Episode 156 – Is Bitcoin good for the world? (feat. Andrew Bailey)

Is Bitcoin good for the world? (feat. Andrew Bailey) – Crypto Critics' Corner

Cas Piancey and Bennett Tomlin are joined by Andrew Bailey, author of Resistance Money, to discuss Tether on Tron and Bitcoin. This video was recorded on September 9th 2024. Resistance Money Patrick McKenzie and Tyler Cowen podcast Cas Piancey and PJ Vogt podcast Bennett's newsletter about Craig Wright Bennett's article about Fei Bennett's newsletter about Terra-Luna

Cas Piancey and Bennett Tomlin are joined by Andrew Bailey, author of Resistance Money, to discuss Tether on Tron and Bitcoin.

This podcast was recorded on September 9th 2024.

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00:00:05:10 - 00:00:06:11
Cas Piancey
Welcome back everyone.

00:00:06:11 - 00:00:12:09
Cas Piancey
Long time no see. I am Cas Piancey. I'm joined, as usual, by my partner in crime, Mr. Bennett Tomlin.

00:00:12:09 - 00:00:13:05
Cas Piancey
How are you today?

00:00:13:05 - 00:00:14:17
Bennett Tomlin
I'm doing well. How are you, Cas?

00:00:14:17 - 00:00:20:18
Cas Piancey
I'm doing great. We're joined by a special guest today, coauthor of the book that we, Bennett and I both,

00:00:20:18 - 00:00:24:20
Cas Piancey
just read and got through called Resistance Money.

00:00:24:20 - 00:00:28:20
Cas Piancey
It is a book about Bitcoin, I guess is how I'll term it. But,

00:00:28:20 - 00:00:30:20
Cas Piancey
Andrew Bailey, how are you today, sir?

00:00:30:20 - 00:00:33:16
Andrew Bailey
Happy to be with you guys. A fellow partner in crime.

00:00:33:16 - 00:00:34:17
Andrew Bailey
Just for. Just for today.

00:00:34:17 - 00:00:36:14
Cas Piancey
right outside of that, never.

00:00:36:14 - 00:00:39:00
Cas Piancey
But it is nice to have you here because,

00:00:39:00 - 00:00:55:07
Cas Piancey
Yeah, this was a fun book for for us to read, and I think we wanted to go over. We wanted to go over some of the parts that we disagreed with you on. Now, I just want to preface this, to say to everyone that this isn't to suggest that I dislike the book, or that Bennet dislike the book.

00:00:55:07 - 00:00:58:03
Cas Piancey
We actually both enjoyed it a lot when it comes to,

00:00:58:03 - 00:01:06:15
Cas Piancey
Bitcoin maximalists. If you hear that term in the cryptocurrency industry, it's generally derisive and not a term of endearment.

00:01:06:15 - 00:01:10:01
Cas Piancey
And it usually comes with some pretty heavy baggage, I would say.

00:01:10:01 - 00:01:18:14
Cas Piancey
So Andrew and his coauthors, I would say, are some of the more sane individuals in the Bitcoin maximalist

00:01:19:14 - 00:01:24:14
Bennett Tomlin
As sane as people can be. When they voluntarily decide to study philosophy.

00:01:25:04 - 00:01:28:02
Cas Piancey
Yeah, that's a whole other yeah, that's a whole other,

00:01:28:02 - 00:01:29:09
Cas Piancey
can of worms. But,

00:01:29:09 - 00:01:30:13
Cas Piancey
I think,

00:01:30:13 - 00:01:41:18
Cas Piancey
your book is, is I really enjoyed it because it spoke about a lot of the things that we generally take issue with when it comes to maximalists of any sort.

00:01:41:18 - 00:01:59:18
Cas Piancey
The idea I think maybe you're not a maximalist in the sense that maximalists suggest that you shouldn't really be relying on any other form of money outside of Bitcoin, and you should be pouring as much of your resources into Bitcoin as humanly possible, like Michael Saylor or something.

00:01:59:20 - 00:02:24:08
Cas Piancey
Whereas you guys seem to at least allude to and discuss the fact that there is room for and reason for cash, credit, and other concepts of money to exist can you tell me how you're able to operate in that space where you both think that Bitcoin is resistance, money important, necessary, but also think that,

00:02:24:08 - 00:02:29:05
Cas Piancey
these other ideas of money are also necessary as well, without butting heads with everyone

00:02:29:11 - 00:02:49:13
Andrew Bailey
I can't promise to not butt heads with everyone in general. But here's the basic view. Bitcoin is resistance money, which means that it's a tool to bypass would be authorities, whether corporate or state. And that for those of us who want or need to do that, Bitcoin is one thing to put in your arsenal alongside other tools like encrypted messaging.

00:02:49:13 - 00:03:26:13
Andrew Bailey
And yes, cash. Cash is probably the best form of resistance money that we have today. Physical US dollars. It's America's finest export, as one of my other coauthors Will Luther likes to say it's nonviolent, it's freedom technology. It's highly private. And when you can use cash, it's great resistance money. Unfortunately, you can't use cash over the internet. Hence the search for digital cash, computer computerized or digital versions that have some of the properties, if not all, of the key properties of cash that allow it to be private or to bypass would be censors or surveillance.

00:03:26:15 - 00:03:36:03
Andrew Bailey
So that's how I see them as coexisting just fine, is that there are a variety of tools that one might use, and in the physical world, cash is one of them. You know, in the old days it would have been gold

00:03:36:03 - 00:03:41:23
Andrew Bailey
that those are the old days, those are behind us. But physical, bearer instrument money. This is a powerful tool for freedom.

00:03:41:23 - 00:03:44:12
Cas Piancey
Do you think that it hurts Bitcoin

00:03:44:12 - 00:04:11:12
Cas Piancey
as a feasible, you know, global currency? Does it hurt the image of bitcoin when the people who were the loudest proponents of it are people like, you know, I maybe I shouldn't name them but say if it's say adding or these other people who are or even for that matter, people like Michael Saylor who are telling people to like, mortgage their home and buy Bitcoin, like, doesn't that harm your concept of resistance money?

00:04:11:12 - 00:04:29:03
Cas Piancey
Doesn't that actually hurt the idea of what this is supposed to be, as opposed to like it being this usable thing, this transact able resistance money for dissidents or journalists or individuals who might sex workers, whoever is being prosecuted,

00:04:29:03 - 00:04:38:07
Cas Piancey
instead of it being that now it's seen as the up only tool. And don't you think that really does hurt the concept that you're you're rooting for here?

00:04:38:09 - 00:04:55:09
Andrew Bailey
It might be useful to separate those two examples you gave, because I think there are important differences between the way Saifedean sells bitcoin and the way Michael Saylor does. Michael Saylor almost exclusively sells bitcoin as a number go up tool. You buy some for U.S. dollars. And then the value in U.S. dollar terms will go up later. But you never sell.

00:04:55:10 - 00:05:21:02
Andrew Bailey
So that is the fundamental Saylor story. I think Saifedean has a number go up element, but it has its roots in this idea of hard or sound money, and that Bitcoin is the very best ever version of sound money that's ever been created, that the the place where I take issue with Saifedean and those like him is I don't think Bitcoin is an optimal money or the best or the ideal money.

00:05:21:04 - 00:05:41:15
Andrew Bailey
I think that a fixed supply money is useful and better than many other moneys that are governed by irresponsible central banks, but it's not obviously optimal at all. So it's better for some people who don't have access to high quality moneys, and maybe worse or not as useful for those who have access to things like the Singapore dollar or the Swiss franc or the US dollar.

00:05:41:17 - 00:05:53:10
Andrew Bailey
And we can know that fairly easily just by looking at their behavior. What do people choose to use as a money when they have access to Swiss francs for U.S. dollars, Swiss francs, or U.S. dollars?

00:05:53:10 - 00:05:58:13
Andrew Bailey
How about those who don't have access to high quality money as though they will turn to Bitcoin?

00:05:58:13 - 00:06:07:06
Bennett Tomlin
One of the concepts that was discussed a little bit in the book is discussed a lot in Bitcoin circles. In case they were talking a little bit about this before the call.

00:06:07:06 - 00:06:11:23
Bennett Tomlin
One of the things that fascinates me about Bitcoin is how much

00:06:11:23 - 00:06:15:14
Bennett Tomlin
in its hardness and some of its unique monetary,

00:06:15:14 - 00:06:21:20
Bennett Tomlin
properties come in part from the uniqueness of Satoshi as the founder.

00:06:21:22 - 00:06:33:04
Bennett Tomlin
And this was discussed a little bit in the book like that. There was this person or group of persons who worked on this thing for several years, created it, dealt with,

00:06:33:04 - 00:06:39:21
Bennett Tomlin
variety of different potential attacks, accrued 5% of the supply of it, and disappeared.

00:06:39:21 - 00:06:50:21
Bennett Tomlin
Did Bitcoin need to have kind of that type of divine conception to be able to develop into an effective form of money?

00:06:50:21 - 00:07:13:14
Andrew Bailey
Bitcoiners sometimes use that phrase Immaculate conception to describe Bitcoin's birth. The idea here that it was more or less a gift from the gods without a father. And maybe only a mother who then died or left. That's the. That's the image. I suspect that is a contingent matter of historical fact. Yes. This was the only way that Bitcoin could actually be born and launch.

00:07:13:16 - 00:07:34:03
Andrew Bailey
And one piece of empirical evidence we have that suggest that is the long line of digital cash projects that failed for various reasons at least 20. Sometimes people count as many as 100 from, let's say, 1982 all the way up to 2008. And we can try to classify the various reasons for which they failed, but they all failed.

00:07:34:03 - 00:08:00:13
Andrew Bailey
And somehow Bitcoin succeeded. And it wasn't purely its technical design that enabled that, although its technical design was important, it was also the properties of its founder and the unique place in time that Satoshi found himself with things like Occupy Wall Street. Well, that came later. But the the let's say, discontent with monetary systems, discontent with the US dollar, with financial empires built atop it.

00:08:00:15 - 00:08:26:00
Andrew Bailey
So there are a number of contingent things that enabled Bitcoin to to grow, to actually have a non-zero value for a long amount of time. And I think an important one of those was Satoshi's departure, because then it doesn't look obviously like a scam in the ways that so many other crypto projects since then have, where a founders extractive and just trying to sell you a token for something that he made for nothing.

00:08:26:02 - 00:08:50:23
Andrew Bailey
And Satoshi didn't do that and that that can inspire early confidence. You know, early confidence is really important to get the game theory lined up so that people start converging on that outcome where they're both choosing Bitcoin. And the way to make that happen game, theoretically, is that one party has already pre committed to choosing Bitcoin. And an important way Satoshi did that by mining Bitcoin for so long and at such great expense.

00:08:50:23 - 00:08:52:11
Bennett Tomlin
It was also interesting to me.

00:08:52:11 - 00:09:17:21
Bennett Tomlin
And you alluded to it there. There have been a lot of digital cash projects that were tried before in are in some sense still being tried. And it's interesting to me, especially at this point, to compare like Bitcoin's conception and where it's gone since then and like the what I think of as kind of the most successful other digital dollar projects still going on, which would be tether,

00:09:17:21 - 00:09:23:06
Bennett Tomlin
which is in many sense kind of the spiritual successor to Liberty Reserve and the Liberty Dollar.

00:09:23:08 - 00:09:24:12
Bennett Tomlin
And there you have,

00:09:24:12 - 00:09:43:22
Bennett Tomlin
founders who are people who, like, definitely exist, and you can mostly put names and faces to them and a big pile of money that kind of exists in the same way it did for Liberty Dollars or Liberty Reserve and has is substantially smaller than,

00:09:43:22 - 00:09:55:14
Bennett Tomlin
Bitcoin in market cap, but has succeeded at a scale far beyond many of the other digital cash things that kind of anticipated it.

00:09:55:18 - 00:09:57:05
Cas Piancey
to. To add on to what you're

00:09:57:05 - 00:09:58:16
Cas Piancey
saying here. I just want to say, like

00:09:58:16 - 00:10:18:11
Cas Piancey
tether is the fuel to the Bitcoin or ether or whatever engine like the those cryptocurrencies are getting purchased with tether. And tether is the, the currency that's getting transacted with the most. It isn't Bitcoin, it isn't Ethereum or Ether. It isn't, you know, whatever.

00:10:18:11 - 00:10:21:04
Cas Piancey
It isn't Tron. It it's it's tether.

00:10:21:04 - 00:10:45:04
Cas Piancey
And I like not to not to skip to the point of your question, but like, in my mind, doesn't that counter in a sense the idea that Bitcoin is this really good digital money where how how much how much transaction is taking place on Bitcoin even on layer two. Even on even on your lightning networks and stuff like that.

00:10:45:06 - 00:11:13:09
Cas Piancey
How how much transaction how many transaction are taking place? How much is this helping the people that you know, Ben and I are on the fairer side of the criticisms of Bitcoin. I would, I would say, but like how much of it is criminals or whatever versus like dissidents or sex workers that you want to help people who you might not love what they do, but at least you can agree that they deserve an ability to make a living.

00:11:13:11 - 00:11:30:23
Cas Piancey
And so how I guess I'm I struggle to find still to this day, as much as I'm, I'm not someone who's anti bitcoin, I struggle to believe that a lot of the usefulness of it is for

00:11:30:23 - 00:11:38:19
Cas Piancey
is is either taking place at all or happening for positive benefits. Can you talk about the reasons that you disagree

00:11:38:19 - 00:11:46:22
Bennett Tomlin
What I was kind of getting at is like. I'm curious which one of those digital cash press projects is

00:11:46:22 - 00:11:59:10
Bennett Tomlin
more commonly used as a cash replacement for people who can't get dollars or Swiss francs to return to what we were saying before. And I think as cash is kind of sitting there in many cases, it's not Bitcoin.

00:11:59:14 - 00:12:05:03
Bennett Tomlin
And like if there's any tension with Bitcoin's stated goals in that fact.

00:12:05:03 - 00:12:29:22
Andrew Bailey
Here's a thought that many bitcoiners had for a very long time. Which is that your choice in money will be determined by its hardness. And that you'll choose the so-called best money. And that will be a fixed supply money or something that's close to fixed supply, something gold like. And what the empirical evidence about Tether's use and other stablecoins shows us, is that people have other criteria they use to select money.

00:12:30:00 - 00:12:31:22
Andrew Bailey
And it's not just

00:12:31:22 - 00:12:34:10
Andrew Bailey
issues about governance or supply.

00:12:34:10 - 00:12:56:10
Andrew Bailey
In fact, unit of account stability seems to be very important. And that's why people select either U.S. dollars or U.S. dollar substitutes, things like commercial bank balances or PayPal balances or something even further downstream from that, like a tether balance stored in your own wallet. What this shows is that there are trade offs, and depending on what your goals are, there will be different tools that will be useful for you.

00:12:56:10 - 00:13:18:06
Andrew Bailey
So let's say you need a moderate degree of resistance. You don't have access to a US dollar denominated bank account. You don't even have access to Cash App or PayPal, but you want US dollar denominated. Still something that has the stability of the US dollar. You can turn to tether on Tron now at scale. How much privacy or censorship resistance will this affords you?

00:13:18:08 - 00:13:40:06
Andrew Bailey
Virtually none. Virtually none. At a smaller scale, you might slip through the cracks. That is, nobody might care enough about you to monitor or to try to block your activities. So even though physical U.S. dollars might be illegal in your country, you might still be able to get through using tether on your phone with a little Tron wallet.

00:13:40:06 - 00:13:42:20
Andrew Bailey
And this, in fact, is an extremely common story

00:13:42:20 - 00:13:45:23
Andrew Bailey
that this is how tether gets used when it gets used for payments.

00:13:45:23 - 00:14:01:17
Cas Piancey
Yeah, well, it calls into question. Like you just talked about. Two layers of trust that you're introducing to this transaction. Right? Like, if you're someone in a country that doesn't have access to U.S. dollars and also finds it burdensome that,

00:14:01:17 - 00:14:08:08
Cas Piancey
Bitcoin is volatile and maybe it's difficult to it's a little bit more difficult to transact in it.

00:14:08:10 - 00:14:15:18
Cas Piancey
So you rely on tether on Tron. So like we're talking about. Yeah, too. Like serious layers of

00:14:16:11 - 00:14:18:06
Andrew Bailey
At least two.

00:14:18:06 - 00:14:25:10
Cas Piancey
At least two. That's right. At least two. And and one of them is something that Ben and I have gone over a long time, which is

00:14:25:10 - 00:14:26:00
Cas Piancey
stablecoin

00:14:26:00 - 00:14:27:11
Cas Piancey
and we have a,

00:14:27:11 - 00:14:44:15
Cas Piancey
like I don't know what to label Justin Sun is, but yes, another individual who is not to be necessarily trusted with your finances. And so you introduce both of these instead of, say, a bank or your, you know, your country's currency.

00:14:44:20 - 00:14:49:09
Cas Piancey
And at what point do these trade offs seem less and less worth it? And,

00:14:49:09 - 00:15:03:03
Cas Piancey
more and more risky than the alternative, which is like what we're talking about for the old times, right? Like we're talking about cash, we're talking about credit, we're talking about bonds and boring stuff.

00:15:03:03 - 00:15:07:17
Cas Piancey
At what point is it is that like, why why is anyone doing this?

00:15:07:17 - 00:15:17:04
Cas Piancey
I guess is my question for you. Why do you think that there are people doing that instead of Bitcoin instead of cash and instead of these other forms of money?

00:15:17:04 - 00:15:18:18
Andrew Bailey
Have you used tether on Tron?

00:15:18:18 - 00:15:23:05
Cas Piancey
I can't I can't say that I have have needed to, I guess is what I would say.

00:15:23:05 - 00:15:43:02
Andrew Bailey
Cas, It's a good experience. It's buttery smooth. It doesn't require KYC. There's no email. There's no name. You can just get some tether instantly, and then it just says it has the little dollar symbol. They're not actually dollars, but, you know, they function like dollars until they don't. And then you can send them virtually for free to someone else and no one can stop you.

00:15:43:02 - 00:16:05:21
Andrew Bailey
And that's what it feels like, at least because you didn't have an account, you didn't have your name. So it has all the trappings of censorship resistance. And it feels great, buttery smooth. So I don't think it's a mystery why people would use Tron for payments in Turkey, in Argentina and many other places besides. Compare that to the Bitcoin experience.

00:16:05:23 - 00:16:26:12
Andrew Bailey
Bitcoin is weird. You have to wait ten minutes for settlement. If you're doing an on chain transaction, or you have to think about things like custodians or lightning channel management if you're using a layer two, which is weird for most people. So having tried both, I don't find it mysterious that people would turn to tether on Tron.

00:16:26:12 - 00:16:28:08
Andrew Bailey
And maybe you'll find the same if you try it.

00:16:28:08 - 00:16:30:19
Cas Piancey
mean, well, I guess you just segue us into the next,

00:16:30:19 - 00:16:32:13
Cas Piancey
the next topic, possibly there.

00:16:32:13 - 00:16:38:16
Cas Piancey
criticism that you that the book leveled against critics.

00:16:38:16 - 00:16:39:06
Cas Piancey
Was

00:16:39:06 - 00:16:41:23
Cas Piancey
and you guys use this term kind of vaguely. So,

00:16:41:23 - 00:16:44:03
Cas Piancey
that that was another issue that I took with this. So,

00:16:44:03 - 00:16:45:07
Cas Piancey
we'll get into that right now too.

00:16:45:07 - 00:17:07:04
Cas Piancey
But like, basically what was stated is that if you're not using the thing, then it's pretty difficult to criticize it. Now, Ben and I have the benefit of having tried, you know, using cryptocurrencies back in the day. We haven't used, Ben, it maybe he's used it more recently than I have, but I haven't used any cryptocurrencies in years.

00:17:07:04 - 00:17:09:22
Cas Piancey
I haven't cared to I have no need to,

00:17:09:22 - 00:17:10:14
Andrew Bailey
Like a you.

00:17:10:14 - 00:17:11:08
Cas Piancey
Lucky me.

00:17:11:08 - 00:17:12:08
Cas Piancey
but also,

00:17:12:08 - 00:17:33:07
Cas Piancey
you and your coauthors seem to lump in a bunch of different category of critics into one, and that was like, part of my issue is that there was this concept of, not that, that critics need to account for lost opportunity, that there is this lost opportunity cost for all critics that we have.

00:17:33:09 - 00:17:35:13
Cas Piancey
Not been able to cash in on these,

00:17:35:13 - 00:17:40:02
Cas Piancey
these dreams, basically these numbers, the number go up,

00:17:40:02 - 00:17:46:20
Cas Piancey
argument and a bunch of different people were included in these categories. So as economists,

00:17:46:20 - 00:17:51:21
Cas Piancey
like Nouriel Roubini and Steve Hankey, I think that's how you say his name. I'm not exactly sure.

00:17:51:21 - 00:18:07:10
Cas Piancey
it was academics, it was journalists and it and, and then like a broader critic and I think so one obviously, Bennett and I come from, a journalism background, and I think that it's really difficult to lump in journalists,

00:18:07:10 - 00:18:10:16
Cas Piancey
into that broad category that you guys are talking about.

00:18:10:17 - 00:18:48:23
Cas Piancey
I don't know why I would need to mention every time I write an article about, say, Bitcoin, like including the sub header heads up. By the way, the first time I reported on bitcoin was in 2019 or 2018, and if I had purchased some bitcoin at that time, then it would be worth this amount. Like that seems pretty pedantic and silly to me because someone who is covering the oil industry, for instance, if they're covering, you know, Enron or Exxon, it's Exxon, like Exxon should they be talking about the first time they covered Exxon and be like, if I'd purchased their stock the first time I reported on it, then I might have this much

00:18:48:23 - 00:19:05:17
Cas Piancey
like, well, that's not a good argument for being a good reporter on Exxon. That's not a good argument for whether or not you're objective and fair in your coverage of the oil industry, whether or not you purchased a stock at a certain date, and whether or not you're invested in the industry. That has nothing to do with your actual objectivity.

00:19:05:19 - 00:19:32:03
Cas Piancey
Now, you guys mentioned Nouriel Roubini and these other like, people who, you know, their criticisms are perhaps different than the coverage of a journalist. So I like I think it's worth while to parse that out and separate these classes of critics, because journalists are reporting facts. And while Bennett and I might be on the critical side, we're not saying like Bitcoin is a scam.

00:19:32:03 - 00:19:34:01
Cas Piancey
It's going to zero all the time. You know?

00:19:34:01 - 00:19:39:08
Andrew Bailey
You raised two issues. Two kinds of critics. Maybe we should leave one of them for later. Which is,

00:19:39:08 - 00:19:44:22
Andrew Bailey
whether you've actually used. As opposed to held, and I think are separate issues. There.

00:19:44:22 - 00:20:03:00
Andrew Bailey
One thing that we're responding to in making these arguments is the claim from Bitcoin critics or from skeptics more generally, that anyone who ever says anything positive about Bitcoin must disclose how much bitcoin they have and how much it cost them.

00:20:03:02 - 00:20:28:08
Andrew Bailey
This is not an uncommon cry for disclosure, and we think that if that is fair, then by parity of reasoning, disclosure of lost opportunities is fair as well. Now, you could respond to this argument by denying that second claim and say, okay, you know what? Maybe disclosure is not so important after all. But if you've been writing about Bitcoin since it was $17 each, and you've been saying that the actual value is zero

00:20:28:08 - 00:20:32:13
Andrew Bailey
and this is an actual case, this is our our friend patio 11.

00:20:32:15 - 00:20:58:21
Andrew Bailey
If you've been doing that for 11, 12, 13 years and been proven empirically wrong, this is likely to induce various biases in you. The same kinds of biases or mirror images of the biases that those who have held Bitcoin for very long have. So their bias is to be pro, to pump, to say numbers go up. And if you've been calling for Bitcoin to go down to zero for so long and been proven wrong, you're going to be a little bit salty about that.

00:20:59:03 - 00:21:12:03
Andrew Bailey
And you're going to want to be vindicated. And for Bitcoin to eventually go to zero. So you'll eventually be proven correct. So we think it's fair to point out bias in either direction, or if it's fair to point out bias in one direction is point fair to pointed out in the other.

00:21:12:03 - 00:21:27:04
Cas Piancey
Okay, I just to counter here because you and I just talked. We were just talking about tether. And one of the things you said was like. Have you used it right? Have you bothered to use this this product that you're talking about and criticizing? And like, I know that me saying no, some people would be like, well, that functionally is a problem.

00:21:27:04 - 00:21:50:12
Cas Piancey
The fact that you aren't using this thing that you're criticizing is a problem. And and I want to I want to counter that with a couple things. One, just because I'm criticizing Tether or Justin Sun or whatever, doesn't mean that I think it's instantly going to fail, or that I'm not aware that there are some positives that exist within this realm.

00:21:50:14 - 00:21:52:04
Cas Piancey
And two, I want to say that like,

00:21:52:04 - 00:21:53:10
Cas Piancey
the idea that

00:21:53:10 - 00:22:06:13
Cas Piancey
if I'm proven like that, I'm looking for, for instance, that I'm looking for vindication from the tether story. I don't think Ben and I are looking for vindication anymore. I don't know about Bennett. We've talked about this. I'm not certain what's going to happen with tether.

00:22:06:15 - 00:22:29:22
Cas Piancey
My general feeling is that probably nothing like they're probably going to go on just fine for the time being, at least for the next few years. I don't see them getting shut down. I don't see like some, you know, people tell me I'm crazy for switching my opinion and changing my mind about like in 2018 and 2019 and probably even 2020 saying for sure it's getting shut down.

00:22:29:22 - 00:22:39:11
Cas Piancey
It's definitely going to happen to being like, I don't know what's going to happen with tether. I have no idea. Would it feel good to be vindicated and for tether to get shut down and for all that? Sure, maybe.

00:22:39:14 - 00:22:47:16
Andrew Bailey
Oh, it feel amazing. Come on. Man, you guys could go such a victory lap. I can just imagine Bennett's videos and he's going to have the receipts

00:22:48:01 - 00:22:52:23
Bennett Tomlin
I'd be. I'd be an insufferable asshole for at least 48 hours after it happened.

00:22:52:23 - 00:22:58:10
Andrew Bailey
six years of receipts of tweets that you can pull out, and you will have a thread with all of them. I can see it already.

00:22:58:17 - 00:23:24:11
Cas Piancey
For sure. And I'm. No, I don't disagree with you, Andrew, but I do want to say that I'm also not insane. That I'm like, well, that's definitely still going to happen. Like, I'm a human being. I can see that there are possibilities and probabilities here. Right. And so I just want to say that, like as much as, like, I guess I don't know if I don't know if Patrick Mackenzie, patio 11 as you mentioned, is like, is he still saying that Bitcoin is going to go to zero?

00:23:24:11 - 00:23:27:02
Cas Piancey
Like I don't think I've seen that from him in a very long time.

00:23:27:02 - 00:23:40:19
Andrew Bailey
he had a very interesting discussion of this with Tyler Cowan. And I believe October of 2023 is quarter four or so of 2023 and was pretty circumspect. Like, you know what? I've been calling for it to go to zero since it was either 13 or $17 a pop.

00:23:40:19 - 00:23:44:21
Andrew Bailey
I feel like I should say the market has proved me wrong, but I still don't think that they have.

00:23:44:21 - 00:24:02:19
Andrew Bailey
So he felt conflicted and was quite upfront about that in a way I found admirable. It seemed honest to the actual psychology, or what it's likely to be to have been, proven wrong by the market for so long. Maybe that's too strong a term, but to to not have been vindicated by the market for so long, it's got to do something to a guy.

00:24:02:19 - 00:24:05:23
Cas Piancey
just too quickly add on to that, I did a podcast with PJ Vogt

00:24:05:23 - 00:24:21:01
Cas Piancey
a while ago, and one of the questions he had for me was like, doesn't this make you crazy? And it doesn't make you crazy to be calling out a fraud or like something that you think is a fraud for a very long time, and to see it just continue and get more popular and get exponentially bigger

00:24:21:01 - 00:24:22:14
Bennett Tomlin
And the crazy came first.

00:24:22:14 - 00:24:24:04
Cas Piancey
and that well, I was like, I've always been crazy.

00:24:24:04 - 00:24:27:00
Cas Piancey
And he's like, no, really? Like, doesn't it actually drive you crazy though?

00:24:27:12 - 00:24:33:22
Andrew Bailey
I think he went to Hong Kong before you became a professional crypto critic. And that suggests that the crazy came first.

00:24:33:22 - 00:24:53:12
Cas Piancey
but I do want to say that like, I think, I think he's right in that there's certainly yeah, there's certainly levels to this. I mean Bennett and I did podcasts. We did tons of articles. We've spent a large portion of our known lives covering cryptocurrency and discussing Tether and Bitcoin and all of this stuff.

00:24:53:15 - 00:24:56:00
Bennett Tomlin
I don't want to know what I did in my unknown life.

00:24:56:00 - 00:24:57:09
Cas Piancey
I just mean publicly.

00:24:57:15 - 00:25:01:17
Andrew Bailey
One can turn to the archive.org to find out what Ben it was up to in 2016.

00:25:01:17 - 00:25:05:20
Cas Piancey
Let's talk about the, intermittent fasting. Anyway,

00:25:05:20 - 00:25:06:20
Bennett Tomlin
Deep cuts.

00:25:06:20 - 00:25:09:15
Cas Piancey
but anyway, I like, I guess,

00:25:09:19 - 00:25:33:22
Andrew Bailey
Speaking of deep cuts from Bennett, could I give an example of the kind of thing that I have in mind when I talk about critics who need to use the tools they're talking about? There's something Bennett did a few years ago. It was speculated that Craig Wright had done a man in the middle attack by which to get fraudulent signatures of a message from Gavin Andreessen, and it was speculated that, okay, here's how you do it.

00:25:33:22 - 00:25:51:16
Andrew Bailey
You have a fake copy of electrum, you have a Wi-Fi point that does this. The copy of Electron Electrum has been modified so that it returns as true any check for signature validity, as long as it has like three characters at the end of it (CSW) or something like that. Bennett went to the GitHub repo. I believe you compiled it.

00:25:51:17 - 00:26:09:13
Andrew Bailey
It changed the three lines of code, compiled it executed and discovered that, yes, this attack could work as it was speculated to have worked. So you actually dug into the tech stack, you played around with it, you used it, and you vindicated an important hypothesis. That's an that's the kind of thing that I like to see in critics.

00:26:09:15 - 00:26:17:09
Andrew Bailey
What I don't like to see is a critic who has never done that, and who still has opinions about how they think these things go. Similarly, critics

00:26:17:09 - 00:26:25:23
Andrew Bailey
sorry to back and you guys, but who who speculate about why people use tether but haven't actually used it to see there's something to this user experience that's actually appealing.

00:26:25:23 - 00:26:31:09
Cas Piancey
Well, part of part two. And just to to balance this out, part of my,

00:26:31:09 - 00:26:52:17
Cas Piancey
journey to discover even what tether was. Was that I. I, like, saw tether on a cryptocurrency website where I was purchasing whatever bitcoin, Ethereum, whatever it was. And I saw this thing and I was like, oh, dollars. Like I can buy out into dollars and just stabilize myself instead of needing to be in this volatile crypto cryptocurrency.

00:26:52:19 - 00:27:10:18
Cas Piancey
And then I suddenly realized later on that I was not buying dollars, I was buying tether. And I think that that is like a big part of the journey that got me started on this was being like, oh, I didn't even know what I was purchasing. And I feel like that's most people probably dealing with tether

00:27:10:18 - 00:27:11:12
Andrew Bailey
Probably.

00:27:11:12 - 00:27:13:11
Cas Piancey
have no idea what they're actually getting involved in.

00:27:13:11 - 00:27:32:07
Cas Piancey
So these tether disclosures that Benet and I and three other people in the entire fucking world care about, that. They're not looking at those disclosures. They don't care about those disclosures. They don't care about when tether says that, oh, it turns out we only have three quarters of every dollar that we say we have. They don't give a shit.

00:27:32:10 - 00:27:56:11
Cas Piancey
They just simply do not care because they're busy thinking they have a dollar in their account. So I like I definitely empathize with that idea. And this concept of, again, needing to use tether to be like, I understand why it's useful. I don't think I need to do that. I don't think I need to use it to be like, oh, I see why people like it and why it's good in cryptocurrency.

00:27:56:16 - 00:28:12:15
Cas Piancey
I get that it's and it's okay to be a critic from the side, not I don't need to interact with tether on a daily basis to be a critic of it, you know, and I and that doesn't mean, again, though, there's like a level there's a weird level to this where if I'm not acknowledging those benefits, then you're right.

00:28:12:18 - 00:28:29:08
Cas Piancey
I'm being unfair, right? If I'm not even acknowledging that it's beneficial for whoever it is, that it's still useful for speculation or for whatever real purpose in the real world, then I'm not being honest with myself or with everyone else, and I like that's a fair criticism of the critics. I think.

00:28:29:08 - 00:28:49:22
Andrew Bailey
Here's an example that we might find it easier to agree on. Bitcoin maximalists, especially, are upset that tether left the omni layer and has moved to Tron. I think if they've used tether on Tron, they would be less upset if they were reasonable, because it's far easier to use tether on Tron, and it doesn't take very much experience to understand this.

00:28:50:02 - 00:28:58:04
Andrew Bailey
So there's a kind of unreasonable, angry person who's like, why isn't tether still on Bitcoin? Because it's easier to not be in Bitcoin is the example is the answer.

00:28:58:04 - 00:29:02:08
Bennett Tomlin
Are there lots of bitcoiners upset that Tether's doesn't use Omni?

00:29:02:08 - 00:29:04:02
Andrew Bailey
Not anymore. They've given up

00:29:04:02 - 00:29:13:08
Bennett Tomlin
Because I didn't realize that group exists. And I knew some bitcoiners who were upset about tether using Omni because it drove up,

00:29:13:08 - 00:29:25:10
Bennett Tomlin
transaction fees and stuff like that. And there's no benefit to tether to using tether specifically on Bitcoin because tether centralize, yadda yadda yadda.

00:29:25:14 - 00:29:46:10
Andrew Bailey
One of the maximalist theses is that everything will eventually or should eventually be on Bitcoin. So if that's one of your theses, then you should think that tether will or should be on Bitcoin. And that thesis is undermined when you see people act not actually just not doing tether on bitcoin, but removing tether from bitcoin and putting on another chain which is in fact what's happened.

00:29:46:10 - 00:30:07:17
Bennett Tomlin
this discussion is interesting to me, in part because I feel very strongly that you can be critical of something without using it. And like, I think I've done it successfully in the past. And even in like the electrum example you gave there, other people before me had done similar things, or at least had documented how it could be done.

00:30:07:19 - 00:30:45:00
Bennett Tomlin
And so I wasn't really doing it to understand the attack. I was doing it because I thought it might make my piece of content I was producing more compelling to have, like the actual example. And here's how it would be done step by step. And like in the past, in other non bitcoin criticism I've done, like I think of the FAI stablecoin protocol, even before it was announced, I'd been able to go through the white paper, identify math that they had done incorrectly, and then model out their various incentives and stuff for their system and demonstrate, like in that modeling that the system wasn't going to work well,

00:30:45:00 - 00:30:46:09
Bennett Tomlin
kind of similarly, with Terra and

00:30:46:09 - 00:30:52:13
Bennett Tomlin
Luna, it was able to go through the documentation and stuff, never use that coin and be able to point towards like

00:30:52:13 - 00:30:54:09
Bennett Tomlin
issues in the system.

00:30:54:09 - 00:31:14:03
Cas Piancey
Bennett was calling out. We did. We recorded our episode on Terra and Luna days before. The whole thing. Entire thing collapsed. Neither one of us ever had to use the protocol. Like we didn't even have to get, like, the Bennett dug in, and I dug in on the most basic level, essentially, we didn't do

00:31:14:03 - 00:31:16:23
Bennett Tomlin
I mean, I went a little deeper than that, but.

00:31:16:23 - 00:31:32:20
Cas Piancey
I'm just I'm just saying, like, it didn't take us weeks and weeks of research or something to be like, oh, it's a it's a Ponzi scheme. This is a Ponzi scheme. Let me put $6 in and find out what happens to my $6. We didn't need to do that to find out what would happen to any money that we put into it.

00:31:32:22 - 00:31:40:01
Cas Piancey
And on top of that, like, I think there are other journalists and maybe I shouldn't name names and

00:31:40:03 - 00:31:40:23
Bennett Tomlin
You shouldn't.

00:31:40:23 - 00:31:48:06
Cas Piancey
publication. New York Times, where there were journalists who were espousing some of these protocols and talking about their success

00:31:48:13 - 00:31:49:14
Andrew Bailey
Was this Kevin?

00:31:49:14 - 00:31:56:15
Cas Piancey
it was, yeah, it was Kevin. Yeah, it was Kevin. Yeah. So but like,

00:31:56:15 - 00:31:59:05
Cas Piancey
yeah, just Kevin, let's just go with Kevin.

00:31:59:05 - 00:32:03:10
Bennett Tomlin
Could be any Kevin who works for that publication covering this beat.

00:32:03:10 - 00:32:24:07
Cas Piancey
but like, I do think that people took note of that and were like, yo, you you discussed multiple scams as like, net positive or like VC backed bullshit as, like these great innovative things. And he was his maybe his reputation overall hasn't been hurt. But I know amongst people like us it was like that. That was bullshit, dude, why did you do that?

00:32:24:12 - 00:32:41:16
Cas Piancey
And I think at least Bennett and I don't have to think about that when it's like, yeah, well, we didn't put any money in Terra and Luna, you know? And at the end of the day, the same goes for tether, where it's like, I don't think that tether is going to zero anytime soon. I don't think the authorities are going to freeze every tether right now.

00:32:41:18 - 00:33:05:02
Cas Piancey
But if it happened tomorrow, like, I don't know, we were still one of the first people talking about this thing. We were still like, I and and I never touched it. Right? Like I or I never I don't have money in tether right now. I don't I don't think about it as something that like, should necessarily exist and be a good part of the world like some other people certainly do.

00:33:05:04 - 00:33:07:11
Cas Piancey
But yeah, I like I guess I'm,

00:33:07:11 - 00:33:29:02
Cas Piancey
I'm curious why you guys have such a strong position on this idea that either people need to use the protocol or they need to divulge this disclosure. Again, where I think I do think actually disclosures are like quite important. But I also think that my like lost opportunity disclosure isn't a reality.

00:33:29:02 - 00:33:39:21
Cas Piancey
Like it's not a real thing. What am I going to disclose on anything I ever report on that I might have been able to purchase it at some point in my life. I mean, that seems so absurd to me. I guess.

00:33:39:21 - 00:34:00:20
Andrew Bailey
I have another example about why use can be helpful. But here's a concession to make, which is that I don't think that always in every case, is use required to understand or to critique. And the classic example that people throw back to me on Twitter when I make the case for this kind of critics should be users is, well, what about critics of drugs?

00:34:00:20 - 00:34:24:03
Andrew Bailey
Should they be users too? What kinds of drugs? And the answer to that is no. You don't need to take fentanyl to understand its dangers. So also for many other dangerous drugs. And yet, nonetheless, there is something to be said here. For if you want to understand why people use drugs and their effects, talk to actual drug users, even if you don't become one yourself.

00:34:24:08 - 00:34:39:01
Andrew Bailey
So maybe that's the slightly more moderate version and the best philosophical work I've ever read about psychedelics has been written by enthusiasts for lots of professional analytic philosophers who have used psychedelics. Bennett. What is this book you're holding up? What's this visual

00:34:39:12 - 00:34:58:00
Bennett Tomlin
This is Pihkal. It is half how to synthesize and experiential notes on various psychedelics. And the front half is a lightly fictionalized story of two organic chemistry who synthesized a bunch of psychedelic compounds and did a bunch of, experiments and psycho nuts.

00:34:58:00 - 00:35:01:05
Bennett Tomlin
And I was pulling it out because it is it was a

00:35:01:05 - 00:35:10:19
Bennett Tomlin
my field of study in college was biochemistry, and I originally intended to get into drug discovery and design, and it, it it was fine to me because there's a long history of,

00:35:10:19 - 00:35:15:14
Bennett Tomlin
drug chemists experimenting on themselves because in many cases, that was the,

00:35:15:14 - 00:35:20:09
Bennett Tomlin
most, most ethical way to do the like initial events of human trials and

00:35:20:09 - 00:35:22:02
Bennett Tomlin
stuff.

00:35:22:02 - 00:35:23:08
Bennett Tomlin
Yeah, exactly.

00:35:23:08 - 00:35:42:13
Bennett Tomlin
And so I would rank in my head, especially since even now, many of the best chemists I knew or do still know were people who did experiment with various drugs and from that position would sometimes criticize certain things. And I do think there is often,

00:35:42:13 - 00:35:44:04
Bennett Tomlin
understanding to be gained

00:35:44:04 - 00:35:47:03
Bennett Tomlin
from using something that you might otherwise be critical of.

00:35:47:03 - 00:36:12:09
Andrew Bailey
a special case here where use can disclose things that are very hard to learn. Trust lessly without in fact using. And this is privacy tools. So let's say I want to know for sure that shielded transactions in Zcash are indeed shielded. The best way to do that without having to trust Zucco or anybody else, or watching a documentary on YouTube where they go through the process is to actually do a shielded transaction myself.

00:36:12:12 - 00:36:32:19
Andrew Bailey
So I know the recipient and the amount, and then I look in the blockchain and see what can anybody else know? And the answer is nothing. And I dig in and I make sure, yeah, the answer is nothing. Then I can, without trusting somebody else, have a fairly high degree of certainty that the shielding works as intended. And that's not understanding that can be given to me by somebody else.

00:36:32:19 - 00:36:41:22
Andrew Bailey
I have to do the work myself. Otherwise I'm simply trusting them. And when it comes to privacy tools, maybe you don't want to just trust someone else. You want to actually verify yourself.

00:36:42:00 - 00:36:58:14
Cas Piancey
If the criticism is of the economics of the coin in question, or if the criticism is of the people who you need to trust to utilize the coin or the currency or whatever we're talking about.

00:36:58:14 - 00:37:01:00
Cas Piancey
Do you think that is still like an applicable

00:37:01:00 - 00:37:06:07
Cas Piancey
criticism of the critics? Do you think they still need to be utilizing it,

00:37:06:07 - 00:37:08:04
Cas Piancey
to be able to level those criticisms?

00:37:08:04 - 00:37:16:02
Cas Piancey
Or do you think it's a fair criticism if you're talking about almost the philosophy of the currencies that we're that we're talking about?

00:37:16:02 - 00:37:45:09
Andrew Bailey
It might be helpful to use a different verb than need, as though there's some requirement. Like we. We must do this. It could be just that it's helpful. Or it's useful to be a user. Maybe you're pointing to cases where it is not only not necessary, but less useful or helpful to be a user. So if we're thinking about Justin Sun's long string of dubious activities, having a Tron wallet in my possession that has a non-zero balance is irrelevant to assessing that.

00:37:45:12 - 00:38:07:10
Andrew Bailey
What I need to assess that is corporate records and public statements and tweets and deep dives from Mr. Tomlin and so on. These are the tools that I would use to understand that. And one doesn't need a Tron wallet in those cases. For economics, I think it might depend sometimes you can learn this from the white paper, but sometimes white papers lie.

00:38:07:12 - 00:38:27:06
Andrew Bailey
And so or they differ from what is in fact the case. There's a weaker way to put it. So what's described and what's still on the website isn't what is in the protocol. And you can either dig into the GitHub repo and read the code and then you realize, wait a minute, that's actually not the code that's being executed by the client.

00:38:27:08 - 00:38:49:17
Andrew Bailey
So there might be three layers here. There's the white paper, there's the open source code, and then there's the app as actually executed on people's desktops and on their phones. And if you really want to understand that sometimes you could rely on just the white paper, but sometimes you need to install the app and see that it differs in some important way from the code that's on the site, which might furthermore differ from the white paper.

00:38:49:19 - 00:38:57:09
Andrew Bailey
And you cannot know that deep, you know, go that to that third level without actually engaging, I think. Does that seem right?

00:38:57:11 - 00:38:59:14
Cas Piancey
Yeah. That seems fair to me. I so.

00:38:59:14 - 00:39:02:06
Cas Piancey
There's a couple more things.

00:39:02:06 - 00:39:05:03
Cas Piancey
So one of the things we wanted to discuss was,

00:39:05:03 - 00:39:17:20
Cas Piancey
This concept of a circular economy, which I think is, like, generally pretty simple when it comes to a nation state currency. Right. If I'm America and I issue American government backed currency that everyone has to use.

00:39:17:20 - 00:39:29:19
Cas Piancey
The circular economy is, like, almost self-fulfilling, like everybody within my economy, unless there's some horrible emergency or some huge issue is going to be utilizing that transactionally and and the government is relying on it.

00:39:29:19 - 00:39:38:15
Cas Piancey
And all of this is kind of happening in and of itself. I think there's a problem with Bitcoin's circular economic functionality.

00:39:38:15 - 00:39:43:00
Cas Piancey
And you guys talk about Lightning Network pretty bullishly in the book. I

00:39:43:00 - 00:39:59:15
Cas Piancey
disagree with that. I don't think that there's any way Lightning Network ever takes off to any real major extent. I don't think this is the answer to the fact that Bitcoin isn't utilized in the same way that cash is.

00:39:59:16 - 00:40:10:20
Cas Piancey
Do you think that is actually the answer, or do you think there is some sort of other solution in the future that could make for a more circular economy? Also, Bennett if

00:40:11:04 - 00:40:35:08
Bennett Tomlin
Yeah. So? So. Yeah. If I can jump in like we were talking before about how there's a bit of a spectrum of censorship resistance here, and we can put Bitcoin at one end, but not a lot of people seem to want to go to that end, they’re willing to accept other compromises, at least at this point in time. And one of the things that strikes me about

00:40:35:08 - 00:40:48:17
Bennett Tomlin
if Bitcoin really wants to be censorship resistant on the scale that it could be, it requires people to buy, sell, transact, get paid and stuff like that in Bitcoin.

00:40:48:17 - 00:41:00:20
Bennett Tomlin
why do you think that has been slow to develop? And do you think there's enough people who are willing to accept Bitcoin's unique properties to make that really feasible?

00:41:00:20 - 00:41:28:13
Andrew Bailey
I am not bullish on a hyperbitcoinization thesis. So this would be the claim that Bitcoin will became become a dominant reserve currency, or a currency in which major commodities and markets are priced. So that kind of thesis would predict. Give it a timeline. Let's say within 20 years that oil will be priced in Bitcoin, and that it's a unit of account in which contracts are denominated worldwide, a reserve asset, all that kind of stuff.

00:41:28:15 - 00:41:52:23
Andrew Bailey
We've had 15 years of history now, and though Bitcoin's price has trended up across that time, broadly speaking it doesn't look like it's used as a unit of account is ascendant. In fact, it's use as even a unit of account might be descendant over time, as competitors within the crypto market have taken up various niches. So for about 2 or 3 years, how are NFTs priced?

00:41:52:23 - 00:42:23:06
Andrew Bailey
You know, these are native digital goods. How are they priced in ether and how are ordinary goods priced? Well with US dollar substitutes like USDT. So I don't think the empirical evidence suggests that Bitcoin is on this inevitable path towards taking over money. It doesn't follow from that that Bitcoin isn't good or useful. So I really think it's important to tease apart a standard bitcoin or talking point from another pro Bitcoin, but more modest talking point.

00:42:23:08 - 00:42:48:04
Andrew Bailey
So the wild talking point is that Bitcoin is the future of money. I just don't think the evidence has vindicated that. And yet we can still think that Bitcoin makes the world better by offering a unique set of trade offs for those who need them. What are the trade offs for? Among other things, you have a very volatile unit of account where it's hard to price contracts in it so that you can match both your at the ingoing and the outgoing parts of your accounting, and plan your internal economy.

00:42:48:04 - 00:43:06:12
Andrew Bailey
That's that's hard. But on the other hand, you can hold this thing yourself without a custodian. It has no makers who can inflate you out of the value, or at least the percentage of the network that you hold. And you can trade it or give it to somebody else without the permission of a central bank or a commercial bank, or any of their deputized partners.

00:43:06:18 - 00:43:21:07
Andrew Bailey
And it's digital. So that is a weird set of trade offs that for some will be not very useful and maybe even unacceptable, but it can still make the world better because of those of us who do need to root around central banks or their deputized partners.

00:43:21:07 - 00:43:24:01
Bennett Tomlin
My fear was something like that. There would be, like,

00:43:24:01 - 00:43:55:01
Bennett Tomlin
failure to develop some kind of meaningful circular economy means that it becomes easier to target the ramps, right, either into or out of Bitcoin. And in doing so, severely limit its use for, like some of its most important censorship resistant properties. You're perhaps less willing to send the value over to Wikileaks or the dissent dissident journalist, or the sex worker or whatever.

00:43:55:06 - 00:44:19:11
Bennett Tomlin
If to buy that Bitcoin, you had to go through KYC and things like that, and, you know, your counterparty at the other end is going to struggle to transact it unless they can either go through KYC or find an alternative path. Do you worry that like things like that further reduce like the potential target market for like censorship resistant use of Bitcoin?

00:44:19:11 - 00:44:39:05
Andrew Bailey
Of course. So when people ask me what they should do, I rarely give advice. But I'm happy to give conditional advice. For example, if you really need Bitcoin as resistance money, then you should acquire some via cash. You should do a peer to peer transaction where you buy some bitcoin from someone in person, or perhaps online

00:44:39:05 - 00:44:48:12
Andrew Bailey
in some non mediated or minimally mediated way, but do not, for the love of God, go and exchange and then withdraw some bitcoin to it.

00:44:48:14 - 00:45:09:12
Andrew Bailey
An address that is linked to your name, and then send it to someone else who's going to withdraw it to a deposit address on an exchange linked to their name. You've gained very little by way of resistance. In fact, maybe you lost something by way of resistance, because in the middle is a public ledger that anybody can read, which is less private than commercial bank balances and wiring money and so on.

00:45:09:12 - 00:45:27:18
Andrew Bailey
Because not everybody can read those ledgers. So you may have not only not gained any resistance, you may have lost some by doing it that way. So I don't give advice. I don't tell people, oh go buy Bitcoin. But I do say if you want bitcoin for resistance purposes, then you should acquire it in the peer to peer way and dispose of it in the peer to peer way as well.

00:45:27:18 - 00:45:45:23
Andrew Bailey
Now does everybody do this? Of course not. No. Bitcoin's mostly a speculative instrument, but that nonetheless can, on the margin, support those who want to use it in this peer to peer way. It doesn't handle liquidity. It does make demand higher so that there's somebody who wants it just because the value is elevated.

00:45:45:23 - 00:45:46:09
Andrew Bailey
So

00:45:46:09 - 00:45:54:15
Andrew Bailey
I don't want to discount entirely the existence of speculators and the positive effects they have, sort of like house flippers in a neighborhood.

00:45:54:17 - 00:46:05:09
Andrew Bailey
These aren't people who are going to live in the house, but they actually increase increased liquidity in the market and make it better for those who want to buy or sell houses for actual use when they're house flippers who are available are always ready

00:46:05:09 - 00:46:18:01
Cas Piancey
Well, I it don't you think like. Don't you think that the the you say makes it better for them? They're increasing liquidity. That doesn't that doesn't necessarily make anything better. That just increases liquidity. Right?

00:46:18:03 - 00:46:36:02
Andrew Bailey
Well, increased liquidity will be linked to stability. It'll be linked to the ready sale ability or the ready by ability, even on markets that aren't directly linked to the exchanges, where speculation is happening because there's somebody who's going to do arbitrage between the peer to peer circulars side of things and the

00:46:36:09 - 00:46:40:13
Cas Piancey
I but I feel like I feel like a huge part of the criticism of the, the,

00:46:40:13 - 00:46:55:13
Cas Piancey
the at least if there is a criticism of the price of Bitcoin, like one of the fairer criticisms that I've heard, if you're going to try to argue about Bitcoin and its price and it being a currency, is that because it's so volatile,

00:46:55:13 - 00:46:59:13
Cas Piancey
its usefulness as a currency decreases because of that.

00:46:59:13 - 00:47:08:19
Cas Piancey
And I think part of that is these liquidity merchants being available, right? These people who whether we're talking about, I don't know,

00:47:08:19 - 00:47:19:16
Cas Piancey
who who was it? It was jump right when there's like been a noticeable people have been able to like track when jump was involved in Solana and when they're not. And it's like, oh, look at the liquidity.

00:47:19:16 - 00:47:25:02
Cas Piancey
Here's all of this. And then jump wasn't able to trade it anymore and the liquidity disappeared like

00:47:25:02 - 00:47:32:16
Bennett Tomlin
Yeah, but I think if you ask Solana traders or Solana investors, they preferred it when Trump was there providing liquidity.

00:47:32:16 - 00:47:37:22
Cas Piancey
they did. But but I'm trying to say that those people just like in oh eight,

00:47:37:22 - 00:48:00:09
Cas Piancey
like these people who are there to provide liquidity when times are good or when there's a reason to provide that liquidity, are only there when times are good, or when there's reason to provide liquidity as soon as anything happens. And there's any crisis where you actually do need liquidity, well, the house flippers disappear and the jump cryptos of the world disappear.

00:48:00:11 - 00:48:20:12
Cas Piancey
So that liquidity drying up actually hurts everybody in the end, because now the prices of all the values all around here are plummeting, or the prices of all the cryptos are plummeting all at once because all the market makers are gone. Right. Like, I think that providing liquidity, it's the same as anything else. We're talking about a tool.

00:48:20:17 - 00:48:35:06
Cas Piancey
You're, you're you're providing a tool. A tool can be a weapon or it can be something that is super positive. It can be a chef's knife. Right. Like I it is pretty hit or miss whether or not it's a good thing or a bad thing, I guess is my my only argument there.

00:48:35:06 - 00:48:53:02
Andrew Bailey
I think that argument would also apply to the example I gave of house flippers in a neighborhood. The house flippers will be less likely to be active in a real estate bear market. And more likely to be active in a real estate bull market. It's still good. It's better for housing inventory that they're people be they're ready to buy and sell than not.

00:48:53:04 - 00:49:00:19
Andrew Bailey
It smooths out the price over time, and they hold the property and are ready to sell it. And not just when they're trying to move out because they don't actually even live there, but

00:49:00:19 - 00:49:08:21
Andrew Bailey
they're taking a risk in order to provide that service of buying and selling. And maybe they provide that service more in a bull market than a bear market.

00:49:08:23 - 00:49:12:13
Andrew Bailey
Fair enough. Probably true in crypto as well as in real estate. And

00:49:12:18 - 00:49:33:07
Cas Piancey
Couldn't the argument be made that they help? Couldn't the argument be made that they help cause the crises that occur when they do occur? Right. When the when the price, when the when the housing crisis occurred, I would say there is a huge problem when it came to house flippers, but it was house flippers being given credit from the banks being given like that.

00:49:33:10 - 00:49:58:12
Cas Piancey
The house flippers were incentivized from all of the other parties involved, just like I think market makers and all these other people involved in the leveraging up liquidity and the price of cryptocurrencies, whether we're talking about 3AC right, or Celsius network or jump crypto or Cumberland Global or whoever, like, these people are incentivized to be there until they're not.

00:49:58:12 - 00:50:20:19
Cas Piancey
And then when they pull everything out, I feel like that hurts retail and consumers the most. So like while house flippers might be helping the market in good times, they really hurt the end user the most when they have to leave and when there aren't any anymore. Like, the people getting hurt aren't just like the banks who are closing the mortgages on the houses.

00:50:21:00 - 00:50:41:00
Cas Piancey
It's people were having the mortgages close down on them and having to leave their home. Right. Like, I guess that's what I'm trying to say is that this is not it seems like a net positive when everything is good. But as soon as times are bad, you can see that it isn't just a net positive anymore. And and I'm thinking about this with a lot of stuff lately when it comes to like, I,

00:50:41:00 - 00:50:43:12
Cas Piancey
crypto, like whatever.

00:50:43:14 - 00:50:47:17
Cas Piancey
I and this was a part of the big part of the book is you guys are suggesting, like

00:50:47:17 - 00:50:55:19
Cas Piancey
overall Bitcoin is a net positive, right? Like that. This is a better thing for the world then. And, and,

00:50:55:19 - 00:51:14:21
Cas Piancey
for everyone out there, there for a lot of them, they're mostly philosophers. So they're like philosophizing about whether or not it is a good thing or a bad thing or how and why and, and that's why Ben and I really enjoyed this, but I, I and maybe this is why you guys wrote it, but I, you know, it's kind of impossible to answer that, right?

00:51:14:21 - 00:51:17:02
Cas Piancey
Like, I love cash, but,

00:51:17:02 - 00:51:18:23
Andrew Bailey
That's why we're friends. Because I love cash to.

00:51:18:23 - 00:51:48:23
Cas Piancey
I know, I know you do. I know you do. But I also, I also reflect on cash, and I'm like, I love cash for all of these reasons, but I don't know if cash is like a net a good thing or not. I really don't, you know, like, there's a lot of terrible people that use cash. There's a lot of honestly, guys, the reason I, I was reflecting on this so much today was because I was thinking about my wife in China, and I was thinking about the trade offs that that are made in those two countries and the lives that we lead and the drastically different lives that we lead and the drastically

00:51:48:23 - 00:52:10:22
Cas Piancey
different life she'll have when she lives in America, versus the drastically different life that I have when I spend time in China. And those trade offs are like super real. And I'm not sure one is good or bad, right? Like, I'm not sure. I know it's easy for us as Americans to be like, yeah, well, freedom. Duh. Like I get freedom, so why would I have any have it any other way?

00:52:10:22 - 00:52:36:15
Cas Piancey
But it's like, oh, well, why would you have it any other way? They get like affordable health care safety like you've never seen before in your entire life. There aren't mass shootings every other day. There's no crazy, stupid political shit because there's one political party, like there are real trade offs. And they're not just negative trade offs. And I think it's really tough for Americans to reflect on things like that.

00:52:36:15 - 00:52:59:06
Cas Piancey
But it's also tough for us to reflect on innovation. Now where I'm like, is it innovation, though? Like, isn't it just a trade off? Indoor plumbing wasn't innovation. Is AI the same kind of innovation as indoor plumbing or something? Like, are we saving lives? Are we drastically going to alter the way that humans live in a really positive way?

00:52:59:08 - 00:53:06:22
Cas Piancey
Period. I don't actually know. And I think it's a really tough question to answer with something as complicated as Bitcoin. Truly.

00:53:06:22 - 00:53:27:01
Andrew Bailey
Do their cats. I live in Singapore. And I've lived here for my 13th year. Now by choice. So I'm familiar with the idea of making a very different trade off and the kind and quality of life that I enjoy here than what most Americans enjoy. This is not a liberal democracy. It is a democracy, but not a liberal one.

00:53:27:03 - 00:53:41:03
Andrew Bailey
And you can tell by my actions, don't, you know, don't pay attention when I say, look at what I do. I've chosen to live in a place like that. So I get exactly what you're saying. Even though Singapore and China are very different places, there are some trade offs that are similar in kind

00:53:41:03 - 00:53:43:18
Andrew Bailey
when it comes to money.

00:53:43:20 - 00:54:02:23
Andrew Bailey
I think each of us is in a very different situation. We each have different lives. We each have here. Here's an image from John Stuart Mill. He's like, every man has a different back and shoulder, so every man needs a different coat. And the coat is your lifestyle. And so also for money we have different needs. Some of us need resistance, sometimes not.

00:54:03:04 - 00:54:23:15
Andrew Bailey
So I think it's good to add options that trade off in different ways. And that's what Bitcoin does. It adds this very weird little corner edge case that has some pretty severe trade offs that not everybody will want. Now does that make the world net better? It's so there are two questions here. Does it make it better for the user and then does it make the world better?

00:54:23:17 - 00:54:40:06
Andrew Bailey
I think we can leave the first question to users themselves. We can let them decide which money to use. As to evaluating for the world. As you know, we have a device in the book to try to get at that deeper and more difficult question. This is the veil of ignorance. I'm happy to walk through that, if you like.

00:54:40:08 - 00:54:41:05
Andrew Bailey
If if not,

00:54:41:05 - 00:54:43:00
Andrew Bailey
I can just say read chapter four,

00:54:43:00 - 00:54:54:22
Andrew Bailey
for anybody listening. And you can you can hear more about that. But the idea is to find a thought experiment that helps us think about things more neutrally, without respect to which person we are, and then evaluate Bitcoin from that neutral perspective.

00:54:54:22 - 00:55:00:11
Andrew Bailey
But this, of course, is hard because each of us has a non neutral perspective, namely our own.

00:55:00:12 - 00:55:04:21
Andrew Bailey
And it's difficult to break out of that. So you need these weird tools to do so.

00:55:05:00 - 00:55:08:16
Bennett Tomlin
Before we wrap this up, I need to channel my inner. My inner,

00:55:08:16 - 00:55:11:08
Bennett Tomlin
Micah Warren for a few minutes.

00:55:11:08 - 00:55:13:14
Bennett Tomlin
We've kind of talked about how

00:55:13:14 - 00:55:44:12
Bennett Tomlin
even many users who need more censorship resistance then their default fiat currency allows, often choose other alternatives before Bitcoin. And, like for me, when I look at that and I look at Bitcoin, I see a small and often it feels dwindling pool of like transactors and participants in the Bitcoin network who regularly need or want censorship resistance.

00:55:44:14 - 00:55:54:00
Bennett Tomlin
And I combine that in my head with the increasing number of Bitcoin under the control of relatively few individuals.

00:55:54:00 - 00:55:56:00
Bennett Tomlin
We've mentioned Saylor,

00:55:56:00 - 00:55:57:23
Bennett Tomlin
we can talk about Justin Sun,

00:55:57:23 - 00:56:02:08
Bennett Tomlin
Nayib Bukele. He supposedly has a bunch of bitcoins somewhere.

00:56:02:08 - 00:56:05:00
Bennett Tomlin
I'm sure he'll tell people where eventually.

00:56:05:00 - 00:56:11:20
Bennett Tomlin
And like, so there's a smaller number of people who use and need these censorship resistant features of Bitcoin.

00:56:11:22 - 00:56:39:07
Bennett Tomlin
There's all these other parties who don't need them, or at least aren't using those features, like as regular users to transact with people that they are often likely to be censored from. And I increasingly worry about like kind of what you all describe as a semantic attack in the book where what is Bitcoin becomes changed, or there's this disagreement in what is bitcoin.

00:56:39:09 - 00:57:01:12
Bennett Tomlin
And maybe this comes from having like lived through the block size war. But like that seems always to me like a possibility, especially in and like the specific thing I expect could eventually cause that crisis is like the $21 million or not dollar, 21 million bitcoins cap.

00:57:01:14 - 00:57:05:01
Bennett Tomlin
My worry when I look at it is for

00:57:05:01 - 00:57:19:03
Bennett Tomlin
Bitcoin to maintain its security budget as it is now going forward and things might change, there could be additional development and various other ways to transact that minimize and chain transactions that will

00:57:19:03 - 00:57:31:12
Bennett Tomlin
pretty quickly in a decade. Two decades would ever start to price out more and more people who need like the actual censorship resistance and like that tension there.

00:57:31:16 - 00:57:54:22
Bennett Tomlin
And I'm not being entirely clear, but like, it seems to me that there are a lot of paths forward where Bitcoin eventually breaks into multiple things, where a group of individuals try to fork away and raise the cap to subsidize miners with further issuance, diluting the network effect like you talked about or,

00:57:54:22 - 00:57:59:03
Bennett Tomlin
Micah talked about a few of these different possibilities in his book, Large Custodians.

00:57:59:03 - 00:58:23:12
Bennett Tomlin
Eventually agree to fork off, even perhaps with minority hash rate and declare their thing Bitcoin because of state pressure, economic pressures, contracts that they shouldn't have signed, whatever. Some force that makes them have to try to argue this thing is now Bitcoin. What do you think keeps like bitcoin as Bitcoin for the next several decades?

00:58:23:12 - 00:58:31:02
Andrew Bailey
I think I can speculate responsibly only into the next few years and decades. You know the responsibility.

00:58:31:02 - 00:58:33:14
Andrew Bailey
Quotient goes down as one looks further and further

00:58:33:21 - 00:58:34:16
Bennett Tomlin
Fair enough.

00:58:34:16 - 00:58:37:03
Andrew Bailey
There's a lot going on here, Bennet.

00:58:37:03 - 00:58:42:10
Andrew Bailey
There's fee crisis FUD, there's semantic attack FUD, there's,

00:58:42:10 - 00:58:45:11
Andrew Bailey
centralized control FUD. And you're giving a,

00:58:45:11 - 00:58:52:08
Andrew Bailey
a series of pretty dire stories where these all interact in ways to undermine Bitcoin's ability to be resistant money.

00:58:52:08 - 00:59:16:13
Andrew Bailey
I think there are both social and technical aspects that we'd have to think about to understand whether Bitcoin can withstand these attacks. So let's speak first to the technical. We need at least one major soft fork to enable sovereign, censorship resistant use of Bitcoin for an appreciable fraction of the world's population. Let's say if we want to get an order of magnitude more than what we have now.

00:59:16:17 - 00:59:17:04
Andrew Bailey
So

00:59:17:04 - 00:59:30:17
Andrew Bailey
again, I'm not a hyperbitcoinization guy, but let's say that we wanted to enable a bigger portion of the world, let's say one order order of magnitude more of the world to enjoy these wonderful resistance money features. We need at least one soft fork to do that.

00:59:30:17 - 00:59:43:02
Andrew Bailey
I myself favor covenants. Things like Bip 119 CTV, which allow for sharing of UTXOs in a trustless way and for enhanced privacy and self-custody.

00:59:43:04 - 00:59:59:00
Andrew Bailey
Now, the cool thing about the soft fork is that it doesn't require the cooperation of the whole network. You just do it. And as long as no major economic nodes within the network deny it, and as long as miners don't deny it, then you've basically won.

00:59:59:00 - 01:00:10:13
Andrew Bailey
So there's a technical side and people interested in this can dig into things like Bip 119 or drive chains or other weird little supplements that could enhance Bitcoin's ability

01:00:10:13 - 01:00:19:03
Andrew Bailey
function well for all the social side is harder to evaluate because this is a matter of predicting what the crowd will do.

01:00:19:05 - 01:00:47:11
Andrew Bailey
And I agree with you that the pool of, let's call them resisters, people who use Bitcoin as money and in particular as resistance money that it feels like this is a dwindling pool. Now, here's a hypothesis. I think that in terms of absolute numbers, that pool hasn't dwindled and in fact has grown. But because the larger pool of Bitcoiners, which is mostly number go up guns, has grown dramatically, though, that that pool,

01:00:47:11 - 01:00:48:15
Andrew Bailey
has been drowned out.

01:00:48:16 - 01:01:09:17
Andrew Bailey
Or at least it's easy if you're not looking for it to be drowned out. It's much easier to find the new voices than to find Bitcoin as resistance money, voices. But those voices could play an important role in preserving Bitcoin as resistance money in the future. Here are a couple of ways that can do that. One is by economically enforcing

01:01:09:17 - 01:01:15:03
Andrew Bailey
a soft fork, that is, by instructing their nodes to,

01:01:15:03 - 01:01:25:15
Andrew Bailey
to upgrade, let's say with Bip 119 and to fork to be prepared to do the so-called user activated soft fork.

01:01:25:20 - 01:01:53:11
Andrew Bailey
If anybody tries to hard fork away from Bip 119 or some other soft work upgrade. Now this is the nuclear option, because when you either signal readiness to do this or in fact do it, you're taking the risk of being on the wrong side of a fork. Now, who's willing to take that risk? Only somebody with something of greater value on the line, their own liberty, their own happiness, their own, their own ability to not be thrown into jail or something like that.

01:01:53:11 - 01:02:17:00
Andrew Bailey
So as long as there's some people willing to do that and make a credible threat to do that, that is significant protection for Bitcoin. So a guiding hypothesis I'm not going to, but let's say it's greater than 50% chance, but certainly not close to 100 is that there are still enough of those people around who are willing to make those risks, or at least to give a credible threat of doing so.

01:02:17:00 - 01:02:36:20
Andrew Bailey
And as long as there's enough of them around, then it keeps everybody else in check from engaging in some wild, hard fork that will retire Bitcoin's ability to serve as resistance money, or stop the ability of the soft fork to expand Bitcoin's, censorship resistant access to all in a trust reduced way.

01:02:36:20 - 01:02:45:21
Andrew Bailey
I agree that on chain access is quite important here, and that thinking about fees is the way to evaluate that on chain.

01:02:45:21 - 01:02:49:12
Andrew Bailey
Bitcoin is the way to get it most censorship resistant.

01:02:49:12 - 01:03:04:10
Andrew Bailey
And yet there's this dilemma for fees. Either the fees are low or their high. If they're low, then everybody can use it. On the other hand, that means that miners aren't getting paid and their subsidy pay is going down dramatically. And indeed by half every four years. So that's no good.

01:03:04:12 - 01:03:12:19
Andrew Bailey
On the other hand, if fees are high, then people can't use it. So this is a fundamental dilemma. I'm not saying that Bitcoin is effed either way, but,

01:03:12:19 - 01:03:25:12
Andrew Bailey
I think that there are variables here, both social and technical, and they kind of interact too. So that's not a prediction. That's not a full scale assessment. But those are the variables that I would look at.

01:03:25:12 - 01:03:32:08
Andrew Bailey
Bennett when evaluating Bitcoin in the next five years and then thinking more speculatively, ten, 15, even 20 years out.

01:03:32:08 - 01:03:40:18
Cas Piancey
Yeah, that seems like a pretty good summation of what Bennett and I had in mind for talking about today.

01:03:40:18 - 01:03:45:12
Cas Piancey
Is there anything that you wanted to discuss before? We. We call it Andrew.

01:03:45:12 - 01:03:47:00
Andrew Bailey
I'm just glad to hang out with you guys.

01:03:47:09 - 01:03:49:03
Cas Piancey
Well, it was awesome talking to you.

01:03:49:03 - 01:03:55:14
Cas Piancey
Bennett and I both really enjoyed the book. I know there's some some deep cuts to critics in there.

01:03:55:14 - 01:03:56:07
Cas Piancey
But,

01:03:56:07 - 01:04:07:02
Cas Piancey
but we did both really enjoy it, and I and I actually do recommend that that everyone go and check it out. I will say it's kind of like, like an educational

01:04:07:02 - 01:04:07:11
Cas Piancey
book.

01:04:07:14 - 01:04:08:06
Cas Piancey
It

01:04:08:06 - 01:04:12:01
Andrew Bailey
It was written by three philosophy professors. I'm afraid we cannot hide that fact.

01:04:12:01 - 01:04:19:18
Andrew Bailey
It has all the. All the weirdness you might expect from a book written by three philosophy professors who've decided to build their careers on bitcoin.

01:04:19:18 - 01:04:22:04
Cas Piancey
So with that understanding, it is not

01:04:22:04 - 01:04:32:18
Cas Piancey
number go up by Zeke Fox, which was like this enthralling discovery story. This is like teaching you about Bitcoin and money.

01:04:32:18 - 01:04:34:03
Cas Piancey
It helped me realize there

01:04:34:03 - 01:04:35:07
Cas Piancey
there and there's number go up.

01:04:35:07 - 01:04:47:00
Cas Piancey
But but this this data helped me realize things like, like there are people like you, Andrew, and others who are really good at talking about what money is and how it interacts with society and culture.

01:04:47:00 - 01:05:02:23
Cas Piancey
And then there's people like Ben and I, and that is really not something we ever need to discuss, ever. So I'm glad you're doing it. And people can read your book if they want to, if they want to hear about that stuff. So that when Ben and I eventually finished our tether book, we never have to mention any of that in any of it.

01:05:02:23 - 01:05:08:00
Cas Piancey
We could just say, read Andrew's Resistance Money book instead. If you want to hear about that.

01:05:08:00 - 01:05:11:04
Andrew Bailey
I will I will instruct people to read your book, too. It's

01:05:11:04 - 01:05:18:20
Bennett Tomlin
Bitcoin is a cryptocurrency. We can skip the whole chapter that every crypto book has to have. And what is Bitcoin?

01:05:19:03 - 01:05:30:14
Andrew Bailey
I think the worst chapter is not the What is Bitcoin chapter? It's the what is money chapter where our journey begins and the Isle of Yap. That's that's the worst part of every Bitcoin book for me. The tedious history of money.

01:05:30:15 - 01:05:40:19
Cas Piancey
Thank you, Andrew, for joining us. It was such a pleasure to have you on. We've been talking about doing this forever. Obviously, Andrew wrote this book. Hopefully his next book is about Cash Coin instead, but

Crypto Critics' Corner

Episode 156 – Is Bitcoin good for the world? (feat. Andrew Bailey)

Is Bitcoin good for the world? (feat. Andrew Bailey) – Crypto Critics' Corner

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Episode 156 – Is Bitcoin good for the world? (feat. Andrew Bailey)

Is Bitcoin good for the world? (feat. Andrew Bailey) – Crypto Critics' Corner

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Other resources mentioned in this episode:

Where to find Crypto Critics’ Corner:

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