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June 30, 2021 - Freedomain Radio - Stefan Molyneux
01:06:15
Bitcoin, Currencies, and Bubbles by Nassim Nicholas Taleb - A Response
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Hi everybody, this is Stefan Molyneux from Free Domain.
Hope you're doing well. So, we're going to take a little bit of a leisurely stroll through a very interesting document.
It's a draft paper that has just been released by Nicholas Nassim Taleb, who you may remember I had a few tangles with, quite a few tangles with on Twitter back in the day.
So he's released something.
It's a draft paper.
Maybe it will change over the course of its eventual publication, but we'll deal with it as it stands.
And it's called Bitcoin Currencies and Bubbles.
And it's come out of New York University.
Nassim Taleb actually wrote the foreword to the first edition of a pretty famous book called The Bitcoin Standard.
Has since gone 180.
He said, I think earlier this year, that he'd been selling his Bitcoin.
He'd been getting rid of his Bitcoin.
There are rumors, and I do have a tiny weakness of gossip, tiny, tiny weakness of gossip, but this change of heart...
That Taleb has had with regards to Bitcoin.
Some people are speculating it has more to do with a sort of personal feud or fallout between Taleb and Safedin Amus, who wrote the Bitcoin Standard.
And so maybe it's something to do with that.
Maybe he's got good reasons, but we will see.
So there's three arguments that Taleb puts forward in his paper.
One is that Bitcoin's value must be zero.
The second is that Bitcoin cannot be a currency.
And the third is that Bitcoin is not a hedge against inflation.
So he pushes back against the general narrative that a combination of libertarianism plus Austrian economics is one of the main drivers for the value perception of Bitcoin.
I'm not going to go through the whole paper in detail.
I will link to it below. Of course, well worth reading.
I think it's a very interesting set of arguments, and I really do enjoy these challenges, so I hope that you will enjoy it as I sort of pull this apart.
So, Taleb quotes the original white paper, which I actually read on the show many years ago.
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
So that is pretty wild when you think about it, of course, right?
A rough analogy is...
Email which goes from one person to another without going through the post office, like the monopoly government post office.
And a lot of Satoshi's original ideas behind Bitcoin came out of what he, I assume, perceived to be the corruption that was going on in the 07-08 financial crisis.
When all of these large financial institutions that were significantly corrupt in many areas ran to the government and threatened a basic shutdown of the entire financial system if they didn't get massive bailouts and protections and so on.
So there was this idea of like, is there any way we can do away with the middleman?
Like doing away with the middleman is really, really important.
You and I are having this conversation without a middleman, right?
I mean, the whole growth of the internet, the whole growth of my philosophy show had to do with not having a gatekeeper.
Because wherever you have...
You know, the spider, right?
The spider is like you've got the one body and you've got all the legs.
And if you want to get from one leg to another, you have to go through the body.
That central, the thorax, the torso, the body of the beast is the belly of the beast, right?
Wherever you have centralized control of human interactions, and you can think of places like Twitter and YouTube and so on.
Wherever you have centralized control of human interactions, power seekers, power mongers are going to gather...
To control those giant levers and allow or disallow conversations, right?
I mean, back in the day, you used to have these, you can see them in old movies and so on, these operators who would plug in and unplug people's particular conversations and so on.
So if you can eliminate the middleman, if you can eliminate the gatekeeper, if you can eliminate the body of the spider, so to speak, Then people can have conversations, they can have financial interactions, without going through a centralized hub, which is going to draw those obsessed with controlling others so that they can manage, de-platform, censor, kick off, and so on.
And so it's solving a central issue of human society.
We all recognize, of course, that power corrupts, power corrupts, power corrupts.
Everybody recognizes that.
And then it's weird, like, they just say that.
And then they just bounce around in this world like power doesn't corrupt.
Yeah, power totally corrupts, but let's give government control of the healthcare system.
Power totally corrupts, but what if we allowed governments to borrow and pretend they were adding economic value by pillaging from the next generation before they were even born?
Like we all know that power corrupts, and Bitcoin in particular is a solution to this question that power corrupts.
So I just wanted to point that out.
Now, what's interesting as well is that he quotes this peer-to-peer system that allows one party to inform another without going through a centralized institution.
And I assume that Nassim himself disseminated his paper, this draft paper, across the Internet without a central clearinghouse.
He didn't go through a central clearinghouse.
He put it on the Internet. Anyone can get it without going through a centralized area.
Some sort of centralized control group.
So you don't have to have a library card, you don't have to be a member of a faculty, you don't have to have some expensive membership in some academic website or whatever.
So he basically sent it out to the world without going through a centralized institution so that he could criticize electronic cash that wouldn't have a centralized institution, which is kind of funny, right?
So I'm going to assume that you have some knowledge.
I'm not going to go super technical, but some knowledge of the Bitcoin as a whole.
So some of the criticisms he has.
This is from his website.
The system establishes an adversarial collaboration.
Interesting phrase, right?
An adversarial collaboration between the so-called miners who validate transactions by getting them on a public ledger.
These get coins as reward plus a fee from the underlying transactions that is transfers of coins between parties.
Right, so you send a Bitcoin, the miners process the Bitcoin, and they shave a little bit off to keep for themselves, and so on.
The proof-of-work method has an adjustable degree of difficulty based on the speed of transactions, which aims, in theory, to keep the incentive sufficiently high for miners to keep operating the system, right?
So if there are lower transactions, you get higher fees in general, so you still have an incentive to do it, even if Bitcoin's kind of quiet on 2 o'clock in the morning in Hong Kong time or something, right?
Such adjustments lead to an exponential increase in computer power, making, at the time of writing, onerous energy demands on the system, energy that can find substitutes in other computational and scientific uses.
So I think it's a little hard.
His writing is kind of opaque.
And so I think what he's saying is that, yeah, it takes a lot of power to run Bitcoin, which is a nonsense.
If you look at...
National debts and deficits are spending in the here and now rather than the future, which of course causes a massive overstimulation of demand here and now.
Like if you go and borrow a million dollars and spend it now, you're stimulating a huge demand that's going to be paid for by lowered demand in the future.
So the current fiat currency system...
Massively stimulates energy consumption and production by creating a demand for excessive goods in the present at the expense, perhaps someday, of deficient goods down the road, right?
So you borrow a million dollars, you've got to pay it back, you're going to spend less in the future.
So that war, of course, is entirely enabled by fiat currency.
In fact, fiat currency was largely invented and adopted to deal with the problems of running out of gold in World War I.
World War I would have been over very quickly if countries had had to rely on the actual gold that they had in a gold-backed currency.
So they had to go off the gold standard so that they could print money, so they could continue the war and, I don't know, get another 8 million people or so slaughtered and destroy almost all the financial gains that the suffering of the Industrial Revolution had given to Western society.
So, you know, the idea that, well, Bitcoin uses energy, it's like, well, yeah, but governments use energy and fiat currency uses energy and war uses energy and deficit financing uses energy and so on.
So, I don't know. I just find that all...
And I think he's saying that it would be better if you could do other computational and scientific uses.
Okay, well, I don't really know what to say about that other than, I guess, the...
Coronavirus gain-of-function research.
Well, they're not going to sequence themselves.
Clearly, you've got to pull computers off of creating, liberating a currency for mankind and put it onto finding gain-of-function splicing points for COVID. Anyway, so, or for coronaviruses, bad coronaviruses.
So, for those of you who don't know, the miners and so on, the whole point of Bitcoin, or at least one of the central features of Bitcoin, is solving what's called the Byzantine general problem.
So, let's say, it's the Middle Ages, right?
You're surrounding a city, and you have 20 units surrounding the city.
Now, if they all attack at the same time, you win.
But you don't have phones, you don't have...
Carry pigeons that are very reliable.
So you've got to send messages.
You've got to send messages all around the city saying, you know, we attack at dawn tomorrow.
Now, if all of your 20 military units get the message and they all decide to attack at dawn tomorrow, You're good to go.
However, if some of them betray you, if the messengers betray you, if the messengers get caught and somebody says, we attack at dusk, not dawn, and that's knocking out some of the attacks and so on.
So how do you get coordination, which produces a positive outcome, in this case, taking the city?
How do you coordinate disparate groups?
A lack of coordination is disastrous.
Coordination beyond a certain amount.
I mean, if two or three of the 20 groups don't attack, you're still going to win.
And so they solved this with proof of work, with a consensus of 51% or two-thirds or whatever it is.
Is a transaction valid?
Well, it has to be validated by a variety of people and so on.
So that's the general idea behind it.
So an adversarial collaboration.
Again, that's such an interesting phrase.
I'd like it if he broke it out a little more.
I don't believe he deigned to.
So he goes on to say, Okay, that's a good description.
Good description, I think. And...
That's really, really important, I think, to understand the Bitcoin value proposition.
It's not just limited to Bitcoin, but this is papers about Bitcoin, so we'll stay focused on that.
Digital is so efficient, it's ridiculous.
You know, I mean, if I wanted to do a rebuttal and I'd have to fly places, we'd all have to gather together, I'd have to go door to door, hey, are you interested in Bitcoin or whatever, and have to give this speech.
So digital, like being able to send this out to hundreds of thousands of people, That's really, really cool.
And so, of course, one of the problems with digital, though, is that the value of each individual instance diminishes because there are so many copies of them, right?
I mean, if there was only one copy of a great song, then you'd have to pay a lot to listen to it, and you'd have to pass it around and so on.
But, of course, the songs can be copy-pasted, just like sort of fiat currency.
So, one thing that's hard for people to wrap their heads around is Bitcoin has the efficiency of digital.
You can just squirt it down the two pipes of the internet from end to end.
You can walk across the world with, you know, the phrase in your head and you can have access to your resources or your Bitcoins.
So, it has all of the crazy, ridiculous...
Efficiency of digital, but it has scarcity.
And that's a combination that is kind of unprecedented.
I mean, you have NFTs to some degree, but NFTs, you can at least look at them usually or have a view of them or whatever, right?
So, the efficiency of digital and the value of scarcity is really a wild combination, and it's taking a lot of people a lot of time to kind of get their heads around this, right?
So, yeah, bitcoins are capped, I think, 22 million, and there won't be any more, and so how do you make money off bitcoin after you have mined the last bitcoin?
Well, you get transaction fees for processing them, right?
Yeah, too. Bitcoin is a lot of resources, a lot of energy.
It's like, what do you think Visa runs on?
Hummingbird farts, my God.
Okay, so he says a central attribute is that Bitcoin depends on the existence of such miners for perpetuity.
Bitcoin depends on the existence of such miners for perpetuity.
I... I don't really know what to say about that, which is not, you know, maybe my limitation or whatever.
Fiat currencies require the existence of governments in perpetuity.
And if you know anything, and I'm sure that Nassim does, know about the history of fiat currencies, fiat currencies very rarely last.
I mean, there's only one that's lasted more than a couple hundred years, and that's the British pound still.
It's lasted for about 400 years, but it's lost 98% of its value.
So, fiat currencies have a pretty short shelf life.
You know, I'm sure everybody has that Austrian economist friend, I know I do, who's framed that trillion dollars, Zimbabwe dollar, from sort of back in the day.
Or you can look at the history of French currency, obviously Weimar Republic, German currency, Roman currency, how they corrupted all of that.
So, I mean, yes, when you have something that relies on something else, Yeah, I get that.
You know, a central attribute of us staying on the planet is that gravity exists in perpetuity.
A central attribute of fiat currency is that governments exist in perpetuity, which they don't.
They absolutely don't, right?
There are overthrows and collapses and cycles and fiat currencies and hyperinflation all the time.
So I don't really know what...
That, I mean, a central attribute of the value of Apple stock is that Apple exists for perpetuity.
I don't know what perpetuity means in this.
I mean, if you look at the Fortune 100 companies from 100 years ago, like five of them are left today.
Does that mean that there was no value in what came before?
Nobody should ever have bought those stocks?
What does that even mean?
Some horse and carriage business has been around for 200 years and has made people a lot of money, got people around and paid people bills and dividends and salaries and so on.
And the car comes along and maybe it shrinks, maybe it collapses.
What is that? Does that mean it's not valuable while it lasts?
For perpetuity, a central value, a central attribute of the internet is that it depends upon the existence of computers and servers and TCP, IP lines and all of that in perpetuity.
Well, yeah, I guess, sure.
I don't know that you're saying anything particularly important.
So, he says, the central attribute is that Bitcoin depends on the existence of such miners for perpetuity.
Yes, and the internet depends upon the existence of internet servers for perpetuity, and email depends upon the UK in perpetuity.
So what, right? If there's value, it will continue, right?
So, he goes on to say, note that the entire ideological basis behind Bitcoin is a complete distrust of other operators.
Now, when people say no to that, it usually is a way of vaulting over the absolute requirement or any requirement to make an actual argument, right?
Say no to that, it's like, well, no, you've got to prove that.
Because if you want to say the entire, entire, not just a bit, the entire biological basis, ideological basis behind Bitcoin is a complete distrust of other operators.
So you have to say, okay, is that the entire ideological basis?
No, no, it's not a complete distrust of other operators.
It's a complete distrust of coercive, violent, fascistic, centrally controlled organizations like central banking, right?
Like government-controlled and sponsored currency.
Type whatever you want into your own bank account.
Currency. So, yes, a distrust...
Of, you know, pillaging, coercive, because, you know, it's a violent, enforced monopoly, central banking, right?
So, it's, yeah, there is a complete distrust of the motives and moral value of coercive, centrally controlled government entities or agencies.
Not all other operators.
Not all other operators at all.
And also, you have to ask yourself, okay, compared to what?
Compared to what financial...
Are there any financial transactions where strangers have perfect trust in each other?
No. You have to agree to these end-user license agreements to start up your phone or to come into a website.
You have to accept cookies.
Wire transfers, you have to show proof of ID. You open a bank account, you have to do the same thing.
If you want a credit card, it's the same thing.
If you apply for a passport, they don't trust you.
If you're paying taxes, they don't trust you to pay taxes.
They enforce it. And you compare this to one of the things that was a big problem in the lead-up to the 07-08 financial crash, which was the liar's loans.
They were calls, right? You could just write whatever you wanted into your own income, and they didn't validate it, right?
So that was one of the reasons why, and there were particularly political and demographic reasons why that came about.
But compared to what?
Complete distrust of other operators.
I don't even know what that means.
I mean... I don't know what that means.
I don't know what that means.
When a website asks me for a password, it's like, hey, no, man, it's just me.
Of course they asked me for a password because they want to validate that it's me.
So you got a pin on your phone.
So does that mean you distrust her?
I don't know. It's just kind of weird.
A complete distrust of other operators.
Well, again, it's centralized, coercive institutions that Bitcoin is suspicious of.
I don't know what complete distrust and I don't know what entire ideological basis is, but it's not accurate.
It's not accurate. Okay.
So, he says, there are no partial custodians.
The system is fully distributed, though prone to concentration.
Furthermore, by the very nature of the blockchain, transactions are irreversible, no matter the reason.
It's fully distributed, absolutely.
There's no central power that can be corrupted that is in control of the currency.
There's no central power that can just decide to print money like crazy and thus steal, particularly from the poor through the hidden stealth theft of inflation.
There's no centralized power that can engage or enter into a contract on behalf of the unborn to steal their economic future.
There's no There's centralized coercive power that can print money at will and hand it out before an election to ensure it gets re-elected, right?
Yeah, there's no central power that can be corrupted.
I don't know how that's a bad thing.
That's the whole point behind it.
So there's no partial custodians, right?
So there's no escrow and so on.
So yes, human beings can't handle power.
And having the power over a multi-trillion dollar economy in a country, it's way too much power.
People cannot, they short-circuit, their moral fuses get blown, or anybody with a decent moral sense runs away from that kind of power, while people with no moral sense, or a moral sense only to manipulate and destroy, are drawn towards that kind of power.
And you can't solve that.
By saying, well, we just want nicer people to be in charge of the entire economy.
We'll just get nicer people who can't be corrupted in charge of the entire economy.
Come on, man. That's a pipe dream.
It's a complete fantasy, right? So this solves the problem of centralized coercive power.
And of course, so you say, oh, transactions are irreversible no matter the reason.
So if you send your...
Well, they are reversible to a large degree, right?
Because you can, you know, if somebody sends you coins by mistake, figures out who you are, says, hey, man, I sent the coins by mistake.
Can you send them back? Can you send them back?
I mean, that's effectively reversible.
So it's just that there's no centralized authority that can claw back transactions.
Whatever transaction has occurred.
And again, that's because the perception is, I'm talking about governments here more than private entities, but the perception is, and it's been borne out repeatedly, in fact, inevitably throughout history, the perception is that this is a power that corrupts people, and there's no way to solve it.
You know, wanting angels to be in charge of a system that only works for devils is the greatest fantasy of mankind, right?
So he says, okay, why is Bitcoin worth exactly zero?
He says, well, gold...
And other precious metals are largely maintenance free.
Do not degrade over a historic horizon and do not require maintenance to refresh their physical properties over time.
Yeah, I mean, that's true.
Sure. I mean, you put a gold ring in a drawer, you come back in 20 years, you've got a gold ring in a drawer.
So, you know, one of the things that's kind of dull, and I learned this many years ago, the great economist, I think it was the undercover economist, he was sort of pointing out, you know, he was reading some article which said, you know, you should always buy real estate.
You should never rent.
Because the money that you throw into renting, you just...
It's just gone. Whereas if you own the property, then, you know, it's yours and it's solid and it's tangible.
It's a real asset and so on, right?
And he was saying, you know, this is really boring.
It's a really boring and dull-witted analysis.
I'm not putting Taleb into this context.
I'm just telling you how I learned how to look at these things.
It's a very useful thing. So what you're doing when you say it's always better to buy than to rent is you're comparing all of the pluses.
Of buying to all of the minuses of renting, and you're not pretending there's anything else.
There's no other factor in the equation.
So, yes, if you rent, you put your money in, and you don't get to keep the property at the end, right?
I'll get that. Sure.
So what? To say that there's no benefits to renting is ridiculous.
So, I mean, to take an example, sort of relevant to this current conversation, let's say that you didn't put $50,000 down on a condo five years ago, but instead you put $50,000 into Bitcoin or some appreciating asset, right? Okay, well, that's pretty good, right?
And also, when you buy, you generally pay higher on a monthly cost, depending on your down payment, you pay higher on a monthly cost.
So, what if you took the money that you had because you didn't have to put a down payment down and you paid like $1,000 or $500 less a month.
Let's say you took that money and you started your own business and became a millionaire, right?
So was it better to rent or was it better to buy?
It doesn't like to take, well, all of the strengths of buying compared to all of the weaknesses of renting, it's like, that's not a rational analysis.
Let's say it's a salesman.
That's a con job.
It's, you know, that's manipulation.
There are advantages to renting.
You get a lot more money in your pocket and maybe you can use that money for other or better things.
There are advantages to buying, for sure.
You end up with an asset at the end of a long haul.
But comparing the strengths of one thing to all the weaknesses of the other, and I don't know, you have to have a multivariate analysis, right?
So you have to deal with the strengths and the weaknesses of the various systems.
So if you say, well...
Bitcoin is worse than gold because Bitcoin requires service and energy to maintain its value, whereas gold doesn't.
Okay, so that's one thing in the column of gold.
Yay! You're a genius.
You put one thing in the column of gold.
And of course there are columns.
Pluses in gold. There are tick boxes on the pluses of gold.
Absolutely. There are tick boxes.
Gold has multi-use, right?
Half of gold goes to jewelry.
10% goes to industrial manufacturing.
25% of gold goes to central bank.
Gold hoarding and so on, right?
So, yeah, there's dual use for gold.
Absolutely. Gold is a fixed thing that after you spend unbelievable amounts of energy getting this out of the ground, you know, I would be remiss if I didn't mention, you know, something I mentioned before on the show many times.
After high school, I spent a year to a year and a half Gold panning and prospecting and looking for a mine up in northern Ontario, northern Saskatchewan, northern Manitoba, and so on.
I'm telling you, man, that is some brutal, ugly, difficult, glorious work.
I love nature, so it wasn't too bad for me.
It's an unbelievable amount of work and labor to get gold out of the ground.
And so you've got one tick box for gold.
Fantastic. That's great, you know?
It's dual use. It's a fixed thing.
Once you get it out of the ground, it takes much less energy, I would argue, to create a Bitcoin than it does to create the equivalent in gold in terms of getting it out of the ground and purifying it and all that kind of stuff.
And the runoff is brutal for the environment for all of that stuff, whereas you can get a lot of the electricity that powers Bitcoin miners can come from clean energy sources and so on.
So yeah, I mean, the other thing too, bitcoins can't be faked, but gold can be faked, and it regularly is.
I'm not just talking like fool's gold, like pirate.
I mean, you can really fake, you can mix it down, you can have gold, high quality gold over lower quality interior, and entire businesses have been founded with a supposed gold as an asset that turns out to have been faked.
Gold is, of course, very hard and expensive to find gold.
The price of gold can be very unstable.
It's subject to market manipulation.
And, of course, Bitcoin is as well.
There's no way to know how much gold is on the market.
There's no way to know. You don't know how much is in the ground.
You don't know what's on its way. You don't know how much is in people's drawers, which might come out if the price of gold goes up and they sell it.
Whereas, of course, with Bitcoin, you can see How many Bitcoins are floating around very easily, right?
I mean, to the Satoshi level, right?
You know exactly how many Bitcoins there are out there.
So, if I were to say, well, you know, Bitcoin beats gold because you don't know how much gold is in circulation, but you absolutely know how many Bitcoins are in circulation, that would be a dumb analysis because I'd just be pointing one tick box on Bitcoin with one tick box not on gold, and...
It's a multivariant analysis.
There are pluses to gold.
There are pluses to Bitcoin.
If I were to say, well, Bitcoin beats gold because Bitcoin can be squirted from one end of the planet to the other with, you know, within 10 minutes for virtually no cost.
Whereas if you want to send, like, you can send a million dollars in Bitcoin like that.
But if you want to send a million dollars in gold, you've got to hire, like, armored trucks and security guards and secure transportation on the ocean and all of that.
And you could get stolen and it could, you know, could get damaged or whatever, a shift is shaved or whatever.
Well, then I would say, okay, well, here's a plus for Bitcoin and here's a minus for gold.
But the idea that you just come up with, here's all the strengths of gold and here's all the weaknesses of Bitcoin.
If that's the only decision you have to make, I don't know.
I don't fundamentally understand it.
And he's a very smart guy, without a doubt, right?
So I just sort of wanted to point that out.
So he says, cryptocurrencies require a sustained amount of interest in them.
Compared to what? Are you saying that if everybody woke up tomorrow and said, I don't like gold.
All the vaccines make people allergic to gold.
Whatever. I don't want gold.
I don't like gold. And they find some better way of using some made-up metal or some other metal other than gold for whatever they're doing in conductivity.
I guess it is in cell phones and computers and so on.
And central banks dump all of their gold and governments ban gold.
Okay, well, then the price of gold is going to collapse.
I mean, compared to what?
Cryptocurrencies require a sustained amount of interest in them.
Yes, that is true.
Compared to what? Compared to what?
A bestseller requires a sustained amount of purchase in order to remain a bestseller.
It's like, oh man, I'm an economic genius by coming up with that, right?
So, the question is the efficiency, right?
So, if you look at physical books versus...
ebooks or pdfs or websites, html or whatever, right?
Are there values to physical books?
Absolutely. Some people prefer to read them.
They can be easier to annotate sometimes.
They survive deplatforming in a way that, you know, you go to hoakstomovie.com and there were times where it was getting yanked from websites even after people had bought them.
And you should go to hoakstomovie.com, by the way, and watch the documentary.
It's fantastic. I'd pop up a little too.
So, yeah, is there value to physical books?
Absolutely. Is there value to books over the internet?
Absolutely. MP3s versus records, right?
The other thing too, of course, if you look at books, you buy a book, you stick it on the shelf, it doesn't require any additional electricity, I guess humidity, constant temperature, not too humid or whatever.
But, you know, putting all that aside for the sake of supporting Taleb's argument.
So, yeah, you get a book and...
You can just stick it on a shelf and you don't have to apply any more energy to it.
But, of course, to read a book on a computer, you've got to power the computer, you've got to have a server to download the book from, you've got a payment processor if you're buying it, and so on.
It's like, yeah, so when I was a DJ in college, I did...
I spun The Platters That Matters, right?
The Platters That Matters. Which was...
There was a huge library of...
33 RPM and a couple of 45s and a couple of 78s even.
But there was a huge library of records and you'd sort of go through and get the records, you'd queue it up and so on.
Now when you put all the music in the record sleeve, the sort of plastic discs, right, and you put them on the...
Yeah, you didn't need any more energy to maintain them, to create them.
Sorry, to create them takes energy to maintain them at zero.
Oh yes, I get that. So what?
So again, all you're saying is that physical books don't take any energy to maintain, but internet books do.
You're saying that physical records or audio records don't take any energy to maintain them, but MP3s do, right?
You've got to have power to play it and so on.
Although the records, you could say you have to have the power for the record player, but at least the records themselves, right?
PDFs versus paper.
I get all that.
So yeah, I mean, so what?
I mean, why would there be any interest in electronic books or music or PDFs?
Why would there be any interest in that if there weren't any advantages to these things?
And by not talking about the advantages...
Of the electronic distribution system, again, you're just comparing the strengths of one thing to all of the minuses of another thing and thinking that you've done anything other than completely skew and manipulate perspectives, right?
Electronic distribution is crazy efficient.
I mean, I remember going down to Queen Street in Toronto with my collection of albums I didn't listen to anymore and trading them in to get new albums that I wanted to listen to.
And... That was not very efficient.
Whereas if you've got some online subscription service for music, you can just sell, tell your phone, play this particular song.
You don't have to dig it out. You don't have to create a mixtape that eventually slows down.
So, yeah, I... I don't know.
I mean, it just...
Yeah. Gold self-maintains and cryptocurrencies require continual energy and so on.
I don't know. But there's value to it anyway, right?
So, I mean, it's sort of like saying, well, lifeboats you see are smaller and more subject to choppy weather than the Titanic.
It's like, well, sure. And that's why nobody gets into the lifeboats unless the Titanic is going down.
And nowhere present in this paper, and I read it pretty carefully a couple of times, but nowhere present that I could see is, okay, what's the shelf life of fiat currency?
The shelf life of fiat currency is 100, 200, 250 years max.
And what's the shelf life of fiat currency?
What are you going to do when the fiat currency runs out of value, as it historically always does?
Always does. Okay, so what are you going to do?
Because if people are edging towards lifeboats and you think that the ship is perfectly stable and it's going to make it from New York to London or wherever it was going, okay, then it looks great.
Why do people go into lifeboats?
They're small. There's not much food on them.
They're not comfortable. There's no band.
There's no covering. There's no heat.
There's no beds. Like, why on earth would you be going to these crazy lifeboats because it's so much more comfortable here on the ship?
And they're like, yeah, but the ship is now 20 degrees.
So we're going to get to the lifeboats, thank you very much, and saying, well, look, here are all the negatives of the lifeboats, and here are all the positives of the Titanic.
It's like, okay, well, if you think that the, you know, why would you run to Bitcoin if you think that fiat currency is going to maintain its value, is going to be a stable and predictable source of the comparison of relative worth or contributions to human values and so on?
Sure, why would you? Why would you?
I get that. Why would you go to a lifeboat if you think that the ship is perfectly stable?
You've got to be crazy to go to a lifeboat.
Hear all the negatives. However, the big negative on the Titanic is it's going down, baby!
It's going down. It's going under.
It's going to crack in two.
Guys are going to hit their heads on the propellers and then freeze to death.
So, without pointing that out, it just seems like a bit odd to me.
Or at least addressing the argument, which is that fiat currencies go to zero and we are in a situation of massive money creation.
And, you know, the MMT arguments, I'm aware of those, that that's simply shifting more resources to the private sector.
And I get all of that for sure. I mean, there's value in that stuff as well.
But, nonetheless, there is a significant amount of economic change going on at the moment, particularly with the money creation that's coming out under COVID. So, yeah, lifeboats are smaller and less stable than the Titanic, so why would you be there? It's like, well, if you think the Titanic's going to last forever, then it would be crazy to go to a lifeboat, right?
But Bitcoin right now is a bit of a lifeboat, right?
So he says, earnings-free assets are problematic.
He says the implication is that owing to the absence of any explicit yield benefiting the holder of Bitcoin, if we expect that at any point in the future the value will be zero when miners are extinct, the technology becomes obsolete.
Future generations get into other such assets and Bitcoin loses its appeal to them, then the value must be zero now.
So a yielding asset is something that, you know, you get dividends, you get something, your house is going to go up in value, so you're going to get some future accrual of value that's a dividend.
And now some are more specific, like stocks paying dividends and some are just like yields some value in the future.
So the basic argument seems to be, well, if a non-yielding asset has some chance to be worth zero in the future, then if we sort of work backwards through time, it must be worth zero now.
Which is a similar logic of saying, okay, well, if I'm dead in the future, I must be dead now.
Or if I'm bald in the future, I must be bald now.
Or whatever, like whatever you can, if my teeth are bad in the future, my teeth must be bad now.
I don't really think that makes much sense to me.
If people just lose interest in the internet or people don't want to invest in the internet, then Alphabet or Google, what are they worth, right?
If everybody just logs off Facebook and doesn't care about it anymore, what's Facebook worth, right?
right?
I mean, in the future, are we going to say that now Facebook or Google or Apple, they are going to have value for the rest of time?
They will, like the next, what is it, five billion years until the sun collapses or something?
Okay, so for the next five billion years, these relatively new companies are going to be valuable.
Nothing's going to change. You say, well, that's a pretty big speculation.
I'm sure that at some point over the next five billion years, these companies are going to go to zero.
The economy is going to change.
Some new technology is going to displace them.
There's going to be bad management. Something, right?
Something is probably going to go.
You know, there are companies like Eaton's in Canada that lasted for, I don't know, 200 years or something.
And then you just get a bunch of bad managers and it all goes boobs up, right?
So if we say, well, at some point over the next...
I know this is an argument from absurdity, but I think it's valuable too, right?
So is Apple, over the next five billion years, always going to retain some value?
Say, well, I wouldn't put any money on that, right?
I mean, I wouldn't. I would say, yeah, at some point over the next 5 billion years or 5 million years or 5,000 years or 500 years or whatever, maybe even 50 years, maybe it'll go to zero, right?
It happens, right? Computer companies go out of business.
So then if you say, okay, well, so at some point it's not going to be valuable in the future, therefore its true value, its final value is zero because it's going to zero, man.
It's going to zero. And because its final value is zero and it's going to zero, therefore its intrinsic value is zero.
And it must be worth zero now.
Because its true value, its eventual value, is zero.
If everybody loses interest, if nobody wants it, if nobody cares, if nobody...
It's going to go to zero, therefore it's zero now.
I don't know. I've got to tell you, I don't really know.
And it kind of jumps over bonds here, some of which are paying negative at the moment.
So... I don't know.
You could easily say to the argument, which is, you know, Bitcoin is new technology, which we'll get to in a second here.
But you could say about fiat currency, well, my gosh, fiat currency is, you know, all fiat currencies historically go to zero.
Don't you know? All fiat currencies historically go to zero.
Therefore, there must be zero now.
Therefore, you've got to get to Bitcoin.
You make that argument. I don't really think.
I may be reducing it to too much absurdity.
There may be some wrinkles there I'm not aware of.
I'm fully aware to be corrected on any of this stuff.
This is just my sort of thoughts, right?
So, you know, yeah, without a running network, with no miners, with nothing like that, then yeah, the value is zero.
But, you know, Bitcoin is a decentralized network that nobody needs permission to join.
So there's no single point of failure in all of that.
So as long as some people have some interest in running the network, they can do that.
Bitcoin is going to remain functional.
And so for Bitcoin to be worth zero, you'd have to have actually zero people interested in running the network.
It's pretty tough, right? So, and again, without the sort of shadow, the smorg-like shadow of troubles in fiat currency, which again, historically, there's thousands of years of history on fiat currency's Self-destructing, right?
Because, oh, Bitcoin's not based on anything.
Well, what is fiat currency based on?
It's fiat. It means it's by violent decree.
That's it, right? So it's sort of like saying, okay, so if the Titanic is going down and Bitcoin is the lifeboat, it's like saying, well, At some point in the future, people aren't going to want to be on those lifeboats anymore.
It's like, you okay?
Does that mean the lifeboats don't have any value?
It's like, well, you're going to step off that lifeboat and you're never going to want to get on a lifeboat again in the future.
Therefore, lifeboats have no value.
We're going to stay on the Titanic and drown and die, right?
It's like, I don't know.
It's just strange to me.
I could be missing something.
Very, very... Very obvious.
So, he says, Sure, but, you know, if you go to social media and you do a search for Taleb, you'll find, you know, tons of interviews and podcasts and video interviews and so on.
It's like, well, we don't know what the taste, interest, preferences of the future.
We don't know if YouTube servers are going to be around in 50 years.
We don't know if Facebook servers or Google servers are going to be around in 20 years or 50 years or 100 years.
Yet still, there's value in doing stuff in the here and now.
So saying we don't know what the future holds, therefore...
The present is worth zero would mean that he wouldn't be doing any of these things which are digital and require servers and require interest and all of that, right?
So, anyway, I don't know. It's strange.
So, he says, there is conflation between success for a digital currency which requires some stability and usability and speculative price appreciation.
Transactions in Bitcoin are considerably more expensive than wire transfers or other modes.
Or ones in other cryptocurrencies.
And order of magnitudes slower than standard commercial systems used by credit card companies.
Anecdotally, while you can instantly buy a cup of coffee with your cell phone, you would need to wait 10 minutes if you use Bitcoin.
That is true.
That is a fact. And...
Again, I hate to say I don't know what to say because it seems I just...
I don't know what to say. I mean, if you look at any technology 12 years into its inception, it's kind of primitive.
I mean, we'll get to the internet in a second here.
But okay, let's say that you can't ever solve this issue in Bitcoin.
That's fine. Let's say you can't ever solve it.
I mean, there's Lightning Network, there's transactional layers that go above and resolve later.
I get all of that, right? So let's say that you can never get the transaction speed down below 10 minutes.
Okay? So it'll never be a coffee and donuts currency.
So what? I mean, I spent most of my software entrepreneurial career In the B2B economy, I created software that helped companies vastly reduce their environmental footprint, reduce their air, water, groundwater, and emissions all over the place.
And I sold to very, very big, I mean, of the companies that I sold to, you would recognize every single one of them as just massive multinational conglomerates.
And so I was building software that had no, you'd never find this in Best Buy, like never in a million years, right?
Because sometimes it was a million dollars plus to buy and install.
And so I was in the B2B economy, business to business.
There's the B2C economy, BTC, like Bitcoin.
There's a business to consumer economy.
The business to business economy is far larger than the business to consumer economy.
I mean, if you think of all the people who have to manufacture something maybe overseas and it has to come all the way and end up in a shoe store in Manhattan, you think of all the people involved in that versus the sales clerk and the customer buying it.
There's many more people involved in getting the shoe made and transported and boxed and all of that as opposed to just the business to consumer.
There's a small slice of everything else, right?
Business to consumer. It's not quite the tip of the iceberg, but...
Business-to-business is very large.
Now, business-to-business, let's say you're entering into a five-year lease.
Do you care if it takes 10 minutes to process the transaction?
You know it. Are there real values in having the Esperanto of value, Bitcoin, rather than having to arbitrage your way through six different layers of currencies?
Yeah. So, yeah, there's software solutions that are being worked on that are pretty good, very good, in fact.
And the business-to-business economy, people who say, well, it has to deal with the cup of coffee, I don't know why.
I don't know why. So anyway, he says, so to date, 12 years into its life, in spite of the fanfare, with the possible exception of the price tag of Salvadorian permanent residence, three Bitcoins, there are currently no prices fixed in Bitcoin floating in fiat currencies in the economy.
Okay, so 12 years into Bitcoin.
Okay, so let's take a little rewind here, right?
Let's take a little rewind here.
And let's look at 12 years into the Internet.
Okay, where did the Internet come from?
So... In 1962, a scientist from the Massachusetts Institute of Technology and ARPA named J.C.R. Licklider proposed a solution to this problem.
The problem being, well, what if there's some big attack and we lose our ability to communicate and the central platforms for phones and all of that go down and so on?
So he said, what if we have a galactic network of computers that can talk to one another?
In other words, a decentralized way for computers.
If one computer goes down on the internet, the whole internet doesn't go down.
It's not like those godforsaken Christmas lights where one light goes out, the whole thing goes down.
So such a network, this galactic network, would allow government leaders to communicate even if the Soviets or some bomb destroyed the telephone system and so on, right?
So, you know, the idea, 1962, this would be the equivalent of Satoshi mulling over the white paper on Bitcoin, right?
So in 1965, another MIT scientist developed a way to transfer information from one computer to another that he called packet switching, right?
So a packet switching breaks data down into these little blocks or packets before sending it to its destination.
Then it gets reassembled.
It's like transporting it, disassembled, squirted and reassembled.
So each packet can take its own route from place to place.
Without packet switching, the government's computer network, which was then, at that point in 1965, known as the ARPANET, would have been just as vulnerable to nuclear attack as the phone system.
Okay, so 1965. Let's look at 1969.
October 29th, 1969, ARPANET delivered its first message.
A node-to-node communication from one computer to another.
So each computer was about the size of a small house.
One was in a research lab at UCLA. The second was at Stanford.
The message was the word login.
But it crashed the whole system because the computer only received the notes first two letters, right?
So, by the end of 1969, only four computers were connected to the ARPANET, but the network grew steadily during the 1970s, right?
Okay, so you can go into this.
All the history is really, really interesting and all that, right?
So, the first idea for this came in, you know, 1962, right?
1962. Twelve years into the first idea, we're talking 1974.
How big was the internet in 1974?
Could you do Zoom calls?
Could you... Was there HTML? Were there markup languages?
Were there many servers? Could you make phone calls, send emails?
No! No!
There were like a dozen computers on.
It was nothing. Right?
Let's say we talk about...
1969, right? So 1969 was when the message went from place to place.
Maybe that's closer to the beginning of Bitcoin, although there's theory before practice and all of that, right?
So you add 12 years to 1969, we're talking 1981.
Okay, can you judge the internet by 1981?
Can you judge the internet as it stands now, 50 years since the beginning of the internet?
So half century, plus or minus, right?
So now we're talking 50 years in.
So he's trying to judge a technology 12 years into it.
How stable was America 12 years after the revolution, right?
Or India 12 years after liberation, right?
So can you judge the internet as it stands now by what was going on in 1981?
What was that, Teladon, for the people in Canada and all of that, right?
No. So, I think that's kind of important.
So, judging a technology now, and if you look at the growth of value, Bitcoin is the very fastest human technology to get to a trillion dollar valuation.
I know it's been up and down and all that, but nonetheless, right?
It's an amazing, amazing growth.
It's grown faster than any other human institution to get to a trillion dollars in value.
And also, when people haven't predicted the price going up very well, I don't really care about them predicting the price going down, right?
So, if Taleb did not sell at 80,000 Canadian, well, I don't know.
Anyway, he goes on to say, gold and silver proved then that they would neither be a reliable numeraire Nor an inflation hedge.
The world had gotten too sophisticated for precious metals.
So he's talking here about the silver hoarding or the silver manipulation that happened and the price went up and then it went down.
In the 07-08 financial price, the price of gold went up and then it went down.
So what's he saying here?
So, what is an inflation hedge?
Traditionally, I mean, it's been gold and silver, or more recently, it's been Bitcoin.
So, he's saying, well, Bitcoin's going to zero.
Gold and silver are not an inflation hedge.
So, what's the plan here?
Nassim, what's the plan here?
So, he says, this is very interesting.
Let us go deeper into how a currency can come about.
No transaction is analytically pairwise in an open economy.
The root of the confusion lies in the prevalent naive libertarian illusion that a transaction between two consenting adults when devoid of coercion is effectively just a transaction between two consenting adults and can be isolated and discussed as such.
This is the atomic theory of libertarianism.
So libertarianism is around the non-aggression principle.
We'll get to that in a sec. And libertarianism doesn't say that, well, there's just two people in complete isolation.
Libertarianism recognizes that we're a social species, that we exist in an economy and a larger cultural and linguistic framework and blah, blah, blah, blah, blah.
It's sort of like saying, well, we've got forced marriage at the moment and the people who don't want forced marriage want everyone living at opposite sides of town and never reproducing and never getting married and never getting together and not existing in a community or in a society.
No, let's just stop institutionalized rape.
That's all we're saying. Let's just stop forcing people at gunpoint to do things that other people want.
Can we get to there, maybe, just possibly?
Can we get to the point where we put down the gun and reason like human beings as opposed to just threaten like apes?
Is that possible? So this idea that libertarianism, because it opposes institutional and personal coercion, somehow is atomistic and doesn't want people to have a community, which is like saying, well, you know, like some guy saying, well, if rape is not allowed, there won't be any reproduction, which is, you know, like saying, well, if we ban slavery, we're not going to have any cotton or vegetables or food.
We'll all starve and freeze to death.
Come on. That's not.
I mean, and here's the thing, too.
So, look, I mean, Taleb is, I assume, I don't have the competence to judge this, but I don't want a Dunning-Kruger up the place here.
Great at math. Great at math, right?
I mean, fantastic at math.
And he seemed to be a good options trader or stock trader or whatever he did, right?
So he's very, very good at that stuff.
I can't judge him on those areas and those fields.
However, when he starts to go into stuff that I've studied for 40 years, like libertarianism, And he gets it completely wrong, that makes me kind of suspicious about other things, right?
Really, really important.
This is an old Michael Crichton principle, right, where he said, you know, you read the newspaper and whenever they talk about something you're familiar with, they get it completely wrong.
But then somehow you think that whatever else they talk about, they're getting completely right, which is, of course, not the case.
Anyway, so he says, one must consider the ensemble of transactions and the interactions between agents.
People happen to engage in contractual agreements with others.
For them, a given transaction is just a piece.
To be able to regularly buy goods denominated in Bitcoin, that is fixed in Bitcoin, floating in US dollars or some other fiat currency, one must have an income that is fixed in Bitcoin.
Such an income must come from somewhere, say an employer.
for an employer to pay a salary fixed in Bitcoin, she or he must be getting revenues fixed in Bitcoins.
Furthermore, for the vendor to offer a can of beer in fixed Bitcoins, she or he must be paying for the raw material and have the overhead fixed in Bitcoin.
The same with a mismatch of assets and obligations on a balance sheet.
All this requires a parity Bitcoin US dollar of low enough volatility to be tolerable and for variations to remain inconsequential.
Okay, so if...
If you're a prepper, right, like you've got food in the basement, you've got like whatever else you feel you need to deal with, interruptions in the food chain supply or whatever it is, right?
And someone says to you, oh, come on, you can't possibly eat all of that food this week.
It's like, well, no, the point is not to, I want to store food up for a year or whatever it is you want to do, right?
So there's prepping versus eating.
And when you're in the accumulation stage, You are preparing to eat.
You are accumulating in preparation of the emergency that's going to make that preparation worthwhile.
The grasshopper versus the ant stuff, right?
So Bitcoin, yeah, I get it.
It's not a currency yet. El Salvador made an official currency and gave 30 bucks of Bitcoin to everyone, I think.
But yeah, it's not a currency yet.
So people are in the accumulation phase in that when Bitcoin does become a currency, it's going to be worth a heck of a lot more.
I get all of that.
I mean, so what? I mean, if somebody stores...
I just reminded this old Steve Martin joke.
He's trying to impress some girl in this made-up skit.
And he says, yeah, I own three tons of cardboard.
And currently worth four cents a ton.
And I bought it at two cents, so that's...
Oh, you do the math. And made a special deal where I only have to store two tons of it in my house.
I just think Steve Martin and his prime was fantastic.
Fantastic. Anyway, too bad Tinnitus took him down.
But so, yeah, we get it.
Bitcoin is not a currency yet. So people are in an accumulation phase.
Now, if Bitcoin does displace...
Fiat currency or fiat currencies as a currency, then clearly it's going to be worth a truly ungodly amount of money denominated in fiat currency dollars, for sure.
So the fact that you're not eating the food that you're storing for the winter or you're storing for some crisis or some emergency, I don't really know what that means.
It's like saying, well, you can't really use your phone when you're charging it as easily.
It's like, well, yeah, but to use it later, you've got to charge it now.
And you want to get to the lifeboats before the ship goes down and sucks all the lifeboats down with it.
Even if they're in the water, it could suck them down, right?
So you want to get to the lifeboats and get away from the sinking ship sooner rather than later.
And so the idea that...
I guess it's like saying, well, in 1972, it's like, well, you can't possibly replace significant portions of...
Mail, like post office mail with email because there are only like 10 computers connected to the internet.
It's like, yeah, I get it.
But that's not the goal.
That's not the long-term thing that's going to happen, right?
So, again, 12 years into a new asset with all of the opposition of the mainstream media and governments and so on, 12 years into a new asset that's gained the fastest valuation in all of human history, it has not become a fully-fledged currency.
It's like, yeah, I mean...
I get it.
I get it. I mean...
Again, would it only be acceptable if after 12 years it had displaced every currency?
The way things start is not the way things go on.
If you're a startup, you work 16 hours a day and hopefully that eases up.
When I first did my show, I spent the vast majority of time publicizing it and not recording it.
The first page of your notebook when you were a kid was much neater than the last page.
You don't fart on a first date.
You might when you get married later.
The internet as a whole started off real raw and crashy and, you know, 300 board modems and so on.
And now it's video conferencing with 12 people and, you know, I don't know what to say.
It's early on in Bitcoin and it's, you know, I guess it's taking your time.
It's taking your time, right? So yeah, people are accumulating Bitcoin in the same way that they're prepping for, you know, the Game of Thrones winter that goes on forever.
So yeah, people are accumulating, they're exchanging fiat for Bitcoin, and they're holding on to the Bitcoin.
You know, if people hit an emergency, they'll sell bitcoins.
You see this happen when people have to pay their taxes, they'll sell bitcoins to convert to fiat to pay their taxes and so on.
But there's, you know, it's just a, it's an adoption thing.
It's just a, it's a scale of adoption thing.
And yeah, there's, there's volatility.
I mean, gosh, what can I tell you?
How stable was the US dollar 12 years after the revolution, right?
Well, not very stable at all, right?
So then he talks about something very interesting, alternate currencies.
He says, during the 1970s, the Italian national telephone tokens, the gettoni, were considered acceptable tender, almost always accepted as payment.
The price of the espresso, when expressed in lira, varied over time, but remained sticky to the gettoni.
For a while, the gettoni proved...
Sorry, I just like saying that. Proved closest thing, I think he means thing, in tracking the Fisher Index across 12 communes.
And while the gettoni...
Work for daily purchases such as the espresso, it is doubtful it could have been used as payment for an Alfa Romeo.
So again, we have large economic transactions, have a different currency even than this one that was used for an espresso, right?
So yeah, maybe there will be other cryptocurrencies or other ways of doing, or maybe the Lightning Network will scale well, so there'll be ways of doing the coffee and donuts purchase.
But he's saying, look, for the little things you could use this currency, but for the big things you needed something else.
So why couldn't you just have fiat currency for the little things?
And Bitcoin for the big things.
Why not? He says, in the parable of the Christ in the temple, Jesus kicked the money changers out of the temple of Jerusalem.
Now one wonders why. Were there money changers in a place of worship?
Because the temple took only for currency the shekel of Tyre, known for its 90% silver content and its ancestral quality control.
Simply, there is a free market of fiat, but the most reliable at the time used by third parties.
Before the euro, there were plenty of currencies in Europe, but real contracts were drawn in Deutschmark or Swiss francs, sometimes the US dollar, drachmas, liras, and pesetas were there for petty expenditures.
So what we had was competition between fiat currencies just as with the shekel of Tyre.
Yeah, so B2B, big contracts, really important stuff, long-term, multi-year, multi-decade contracts, and so on, were denominated in a different currency than the local one, which is exactly what I'm saying with business to consumer versus business to business.
Almost done. Appreciate your attention here.
Okay, here. Oh, my God. Okay.
He says here, Libertarianism is fundamentally about the rule of law in place of the rule of regulation.
I've been around libertarianism for 40 years.
40 years. I've never heard it described that way.
Now, I'm not an oracle of libertarianism.
Maybe there's a way that that's been described.
I don't know what that means. The rule of law in place of the rule of regulation.
And he says fundamentally about the rule of law in place of the rule of regulation.
Again, I've never heard it described that way.
I don't know what that means, and he doesn't explain it.
He says, Oh my god.
Is he saying that it's bad for the economy if people know ahead of time what the rules are and the rules are objective and clear and simple?
What does it mean? Libertarianism is not fundamentally about the rule of law in place of the rule of regulation.
I don't even know what that means. Libertarianism is about the non-aggression principle.
You cannot initiate force against others.
Fiat currency violates the non-aggression principle at its most fundamental level.
Its most fundamental level.
Fiat currency by creating an enforced monopoly and banning alternatives.
Fiat currency violates the non-aggression principle.
I don't know what the hell he means by the rule of law in place of the rule of regulation.
I don't even know what that means.
I've never heard that phrase. Never again.
Maybe there's a whole school of thought out there I'm unaware of.
But no, libertarianism is about the non-aggression principle.
So libertarianism has had, and I've given entire speeches on this, massive foundational opposition to central bank, to government coercive control over currency.
I mean, just go listen to Ron Paul, one of the high priests of libertarianism, talk about the Federal Reserve.
He wants to audit it, he wants to abolish it, he wants to abolish taxation, certainly income tax and so on.
So the idea that, I don't know, libertarianism is fundamentally about the rule of law in place of the rule.
No, libertarianism is about the non-aggression principle.
And there's no morals in any of this stuff that he's talking about here.
Bitcoin is voluntary.
Bitcoin is not coercive.
With Bitcoin, you can't mount endless wars.
With Bitcoin, you can't go and fund gain-of-function research in labs all over the world.
Bitcoin, you can't enslave the next generation in intergenerational pillage vampire contracts to foreign banksters.
You can't steal from your neighbor by overprinting money in the legal way called fiat currency production.
You can't steal from the poor and those on fixed incomes.
And you don't have the corrupting power of centralized coercive control over an entire economy.
So there's not one shred of morals anywhere in this.
Not one shred of ethics anywhere in this.
So, last thing I wanted to say here was, he said, fallacy of safe haven, protection from tyrannical regimes to many paranoid anti-government individuals.
See, you know, opposing massive government overreach It's just being paranoid, you see.
Again, this is the kind of stuff that he throws in all the time.
It's kind of childish. Anyway, sorry, that's a bit of an insult to children.
Too many paranoid anti-government individuals and others distrustful of institutions.
No, no, no, no. Libertarians are not distrustful of institutions.
They are morally opposed to the initiation of the use of force.
So, anyway, to these people, Bitcoin has been marketed as safe haven, also with the open invitation to fall for the fallacy that a volatile electronic token on a public setting is a place for your hidden treasure.
By its very nature, Bitcoin is open for all to see.
The belief in one's ability to hide one's assets from the government with the public blockchain easily triangulizable at endpoints and not just read by the FBI but by people in their living room also requires a certain lack of financial seasoning and statistical understanding, perhaps even simple common sense.
For instance, a Wolfram research specialist was able to statistically detect and triangularize anonymous ransom payments made by Colonial Pipeline on May 8th in 2021, and it did not take long for the FBI to hack the account and restitute the funds.
First of all, I thought he said that nothing was restitutable.
But anyway, I don't know.
Has this been confirmed? Has it been confirmed that the FBI is just able to hack into Bitcoin and move money around?
I don't think that's happened.
My guess is that, I don't know, maybe it's no, maybe it's not, but my guess would be that...
The FBI caught someone through some indiscretion that they did publicly and then used that to get private keys and all of that.
So, I don't know. Did the FBI? I don't think the FBI hacked the account.
Again, I could be wrong about this, but I don't think it's been proven that the FBI just was able to hack into Bitcoin accounts because that would be a huge issue, not because of the FBI, but because of hacking as a whole, right?
So, what have we got?
Um... Okay, so if Bitcoin value could go to zero, because it is zero, because at some point it could go to zero, that's not specific to Bitcoin, but to everything else, including the internet as a whole, even gold.
So, yeah, Bitcoin in its current form has not achieved the characteristics of it being a currency.
But again, that's like two hours into the movie Titanic saying, well, it hasn't sunk yet.
It's like, so then don't go to a lifeboat.
And I would suggest go to a lifeboat, but, you know, don't go to a lifeboat.
So the fact that, I mean, gold was not developed as a currency originally.
Gold was just pretty and shiny and people liked it.
And then it just transformed into one shells on a beach, which eventually became currency and other things as well.
So, I mean, we've got theory.
Is Bitcoin a hedge against inflation?
Well, so far it has been.
I mean, so far it absolutely has been.
12 years, it has gone up in value massively relative to fiat, and fiat has gone down in value.
I mean, if you just, if you denominate fiat relative to something like housing, fiat value has completely collapsed, right?
So, whereas Bitcoin has accrued in value.
So in relative and absolute terms.
So, you know, saying, well, it's not an inflation hedge and ignoring the last 12 years seems like a bit of a stretch to me.
Anyway, so these are sort of my major thoughts.
I look forward to your feedback, and I do appreciate the fact that Dr.
Taleb wrote the paper.
I think it's very interesting. Be sure to check it out in its final form, and I appreciate it.
The wax that he's taking at Bitcoin, I think it's very good that people do this to make sure that weaknesses within the system as a whole can be looked at.
And of course, whatever weaknesses evolve can be remediated by future Bitcoin core releases and so on.
So I hope this helps.
I thank you very much for your attention.
I hope this has been useful to you.
Please don't forget to help out my show, freedomain.com forward slash donate.
Take care, everyone. I appreciate your time.
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