Bridging Two Worlds

Every passage, on the record.

1. 00:01Reference

   an idea that has been made popular most recently by Jason Lowery and that is Bitcoin as a defense system, primarily how it is going to change the way that we interact in cyberspace, the ability to inflict or impose real world energy costs on attackers in cyberspace.

2. 00:01Claim

   That changes the game, it changes how we relate to one another in cyberspace and it can happen in, from, through cyberspace.

3. 00:37Idea

   The use of Bitcoin will change how energy can be channeled to defend oneself... it is transferable cyber power and power is the consumption of energy over time. You know, that is the power equation.

4. 01:07Claim

   P equals E over T or set another way. P equals W over T work over time, right? P equals energy over time... And Bitcoin is tied to the physical world through proof of work. There's only one way to get Bitcoin energy in.

5. 01:07Quote

   There's only one way to get Bitcoin energy in.

6. 01:38Idea

   What can you do with this cyber power? You have a receipt for this real world power.

7. 01:38Analogy

   How do you defend yourself in the physical world with energy? One way that you could do it is you could build a moat around your castle... Why does a moat around your castle work? Well, the attacker needs to expend a large amount of energy to overcome the energy you already sunk into creating the moat in the first place. So without expending that energy, they will not be successful at attacking you.

8. 02:12Claim

   You sunk tremendous energy resources into building a defense system embodied in the castle. That castle represents a tremendous amount of energy. To penetrate the castle will require a very large energy transformation. It is very costly to the attacker... In cyberspace, we have not had adequate defense systems because there was no way to impose a real world cost on attackers.

9. 02:44Claim

   The attackers have had the advantage and defense has been extremely costly and not very effective for nation states, for corporations, let alone, you know, your average person... now with Bitcoin being proof of real world power, Bitcoiners have the ability to impose real costs on attackers in cyberspace.

10. 03:16Analogy

    You put someone on the door to stop entry into a specific area. For an attacker to gain entry, they need to overcome the bouncer. Well, Bitcoin is the bouncer. Provide the energy necessary and you can come in. If you can't prove you control the necessary energy, you cannot get access to whatever it is.

11. 03:16Quote

    There is a cost to faking it.

12. 03:46Claim

    To do X, you must have sufficient energy. There's no way around it. If you don't have X amount of SATs, which is proof of power, you can't do Y the action. There's no getting around it. That's it.

13. 03:46Reference

    this is essentially the exact opposite of the power that is enabled by CBDCs. So central bank digital currencies, with them, a centralized controller can remove access in the digital world to funds or a digital ID system can be used to bar you entry to a checkpointed area in the physical world.

14. 04:24Analogy

    So you change a slave's travel status from green to red in the digital world and it manifests itself in the physical world when the slave tries to get on the train to move and they are now constrained. They can't. The checkpoint limits their movements in physical space.

15. 04:24Claim

    Well with Bitcoin, we can bar access in the digital world by requiring energy in the real world. So the obvious big difference here is that it is an open and permissionless system.

16. 04:56Reference

    this idea can be seen again, explained by Jason Lowery, with building trust in cyberspace by implementing lightning walls rather than paywalls.

17. 04:56Claim

    You want to send a message? Okay, that's going to cost you one set. Now what can I tell from you deciding to spend that one set or to put that energy into that message?

18. 05:29Quote

    Don't show me, don't tell me what you value. Just show me where you're sending sats.

19. 05:29Reference

    This goes back to the podcast where we talked about talk is cheap. Bitcoin is not.

20. 05:29Quote

    Talk is cheap. Bitcoin is not.

21. 05:59Idea

    If the users act honestly, well, they will get their Bitcoin back. If they act dishonestly or if they violate the rules... they will pay a cost in the real world. So while it might sound like a paywall... it is actually an energy wall rooted in the physical world.

22. 06:30Claim

    This is, we're talking about instant happening most likely in the background with no need for any personal information apart from do you have the power or not?

23. 06:30Reference

    this idea is most common in Bitcoin circles via the argument with Michael Saylor and his idea for orange check marks on Twitter.

24. 07:08Claim

    To get an orange check would require depositing some amount of satoshis. Now, if you act honestly, you can get continued access to the platform. But if you act dishonestly, if you violate the rules, essentially you are forfeiting your Bitcoin at that point.

25. 07:40Quote

    Bitcoin is becoming or can become a defense weapon that is non-lethal.

26. 08:10Claim

    Constraints put in place demanding Bitcoin can only be overcome with proof of real world energy. And this is a massive idea. This is a mind altering approach to seeing the world, to seeing how value is going to be transferred and how it's going to help regulate honest activity in a world that was in a way that was not possible before.

27. 08:48Idea

    Let's now think about how can the proof of energy idea manifest itself in the future, in a post-hyperbiquinized world, in the actual physical world... Well, if we think about it, Bitcoin can become the antlers of human interaction.

28. 09:24Analogy

    Just like antlers can be verified in the visual realm by deer, what are antlers telling? What are large antlers telling deer? They're saying, well, that particular deer with the large antlers can project quite a bit of power. So I probably shouldn't mess with that deer if I don't have antlers as big because it's going to be able to attack me and I won't be able to attack it. Eventually it's going to overpower me and I will be defeated.

29. 09:56Claim

    If money is ultimate optionality and Bitcoin is the best form of money that we have ever had access to, Bitcoin is ultimate energy optionality. If you have a lot of Bitcoin, you have a lot of ability to project a lot of power.

30. 09:56Quote

    Bitcoin is ultimate energy optionality.

31. 10:27Claim

    Either you control the energy or you don't. Everyone can prove how much energy they actually control and we can measure it in a way that cannot be manipulated. And just like antlers can be verified with the visual realm, so Bitcoin can be verified.

32. 11:05Prediction

    Essentially, when Bitcoin becomes the preferred medium exchange, which it will, Bitcoiners will have armies at their fingertips.

33. 11:05Claim

    What is an army? Measured in Watts, it is the ability to project power. To translate that, it's the control of lots of energy that can be directed where the leaders wish it to go... Energy was transformed from reserves into those things I just mentioned.

34. 11:39Prediction

    In the future, if we live in a hyper Bitcoinized world, no government, no entity can stop transfer of energy from one address to another.

35. 12:18Analogy

    I'm sure you have seen those videos of these drones that are delivering dog like robots with machine guns on their backs to remote areas... those people who are building these things, they're going to want to exchange those things for Bitcoin. If Bitcoin is the preferred medium of exchange, think about how much power you have access to if you hold Bitcoin, that you can at the speed of light transform from Bitcoin into these droid armies.

36. 12:48Prediction

    You can have them deployed to delete your enemy. Is it actually necessary to go through that process?

37. 13:19Claim

    If you have access to more energy, you are more powerful. Where is the fight? If we can measure the outcome beforehand, if we can know the outcome for a fact beforehand, and it's naive to think that it's going to be any other way in the future.

38. 13:52Claim

    The beauty of Bitcoin is you can only really pull that off once if you have more Bitcoin. Because as soon as you purchase the Droid Army, that Bitcoin is gone... It is redistributed to the droid makers, the commodity producers who gather the materials necessary to manufacture the droids and so on down the chain... Bitcoin hodlers are incentivized to make everyone around them as efficient as possible because that increases their own returns.

39. 14:57Idea

    Bitcoin as a whole represents the TASOE, the total accessible supply of energy, that the economy, which in Bitcoin's case is made up of everyone willing to share and store energy within the rule set.

40. 14:57Claim

    In a hyper Bitcoinized world, the more efficient the world becomes, the more the hodlers are rewarded with their ownership pie increasing in size. Not the percentage, but the actual number inside is increasing.

41. 15:30Prediction

    The enormous advantage that early Bitcoin adopters will have will not last forever. Over time, they will need to part with stats to gain access to energy... Energy will flow eventually to those that become the most efficient. But this is going to take a long time.

42. 16:02Claim

    Those that are late to the party, what is going to happen to them in terms of their ability to control the amount of energy reserves that they would normally be able to control versus after Bitcoin becomes the preferred medium of exchange, the preferred store value.

43. 16:36Prediction

    There will be countries, there will be nation states, there will be governments that let others debase their own currency and exchange it for Bitcoin while people are still fiat-brained... Someone has to go first.

44. 17:07Prediction

    There will be a point where no amount of fiat will buy Bitcoin.

45. 17:07Quote

    There will be a point where no amount of fiat will buy Bitcoin.

46. 17:39Claim · condensed

    How do governments spring up in the first place? They are the largest energy holders in the region... They can then direct the most amount of energy to defend themselves and to impose their will against those that would oppose them. They provided a more efficient option than the alternative.

47. 17:39Claim

    The way governments keep large, wealthy individuals in check now is through the centralized financial system. You go against them and they can cut off your funds. They can cut off your ability to access your energy reserves no matter how massive they get. You can't hide because it is a centralized system and they can cut you off from it.

48. 18:42Prediction

    If the government is late to the party, they are essentially writing their own obituary. They are eliminating themselves from the table.

49. 18:42Quote

    They are essentially writing their own obituary.

50. 19:15Claim

    In a Bitcoin world, you can't force anyone to pay taxes. If they don't want to pay, you can't make them. You can't freeze their accounts... You can still impose physical constraints on them, right, for example, by locking them up. But you can't confiscate the value even then, even after you lock them up, you can't take the Bitcoin if properly custody.

51. 19:46Quote

    Enforcement, when defense is essentially costless, is very, very expensive.

52. 20:18Claim

    For small businesses and services, why would you, when your competition won't, right, direct exchange via Bitcoin means there is no way for the government to track how much is moving and where it is moving on a mass scale. It's just too costly to do that.

53. 20:51Prediction

    Countries that fall behind early simply won't be able to keep up with the energy reserves necessary to stay on life support through confiscation alone.

54. 20:51Claim

    Bitcoiners will be forced to distribute stats over time to the most efficient entities. Bitcoin whales won't be able to enforce any of the things that present day governments can enforce either.

55. 21:56Claim

    The most peaceful scenario that I can imagine takes place if and only if the United States is one of the first to make the shift to Bitcoin. And this is only because if they are late during the changeover, during that process, they are really the only nation state that has the ability, that has the most real world resources to be able to successfully clamp down on what Bitcoiners will need in a meaningful way post-hyper Bitcoinization.

56. 22:40Prediction

    If the Americans are late, what is the strategic play for them to ensure that they can continue to accumulate Bitcoin for the longest period of time moving forward? Well, for me, the play would be confiscate energy production across the world.

57. 23:13Claim

    There's no other nation that has the real world power to pull off an energy coup like that. And if the Americans were able to do that, they essentially would then price the energy in Bitcoin and force HODLers to exchange the Bitcoin for that energy... Even this scenario ends poorly, though, for the US government, because enforcing this plan requires massive energy reserves. Eventually those run out.

58. 23:43Open question

    I want to do an entire episode on that in the future, where I talk about not only that situation, but other situations which would play through what it looks like for different nation states, different levels to adopt Bitcoin and how that's going to impact the transition, because that is the murkiest part.

59. 24:25Claim

    It's hard to see on the other side how it's quite easy to see what it's going to look like when we get on the other side, because we know Bitcoin, we know the monetary issuance schedule, we know the reliability, we know the trust that emerges from that and we can imagine how efficient the world is going to become. But that transition from here to there is what is not known.

60. 25:09Claim

    Funding government becomes significantly more difficult. You can no longer print, which means power diminishes, which means the need for lobbyists goes, which means even less power still.

61. 25:09Prediction

    The percentage of GDP that comes from government spending will drop significantly.

62. 25:40Claim

    Without the government misallocating resources, true markets conform without the power to manipulate and hamstring markets through regulation and cronyism. Efficient firms will capture more and more market share leading to never foreseen growth.

63. 26:18Claim

    They're not even efficient enough to be able to collect the information that is going to tell them how much taxes they're going to need to be able to collect or that they can collect. And if they can't know how much I owe, well, they can't know how much I owe if they don't know how much I have. And Bitcoin makes that possible. Wealth tax and income tax become practically impossible.

64. 26:48Reference

    a good example of this is El Salvador and Bitcoin City. You know, they're a prime example of what it's going to take to compete on the global playing field for Bitcoiners.

65. 26:48Claim

    No income tax, no property tax, no procurement tax, just a 10 percent VAT.

66. 27:21Claim

    It all ties back into the idea that we started with, with this idea that Bitcoin allows for real world cost to be imposed in cyberspace. The ability to do that will change how we interact with one another, will change the incentive models of behavior in those spaces. And over time, that will make its way into the physical world.

67. 27:58Claim

    Back to the antler proposition that I laid out. Why fight if you know you're going to lose? Right. The answer becomes where the solution becomes compete and offer value.

68. 27:58Quote

    Why fight if you know you're going to lose?

69. 27:58Quote

    By removing all of the noise, what we end up with is just pure signal. And that signal tells us to be successful, to gain access to more energy reserves than you started with.

70. 28:34Quote

    All you have to do is compete and offer value.