Now we can build custody on top of that. Illegal custody, like anarchist kind of, uh, like Bitcoin banks. Some people thought that Al was talking about actual banks.

He was talking about people on Tor just building a reputation as a bank, because you don't need any paperwork for that. Just give me Bitcoin. Trust me, bro. I will give it back to you. That can happen at the margin. It was a sad trade off to make, but it was a trade off that we had to make. With Lightning, with the techniques of trustless UTXO sharing, we can have, uh, one single [00:09:00] Bitcoin TXO, which is shared by more people without trusting each other, or at least in some, uh, within some security, uh, scenario.

And that's cool, even better. So Lightning is better. So my point was, if you want to trust, Trust. If you want Lightning, which is trustless, go Lightning. But what's the point of putting trust on top of Lightning? And I changed my mind because I think there is a point. It's a very nice layerization. You have the main chain, then you change your security model for the second layer.

And then even actually Lightning is two layers in one because you have the channel and the routing. When you go routing, you are still changing your security model. Routing nodes is, uh, are very, are dangerous. Like there was an attack discovered two days ago, well, a few days ago. When you route Lightning, you, your funds are more in danger.

Then on top of that, you can, you can basically serve people with credit. But why put the crate directly on top of the base layer? It's nicer, actually more elegant, if you give the users [00:10:00] a very smooth way to go from trust to trustless without big jumps. So you start with, for example, Albi is very good. You start with the pocket silver, trusted.

Uh, they will ragpoll you. Okay, so what is pocket silver? They will confiscate it. Ah, go for it. It's just my pocket silver. You increase the amount of money you have to move. Oh, now you probably want your node still on Lightning, but maybe you want to route because you're reckless, you want to do business, you want to be safer long term, and you don't want to have a watchtower to take, to take control, then maybe go to a Lightning leaf that's not routing, it's much safer.

If you want to be safer, just close the channel and go back on chain, uh, so you can stay there and the, uh, on Lightning, the more time passes, the more risk you get. On base chain, the more time passes, the less risk you get. So that's great. So it's a nice thing. Uh, I think we should not. Uh, I think we should culturally [00:11:00] fight for non custodianship always, uh, ever.

So custody is okay, should not be a meme because it's like, it's like when you, when you eat or when you indulge in any kind of like a high time preference thing, uh, it's okay. Eating is a high time preference. Well, eating, eating garbage, especially, uh, or, or smoking or whatever. Well, there is no need to create a culture that normalizes that, uh, if you create a culture that, that's, that creates the, uh, that, that specifies the long term problem with that.

So a culture of caution, then people will still ignore the culture and make a cheated meal or something. So you don't need to praise cheat meals, just praise the right diet, culturally speaking, and be tolerant with the fact that people will. Cheat meal, because that's fine because I mean, YOLO.

[00:11:54] Bitcoin Layers

Knut: So, so is custodial lightning layer three in your opinion?

Well, I think the

Giacomo: [00:12:00] lightings are two layers, at least. There are many layers inside lightning, but the real trust related layers are two different. Uh, channel and routing are very different trade offs, and I think the more we go on, the more it's clear that routing is way more dangerous than just having a channel with your counterparty and going back and forth.

So we say that lighting is a lighting channel, or in the future, a L2 channel, an ARC channel, an ARC provider. So UTXO sharing. So sharing your Bitcoin TXO is layer two, in my opinion, that's the most elegant definition. Routing on, atomic routing on top of your TXO sharing is layer three. Uh, and then, uh, asking, uh, a friend to keep, uh, a channel for you, but it's not yours, that would be probably layer four.

Okay,

Knut: so what's an Opendime? What layer

Giacomo: is that? That's, that's very interesting. I would say that, uh, that's, uh, Opendime is basically, uh, trust plus plus. It's, [00:13:00] it's a very badass kind of trust. You still have to trust another provider basically. So it's cool, but it's probably a layer four with, with some kind of, well, probably you go, when you discuss this stuff with Maxi Morlowski, you start to go.

Thread three dimension with layers. Yeah, yeah, yeah. Basically slight layers going down. So I, I'm not as good. I'm

Knut: envisioning like the layers in an Asher painting, like going into, so, alright, so, so I had this idea, um, a year back or two, uh, about like, As Bitcoin scales, this is connected to the time preference thing, that people will use money less and less, like, and will spend less because, because of the time preferencing, you're incentivized to prioritize quality over quantity.

So do you think that, like, in general, do people with, is that something you see play out?

Giacomo: That's a cool idea. Yeah. Bitcoin can scale because you reduce the need to use, uh, monetary transaction. [00:14:00] That's, that's, I think that's a fair assumption. Still, maybe scaling as a technological problem is still challenging and interesting, but that's social.

Version is also very

Knut: interesting. Yeah. Because it's never talked about in the technical discussions about scaling. And there's another thing to it, like, um, the, with Bitcoin, uh, with the deflationary currency, uh, or money, you, you're incentivized to lower your term preference. Right? Uh, but the other thing is that you're also at least now, uh, incentivized to help other Bitcoiners with whatever they do.

Because we help each other, we help Bitcoin, and we all win. And I don't see a point in time where that incentive necessarily goes away. So if we're just incentivized to be awesome to one another, I see like people interacting voluntarily and trading other things than Bitcoin might like. Services mostly like Bitcoiners, like this, this thing, for instance, is a [00:15:00] transaction between me and you.

Yeah. And we're not spending money and we're not spending, we're not You. clogging the chain at all by doing this. So, so is that a part of the scaling problem and solution?

Giacomo: Yeah, I think it is. Let's put it this way. Money is useful aside a trust circle. So within the trust economy, the gift economy of family monies is just redundant.

You just exchange You just be nice with each other. And things may just, uh, even out over the long term. Maybe the parent is taking care for the child, not for any return, but then maybe when the parent is old, there will be some kind of, that.

Bitcoin is a good money, but it's also a kind of money that as a side effect can increase trust circles in a very unique way, so that's a fair way to put it. Yeah,

Knut: so if you follow that thought vector far off into the future, is that like, because I find [00:16:00] this so, like a beautiful paradox that don't trust verify.

enables us to trust one another more because you, you don't have the incentive to try to cheat and system. And you know that if more and more people are living in this world, I mean, I, I trust the people here at this conference way more than I trust the normie. So, so, so if we really try to extrapolate that, do we get.

To a place where the necessity for money to exist at all,

Giacomo: it's just, I think that you can increase the number, number, let's say, of trust to a certain point, but not at infinite. I think that eventually there is more bitcoins that you can even understand. No, but

Knut: not infinite, but like trending towards, and will that ever be a

Giacomo: trajectory?

Like in your mind, you still have to perceive a community of like minded people working toward the same goal. Now you have it in Bitcoin. Yeah. You have, you have an internal fractal of different cultures and motives and trends, but you still have a unitary bit. We are here for [00:17:00] Bitcoin and you can see that you can feel that that, I don't know if that can scale to, for example, really millions of people.

So they like rock and roll scales to billions, but being a rocker with, let's say with, with bicycles and motorbikes, they scale. But being a biker is another thing. So then the Bitcoin culture, which is what you're describing will, will persist, but we'll probably not grow outside of what the biker culture will do.

Okay.

Knut: So it's, uh, yeah, fair point.

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[00:19:00] You Are Your Bitcoins

Knut: There's another thing adjacent to this, which is another, what I've been eager to talk to you about for a long time is this idea I've been talking about for a while of you, that, you know, We are the bitcoins, like the people, they, they, since it's only keeping a secret, they exist in your head.

The node is not the raspberry pie, it's the guy deciding to buy one and run the software. And the, the miners, the miner is not the asic, it's the guy who chooses to buy one and run the hard. So what do you say to that? What? Like what's your angle?

Giacomo: I agree. People is layer zero. But I mean, this also, this is true for Bitcoin and it's an important point because, People may think that the Bitcoin is secure, but just by automatic processes is actually secure by human incentives.

So

Knut: by human, backed by human action. It's human action.

Giacomo: Yeah. Which is a point that is made, I think very well by Erik Voskville in Cryptoeconomics. There is this book that makes this point pretty well. It's just a human act, human actors, basically. And then you, these human actors can use tools and this tool can [00:20:00] change.

The relative power or the relative, uh, the incentive. So tools matter, but is, but, but human action matters more and the more tools are tuned to help human action and to synchronize, coordinate human action, the better the tools are. Uh, there may be an even deeper point, like, uh, this may sound crazy, but my deep conviction from a philosophical level as a, as a former physicist is that, uh, People are layer zero of reality, not just Bitcoin.

I think that, uh, well, materialism, consensus, which I think is very fiat, is that, uh, you have fields or particles, but mostly fields in modern physics. And then as an emergent phenomenon, uh, you have yourself. And I think it's actually the other way around. You have selves. You have a perception, you have consciousness, you have choice as a fundamental layer.

And that has been demonstrated to a point by, for example, [00:21:00] David Hoffman or other physicists. When you assume a network of conscious agents, you can build... Uh, general relativity and, and, and a draft of quantum physics. Uh, so basically, or also when you go deep into quantum mechanics, they, one of the interpretations of quantum mechanics that I think is the least, uh, it's the least, uh, uh, convoluted is basically assuming the observer as the fundamental unit of physics and everything outside of that actually has the emergent, apparent, temporary Phenomenon.

So in this way I like, I like to framing it because I think that not just Bitcoin is made by people, but like chairs, tables, and stars, everything. Yeah. literally stars. Yeah. I read a,

Knut: a really interesting theory once called the the meme theory of Everything. Uh, what, what we, what we define as objective reality.

This table here, for instance, is, is where our memes collide. So it's where, where the [00:22:00] consciousness is, consciousness is, uh, uh, , where, where they sort of intertwine. Uh, but that leads to all sorts of other, uh, strange, um, Realizations like that there is a meme horizon, for instance, and we couldn't sync with brems brains outside of the solar system.

Well, minds even more

Giacomo: than

Knut: brains. I mean, minds. Yeah. Yeah. That's a better term to use. Uh, uh, for instance, it would explain why the Apollo, the signals from the first Apollo satellite, um, is, are so strange, um, and why they get, why the signal is getting weirder and weirder, it was also, would also explain why we haven't seen intelligent life anywhere else in the universe and stuff like this.

The Fermi Paradox. Yeah, yeah.

Giacomo: Well, I will probably not go as far as to think that this, uh, that my ontology, uh, which is basically a mind first ontology. We'll change, we'll make predictable, observable [00:23:00] changes to the mainstream view. No, I think they're basically compatible, but I think it's what I, what I see is basically, uh, some people will say that what we're discussing is counterintuitive or even they say, um, quantum mechanics is counterintuitive.

I think it's not when you are a child, uh, or when you didn't study anything, your assumption is. When you close your eyes, the world outside of you disappears and every phenomenon is basically a will of somebody, like the sun is, I mean, even primitive cultures, like everything has a will, everything is some kind of, so I perceive myself, I want things, I choose things, I perceive things.

So everything else outside of me must be quite like myself to some degree. So the first assumption is that everything is mindful, everything is basically free, not deterministic. Then when, and also everything is probably discrete. You don't get continuous when you, when you think about that, you don't get deterministic.

Then you study reality and you focus on some very small subset of [00:24:00] phenomenons that are repeatable and intersubjective and repeatable. Death phenomenons are not very much, not very many, but they are important because if you harvest them, you can build tools, machines, and you become more powerful. So we created a, basically a philosophy during the very modern times, like after the 17th century, where everything that the child would think is wrong.

And then you grow up and you learn that the world is deterministic, just atoms bouncing around. And the world is, there is no free will. Everything's deterministic. There is no consciousness, just a delusion. There is a, and there is continuity. There is no, there is no discreteness, but then you get to quantum mechanics and you break down literally all of the things.

So you can react in two ways. One way is to say, okay, I was right the first time and this, this emergent AP appearance of determines is just a special case. Yeah, just an emergent case. Or the second reaction is I really love, love my mechanics, mechanistic, um, [00:25:00] ontology, metaphysic, and we defend it. By creating convoluted theory.

So you get like many words and you get like, or super determinism, and you have to desperately try to keep your 19th century, 18th century worldview, which is basically broken by actual, actual empirical evidence.

Knut: So you have to shoe hor it. It, this reminds me so much about the arguments made by Hoppa in, in, uh, uh, economic science and the AAN method, which is one of my favorite books, uh, where he is.

He points out that what Mises really did was, was, uh, connect the two worlds, uh, via the axiom of action. So even if an empiricist would say that we can never say that something is absolutely true, we can only say that, uh, we can, we can do approximations and we can get closer to the truth, but never to the actual point of truth.

But that statement in itself is an absolute statement. So it requires you to have a, an absolute truth, like, which is. [00:26:00] Connected to this from the, everything starts from the individual.

Giacomo: Performative contradiction for anything, which is not, uh, yeah, I agree. It's if you, if you want, it's also the good old, uh, midwit meme.

Yeah. Yeah. You, you start with a simple, so. The point of the mid width IQ bell curve meme is that the universe is not really that tricky. It's kind of, the universe is beautiful, it's rich, it's complex, but it's kind of truthful. And when you, when you're simple... You may not get the nuances, but you kind of get it as a general heuristic.

Then when you become smarter and more pretentious, you start to lose track and you enter very, very stupid kind of models. And then when you go really deeper and you get all the nuances, you realize that you were just right the first time.

Knut: Oh, yeah. Yeah. It's so fascinating.

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[00:28:45] Lugano Plan B

Knut: Luke, you have anything? Oh,

Luke: first great summary of a now classic talk from, from Riga.

I encourage anyone to, to, who hasn't yet checked it out to go watch that one

Giacomo: because it's

Luke: absolutely Absolutely. [00:29:00] Absolutely. And since we, we don't have a whole ton of time and thanks for squeezing us in, by the way, uh, can you tell us a little bit about, since we had to get back there, a little bit about what's going on at Lugano generally these days?

Giacomo: Yeah, sure. Lugano was an interesting city, has a nice history. Like they stopped Napoleon troops from invading. They were the, uh, the, um, uh, the refuge of Europe. It

was famous for that. It was a nice like Lake City, nothing, nothing big. Then it became important mostly from, uh, I hope, I mean, the, the major will not see this, this stuff because it's in English, so I can say it. Lugano became important because of basically money laundry from Italy. That was the old point of Ticino financial infrastructure.

And Money Laundry is beautiful. Money Laundry is beautiful. So Lugano was beautiful, but, uh, unfortunately that stopped. Uh, and after, after Petro Tech, that basically stopped. So now Lugano was searching for a new identity and there is some, uh, there is some cultural push to go [00:30:00] away from the past of financial privacy because they have been hurt by, by the United States mostly.

So some, some pressure to less. Forget the past and some, some counter pressure to remember the past, which is financial privacy and some money. Swiss was, Switzerland was the last country on earth to abandon gold standard. So there is, there is something there that is very Bitcoin like and Lugano was starting to feeling it.

And then some, something, some happy coincidence happened that, uh, like Tether, we were discussing before, Bitfinex and Tether and all the companies in that, uh, Family, like a whole bunch, synonym. They were basically decided to base camp in Lugano for, I don't know, practical reasons, logistical reasons. The guys beyond Tatar, as you know, are Italian.

So Switzerland is basically a non retarded version of Italy or less retarded version of Italy. You, you, you basically eat almost Italian. You speak Italian in Ticino, especially, but you are not living in the socialist hell. That, uh, Italy, Italy is. So, I mean, it's a good, [00:31:00] it's a good, probably it's a good, uh, compromise.

So these two things merge and the city municipality fell in love with Bitcoin at the beginning, also with crypto. But then we managed to explain them that, uh, even from a non ideological standpoint, there are so many crypto cities, crypto island, crypto nation that already happened. That was so 2016. There was like Island of Man, the Malta, Puerto Rico.

Zoo. So we told Dubai , so Dubai, we told them, if you are crypto, you are just a very late zoo Canton. Uh, but zoo already was, I mean, it's already there. If you're Bitcoin, you're just a second after Salvador worldwide. It's a different kind of approach. So we managed to, um, to make the, the initiative more toxic over time.

Uh, last year there were still some very delicate coining going on this. So

Knut: you don't count Tether as a

Giacomo: shit coin then? No, I don't. I think tether is, uh, I mean a fart coin maybe. [00:32:00] Uh, it's, yeah. It's, it's a fiat coin in a way. It's, it's, it's closer to a cryptocurrency in a way than a cryptocurrency because it's, it's way you will not lose money.

I mean, it's way more riskier for your portfolio to have a more error than to have te in a way. Yeah. In my opinion. Yeah. But anyway, uh, I think that, uh, and even that part Teter itself, is also becoming more maximalist, that the narrative of Tether is moving to Bitcoin first a lot and is also moving, as I said, to Tether Gold, which is closer to our idea.

So everything is getting, it didn't start from a very maximal point of view because the practical situation was crypto, but it's evolving in a very nice direction to see. And, uh, so what we have now is... The forum, second year, beautiful conference. I mean, a lot of people, well organized, very, very great. And we have the Lugano Summer School that we incorporated into this PlanB network initiative.

We have, well, many other things. And [00:33:00] there will be this Lugano PlanB Bitcoin Hub. Which will be a very tall building in the five stores building in the center of Lugano, bought by Fulgur Venture and Tether, that will be a Bitcoin hub. And I miss one. I had one in Milan many years ago, and it was so cool having Bitcoiners all day and physical places are important.

Knut: And like the, the network that these, um, you know, Bitcoin sanctuaries around the world are creating is just fantastic. Like how, uh, because this is so connected to El Salvador and Madeira and all of these, it is,

Giacomo: my plan will be, of course, it's always difficult when you create the infrastructure and you propose it because anybody will create their own.

[00:33:47] Centralization and Decentralization

Giacomo: So it's, I joked on stage. That my mission is centralization to a certain degree. That's true. I don't want everybody to reinvent the wheel. So as long as money is decentralized, knowledge is [00:34:00] decentralized and everything we do is open source. So you can just fork it and do it yourself. As long as that's true.

I like coordination. I don't like reinventing the wheel. As you said, the fact that we don't have to trust. Make us very keen to trust each other inside Bitcoin. So what I would like to provide with, uh, with the resources that Fulgur and Tater gave me about this network is to provide a template for this kind of sanctuary where the main key would be education.

Of course, sanctuaries can, can be useful for many things from escaping government persecution to, uh, to do business, but the education angle, like university, universities, campuses is, I think it's very, Easy to sell, like very, you know, a citadel seems something aggressive, maybe you're going to hide the terrorists there, right?

A university campus seems, seems very innocent, but it's the same fucking thing.

Knut: Decentralization is one of those words that get thrown a lot thrown around [00:35:00] and it's not stopping anytime soon, I think. But, but the way I see it, it's a decentralization is an unfortunate means to a way greater, greater end, which is sound global, sound

Giacomo: money. Agreed. Well, or you could go there. Like, like, I agree that blockchain, for example, is a necessary evil.

I don't know if I will agree with this decentralization, but for sure, there is a trade off. And it's not that. The, there's a specter and there is no decentralization, good and centralization bad. These spectors are basically in a taoist kind of situation where decentralization is always, uh, very, very anti-fragile, but also very, very inefficient.

Well, centralization is also very efficient, but more fragile. So based on the level of fragility you mean or you don't mean or you don't want, you can basically navigate the spectrum. Let me give you an example. When you go from barter to money. That's a centralization process. You have a lot of nodes [00:36:00] that are creating a network of good to good exchanges that will grow as a network power law, basically, when you, when you, so you have two people, you have one line, you have three people, you have a triangle, you have four people, you have the diagonal.

Metcalf. Yeah, Metcalf, Metcalf law. So you have that, then that's, in the value of the network. It's the friction in the network that is growing N square. So what you want is to have a center of the figure where instead of having all the diagonals, everybody's connected right into the center. This center is money.

So that's a centralization process. The reason that's tolerable and good is that it's creating efficiency, but the robustness of a piece of gold is so high because nobody Uh, human or that we know of can easily change the atomic numbers of gold, can easily create gold after nothing. So you did centralize on something which was very robust against takeover, which was basically a precious metal.

So it's a good [00:37:00] kind of centralization. Uh, the fiat word is a bad kind of centralization because we centralize over an entity which is very fragile, very easy to take over. So we don't have to decentralize everything. We have to disintegrate something. And another example that I think is cool. I am, I research a lot with my wife about homeschooling.

We think it's very cool. Also unschooling, very, very cool. But then, uh, we said, okay, but are we going to teach ourself all the time? Maybe not yet because we have other times to do so. We may hire some teacher as well. Maybe we'll, we will do something ourself with some teacher. But then, I mean, it's very expensive.

Maybe we can, we can do, uh, efficiency with, uh, um, with economies of scale. If we join another family, but then maybe you don't want them in your home. Maybe we can just rent a place with where family can jointly pay for a team of teachers. Which is schooling. We are reinventing schooling, right? So we're, the point is that the current schooling is broken.

And we just want to create a better

Knut: one. Yeah. Yeah. But that's the, I [00:38:00] mean, there's no, nothing wrong with schooling in itself. I mean, it's wonderful to leave your kids for a couple of hours. So you can get something done. Like it's, it's not something new either. Like I, I bet people did this when they were living in caves.

They left the kids in the cave.

Giacomo: They didn't join the family. People were not like intensive parenthood of modern times when you stay with your kids alone, insulated from, uh, that didn't exist in the central times. Uh, the, the grandmas were basically growing up, they were basically So, yeah, in a way, uh, I think that the point, or even again, another example, uh, I have, I, uh, guns, firearms, uh, firearms.

You want guns to defend yourself. That's cool. I love that. I have them and I want them, but, uh, if you really want to defend yourself in some, uh, in some kind of high, uh, of huge scale, you will have to hire guns, not just own guns. And maybe you don't want to create a new company. You will hire an existing company and they will be specialized.

They will be, they will be [00:39:00] re specialization. So I think the point there is that. too much centralization. So depending on a third party, defensive firm, or, uh, educational firm, uh, in a total way. So where you have no bargaining power, that's bad because now you're fragile. Now the firm turns against you and you have nothing.

Try to defend yourself or educate yourself without. Using the division of labor, that is, it's also bad because it will be super inefficient. It will be the man on the hill with a gun, but then as soon as somebody better armed come, you will lose. So the point is that you have to stay in the, in between the Fiat world.

Went too much on the centralization side. Absolutely. Modern individuals, they cannot do anything on their own. This is wrong, but you don't have to do anything on your own. Otherwise you get back to be a savage. Civilization is division of labor. So it's basically a really a ying yang kind of balance. I think

Knut: we [00:40:00] the non aggression principle.

Non aggression principle. Non

Giacomo: aggression can be dangerous.

Luke: Yeah, I think, I think we're going to have to call it a here. I think this is a perfect ending. If we go in another rabbit hole, we'll be here for another hour. So thanks Giacomo, always a pleasure. My

Knut: pleasure. I hope we can do this like 21 million times more.

If we have the time in our lives, always a pleasure. Giacomo, thank you for having us here.