FFS085 - Stephan Livera

Intro

Stephan: , [00:00:00] I have been shouting about Bitcoin from the rooftops since early 2013. And in those days, people barely even knew the term fiat money, now, in just the recent months, we have people like Javier Millet explaining Cantillon Effect on television So, you know, it just takes time, it takes repetition, and over time, people just start to realize, oh wait, it's just You know, this is just the new way.

And so therefore, I'm looking at it when, you know, the Jamie Diamonds of the world or Christine Lagarde of the world try to discredit Bitcoin They're trying to make it seem uncool or not the done thing. Obviously on the other side of that, you've got people like us and others out there who are just saying no.

Like, yeah, you should use Bitcoin. It's a better technology. Just upgrade your money. It's cooler. It's better. It's simply a better technology. Why wouldn't you use it? And over time, I believe the Bitcoin people will win out.

Luke: Welcome back to the Freedom Footprint show, the Bitcoin philosophy show with Knut Svanholm and me, Luke the Pseudo Finn. And we're here today with Stephan Livera, well known Bitcoin podcaster, host of the Stephan Livera [00:01:00] podcast and Austrian economist, head of education at Swan Bitcoin, and he does a whole bunch of other stuff in the space.

So we're really excited to have you here. So Stephan, welcome to the Freedom Footprint show.

Stephan: Hey, thanks for inviting me guys.

Knut: Yeah, great. Uh, last time, like, we haven't had a conversation for, for, uh, quite a while now. I think I was on your pod last time and, uh, yeah, and well, we've spoken in person in between that, but yeah, what, what are you doing at the moment? Like, what, what's your main thing except being Just being Stephan Livera, I this Bitcoin does that to people.

You just go around, be yourself all day and it's awesome. But yeah. What's your main focus today?

Stephan: Well, yeah, probably two main things, right? As you know, my podcast, I spent a lot of time on that. And also just being head of education at Swan. So I'm working on some educational content and things like that. And periodically I might write an article for Swan Private Insight, which is our special monthly research report that [00:02:00] goes out to our Swan Private customers and subscribers.

So, you know, whether it's writing content and doing some things in the background for Swan or obviously doing podcasting, researching podcast guests and, you know, getting new podcast guests on or doing editing and things like that, as well as, of course, following what's going on in the Bitcoin space, because obviously I'm trying to cover the space and provide relevant content.

Information both of the economic side and at the technical side because as you probably know, I've maintained for a long time that you really, you need both to actually understand Bitcoin. You sort of, you need a good base of economics and some of the historical understanding of money and you know, what's going on with that as well as some technical knowledge about Bitcoin and without it. a decent level of both. You simply won't grasp it, right? You might fall down the kind of the blockchain, uh, blockchain, not Bitcoin, uh, route, or you might become a person who thinks, oh, tokenize the world or some other garbage, or you might become a shit coiner. Uh, you know, so there's various, uh, reasons why I think we all have to continually educate ourselves on economics and [00:03:00] technology.

Knut: Yeah. Yeah. Giacomo made a, a nice Venn diagram about that. like the idealists and the

Stephan: He had the,

cultural, and that was kind

of like the subcultures of Bitcoin, and that was a slightly different point, but still related, right? Because I think he was talking about how there's like the cypherpunk people, and then you've got like developers, and then you've got maybe Let's call it like NGU sort of thing, but really the real best is to sort of be in that middle spot of the

Knut: In the middle of the sweet spot, yeah.

Jamie Dimon on Bitcoin

Knut: I just saw a clip of Jamie Dimon, and I think he's definitely in the wrong Like, everything he said was like the complete opposite of the truth.

Stephan: Well, it's funny because I saw that same clip and I was just responding to it. I did a quote tweet, but basically he commits a lot of the same kind of errors, or maybe he really does know, but he's just trying to discredit Bitcoin, right? So he brings up all the standard things. He goes, Oh, blockchain, not Bitcoin. He says, you know, tokenize the world. It's about tokenizing things. Uh, and also the typical, oh, Bitcoin is used for [00:04:00] illegal drug laundering, whatever, terrorism, whatever, you know, typical narratives, because he's trying to discredit Bitcoin. And, you know, you do have to wonder, after this many years, is he really just dumb, or is he actually just trying to discredit Bitcoin?

And I'm sort of leaning more towards He's not stupid here, like, he actually does understand, he could at least be able to better represent the view, like, if he at least said, Oh, I understand there's these people out there who view Bitcoin as sound money, but I disagree for this or that reason, that would be one thing.

But clearly, he makes no mention at all of the sound money. case for Bitcoin, right? The Bitcoin standard, the safety numbers, vision, or, you know, whoever else, many of us have that view. Instead, he's trying to discredit Bitcoin and say, ah, see, it's blockchain, not Bitcoin, and all this other garbage. So, you know, I think he knows where his bread is buttered, and he wants to try to keep it this way.

Now, of course, longer term, He and JP Morgan will have to bend the knee or become [00:05:00] irrelevant. I think that's the bottom line, longer term.

Knut: Absolutely. And like the, this is not a Jamie Diamond bashing show, but it could be. But, but it's a good example because there are many people who hold the same views and, and often, uh, people in, you know, powerful positions like Jamie Diamond, like who, who, uh, manages a lot of money. And he, what he says, uh, influences a lot of people.

And if it's not just plain stupidity. Then it is, uh, insincerity, and that's really bad coming from that position. That's, that's going to hurt a lot of people. I mean, the, the thing that baffles me is this whole, like, every other shitcoin has a use case, but not bitcoin. Like, All the other stuff, the JPEG crap things going on and the smart, so called smart, idiotic moronic contracts, all of this crap that surrounds the space that is just buzzword salad and code salad tossed around.[00:06:00]

That's the thing he thinks has value. And he sees no value at all in Bitcoin, except if you want to do illicit activity. And it's not, he points out that it's not even good for that because it's More easily traceable or something than Monero or some shitcoin that's dead already. Like, so, yeah, it's It's just baffling to me that they like, it's like you have the circle and you want to, you want to construct a wheel and you have a perfect circle and people, and people like this, they try to promote, you know, rectangular shapes and hexagons and octagons and stuff.

This is better. This wheel will be way more efficient because, you know, it has more corners or something.

Stephan: Yeah, it's absurd, right? They, they think it's about utility, right? Like, because in their mind, they're thinking of it like maybe smart contracts on the chain or some other thing like this. And in their mind, it only works if there is a [00:07:00] utility. Whereas those of us coming from the, you know, most You know, actual hardcore Bitcoiners or people who've been here for a while are thinking about it as sound money, right?

The utility is actually the monetary use of Bitcoin, right? So that he discredits that by saying, Oh, it's a pet rock. You guys don't know what you're talking about. Now, similar lines now in decades gone past, people made similar criticisms of gold, right? It's this Dead Relic, or it's a Barbarous Relic, it's just a pet rock, it's just a, you know, but they weren't thinking more broadly, or they knew better, but were trying to discredit that use case, because in their view, they want the fiat system to continue, because he is at the parasite level, or the parasite class, or the predator class, whichever one you, you know, you prefer, and they would very much rather that the fiat system exists, and that they can hoover up the benefits of that, and they No, that if hard money were to become more popular as an idea, that could really challenge his business model.

And [00:08:00] that could in turn really, you know, cause a lot of poverty for him and he doesn't want that.

Knut: Well I'm willing to give him the benefit of the doubt in just the sense that, you know, for most people, it's quite a leap to stop seeing what they've seen throughout their entire lives as money. To stop seeing that as money anymore. And like, seeing that as a big fucking scam, all of it. And there's this new thing that is, you know, better money, or more real money.

But like, for most people, that's quite a hard pill to swallow, and I think Jamie might be one of them. It's either that or he's just being a very bad actor.

Stephan: Well, yeah, I mean, I, I think at the end of the day, it's, it's one or the other, right? It's, you know, the classic saying, I think it's Upton Sinclair who said, you know, you can't make a man understand something if his salary depends on him not understanding that, right? Obviously. CEO of JPMorgan, he has a very vested interest in retaining the system [00:09:00] as it is and not trying to upend the system like Bitcoin eventually will, you know, as we believe in the medium to long term.

Knut: Funny thing about Upton Sinclair that I learned while writing the praxeology book, I believe, like that, that he was a bit of a commie and a bit of a statist.

Stephan: Well, even a broken clock is right twice a day. You know, and that's the funny thing because there are people who, you know, will hold non liberty focused views, but they might still be interested in Bitcoin too. And, you know, like there are some progressive people or more lefty aligned people who still like Bitcoin. Now, you know, I find that kind of funny in a way, but, you know, in some ways, they've found their own reason to be pro Bitcoin, whether that's, you know, it serves their own ideological motives or purposes, and so be it, you know, more people are going to adopt this thing, and that's just the way it's going to go.

Knut: yeah, I love, like the leftists are even better than us at promoting the thing. Like Christine Lagarde's, uh, [00:10:00] if there is an escape hatch that, that hatch will be used. That's like the best. tagline for Bitcoin ever. It's so powerful. She is absolutely 100 percent right. We will use the escape hatch.

Stephan: Yeah, that's right. I think there's just going to be more and more people who slowly wake up to this, and for a lot of people, it just takes time. Like, I have been shouting, and I've said this, you know, I've been shouting about Bitcoin from the rooftops since early 2013. And in those days, people barely even knew the term fiat money, or they barely, you know, if you tried to explain the Cantillon effect to them, at that point, it would have been like, what language are you speaking here, mate? And so, now, in, you know, in just the recent months, we have people like Javier Millet explaining Cantillon Effect on television to everyday people. So, you know, it just takes time, it takes repetition, and over time, people just start to realize, oh wait, it's just You know, this is just the new way. And it's, you know, it's like, [00:11:00] imagine trying to tell people to type in their credit card details on the internet in 1998 or 1997.

It would have been like, what? You want me to? No way. And nowadays, it's very, everybody does that. Like, most people, you know. Of course, those of us Bitcoiners like to use Bitcoin where possible, but, uh, you know, that's, that's the reality of the world. It's just become So much more ingrained into society because that's just what everybody does.

And so therefore, I'm looking at it when, you know, the Jamie Diamonds of the world or Christine Lagarde of the world try to discredit Bitcoin or try to pooh pooh it and play it down. They're trying to make it seem uncool or not the done thing. Obviously on the other side of that, you've got people like us and others out there who are just saying no.

Like, yeah, you should use Bitcoin. It's a better technology. Just upgrade your money. It's cooler. It's better. It's just a It's simply a better technology. Why wouldn't you use it? And over time, I believe the Bitcoin people will win out.

Austrian Economics and Praxeology

Knut: Yeah, the incentives are too strong, [00:12:00] I guess. Like, I, I, this is one, one of the things like deep diving into, um, Austrian economics and praxeology did for me is, is inject this great sense of optimism, still, it's, the first thing is that you see everything that's wrong with the world, and you think it's horrible, but the second thing is like, when you really deep dive into it, you see how powerful the free market really is, and that it really does win over time, like, totalitarianism is unsustainable, it doesn't work,

Stephan: Yeah. Well, I sort of go back and forth on this. Like, let me explain my view. I think there are, we have to be careful, right? Because there are some people who sort of take an overly rosy view, right? They just think the future will always just be better than it is today. But that's not really how history has worked, right?

There have been periods of, you know, the Dark Ages or there have been times where You know, things were bad for a long time because people had wrong ideas about the world and it took sort of a shift and it mattered what ideas people believed in. [00:13:00] To your point, though, it is certainly true that, uh, it's, it's remarkable that given the level of socialism and governmental control that there still is Some semblance of free markets around the world, and that production is continuing, and you know, we are living mostly better lives than let's say a hundred years ago, 150 years ago.

We are still living better lives, so it's kind of You know, backward, put it this way, progress is not inevitable, like backwards, you know, going backwards is possible, you know, but at the same time, I'm still very optimistic that we have something now, like, and for me, when I first became a libertarian, because I became a libertarian before Bitcoin existed, right, and so, you I, I think a lot of libertarian people have this maybe a black pill moment.

They're sort of like, oh wow, the government is just so powerful and there's so few libertarians who are speaking out against this, that it's kind of hopeless, that I might as well just kind of live my [00:14:00] life, I'll just live a double life, you know? But now it gives us hope with Bitcoin.

Knut: That's what I mean, like, uh, because that's the first, that's the first instinct, to be blackpilled, and like, holy shit, this is horrible, theft is fucking everywhere, every country has an inflationary currency, every country has taxes, it's absolutely horrible, there's no transaction going on except for black market transactions, not even those are safe if you're dealing with fiat currency, everything has a, you know?

leeching, third party, stealing value from people. It's horrible. Like, that's the first thing, but the thing that Deep Dive did for me is like, inject a bit of optimism into that, because despite all that, as you say, we still have production and stuff.

Stephan's Bitcoin Journey

Knut: So I'm curious, like, what led you down the libertarianism rabbit hole in the first place?

Like, how were you so early to this, to Bitcoin, and how, like, what were the motivation for starting the pod and everything? Give us the backstory, please.

Stephan: Yeah, sure. Okay, so the [00:15:00] libertarian story for me was, I was Let's say 14, 15, and I would, back then, uh, there's a thing called IRC, so for the younger listeners, that's called Internet Relay Chat, and that's kind of like, think of it like Slack, but before Slack existed, alright, and there's like, it was more like open chat channels that people could go on, right, so I would go on some of these, uh, and I'm, you know, I'm 35 now, I'm almost 36, so this is, you know, 20 years ago, uh, and so I would go on this Australian politics channel, and a guy in there kept linking to MisesDaily articles. And at the time I thought it was kind of a crazy idea, like how the hell would this work, but over time it actually started to dawn on me that actually what they were writing in these Mises Daily articles made a lot more sense than what they were teaching me at school. And so then eventually I started going down the Austrian economics and libertarian rabbit hole from there, and so I would say I probably called myself a libertarian, let's say, around 16, 17. I would've called myself, I would've believed that, let's say at least [00:16:00] philosophically, that anco capitalism is the way, probably around age 18 or 19. And so from then on, I just, I was, I was holding libertarian ANCO capitalist views. And so around that time also, Ron Paul's campaigns were sort of getting bigger. Uh, he had the 2008 campaign and the 2012 presidential campaign. Um, and so, yeah, so I was, you know, a free market guy, and then, in terms of, you know, Bitcoin, I was, I grew up in Sydney, in Australia, so I didn't have as much exposure to, let's say, the American libertarian scene, other than some online exposure, and so, I think I basically stumbled across an article in December 2012, and I remember, I was, Uh, on a family trip, um, back in Sri Lanka, I've, I was born in Sri Lanka, I have family from there, so we were on a, just a family holiday, and I remember it was, I think, December 2012. I sort of stumbled across an article that explained Bitcoin [00:17:00] in a real explanation, rather than just sort of these kind of random news headlines that I had ignored up until then, right? I might have, it might have sort of briefly flashed across my virtual desk in a sense of seeing, you know, maybe a slash dot article headline or something from, I don't know, 2011, 2012, but I disregarded it, right?

Because in those days, I just kind of thought, oh, it's just like You know, World of Warcraft gold, or some kind of in game money, it's not a real thing, but this article I read in December 2012 made it real for me, it was like, whoa, no, actually, this thing can challenge central banks, and it could, you know, do all these things, like, back in those days, people spoke about remittance in those cases, and also just, you know, the general kind of idea of having a free market money that's outside the control of any state or any corporation, and so, that was my real moment, and at that point, I just, you I was shouting from the rooftops, telling anyone I could, you know, telling anyone and everyone.

I would post on my social media accounts and I would write about it. I even went to some Bitcoin meetups and things [00:18:00] in Sydney. I spoke at an early Bitcoin conference in Melbourne in 2014. Fun fact, um Craig Wright was actually a speaker also at that conference in 2014 in Melbourne, um, and he had the, yeah, and I, I believe, I remember seeing him up on stage, now this is before the kind of the big controversy stuff had happened, and so, he was this really overconfident, arrogant guy, and I was kind of like, I don't really, yeah, like, yeah, I didn't really know a lot about the guy, because, again, this is pre the sort of big controversy stuff happening, you

Knut: you became Craig Wrong.

Stephan: Yeah, so, uh, yeah, so then I remember seeing that and yeah, I mean, so I, I was, I would go to some of those Bitcoin meetups in Sydney in like 2013, 2014 days, but there was a lot of like TA and trading people and it just, and yeah, it just kind of was a bit off putting for me. In those days. Now, I was still writing about it and telling people that I could just in my personal social media. You know, there are people to this day who sort of remember that and [00:19:00] saying, Oh, hey, thanks for telling me about that stuff back in those days. uh, but then, yeah, I guess if we move forward to Uh, the 2017 cycle, I was getting a bit annoyed by all the garbage out there, right, all the shitcoins and shitcoin podcasting and blockchain this, blockchain that.

It was just very frustrating to me and so it sort of culminated in me starting my podcast in 2018. Uh, and that was really, the motivation for that was just simply that I was so frustrated with all the shitcoining and blockchaining going on out there. Right, nowadays there's so much Bitcoin material out there, but at that time there wasn't a lot of Bitcoin only podcast material in those days.

In those days you could pretty much count them on one hand, right, you had Noted Podcast and TFTC and that was just about it. And so, I was starting the podcast as just something that I wanted to exist. And I was scratching my own itch and I was doing something that very few other people were doing at that time. Uh, and then it, you know, thankfully it luckily took off and I got [00:20:00] enough listeners to make it a sustainable thing, right? When I started it, it was just a labor of love. I had no intent to make it my job to do it professionally. It was just a labor of love that I would do basically in my free time outside of my fiat job. And so yeah, that's kind of the, the story.

Knut: Beautiful. I mean, uh, I think we met, first time we met in person was in Riga 2019, I think. You were there,

Stephan: Oh, maybe. Yeah. I'm not sure. Yeah.

Knut: Yeah, so, so, uh, and I was aware of the podcast then, so then it had been going for a year, I guess.

Stephan: Yeah. Roughly. Yeah. Yeah. That was when I, and that was when I first started going to, let's say the international scene in 2019 was when I started going to some of the conferences internationally. Whereas prior to that, I'd only been sort of around the Australian Bitcoin meetups and, you know, a conference here and there sort of thing.

Um, and so, yeah. Yeah, 2019 was when I went to Bitcoin 2019 in San Francisco, [00:21:00] uh, Riga, the honey badger one, and also the Lightning Conference. I was the emcee of the Lightning Conference in Berlin, uh, around October 2019 or so. So it was me and Des Dickerson,

Knut: Yeah, I know Hodlonaut went to that one. I didn't go to that one, but uh, he was there, I know. Uh, so like, I, like, uh, you were a bit earlier than me, but conference wise a bit similar. I, I went to like, the first crypto conference I went to was in 2017 in Stockholm. It was called Bloxpo. And I was there mainly to see Richard Hart, because back then Richard Hart was a, a hardcore maxi, right?

He was, he was fighting for Bitcoin and he was well spoken and an intelligent guy as he is, like, uh, uh, and that same night, he, he told me that he was going to To, to, uh, start his own shitcoin, and that he wanted to, uh, he also wanted to buy [00:22:00] Lambos and, and make money fast and stuff. Like, all these other people are doing it anyway, so why couldn't I?

And I couldn't believe what I heard, and then he went off and did that, and screwed a lot of people over and bought some Gucci pyjamas. Like, uh, it's pretty ridiculous in hindsight, and, uh Yeah, I felt like the only, only Bitcoiner at the conference, which I found baffling, like everyone was there for crypto stuff and like, it seemed like a room with like a thousand people who, and they were all clueless, like really clueless about The economics of the whole thing, they're all in for the tech stuff, and like, Stockholm was very much a, you know, startup scene, sort of, they had sort of a, they wanted to be Silicon Valley, and that's why the crypto scene was big there, and still is to a certain extent, I mean.

All the bus, all the crypto boys are [00:23:00] AI experts at this point instead of crypto experts, I guess. But, but still, uh, yeah. The move fast and break things attitude. Yeah, this is a lonely, lonely place to be.

Stephan: Yeah, I mean, it definitely can feel lonely, like sometimes even, you know, in some of those earlier Bitcoin meetups, you kind of meet people who are just into kind of like TA aspects of it and not really Not really about the sound money vision, let's say, whereas I would say from 2017 18 onwards This kind of sound money vision of Bitcoin became a lot more prominent, right, because when I sort of first came into Bitcoin in 2013 days, it just wasn't that prominent.

There were some people, there were people like Tour de Meester, back in those days, Trace Mayer, uh, the Nakamoto Institute boys like Bitstein and Pierre, there just wasn't as much focus on that, and I think there was a lot of other kind of random experimentation and just different ideas, and I think 2017 18 onwards, it sort of became a lot more clear to people, this kind of sound [00:24:00] money, hodling, saving sort of vision.

Um, but of course there was still like a big clash, you know, in those days of like, B cashers and You know, small blockers, or not, you know, not raising the block size side. and so, you know, that, that's kind of the story, I guess, of how it's sort of shifted and evolved over the years. At least the narratives around Bitcoin.

Knut: Yeah, I guess Safedin and the Bitcoin standard played a huge part there in like tilting it towards the sound money narrative.

Stephan: Right, yeah.

Luke: Alright, you might have noticed that we've recently partnered with AmberApp. After our episode with Izzy, their CEO, and our close friend, we knew we would have to partner with them in some way, If you haven't seen our episode with Izzy, definitely go check it out, you'll see why it's such a great fit, and honestly, they're following the orange glowing light like Izzy always says, and that's exactly what we try to do here at the Freedom Footprint Show.

The big news about AmberApp is that they're going to be launching their version 2. [00:25:00] I've seen some of the screenshots and it looks fantastic. They're going to be including a non custodial on chain wallet, an anonymous lightning wallet, a fiat wallet, And finally, it's going to be an exchange, of course. it's going to be just this super app, They're also going to be launching globally.

Everyone's going to be able to use it. we're really excited about all that. Stay tuned with us and you'll hear all about it. And for now, check out their website, amber. app and the episode with Izzy to find out more.

Misconceptions About Economics

Knut: So in your mind, what are some of the most common misconceptions about economics that people have? Like, what are they missing?

Stephan: I think a lot of people People have not really been reasoned into the positions they're in, right? They just sort of see a headline, they might hear some random talking head, some economist on the news who may be more accurately described as a statistician or a talking head or a propagandist, and so in some cases they are just [00:26:00] propagandists for the central bank or the state, or in other cases they are more just like a statistician who works for a private company trying to give you like Some sort of guess or reasoning, uh, at what's gonna happen, right?

And some of this stuff is like, you know, macro quote unquote macro, macro talking heads. Because the funny thing is some of this macro content, it's so, so popular, right? Like macro, whatever, but. Realistically, are there actually people who have really, truly made good predictions in the world of quote unquote macroeconomics, when really there's just so many different things that can go wrong, there's so many different things that can happen, there's just a million different variables, whether it's just, you know, interest rates here, or a war there, or a, you know, the unemployment rate here, or the regulations in this particular country versus the deregulation in some other country, Versus, you know, a thousand other factors and things that could happen, so I think just in general, predicting things at a quote unquote macro is just difficult.

I think if you're looking more [00:27:00] at specific policies, that's where you can start to understand more about, okay, what, how should we reason about this. Conclusion, whether it's, you know, the classic minimum wage laws or different government regulations that relate to price controls, things like this, I think those are, you know, that's what the normal, that's what like a normie person thinks is economics, right?

They're just thinking, oh, it's just like, you know, The guy on the financial TV show who thinks this is what's going to happen to interest rates in six months from now, that's sort of the common perception, um, as opposed to a more Austrian praxeological understanding or appreciation for economics and really what are we doing here, what is the actual purpose of this What is the way of reasoning that we use?

Uh, so that's, you know, that's one big thing. A lot of people are under this perception, they're under this misguided idea that the money supply has to expand for the economy to grow, right? In their [00:28:00] mind, that's, you know, that's what a lot of people think. Or they might think that, let's say, GDP needs to go up.

And they might have this kind of, Keynesian, neoclassical idea that just, oh, the GDP number needs to go up when you aren't sort of disaggregating these high level aggregates and understanding what's going on at the individual level, what's really causing and driving some of these different, uh, phenomena.

And so that's really where Austrian economics shines. At looking more deeply at the individual level and the trying to at least ask the question, why is this person doing this as opposed to just looking at these macroeconomic aggregates of, oh, capital is just this one big blob. It's not this sort of differentiated process, this sort of tapestry of, you know, different stages of production.

And different markets for different goods that are sort of pricing in this particular product versus that service because, you know, for this reason there was [00:29:00] a supply shock in this thing and not that other thing. It's just a much more, I think, accurate way of trying to assess the world and understand what's going on there.

Knut: I, I love the, the, the, the pure ethics side of it, like, like, and the simple questions that the thing that Hoppe does a lot, like, like forcing, forcing people to ask themselves the really basic questions, like, why would anyone ever want anyone else to have fewer options? Which is, like, and by just simply asking that question, you debunk the notion of taxes as being a good thing at all, like, how can it ever lead to more options?

And, or, why do people in the public sector pay taxes? That's one of my favorites, because it's so obvious when you think about it, like, why?

Stephan: Yeah, it reminds me of that meme, I don't know if you've seen it, it's not a very common meme, but there's like a bunch of guys trying to push like a pickup truck. And the funny thing is, there's like a guy who's in the [00:30:00] back tray of the truck, trying to push the front of the truck, but he's on the truck, and he thinks he's, you know, he thinks he's pushing it forward, that's like public sector workers, right,

Knut: Yeah, yeah, yeah.

Stephan: kind of, they're in the truck already, and everyone else, it's the private sector that's actually pushing the truck forward, uh, and so, yeah, but fundamentally, Uh, it, it, it does come down to this mutual assurance that we have when there's voluntary exchange, right?

You know that both parties believe they're being made better off. Of course, really, a lot of economics in the, you know, quote unquote mainstream economics today It's not really for the sake of trying to understand, it's almost like it got politically popular because it helps justify how politicians would like to act. And so then, I think that just drove the popularization of this sort of court jester economics, fake economics that helps justify, you know, this particular government [00:31:00] rule or law or new government department or program that

really just

Knut: in general,

Stephan: Yeah, it just helps quote unquote justify these things, when really there's not a good justification, and we're just stuck. In this world where people believe in the necessity of the state and the necessity of these different government programs, it would be like if the government taught our children how to walk, uh, pretty soon people would be like, Oh no! If there was no government teaching our children how to walk, how would they learn how to walk, right?

Knut: yeah, yeah. And it's so, it's like, it's self reinforcing, because the more, the more taxes you pay, the more, or the more inflation there is, the bigger the government and the bigger their influence, and the bigger their influence, the more taxes they can, the more they can steal from you, basically. So, so like, it's a very uphill battle.

I'm just glad that there are bitcoiners everywhere, because when I travel around the world and I go to meetups and stuff, even in smaller places, the, the thing that baffles me is like, Oh, the first thing [00:32:00] is, holy shit, we're so early, there's so few of us. But the second thought is, is the, the big one, like, but hang on a minute, we're everywhere.

We're absolutely everywhere. Every, every single town, every single city of the world has a A handful of bitcoiners just doing their thing.

Stephan: Yeah, that's right. I think I've definitely noticed that in my travels. You know, I've met Bitcoiners from all around the world, and it's funny that there's this, uh Network, let's say, of, you know, of, uh, hodlers around the world. Now, to be clear, I think one thing that's gonna become Difficult as Bitcoin grows is that you can't just trust someone just because they're a Bitcoiner, right.

Like I think that's an important thing that, uh, you know, people can sort of fall into this trap of thinking, Oh, I'm a Bitcoiner. This other guy's a Bitcoiner. We can trust each other, right? No, I don't. I think you've got to be wary about that because, uh, people will try to affinity scam. And yes, historically, the big affinity scam has been this kind of I like Bitcoin, buy my [00:33:00] shitcoin, or this kind of crypto, these crypto people who constantly sort of ride the coattails of Bitcoin, but going forward there'll be, you know, scams and Bitcoin, Bitcoin scams.

And to be clear, this is not a new thing, right? If you went back and looked at the BitcoinTalk forums in the early days, 2010, 2011, 2012, whatever. There were scammers then too, right? There was like early rugs, custodial wallets that rugged, or the infamous Butterfly Labs kind of two weeks TM, uh, you know, there have been scams in the Bitcoin world too, and so it's important to you. Be wary, uh, and you know, not just trust someone just 'cause they're quote unquote, just 'cause they're a Bitcoin.

Knut: Absolutely, like, I find the trust thing to be so fascinating because it's so depressing, like, I remember that as one of the most depressing parts of this crypto conference I talked about, like, how many, the percentage of scammers, because there were almost All scammers, [00:34:00] like, that people are so, so, you know, they want the free lunch so badly, so they're willing to do that, that was a very depressing insight.

Stephan: I think one thing I would add to that is that some of these Shitcoin events, what they do is they almost price themselves out of being able to be honest. Right? So what they do is they might. Raised the price of either the tickets or for the sponsor booths and things like that so high that the only people who can afford to pay are shitcoin people who can print their own money.

And so, it's almost like a negative self selection effect, right? It's like, you've, they've made it so that the only people you see up on that stage are people who have quote unquote, pay to play, right? Like, it's become like a pay to play shillfest, and that's what you see in some of these shitcoin events. And so, you know, and that can happen even, you know, in Bitcoin land too, right? You just, again, it's just because someone's a Bitcoiner or just someone's like into these, into crypto, and maybe they claim to be a libertarian or they sort of talk a little bit vaguely about libertarian ideas, doesn't mean they're actually a libertarian or doesn't mean [00:35:00] they're actually a good, upstanding, honest, moral person. And so that's just the hard reality of it. Uh, now, yes, obviously I believe Bitcoin is going to grow and that will be a good thing for the world. But, uh, you know, you just have to always be wary, right? Everyone's a scammer, as, uh, my friend Bittstein says.

Bitcoin ETFs

Knut: Yeah, that article is legendary, and for good reason. So, the latest fad is, I like Bitcoin, buy my ETF, right?

Stephan: So, I mean, I go back and forth on this, right? Like, I think we should recognize the good and also recognize the bad, right? Like, now, obviously on the bad side, yeah, is there a potential risk that a lot of coins get centralized into Coinbase, which is doing the custody for, what, eight or nine of the eleven ETFs or something like that? Is there a risk that they try to do some kind of, contentious Negative or malicious change to Bitcoin in the future because a lot of the coins are there. Maybe, maybe that's possible. But on the positive side of the ledger, there's a whole bunch of new capital that's going to start flowing in. There'll be a lot of noobs who come into the, let's say, the top level of that [00:36:00] funnel. And maybe they, they buy, you know, an ETF because they think that's what Bitcoin is. And then later they come to, you know, swan. com or somewhere and buy some real Bitcoin and withdraw it to their own custody. Um, and, you know, to some extent We can't stop this stuff, right?

Like, this financialization of Bitcoin was inevitable. Like, we can't stop BlackRock and Fidelity and whoever else from offering these Bitcoin ETF products. Of course, I will encourage people to, you know, not your keys, not your coins. but, you know, there's, there's some positives also that there's gonna, there's gonna be more capital flowing in that will in turn raise the price of Bitcoin and bring a whole bunch, a new round of people in, right?

Because no matter how many podcasts you and I do, The price is going to bring in a lot more people than whatever podcast we do, whatever articles or books that we write, it's going to bring in more people. And my hope is that, you know, the price brings in new people and then it's on us to try to teach them about sound money and liberty and things like this. Um, and so You know, uh, that's, that's kind of, I'm trying to [00:37:00] be balanced on the view of the ETF, so at least that's how I'm seeing.

Everything is Good for Bitcoin

Knut: Alright, so I know in the past that you've had some, uh, some problems with the everything divided by 21 million meme, so, so would you also disagree with the everything is good for bitcoin meme?

Stephan: Yes.

I mean, I think it's become, it's a little bit of a, it's a meme, you know, it's like, it's not really a true, like, okay, it would be like saying, you know what I mean? It's kind of like, oh, imagine if someone cut off my left arm, yeah, sure, maybe my right arm becomes stronger, but am I stronger overall? No. Right? So obviously in a Bitcoin sense, imagine if I don't know, obviously we can make up extreme examples like, imagine the world blows up, that's obviously not good for Bitcoin, you know, or like, imagine, okay, even, yeah, yeah, or like Thanos comes and snaps the world away, I don't know, but, I mean, even more realistic, like, If, you know, there are some people who have this view of like, oh yeah, imagine if the government, like, banned Bitcoin in every country, that would be good because then every [00:38:00] Bitcoiner would have to go underground and it would become like the drug trade everywhere around the world. No, no, like, obviously, there are certain government policies that would be better for Bitcoin, right? Like, if government takes away capital gains tax laws, that is an unmitigated positive thing for Bitcoin. And so I believe there really are things that are net good and net bad for Bitcoin. But yes, what really is going on is people are saying, oh, there's something that sounds like it's bad for Bitcoin, but here's the silver lining.

Okay, yes, you can find a silver lining to many things. Is it net good or net bad? That's the way I think serious analysis should be done. Of course, memes are one thing and serious analysis is another.

Knut: I think it should be, uh, you know, rephrased as everything is memetically good for Bitcoin, maybe.

Stephan: Even if Thanos Snaps the world away. Uh, it's, is that mimetically good for Bitcoin,

Knut: uh, yeah, yeah, yeah, yeah, probably. When they, when they, uh, you know, interstellar, uh, archaeologists found the, find the relics and, oh, there's a pyramid. Uh, probably had something to do with [00:39:00] sound money or something. I don't know.

The Everything Divided Meme

Luke: Could we, could we cover the, your objection to the meme just for our listeners benefit? I think it's going to be interesting.

Stephan: Oz the infinity of a 21 million. Right. Yeah. Yeah. So

Knut: I never said infinity by the way. Other people said infinity because the graphics

Stephan: saying? It's like, imagine everything there is divided by 21 million.

Knut: Yeah, yeah, yeah,

Stephan: So that, that to me, so like long time listeners probably know Knut and I had an episode where we spoke in depth about this, but the short version of it is Global wealth is not the same thing as the global money supply.

So as an example, if you look at the M2, global money M2 supply, broad money, that might, that number is probably something like 100 trillion. But global wealth is probably something like 400 trillion, or maybe a little bit more now. So, my point is that the money supply number Does not have to capture or encapsulate all of global wealth.

It's very possible in the future at some, like, let's [00:40:00] imagine in the year 2150 or something, when most of the 21 million coins are out, that global wealth denominated in Bitcoin is greater than 21 million, right? It could be 80 million bitcoin worth of global wealth, but we still have only 21 million or just under 21 million worth of coins. That's my point. That's why I'm saying, it's not, like, if you're looking at it from an accounting perspective, it is entirely possible that things are worth more, like, at the aggregate level, that it is more than the 21 million total supply of bitcoin, because the accounting valuation of things Can be greater than the actual money supply. That's how I see it.

Knut: this is great because like most people they say actually it's everything over 14 million or something that because you have to disregard the Satoshi's coins and lost

Stephan: lost coins and whatever.

Knut: like, ah, you're missing the point so bad, but you're saying it's more like everything divided by 80 million.

I love it.

Stephan: Well, I [00:41:00] mean, that's just an example, right? I mean, obviously I'm just kind of taking, you know, let's say a hundred trillion versus over four hundred trillion. Is it 4x? I mean, who knows what that actual ratio will be. Maybe some of that is obviously driven by fractional reserve banking. In the future, we don't know exactly, but the point is accounting valuations, like if you look at the accounting entries of a particular company, it can be more than the actual. Money supply, and that's not an unusual, that's not a, like, I guess, on the face of it, contradictory thing, so that's why I kind of disagree with the meme, but I understand it's a meme, and it's not, you know, a serious

Knut: Not to be taken literally like, uh, so, uh.

Debt and Assets on a Bitcoin Standard

Knut: How does that, how does that relate to debt? So like the, the, the, the, the debt to asset ratio in the world right now is like way, way, way more debt. And, uh, like we don't have, we have way more debt than we have actual capital goods, like actual assets. So, so how will that shift on a Bitcoin standard?

How [00:42:00] does that play out in

Stephan: Yeah, so I believe there will still be debt, it's just a lot less, right, so put it this way, and so this comes back to, sort of, Austrian debates about commodity credit, as opposed to circulation credit. Now, I'm in the full reserve camp, I believe that's the Uh, both ethically, moral approach, and also economically sound approach for things to go.

And I believe that fractional reserve causes this instability, this economic instability. And so

Knut: Here we're in a 100 percent agreement, by the way.

Stephan: right. And so I believe there will still be debt, but it will be commodity credit. That means somebody somewhere is voluntarily giving up their access to the capital for somebody else to be able to use that capital for their business or their project or whatever. And so I think, in short, there'll be a lot less credit and there won't be so much easy, cheap credit like we have in the world today for government and even for businesses and just for people in general. Uh, but the [00:43:00] prices of things will be so much less because we'll be living in a deflationary world, right?

The price of things will be coming down in Bitcoin terms, but your purchasing power is going up in terms of how much you can purchase. So that's going to be the cool thing. It may lead to some really funny scenarios, though, where maybe In a paradoxical sense, your salary from your employer might be going down in Bitcoin terms, but actually up in purchasing power terms, which might be kind of like, crazy to really think about, but it's like the reverse, yeah.

Knut: I love this. When I, when I try to think about that, like, if you, if you think about a hyperbitcoinized world, to me, it's inevitable that most stacks will have to decrease over time, because people need to eat. And if, if, if, if you're not doing barter, then, and if you're buying stuff for Bitcoin, then your stack will be, will decrease.

So I can even, uh, Well, in sats terms,

Stephan: right, but think about it like, you're still spending [00:44:00] those sats to somebody else, right? Like, so,

Knut: yeah, but there's some, but no, no, coins will be lost. Coins will be

Stephan: oh yeah, sure, sure.

Knut: So the total amount of coins after 2140 is shrinking. It's not growing. It's in, in. Like all likelihood, it's shrinking because

Stephan: right, but also, we might get much better security technology that, you know, there's very less, very little

Knut: absolutely, but what I'm getting to is like, as you say, purchasing power can still go up. So you can see salaries and stuff go down and, and the prices of stuff go down and still the value goes up, like of the set goes up. So imagine a scenario where people are actually starting companies. Not to have black numbers on their balance sheets in terms of Satoshis, but to have their stacks diminish a little slower, at a little slower pace.

So that's why you start the company. And that's just so weird to wrap your head around, so it's like almost impossible to [00:45:00] think about.

Stephan: Yeah. That's kind of crazy when you really think about it, right? Because then you're like, you're trying to break even, or you're trying to profit, obviously, but uh, it's just going to be really, really hard to do that. And so, yeah, but I think it'll create this environment where there's a lot more saving.

There'll be a lot more people actually saving, and I think that will be a huge boon for humanity, right? Because I believe, like Safetine and probably you and many others, believe that saving is the, really, it's the bedrock of civilization, right? Like, it's this idea that the more people are saving, They're sort of giving up their control over resources to some other entrepreneur who's out there found, who's found the most profitable use for it, and if he's not using it profitably, he's gonna lose money.

So he needs to try to be profitable, uh, or at least break even, as we were talking about, um, Or at least losing less, let's say, and that is going to yield benefits for all of us because those entrepreneurs are going to be out there trying to find [00:46:00] ways to do it faster, better, cheaper, you know, just in general.

And so we're all going to benefit from that, even if it sounds kind of counterintuitive that our salaries are going down in Bitcoin terms, but up in purchasing power terms.

Knut: Yeah, I absolutely love this part of the rabbit hole because it fascinates me so much. And it ties into what you said before about you have to be vigilant and everyone's a scammer and all of this. Because I think there's a flip side to that coin too. And that is, you know, people that like This Bitcoin, my trust in you as the Bitcoiner Stephan Livera is way, way, way, way, way, way higher than it would have been if you were like Stephan the Pokemon guy who I'd known online for eight years, you know?

Uh, you know what I mean? So, so like, I, I completely trust you because I know your character because I've seen it. I've observed it over a long period of time. [00:47:00] And I think the, the feeling is somewhat mutual. If I was Knut Svanholm, the, the Pokemon guy, you wouldn't trust me as much as, or if I was Knut Svanholm, the Ethereum guy, like you, you can sort of sort out the, the bad actors over time, over a long enough timeframe and just.

Judging from their character and what they're saying and how their actions, uh, you map

Stephan: will matter a lot.

Knut: Yeah, reputational capital. Yeah. So I think, like, your reputational capital is probably what you'll start trading instead of trading bitcoins.

Stephan: Oh, I'm not sure I would agree so much with, I think there will still be, like, you'll still need to actually trade, but I'm just saying, reputation will matter a lot, you know, because people will be like, oh, that guy, he was a scammer, or he was a dodgy guy, don't do business with him, because you don't want to, you know, lose, lose out doing business with a scammer, so that aspect is definitely going to be there, but I still see it, like, we will be doing, A lot of commerce.

We'll be doing a lot of transactions because, people will want to buy more stuff, right, [00:48:00] and I think now, yes, you can make arguments about like, oh, certain goods will be more durable, but at the same time, there'll be lots of innovation and new inventions happening that will want people, people will want to buy those new things, whether it's, you know, better technology for living or, you know,

food or whatever.

Incentives to Spend vs Save

Knut: Because this is actually where we might disagree on something. Because I think, like, uh, when you have this absolutely scarce thing, uh, you, you adopt a lower time preference, or that's the theory at least, that you're incentivized to save rather than spend, as you say, like, saving is the bedrock of civilization.

And as you do that, you, you're not as inclined to buy frivolous shit that you don't need. You don't need that margarita mixer with the salsa dispenser, like, and you don't need to buy a trillion Christmas gifts for relatives you don't see, like, and you don't need all this bullshit, like, we live in an age of over consumerism and it's [00:49:00] mostly due to fiat, the fiat monetary paradigm that everyone's selling shit everywhere.

And the, the whole, the whole point of Keynesianism is the velocity of money. Like, so people are selling and buying all the time. And I see like on a Bitcoin standard, that, that trend reversing, of course, people will still want stuff and they will still want quality stuff and, you know, luxury stuff and whatever, but the total number of transactions, I see microtransactions and speed trading as a very, very fiaty thing.

So what's your thoughts on that?

Stephan: Okay, so I agree partially, right? Like, I think there is an element to which, you know, um, people make the, as you said, speed trading, I guess you're referring to, like, Flashboys and this kind of HFT, high frequency trading sort

Knut: only that, but, but also like paying a penny to go to the bathroom in the, in the, in the central station, like that kind of micro transaction

Stephan: Oh, okay, so I can sort of agree some of that. Like, what you might see there is, put it this way, uh, when you go to the [00:50:00] mall You don't have to pay to go to the toilet because the mall has internalized the externality, right? And you don't even have to have bought something in that mall. They are just kind of, all right, that's gratis, that's on the house, you know? And maybe we'll start seeing that in other contexts where it's kind of businesses who kind of give you more for free just because, hey, we're making so much. On our normal business model, then we can just give you this one for free, right? Or it's like loss leaders, right? They kind of, you know, if you go to the supermarket, maybe they've subsidized the price of milk because that's what gets you in, that's what gets you in the door because then you're going to buy other stuff. But where I disagree is I still see a very strong role for transactions because my point is that yes, it's true that we'll have lower time preference. Yes, it's true we'll have less consumerism. But I think that's to a point. Because ultimately, we don't live forever. Right? I still have to provide for my wife and son, and you still have to provide for your family, and we still have to, you know, buy things, and we're not going to live forever, and so, you know, whether that's [00:51:00] buying meat to eat, or whether it's, you know, whatever things that you need, or whether You'll still be buying stuff, and at the same time, we'll be living in this world of incredible technical, technological progress, right?

Maybe people will be going to the space, and they'll be, you know, investing in how to do that, and how to do all kinds of crazy stuff, who knows? Maybe not in our lifetimes, but in like, kind of, later down the line. And so, I see it like, there will still be a lot of transactions. It may be less focused on this kind of consumerism as you point out today, but there'll still be a lot more transactions.

And think about it like this, what if the population of earth grows a lot more, right? What if we have this kind of bitcoin natalism taking on and there's a lot more people and just as part of that factor, there's just a lot more transactions from that sense, right? The world population now is like 8 billion.

It's probably going to get to 10 billion in 2050, 2060, and who knows, maybe we'll expand it even further.

Knut: Okay, let me devil's advocate this a bit further, because I [00:52:00] have an example of something that is possible on a bitcoin standard but not on a fiat standard. And that is a pay once type subscription model. So if you want to subscribe to, you know, Fresh meat every week for the rest of your life. There is a bitcoin price for that, that the butcher would accept, like a one time payment.

Like, you get 10 bitcoins from me and then you get the meat for free for the rest of your life. I'd, if I was a butcher, I'd take that. You know what I mean? Like, if you truly believe that the currency will increase in value over time, even if it's slowly, there's a price point where you will accept the price of a one time payment for a lifetime subscription.

And why couldn't everything be on a lifetime subscription in an economy like that? So I think this is weirder than we think it is. That's my main point here.

Stephan: Maybe, but I just think the net effect won't be that there's like very few transactions. I [00:53:00] think the net effect is that there will be still a lot of transactions,

Knut: Yeah, let me clear that up because that's not what I'm saying. I'm just saying that, that Uh, the trend is sort of reversing, it's, it's not more consumerism, it's less. So, uh, of course, there will still be transactions that those transactions will be more important to the people making them. So it's another type of transaction.

That's so, so I'm not saying that

Stephan: but I mean, I'm sort of, I'm still a bit, uh, like we might see new businesses, new types of services, and, put it this way. Not every service will go on that model, right? Like, it's, I mean, I'll give you an example, right? Like, if you think about Xiaomi DigiCash and stuff like this, when they had this kind of cyber box or whatever it was called, they were kind of envisioning this model that everyone was going to do, like, microtransactions on the internet. And in practice, the way the internet went is ads, right? Like, that's kind of actually what happened. So, the point is more just that [00:54:00] monetization models may be different to how we think they will be, right? Like, maybe this one time subscription model, and you know what? That works in the context of certain apps and software, right?

There are certain software, um, apps that I've seen that are this kind of pay one time, use it forever, right? There are already software Examples that do this, right, like even like Winrar or whatever, some of these ones they just like, pay one time, you've got it for life. but there's lots of other things that are more like, no, it's a subscription, or no, it's a You know, uh, because, here's the other thing, you might, you as the butcher might be comfortable taking 10 bitcoin, but me as the customer might be like, hey, is Knut gonna still, uh, be around in 20 years,

Knut: on other contracts. Yeah.

Stephan: you know, because they might be, they might sort of do this kind of, oh, hey man, you made that agreement 30 years ago, or whatever, something has changed, force majeure or something, how is the customer gonna be comfortable that that other business is really gonna be [00:55:00] around for a The rest of their life, you know?

Knut: Yeah, yeah, well, I sort of pulled the example out of my ass, so it's not a perfect example, but I can see, it's not hard to imagine business models where a one time Bitcoin payment gives you a lifetime subscription. It doesn't have to be meat and a specific butcher. It's just like, the point is that that wasn't possible on a fiat standard, but it is on a Bitcoin standard.

Stephan: Yeah, I guess part of it comes down to I mean, yes, you could look at things like even, let's say, the life insurance model, right? They look at this kind of actuarial tables and understanding, oh, okay, you're this age, you are a non smoker, non drinker, blah blah blah, whatever, and we expect your life to be, you know, 30 more years or whatever. You know, yeah, there are business models that work around that kind of thing, sort of. I mean, even there, there's like life insurance premiums that you pay, right? So, I'm not as sure that we can just assume that [00:56:00] it's going to go in the direction you're saying. Like, I think there's just going to be a wide range of monetization models.

Some of that will be subscription based, some of that will be one time based, some of that will be subscription based. You know, just one time services, and I think the net number of services and firms that are existing might grow, and on that basis, it might be less consumerist, but still a lot of transactions, is how I'm seeing it.

Like, I'm just saying, it's not necessarily going to play that way, is how I'm seeing it.

Knut: Yeah, I think we have almost the same view on this. It's just that I love devils advocating stuff.

Stephan: Right.

Knut: But, but, uh, yeah, so speaking of life insurance, like having those 10 bitcoins that you were about to give to the butcher is like the best life insurance ever anyway. So don't pay life insurance with bitcoin, that's stupid.

Stephan: Yeah, I mean, to some extent, it's like, what's financially optimal, at least, Now, here in early 2024, for many people, at least financially, is HODL bitcoin and rent everything [00:57:00] else. That seems to just be the, you know, because if you buy stuff and you're, again, you're like us, you think bitcoin is going to, you know, however many million dollars per coin in today's fiat terms. Then, it just rarely makes sense to actually buy things, um, but, I mean, you have to trade off, I mean, to some extent, you might say, well, look, I gotta own a house to raise my family, or, you know, certain things, it just makes sense to own, but, yeah, it kind of raises these kind of crazy questions of, like, should you just hodl bitcoin and rent everything else, or what things should you pay the price now to own it?

Knut: I mean, you're a lot younger than I am, and so is Luke, by the way, and so like, you were in a different stage of your life when you, when you found this thing, and like, had a, I mean, I, I was in, I already had a family, already had a house with a mortgage and all this, in the hamster's wheel doing the fiat carrier bullshit, so, and, and I know that Uh, it's, [00:58:00] it's trickier to get out of that position, not only physically, but mentally as well.

I mean, most people don't, don't become crazy Bitcoiners, like, especially if, if they're halfway in a upper ladder, they, they didn't choose. so, so yeah, but for the younger generation, I would definitely recommend like renting everything and keeping your stack as long as you can manage your stack, because that's.

Uh, in all likelihood it's gonna outperform everything else. Like, why wouldn't it?

Stephan: Yeah, it's a hard thing, because, uh, there's a lot of people out there who have And it feels crushing for them. But on one angle, you could sort of say, yeah, look, let me try and hodl as much Bitcoin as I can. Uh, and over time, the debt jubilee, the quote unquote debt jubilee of fiat getting inflated away, if you can survive it, right?

That's the important proviso, right? Because if you take out too much debt and you can't [00:59:00] sustain it, you could get wrecked. Right, you could get wrecked because maybe you lose your job and you can't, you can no longer make the house payments or you, you know, various, various situations could happen but depending on the type of debt, depending on the amount of that debt, depending on your income, how safe you are about it or how stable you believe your income is, there's, there are different scenarios that people could see that it makes sense to sort of retain some of that debt just because It acts almost like a short on fiat in a way, like as someone like Lynn Alden might say, and that's paradoxical, but in the fiat age we live in for the last 40, 50 years or so, it has sort of made sense, now I'm going to be careful about this, I'm not saying plebs go out there and get in debt and, you know, get wrecked out there, but I'm saying, at the professional business level, it has professionally made sense to have some level of debt, because that's just how you kind of got ahead in the fiat standard. And, you know, [01:00:00] I am not endorsing that, obviously, but I'm just sort of trying to neutrally state the fact that that's, that's been, you know, the net effect of what the fiat standard has brought us. And if you were trying to do things just fully zero debt, it's like the equivalent of you're in the boxing ring and you're trying to fight with one arm tied behind your back. And there are other entrepreneurs out there who have access to the cheap. They have access to the printer and they've got this cheap credit and they can use it to quickly expand. They can maybe buy out their competitors. They can do all kinds of things. Maybe they can buy new machinery and beat you out because they've got a lower cost of production and they can beat you in the marketplace that way.

So I'm not endorsing going out there and, you know, going crazy with the debt, but I'm just recognizing it's created this perverse incentive. It's created this weird system that. Sometimes the irresponsible ones are the ones who got ahead because maybe they timed it and they got lucky with the cycle.

Maybe they were property flippers or they were, you know, doing kinds of crazy business acquisitions, but they kind of [01:01:00] got in and out before the bubble popped and now they are way richer. Because they played the Fiat Crazy Clown Show game better than the non debt user person, and so that can be a hard question, especially if for, you know, religious or cultural or just ethical reasons that you don't want to partake in the debt System, the debt, you know, debacle. But, uh, you know, that's, that's the world we're in. And so we're effectively trying to, you know, we're in the boxing ring trying to fight with one arm behind our back. To be fair, if you are orange peeled and you're coddling bitcoin, then you have the advantage longer term.

Knut: No, that's the world everyone else is in. We're in the Bitcoin world. No,

Stephan: for a while, yeah. But I think that's maybe the journey for somebody who's new to this is gonna look at that and be like, oh man, I don't want to leave the fiat standard. I've got all this cheap credit. It's quote unquote working well for me, at least they might think it is, even if it's not really.

Knut: and sadly enough, [01:02:00] like, taking on debt is inevitably how you win fiat. Like, the system itself leads, inevitably leads to that. I truly believe that. That there's no way you can have fiat money without debt being, like, the biggest part of the economy at some point. Like, it,

Stephan: Yeah, the incentive just pushes you that way,

Knut: Yeah. Yeah. And you know, everything else, but money becomes money. Like houses is

Stephan: right,

Knut: easiest.

Stephan: stock market, bonds. You know, some of these things just get out of reach, and that's what we're seeing in many parts of the world. We're seeing this, especially in the big cities, the big, big world cities like New York and London and even, you know, Sydney and Vancouver and Toronto and Hong Kong.

These have these crazy property bubbles because everyone's using housing as their savings. And they just lever up. And so then it just goes

out

Knut: inevitably it crashes at some point as well.

Stephan: Right, but every now and then, because the political system is so aligned to this, they don't want to let the bubble [01:03:00] pop. They can't. They can't politically afford to let it pop, so they just want to keep kicking the can.

And that's where, you know, I think we sort of go back and forth because there are some, you know, macro talking heads who are like, oh, it's all gonna collapse. And then on the other hand, you have people who are saying, yeah, look, it's not good. But the authorities and the powers that be will just muddle through, as they have, right?

They've kicked the can, they're just gonna keep kicking the can. They'll try to do it as long as they can. They'll try to stave it off, and look, communism took six, well, seven decades to fall. How long can they sustain the fiat system and just keep muddling along, um, rather than there being a big crash?

The Sustainability of the Fiat System

Knut: Yeah. That's why I like the, uh, the analogy of rolling the snowball down the hill better than kicking the can down the road because like the can doesn't grow bigger , but the snowball does.

Stephan: the situation gets worse and worse and worse, but we don't, we still don't know, even with that in mind, we don't know how many more cycles, how many go rounds they can do, right? Like, they, they did it at the GFC, they, you know, they pumped up this everything bubble, who knows, we had this corona, kind of, you know, corona tyranny, [01:04:00] COVID tyranny bubble, I should say, not actually COVID, um, but because of that, they pumped it up again, and who's to say, like, what if Trump gets in and they pump it again?

Like, we don't know.

Knut: No, so, so, so let me pick your brain on if you agree with this perspective, like, from decade to decade, like, the reason it didn't crash in the 2000s or whatever, or the reason it didn't crash more than it did in 2008, is because of the increased productivity as a result of Technical improvements, like as, as long as you know, technical improvements and production costs can go down faster, then they can, uh, you know, uh, print the money to destroy the value.

And the, the thing we might see now that, that may sustain the current system for another decade or two is probably the AI revolution. And that's that making everything easier and everything less costly in, in actual terms for people. Like, is that the thing that is gonna save it?

Stephan: Yeah, hard to say, to be honest. I, [01:05:00] okay, so there's different actual theories I've seen. Someone like Stephan Kinsella has spoken about how, you know, maybe it's that, you know, fractional reserve banking is obviously bad for the economy, and it causes all this economic instability, and yet the economy is still so productive, even despite this. That we've just managed to do well, quote unquote, well, at least it hasn't all totally blown up in our faces, uh, and then you've got other people who might argue, you know, more like a WTF happened in 1971 view that, oh look, uh, the productivity and wages haven't kept up, right? That's kind of one argument, but other Epstein, I did an episode about this as well, argue that No, actually, that graph, that divergence, is caused by using two different, uh, inflation metrics.

And once you align everything in nominal terms, it actually does align roughly in terms of productivity and wages, uh, and so we could still make the argument though that the Cantillon effect is still there. Like, even if the productivity growth is kept in line [01:06:00] with, um, wages. You could still argue that the Cantillon effect and the inherent injustice of the system that the, you know, the Jamie Dimonds of the world and the people who get the cheap credit, i.

1. government, and those people who are closest to the monetary spigot, they are benefiting at the expense of everybody else, because they can benefit Accumulate real goods. Uh, and every now and then when we have a crash, a whole bunch of people get wrecked and guess who gets to buy up housing on the cheap, right?

The likes of the Black Rocks and these other, you know, big investment firms who can sort of pick up the, pick up. Everything that's happening is happening. I mean, we're talking about physical goods on the cheap every time there's a crash and people get, you know, laid off or lose their jobs and they can no longer afford to make the payments on the house.

Therefore, there's like an appraisal, you know, there's a, um, what's the word? Foreclosure on the house. And so it's kind of difficult to disentangle these factors. I think it is fair to say we've seen all this productivity come in the world of. Computing and the internet and so on, and that has made [01:07:00] us richer in, in that limited sense, right?

Obviously, people can make arguments about, uh, streaming and, uh, how good our smartphones are compared to, you know, 20 years ago when smartphones were not a thing. And so, there's some element, there's some element of truth to that, and I think here's the other element I would, here's the other point I would make. I think we've, we've, we've been living through this kind of malinvestment, and it's not just at the firm level, it's at individual levels. So put it this way, we've been living beyond our means. There are more people who think, put it this way, they think they can afford to live out on their own, get their own apartment, when Actually, being financially sustainable meant actually living with the extended family, right?

Those people shouldn't have been out living on their own because it's just the cheap credit economy that drove all these jobs that made them think, yeah, I can afford to live out on my own, or I can afford to do all these crazy. So, there's a lot of people who are doing all these different things, but that was kind of a fiat credit phenomenon.

And that actually, now that things are coming back to you know, [01:08:00] every now and again when the crashing is happening and it's sort of coming back to monetary reality, people are realizing, oh, wait a sec, my job is not worth that much, or I just got laid off from my big tech job, but now I can't afford to go out and live in my own fancy apartment. Living with my family or instead of living on my own, there was an incentive to actually, you know, get married and be in a family unit because you can save costs that way, and that there was actually an economic incentive to have a family, or be a part of a family as opposed to. The Big Daddy Welfare State, or Big Mama Welfare Statism, um, that was enabled by fiat credit.

And so, you could argue that we've been living a lie, right? We've, a lot of people have been living a lie, they're living beyond their means, and it's fiat that made them live a lie. It

Knut: Yeah, yeah, we're all living in a lie to a certain extent, uh, I mean,

from a pure, like, Austrian economics, praxeology, ethics perspective, like, that you're, or from a, you shall [01:09:00] not steal perspective, if you wish, then we're all living in a lie because we're, we're categorizing some types of theft differently than other, than others, uh, as long as it's the government, it's somehow okay, and, uh, That's just, from a very, very basic notion of ethics, like kids fighting at the playground over a stick or something, you know that taking other people's stuff is wrong, like, whenever Whatever shape or form it takes, it's, it's just not going to lead to better outcomes than if people could do things voluntarily and with consent.

Uh, so, so I think there's a very, uh, and when, when you do the deep dive, when you, when you see all the, the effects this theft has on, on interventionism in markets have on, on like, Handicapping the thing that ought to be there, [01:10:00] the tide that raises all boats, um, then it becomes really vulgar that people are doing it at all, um, I mean that's, that's how I view,

Libertarianism and Terminology

Knut: like, you called yourself both a libertarian and an anarcho capitalist here before, I don't know, like, the, the, the wordings for these things are, are so, I You know, words change meaning over time and they get hijacked by, by difficult, uh, different political forces.

I mean, progressive, that doesn't mean progressive at all. It means lefty and, uh, and also like liberal means left hard as well. Uh, when, when the, the original meaning of the word was something completely different than what it is now.

Stephan: liberal, like a Mises, like Mises was a classical liberal, whereas in the American context, liberal means like lefty today,

Knut: Yeah. Yeah. So, so, so I would say like the, the, the thing I'd like to call myself as a consensual list, uh, first and foremost, and that's like the, the politically, I want as many [01:11:00] interactions between people to be voluntary and consensual as possible.

Stephan: So, maybe we have a slight disagreement here as well, like, let me explain how I'm seeing it. Like, I I mean, the way I'm seeing it is libit, like, if you think about what libertarianism is, it is a specific theory of private property rights. It's, it's, it's not just property rights, like, even socialism has a property rights theory, it's just that the state owns the property rights, the meaning, the state is the controller or owner of the means of production.

That's the, you know, dictionary definition of socialism. In libertarianism, it's more about this idea of Lockean homesteading. This idea that you. Homestead, a piece of property by mixing your labour with that land, and then it becomes your land, and then the only way from then on that you should mix, or that it, uh, title should transfer is either voluntary contract, or maybe like a fraud sort of context, or um, you Yeah, I mean, that's generally, that's basically it.

Like, it should only, in a legitimate [01:12:00] sense, only be transferred at a, you know, uh, market contract agreed rate. Like, I'm selling it to you for, whatever, 0. 2 of a bitcoin or whatever, right? Um, but, the point where maybe I, sort of, let me explain it this way, politically, I'm libertarian, but I believe, going forward in the future, there may be a role for social and cultural, let's say, restraints on our behavior, right? So, at the political level, I'm a libertarian, but I can still see a role for, you know, a family leader, the patriarch, let's say. I can see a role for, like, in the family context. He's not quite, um, culturally, I guess, libertarian in the sense of, oh, just do whatever you want. He's more like, no, there's certain things that I need to set down rules for my family, especially for the children, to make sure that they don't go and hurt themselves or do certain things, that I still see a role for that, or I still see a role for, let's say, certain social [01:13:00] Norms, let's say, that even if they are consensual, that they might still be a bad thing, or that they, there should be certain forms of social stigma or control, even if it's not illegal at the political level or the legal level.

You get what I'm saying? Like, I don't know, as an example, let me just make a quick example, it might be like, in the same way that Ron Paul would be anti the war on drugs, But he would still be, let's say, at a personal level, anti drugs. Right? He wouldn't want people to go and do those drugs, but he would still not see a role for the state to get involved.

I would say I'm sort of a similar in that sense, that I have some elements of cultural conservatives, cultural conservatism, but at the political level I'm libertarian. That's kind of how I would explain

Knut: Did, did you see a South Park episode called the Death Camp of Tolerance?

Stephan: No, I haven't

seen

Knut: it's brilliant because like, uh, Mr. Garrison, uh, realizes that the, the, there's a teacher that sued the school for a million dollars because they, he got fired for being gay. [01:14:00] So he's, he's trying to get fired for being gay. So he is being as, as , you know.

Provocatively gay as possible throughout the episode. And the whole episode is about, like, uh, Accepting, tolerating is not the same as, you know, accepting. And tolerating is not the same thing as agreeing with. And I'm totally with you there, like, I'm against the war on drugs, but I don't want my kids to take a bunch of drugs, like, it's pretty easy.

Um, I just don't think, yeah, and Who, who was that who said like, uh, be a communist with your family, a socialist

Stephan: That was Taleb, actually. That was Nassim Taleb, yeah.

Knut: it was.

Stephan: Yeah.

Knut: Yeah, even a blind hen can find a golden pebble. Uh, I mean,

Stephan: Yeah. So yeah, so that's why I, I guess put it this way, I, I, I prefer the term libertarian because it's more specifically about what should happen at the political and private property rights level, whereas the term consensualist to me can sort of mean like, oh, as long as any two parties are consensing, [01:15:00] like, it should be sort of morally supported, whereas like I wouldn't. I wouldn't legally say you shouldn't do that, but it might be, there might be areas where I might criticize at a social layer,

Knut: yeah, yeah,

Stephan: You get what I'm saying? So, in that sense, and that's, and that's where I just want to make this quick point as well, because people confuse libertarianism with libertinism, right?

This kind of idea of, you know, hedonism and libertinism and, oh, you're against the war on drugs, you should, we should all be, everyone should just go and have, take drugs and whatever. It's like, no. I'm a libertarian, I'm not necessarily a hedonist or a libertinist. That's kind of how I would

explain that.

Knut: It's a big pile gangbang where everyone's on heroin. Like, that's not

Stephan: Right, it might be consensual, but I might still judge that as, hey, that's degenerate,

Knut: Okay, you guys go ahead and do that if you want to, but I'm not going to participate.

Stephan: Right, or even, even stronger, that there may be a role for some kind of social You know, like, hey, that's wrong, that, uh, you know, and maybe, you know what, maybe in the future, there may be certain [01:16:00] citadels where that is against the rules, right?

Maybe it's like, hey, you're opting into this citadel, and we have rules about, like, no drugs or whatever, um, you know, maybe, maybe there is a role for that in the future, and it, like, let's say it's opt in and it's kind of upfront, you know?

Knut: The thing, like, back to Devil's Advocate again, because I love it. So, the thing, when I hear the word political, to me it sounds like, uh, you're coming from a place where you see this as possible to be implemented politically. And Argentina might be the first example of that, that it actually, uh, a libertarian actually wanted an election for once.

But I think that elections themselves are sort of a lefty thing, and that they're sort of, the game is sort of rigged long term to favor people who care more about belonging to a group than, than about individual property rights.

Stephan: Oh, I mean, look, I fully agree with the Hans Hermann Hoppe view about monarchy being better than democracy, right, so [01:17:00] I'm, I'm with you there about democracy being a dumb system, uh, and basically just being a soft form of socialism, but at the same time, as a pragmatic thing. It's still worthwhile supporting Libertarian political parties, in my view, right?

Like, I, I'm, you know, now, I'm, I don't live in Australia anymore, um, but if I did, I would have no opposition with, you know, voting for the Libertarian party, because, and I guess one important nuance is, in Australia, voting is compulsory, and so, um, so, yeah, I mean, now, uh, you know, there are some people who go and just spoil their ballot, and historically, I, I did do that a few times in Australia, when there was just, like, not even a Libertarian candidate, but, Um, like intentionally just kind of spoiling the ballot and making like a, an invalid vote because I, you know, philosophically thought, you know, but nowadays. I see a role for pragmatism as well in that, yes, I can believe that philosophically anarcho capitalism would be, you know, the, you know, the approach, or the best approach, or the least [01:18:00] bad approach. I still see a role for pragmatically sort of pushing towards that direction, and so for that reason, I'm still okay with some forms of Political, you know, action to try to reduce the role of the state.

And so I would say, as long as you're trying to reduce the role of the state, as long as you're trying to lower the taxes, less of the, decrease the regulation, decrease the size of the state, I believe it's defensible from a libertarian perspective.

Knut: So you don't think you're just wasting your time if you're participating in the system at all? Isn't it a better statement to just go be a bitcoiner?

Stephan: So I think yes and no, like I don't. I don't fully, I don't really agree with that. Like, I think it's like a saying, um, if you're not at the table, you're on the menu, or the other one is, um, you know, just because you're not interested in politics doesn't mean politics is not interested in you, right? Like, we can try to sort of, you know, uh, go away and opt out and do our own thing, and I believe monetarily and financially you should do that, but I think [01:19:00] politically, you're just leaving, you're vacating the, you're vacating the turf for the opposing side. And if you're not even taking part in that conversation, they're just going to come after you and they're just going to steal your stuff. And so, now, I'm, let's say, uh, I'm pro a bunch of different things. Obviously, Bitcoin, the most important thing. But there's a whole bunch of other strategies that I believe will help, right?

So, as you and I know, the Free Private Cities, yeah? Like, obviously, you and I are both ambassadors of that with the Free Private Cities Foundation or the Free Cities Foundation.

Knut: check it out, and brush your teeth, and subscribe, and like, and all that.

Stephan: Yeah, yeah, so yeah, free, yeah, and uh, the Liberty in Our Lifetime conference is there, so that's a great one, so I'm obviously a fan of that, I believe the flag theory, people who are kind of doing citizenships and residencies overseas and things like that, you know, I spoke at Nomad Capitalist Live last year in Malaysia, um, as an example, um, I'm also in favour of the secessionist movement, so things like Texas and Texit, trying to [01:20:00] leave the United States, or, or another example is the Free State Project in New Hampshire, in America, like I, I, obviously, I'm not American, I'm not gonna go live in America, but I kind of, philosophically, I like what they're doing, it's a, it's a good thing, there are more people pushing for that, so we should just be doing whatever we can to promote and win, like, I think, like, Javier Millet, he fought the cultural and social battle, right, he went on these TV shows, and he had this kind of, Persona, right?

He had this kind of personality about him, and he did what no other libertarian at that level has ever done, is to get elected to be the head of state, or the head of the government, so, you know, he was doing something right, I think, and look, there are obviously, there's lots of ways that things could go wrong there, uh, maybe libertarianism or on liberty, but you can't not try, right?

Like, you should at least try, and I believe pursuing all these approaches, whether it's Sort of, uh, voting for a libertarian candidate, doing, you know, even seasteading, free private cities, secession, bitcoin, [01:21:00] you know, all of them, I think, help each other. It all helps.

Knut: Absolutely, I think optionality is key here, like, fight for more optionality for as many people as possible. I, I'm totally on the Michael Malice side of this argument, like, in the, the white pill book about the Soviet Union and the, the East Bloc, like,

Stephan: haven't read that, but I've heard of it, yeah.

Knut: It's great. And he's, he's really hammering in the point that never lose hope.

Like when we lose hope, then they've won. Like if you, if you're not fighting back and if you're not taking the, taking the verbal and the physical, if needed, uh, battle, like,

Stephan: Yeah,

Knut: then you let them win. Yeah.

Stephan: gotta be repetitive, and I know that sounds boring for some people because they've heard the sound money case for the millionth time, but I'll tell you what, like I was saying earlier, in 2013, very few people even knew the term fiat money. Now a lot of people actually have heard the term fiat money, so, it's, we are making progress, it's just very slow, you gotta be, you just gotta keep repeating it, and [01:22:00] eventually, someone somewhere in the movement finds a way to break through, whether that's Javier Millet or Michael Saylor or someone, they find a way to break through, and that's why you've gotta just be repetitive.

Knut: Yeah. And luckily for the world, there's a bunch of dorks like us out there on the internet to do these things over and over again and liking it. Yeah. Yeah.

Next up WasabiWallet. The privacy by default, open source, non custodial Bitcoin wallet with CoinJoin built in. It's the easy to use, comprehensive, affordable way to make your coins private. And the best part is, they've been making huge improvements to the app.

They're really focusing on the user experience, adding advanced features for power users, they just keep getting better. You send your coins to your Wasabi wallet, and they get combined with loads of other coins using the Wabi Sabi protocol, so they're private on the other end. Your tracks are covered so you can work on expanding your Freedom Footprint without worrying about your privacy.

So, check out wasabiwallet. io and download Wasabi [01:23:00] today.

Our newest sponsor is Geyser. They are the portal to the creator economy on Bitcoin. On Geyser, creators can monetize their work through their communities in a social and engaging way. And supporters can send sats to their favorite projects. Geyser has also recently integrated with Zapps and Podcasting 2.

1. So every Zapp sent to a Geyser address shows up on the Geyser page. We have a Geyser fund ourselves. It's the best way to support our show directly with Bitcoin. So whether you're a creator or a supporter, check out geyser at geyser. fund today.

Ordinal Situation

Stephan: Oh, I guess we should talk about the ordinal stuff as well, like, my view on that, um, I would just, I would summarize it like, I, obviously, I agree that it's spam, especially the BRC20 stuff, I am just, I've sort of gone back and forth on whether filtering is going to work though. That's probably where I kind of disagree, like, I like what the ocean mining team are doing, I'm in favor of having Stratov2 and Lightning Payouts and the stuff they're doing in [01:24:00] general, and offering different templates to, uh, miners out there, I'm just not. Sold on the idea of introducing filters at the node mempool level that that will be successful because I just see it like these spammers, these BRC20 people, they are very high time preference, right? Because if you look at how, what some of them are doing, they've got this, they've got this deploy transaction and then they've got the mint transaction.

So what's happening is it's like a decentralized mint. So all these people want to mint. And because of that, they're extremely high time preference. They're willing to pay. To get into the next block. So, I don't know that filtering at the node mempool level will really achieve much, because guess what?

They're just going to go to the miners and they're going to do an API call, and there are various exchanges and frontends and wallets that support these ordinal spammers. Anyway, so even if we run, even if you and I run Ordis, Prospector, or these different things and you support OrdOcean, I think they're going to find ways to get the transaction into each block, which will [01:25:00] happen at the consensus layer, not at the policy layer.

And so, for that reason, I'm kind of, uh, I'm not as sold on the filtering model, or filtering thing. But that said, I do believe it's It could still be a fad, right? It could still be a fad that fades, and for that reason, I'm kind of like, uh, let's just wait it out and hope, uh, that it kind of goes away, and if not, well, the long term answer is to get more value density, right?

To do, like, to use lightning and other ways to make the monetary transactions out compete the spam. That's how I see it.

Knut: Yeah. And what constitutes a monetary transaction is somewhat, uh, subjective as well. Like, I mean, so, so, uh, yeah, it's a, it's a tough one. I think, uh, oceans, uh, I, I don't want to put words in his mouth, but from what we got from Mechanic, I think ocean strategy is not like I'm not trying to make everyone do that, but more like that, uh, this view that miners aren't [01:26:00] really miners anymore, they're just hashers, and the mining pool is the real miner.

So if you're a hasher, that is someone with an ASIC connected to a mining pool, Maybe you should consider connecting to a different mining pool because they might not agree with your views on Bitcoin. And I think hashers should do that. Like, uh, so if you're a hasher and you're listening to this, look into this thing and, and consider switching from F2 pool or ant pool or brains or whatever to ocean.

Luke: Especially Luxor, we don't like them.

Knut: if you say so, you're the security expert. Um, so, uh, Yeah, and, but I've been, I've been thinking of ways of framing this to normies and ways of, of, because it's hard to explain to someone who's not in Bitcoin, right, what, what the hell this thing is.

Stephan: the other problem. It's like a collective action problem, and I just don't believe we sort of have the [01:27:00] numbers to be able to actually properly stop this thing. And so I, I am sympathetic, I wish we could, I just don't believe we can. And, uh, yeah, that's kind of where I'm at.

Knut: Yeah, so, so, but, but when I try to explain it to people, uh, anyway, I say like, all data can be copied, a satoshi cannot be copied, a satoshi doesn't even exist, but it sort of does, but it's in people's heads because it's a secret we keep from one another, and it gives us the power to alter bitcoin in a very specific way, like that's what the satoshi is, it's something that can't be copied, so owning it.

Uh, a specific satoshi and some arbitrary data connected to it is like naming a star in the Andromeda galaxy. And the, the miners are akin to like people working in an observatory and you're forcing them to spend their time, uh, naming this specific star in the Andromeda galaxy instead of like observing, like, background microwave [01:28:00] radiation or whatever else they were doing that was more

Stephan: but I would say at this point the problem is not that we disagree about this Ordinal's, like, overlay or lens. It's that a lot of other people like that lens of viewing Bitcoin, right? I disagree with it, but that's what they're doing. And we can't, whether we like that or not, we can't stop those other people having that external view. of the blockchain that they do this or that they that they are Liveraging as part of the ordinals protocol.

Knut: But the problem is that it's, it's not a difference of opinion. It's just, it's not a different view. It's just a misinterpretation of what the, the, the time chain actually does.

Stephan: They are imposing an external view, right? Like it's it's like a subjective lens that they've all opted into. I don't agree with it. But that's that's what they've that's what they've done. And so I don't I, I, I'm not as kind of, like, I don't think we have like an objective way to say, nah, that's not really the reality, because they, they, it is a made up scheme, like, as Casey [01:29:00] Radama admitted on my show when I interviewed him about Ordinals, it is a made up lens, it's a made up scheme.

It's just that all these people have opted into it. And so, when all these other people have opted into it, how can we realistically be like, Oh, no, they admit it's a made up scheme. They just choose to opt into viewing it that way, regardless of those of us who do not care about that scheme,

you know?

Knut: yeah. So, so, is education key, then? Like, to educate people about this? Or will they ever learn?

Stephan: I think, I believe they'll probably run out under their own steam anyway, um, and so it's probably a passing fad. Now, I could be wrong, maybe it does last, and so be it, I mean, I can't stop them. I mean, that's part of the, that's part of the reality, right? Like, if you look, if you talk to some of the, you know, very well technical people in the space, people like Andrew Polstra, Peter Woller, various others, They've sort of commented that, yeah, we don't see a principled way to stop this or [01:30:00] everything you try to use to stop this thing might end up hurting Bitcoin or genuine Bitcoin users.

And so that's why I'm sort of, uh, I'm, I'm at a bit of a, I'm at a position where I don't necessarily believe the filtering. would work and that it might end up shooting ourselves in the foot longer term. And so that's why I don't take as kind of a hardline pro filtering stance as others do. I mean, I like Giacomo and I, you know, I like what the Ocean team are doing.

I just don't think the filtering approach will work. That's kind of bottom line for me.

Knut: Yeah, it's, it's very tricky. Um, I had something on my tongue here. Um, what was that? Um

CTV Proposal

Luke: Okay, I'll step in since Knut is here. Uh, so, so, and, and I'm going to take us in another direction because your, your, uh, your talk about this whole, uh, Ordinals thing, hopefully it doesn't push us too far because I know we do have to wrap up soon ish. Uh, you, you had a great conversation about the whole [01:31:00] CTV.

Thing. And, uh, what, what's going on, uh, with this, and, and this is just another big thing in the, the space, and so can, can you quickly, uh, give us a tldr r on your position on the, the CTV thing after you've, you've had some in-depth discussion on that.

Stephan: Yeah. So I would say I'm. I'm pro CTV, I'm pro, uh, I've seen a proposal called LNHance by Brandon Black, and that would be CTV plus Chexsig from Stack plus InternalKey, um, but I, I believe,

Knut: You need to give our listeners a TLDR on those abbreviations, I

Luke: Yeah. Like, like what does it actually do? What, what? Like what do these things actually do? I think, I think that's something that a lot of people don't really get.

Stephan: right, I would say, um, my episodes with Brandon Black, uh, and another recent one with Stephen Roos, uh, probably best to explain that, but let me just give a kind of high level. So, the idea with CTV is, um, You're sort of, you [01:32:00] can set up a transaction, like a template of a transaction and hash that and sort of check the that.

It's like a new opcode in Bitcoin scripting that allows a new base level operation. And so many people might be like, Oh, well, uh, you know, that's like Is that a big change to Bitcoin? Well, the answer is no, it's actually a very, very minimal change to Bitcoin. It's not, it's, it's not, it's not on the same level as something like SegWit and Taproot.

It's a much smaller change, but this small change would enable much more scaling in terms of things like ARK or timeout trees or non interactive channels or various other scaling ideas. That could help us make Bitcoin accessible to more people in a self custody way. And so that's why I'm interested in the idea because with Bitcoin as it is today, the ballpark is somewhere between 10 million to 100 million people.

And if you really believe in Bitcoin for the world, then, you know, there's 8 billion people on Earth, there's probably another 300 million entities like companies and [01:33:00] things like that. So, we're talking less than 1 percent of the world who can actually self custody. And then that kind of raises the question, well, will that end up with Bitcoin being centralised, or will that end up with challenging the 21 million limit if there's all this fractional reserve?

I mean, it's an open question, I don't know for sure. Uh, I think we're probably okay, even with no further changes, but I would prefer to make it safer, and if we can use So techniques like covenants that enable more self custodial scaling, then I think it's worth considering and it's worth being open minded to those ideas. And so CTV has been around for like four or five years. I think most of the, there's no, as far as I can tell, there's no serious technical developer objection to this thing. The code has mostly stayed the same for that long and people haven't found bugs in it, despite there being bug bounty for people. Um, I mean there were like one or two small things that got changed but not like consequential or [01:34:00] saying like this is a big risk. Um, so, that's why I would like for more people to consider the idea, but, you know, like I said before, don't trust people just because they're bitcoiners, right? You have to try and do your own reading, understand it to the level that you can, listen to the arguments for and against, try and read the BIP, read the code, try and understand a little bit about it. Yeah, I believe that it would help scale self custodial Bitcoin use, and that that would be a good thing for the world.

Knut: Wasn't this also about like shitcoining on Bitcoin and smart contracts on the blockchain and stuff like that?

Stephan: Not really, I think that's um, I think this is more like enabling new forms of layer 2 scaling. So as a quick example, even to enable Lightning, we needed this thing called Check Sequence Verify, right? It's known as a relative time lock, and not going too deep into the detail, and I wouldn't be able to explain it to that, to that level, but The short version of it is when you route things over the Lightning Network, you are using a [01:35:00] relative time lock to make sure that the routing person is kind of making sure he's got the coins, received the coins from upstream before he releases that HTLC downstream.

And part of what's achieving that is this relative time lock. And so without this little fundamental building block, it's going to be hard to find other ways to make non custodial scaling of Bitcoin happen. And that's why CTV is like this very, very minimal change. And this particular LN hands proposal is something that would enable some of these CTV use cases and also LN symmetry, which is a big, um, improvement for the Lightning Network.

It's like, uh, something that would make backups a lot easier, make, you know, the use of the Lightning Network a lot better. And so It could also potentially, in the future, it's not 100 percent certain, but it could potentially enable this kind of multi party channel vision. So instead of like a two party channel, we could have like a five party channel, or a ten party channel, or more, potentially. And so, obviously there's more research and development needed [01:36:00] around these things, but I believe that is a pathway to go to increase the number of self custodial Bitcoin users. Uh, and so, that's Why I think it's worth looking into and reading a bit about it and just hear, at least hear, hear out some of the arguments for and against, even if you're against it.

Knut: All right, we're gonna have to listen to those episodes, Luke, and can we put them in the show notes, maybe? Maybe you can send us the links afterwards, Stephan.

Ordinals As An Attack

Knut: Uh, yeah, I just remember what my last Ordinals question was. If the, if this is an attack, like, uh, and if the attacker has a money printer, is this, is this a real threat to Bitcoin?

If, if the whole BRC20 token and JPEGs on the blockchain stuff is someone with a money printer funding wizard people to, to, to, to clog the thing, is this, is this an attack vector to be reckoned with?

Stephan: My view on this, and I've spoken to a few developers, it's, I see it as, you could argue that, [01:37:00] okay, the UTXO bloat is bad and maybe there's some incremental chain bloat in terms of running a node and things like that, but I don't view it as a systemic issue, right? It's more like, it's like a light, you know, issue or like annoyance level, like, yeah, it's annoying. Yeah, you could argue that in certain contexts, okay, there's a slight monetary degrading because of, you know, the BRC, degen, spammers. But fundamentally, it's almost, the way I'm seeing it, it's like bite the bullet. Sometimes in life and in Bitcoin, we bite the bullet because trying to do something will end up being worse than just tolerating it.

And I think over time. These spammers, you know, it's probably a fad. So I think it's probably just going to go away on its own if we just let it. And remember, there have been fads that have come and gone too in the past. Satoshi Dice or Omni or I think Veriblock even was another one. So, you know, we've had spam attacks before.

We [01:38:00] may have, we may have spam attacks in the future, but I think the long term approach or answer is value density. Packing more into each transaction, whether that's using Lightning or other layer 2 ideas. to help enable monetary transactions to outcompete the ordinal inscription spam stuff, especially the BRC20 and STAMP stuff, but you know, that's how I currently see it, right?

I don't think it's currently a systemic issue for Bitcoin, um, Yeah, the question as to whether there are, you know, bad actors out there trying to spam the network. Remember, the network, you know, and Bitcoin Core developers, even in 2017, around the time of all the SegWit stuff, they were designing it in a very conservative way.

Like, it was designed in a conservative way. We're, we're within tolerances, I think. So, uh, I'm not like a super advanced technical developer, but this is what, this is the impression I get from talking to different [01:39:00] Bitcoin developers and people in the space, that it's not a systemic issue. It's kind of the bottom line.

Knut: So it's sort of like, uh, carbon emissions, like, uh, they're there, sure, but doing something about them forcefully is probably, is probably going to lead to worse results than just leaving them.

Stephan: Yeah, probably. And you know what? There are some people who take, I mean, on the carbon thing, there are some people who take a more hardline view of, hey, more carbon is better. Like, we should be doing more. So maybe it's even different to that. Um, but yeah, I, I am not so worried. I think we should just. Not worry about that and just worry about, uh, advancing, you know, Bitcoin adoption more broadly as a monetary and as a savings technology.

Increasing Freedom Footprint

Knut: All right, that leads us directly to the somewhat cringey final question. What are you doing to increase your freedom footprint, Stephan?

Stephan: I'm just trying to spread Bitcoin and liberty, uh, adoption awareness in whatever way I can and, uh, that's, you know, that's pretty much it. I mean, I'm just [01:40:00] trying to like, as I mentioned, there's a range of different strategies, right? Whether that's, you know, Bitcoin hodling, which is obviously the number one thing, but also maybe a little bit of flag theory aspects, right?

I, I left Australia because I believe, you know, high taxes and just overall woke socialist ideas in Australia were just too intolerable over time and Getting out and looking at opportunities overseas is something that you can do to increase your freedom and so that is something that I think more people should look at, right? Let me leave you with this example from The Sovereign Individual. Um, I can't remember the exact stat but I believe it was, um, if you saved 5, 000 every year in taxes and you could invest that at 10 percent every year, So let's say you did that for 40 years, right, and every year you saved 5, 000 in taxes, it ends up being like 21 million dollars or something, like 20 million dollars at the end of, you know, at the end of that 40 year period. [01:41:00] And it's just absolutely, uh, sorry, I think it's 5 million, um, but anyway, it's millions of dollars. However way you, whichever way you slice it, it's millions of dollars in fiat terms, and so getting more freedom, lowering your taxes, Can really make a big difference to your family future. And so that's one way to increase your freedom.

Knut: Fantastic! And, uh, yeah, thank you so much for doing this with us, and, uh, where can people find you online? Like, what are we looking for?

Stephan: So StephanLivera. com, StephanLivera on X, StephanLivera on YouTube. Basically, if you just search StephanLivera, people will find me there.

Knut: Yeah, you're not hard to find. All right,

Stephan: Right. Well, thanks for having me guys.

Knut: thank you!

Luke: Yep, thanks a lot. This has been the Freedom Footprint Show. Thanks for listening. [01:42:00]