EP23 Bitcoin podcast with Checkmate.

Welcome back to the Bit by Bit podcast. In today's episode, I speak with Checkmate. We talk about mining, renewables, chainalysis, and what the fuck happened in 1971. We cover this website in a previous episode.

In fact, two, one with heavily armed clown and the other with Ben Prentice. They are episodes 19 and episode 22. So do check those out if you haven't already. I really enjoyed recording this and I hope you enjoy listening.

As always, anyone who has any questions, please do feel free to reach out and ask me. I'd love to hear from you. - Hello. - Can you hear me all right? - Yes, I can. How's things? - Perfect.

- Yeah, good, how are you? - Thanks Max, yeah, good to be here. - Back over in Australia. - Yeah, we had to do an emergency ejection. It took us all of about 36 hours to move our, I mean, a bit over in the UK for about two years and we packed everything up in 36 hours and bailed out.

- Wow, you probably got out at the right time. - Yeah, and interesting enough 'cause we were kind of arming and arring and we were, you know, tossing up with it. We actually pulled the pen and basically the flight we got on was the second last plane to Australia for the next number of months.

- Oh my God, I bet you managed to make it out. It's carnage. - Yeah, I mean, look, it was one of those things where we'd be coming up, in fact, our visa would come up in about 20 days from now.

So we really would have been pushing the envelope and just, I mean, the flights would have been just inexpensive to get home and it just became too hard. - How's it over there then? Is it, I assume it's as crazy as it is here.

You've got lockdowns and all that sort of stuff. - We've got lockdowns and we've got all of the policy decision side of things. To be honest, I don't think that Australia really got hit with the virus.

You know, they say that we flattened our curve but the reality is we're talking about 10,000 cases total. So I kind of think we got lucky in that we didn't actually have a curve. So I think us in New Zealand are lucky in that regard but it also means that we're not immune in any way, shape or form.

So it's kind of like, you know, we didn't get hit with it but how long is it going to last until we can actually go back to normal life, I don't know. - Yeah, it's going to be interesting to see what happens over the next few years and how it all plays out more than that was going to happen.

- Well, I think it's a weird one because it's obviously a lot of people are very scared but it's when you look at the numbers, actual death rate. It's not that huge. And I think the amount of people who are going to be affected financially from it and the amount of suicides and everything we're going to have

because of that is possibly going to outweigh it. It's kind of-- - It's a very, very interesting predicament, isn't it? From exactly that regard. - It is. - Like it's, was it worth the cost did they make?

And look, it doesn't really matter because whether they made the right decision or not, the outcome is the same and people are going to be angry about it. I think that's probably the thing that scares me the most because it really doesn't matter because people are going to be really upset

and you know, things are already shaky before that. So interesting times, eh? - Well, we're going to get into all of that because I think, you know, obviously this is a Bitcoin show. I've heard an episode with you before and you're obviously a hardcore Bitcoiner and you went quite deep into all the economic side of it

and also sort of geopolitical landscape. And I think never has it been more important for people to understand what Bitcoin can do and why it's here and it's being highlighted. I mean, it's like the perfect storm for it really for people to sit up and take notice.

So, yeah, I'd be really very interested to hear your thoughts of what's happening right now. It's a weird old world and maybe you can break things down for the listeners and give us your thoughts.

- Sure thing. Yeah, I mean, it's one of those things where if you're not bullish on Bitcoin now, you probably won't ever be, right? It's kind of got to the point where, you know, the way that governments are, I mean, people are going to question money because the way governments are printing money

at the moment, the way it's being handled, you know, and we've got this interesting, you know, 2008, it was bail out the banks that were overleveraged and the general gist is that now banks cannot be overleveraged because we will inject as much capital as is necessary to stabilize the system.

So I think for the first time in history, the average person is kind of having a thrust in front of them, you cannot ignore that it's paper. And I think the ruse is up, that it is paper. And that's finally, people are coming to terms with that.

And the notion that there is a select group of people in this world who have the right to print it on mass. And we're seeing currencies around the world at the moment, Piper inflating, like in the last few weeks, there's so many, I'm having trouble keeping track of them, currencies that are just collapsing all over the place

'cause they can't deal with the economic weight of what's kind of been unloaded on the world. So, you know, we're seeing it play out in real time and you can't ignore it anymore. And I think that's where Bitcoin stands out, right?

It's the, nobody owns it. It's that, you know, out in the middle of nothing where it's open for anybody to use, nobody can stop you from using it. And it solves a very, very real problem that we have right now.

And if there's one thing that I'm gonna credit Satoshi with to the highest regard, it's, he got the timing really right. (laughing) - It's almost like, well, it's perfect. It's absolutely perfect.

And then the timing for all of this that's going on, it plays in perfectly as well. It's sometimes it's something-- - It's almost so perfect. It makes me wonder whether this is a simulation.

That's the level of that, right? It is so well timed. I mean, you know, halving in what, four days, and we're talking trillions. They've used the word unlimited now. - I know. - Couldn't pick a more bullish scenario.

- Yeah, it's, let me show you the simulations. One of our best friends actually strongly believes that. I don't want to believe it. But like you say, it's when you see what's going on, it doesn't make you think (laughing) maybe it is. - Almost half a laugh.

- Yeah, exactly. So obviously you see, this is the answer, Bitcoin. And I know you're very into Decred as well. And so you're not all in on just one cryptocurrency. But regardless, you see that the future isn't with the current financial system.

And you see that things have to change. What was it that first led you down this path? What was it that sort of grabbed your attention? And when was it? - Yeah, it's a good question. And I mean, I kind of got in, like most people do.

I saw a price moving one way. And I had a friend who had made a little bit of money in the space, and to be honest, a lot of my friends that have kind of gone through this path have dropped out fairly quickly.

So I entered the market back in 2018 at the very top. I really never bought Bitcoin for a very long time. And it was only after the capitulation in December 18, where I really started just, I was hooked on the notion that this technology was taking us somewhere, that it was different.

It wasn't just a, there was something about it, and the distributed nature of it, the fact that you can access all of these things. And when you look at moving money around the world, it takes a long time.

Having now moved across different, across borders, it's a nightmare trying to move pounds to dollars to Australian dollars, just shifting things around takes time, it costs you free, it's painful.

And I first entered, the first thing I bought was Ethereum. And I was amazed that you could just send something and it would take seconds to transact. And it was just, it was new, right? I've never used anything quite like it.

And you know, I used to play video games back when, and you've got items within those games that you collect. And you know, I was probably a little bit, my time in playing games was a little bit before, like it really started to kick off that there's like digital collectibles and things.

But I was familiar enough that it was intuitive, right? And when I start looking at the ability to pay people, the ability to move money around, the ability to have verifiable scarcity, and then following the price capitulation, I just started thinking, all right, what am I missing?

I'm going back to square one and looking at Bitcoin, because I've never done the research. It was a whole year of looking at markets. I taught myself to trade during that time, which was kind of my initial thing that kept me there.

The more you look at charts, the more you see the patterns play out, then you start looking at, in fact, the thing that really got me thinking about, it was the gold chart surprise. - Okay. - The gold chart.

But my God, that is bullish, that is a super stock chart, where it's collapsed since 2012 and the thing wants to go up. Now, why does gold want to go up? Gold only goes up when things are a bit hairy.

And when I started to understand the gold, why gold exists and what it does, it was kind of the melding of the macroeconomics that I'd learned through studying charting and trading, combined with the actual, what the fundamental meaning is of a gold chart wants to go higher.

And that's when Bitcoin really clicked. When I understood that the technical side of cryptocurrency from home, just used it, lost a lot of money in using it, learning the technical analysis side of charting and trading.

And then finally, gold kind of plugged all the holes of the macroeconomic side. And then Bitcoin sits right in the middle of all of those things where it suddenly becomes a parallel financial system with verifiable scarcity on the backbone.

That is absolutely up anybody who's, you know, millennials and beyond. It's just so intuitive that I can't see any way that it doesn't become a reality in some way, shape, or form. I think for a lot of people, or certainly, I imagine you have a similar problem.

If you're trying to explain to maybe people who are of an older generation, it doesn't come as naturally because it's not tangible. And I know it shouldn't be such a massive leap for them, but it seems that a lot of the time, for sort of the younger generation who have been gamers or spent a lot of time online,

we do kind of feel natural with something digital. Whereas, you know, I've tried to explain to people. They're like, yeah, but you can't touch it. Where is it? You know, it's nothing, it doesn't exist.

There's nothing back in it. There's nothing back in it and it doesn't exist. And that's where that little barrier just can't be got over. But, you know, like you were saying before, I think that with what's going on in the world, when people lose complete trust in what they currently have, then they're more likely to actually look

into what the other option is. And as far as I can tell, this is the only other option because gold has its place, but it still can be manipulated and controlled and it can't do what Bitcoin can do.

It's still very useful and I'm sure it will always have value, but this thing's just crazy. - It's the ability to verify it on a Raspberry Pi. That's the most important thing. And I actually saw somebody tweeted this the other day.

It really struck a chord. It doesn't really matter how many nodes are on the network. As much as Bitcoiners like to say that there needs to be plenty of nodes. There doesn't need to be lots of nodes, but the most important thing is that in times of need, we can spin up a node trivially.

That's the most important part of it because a node is a tool for verifying your own coins and privacy and everything else. And it's useful in that regard, but I'm certainly not on the camper where I'm expecting everyone to have a node in their home.

I don't think it's realistic maybe long-term, but certainly not in the immediate term. But the ability, if the network needed to be supported, the fact that you could plug in a $30 computer and spin up a node is actually what's important.

We can get those things spinning at any time. It doesn't matter who sent you the coins, where they're from, any of that kind of thing, you can verify it trivially. And that's really the asymmetric power of cryptography.

And I think that's the part that people struggle to understand is the encryption side of this security and the security of this technology is what gives it the tangible thing. The reason that you know there will only be so many of them is exactly that reason.

It is the asymmetric power of cryptography to ensure that one thing cannot be copied and duplicated. Yeah, it is amazing. And to your point about the nodes, it really isn't that difficult.

If we needed to spin them up, like I set one up the other day, I did it in the evening, and I'm not a technical person. I just ordered the parts on Amazon, ordered a Raspberry Pi, put it together, did it over a glass of wine, put it together, and done, and it's been running for a few months, and it's absolutely fine.

No problems, I'd have to do anything with it. It's easy. So, these things are only going to get easier, and there are companies in the space that will just ship you one, you plug it in pretty much, that's it.

So, that is power. And the only thing that is similar in some regards to Bitcoin is gold, and how do you verify that? You know, you can't do that for $30. Absolutely, and even if you were, and this goes to nation-state level, right?

If you've got, as your populace, you can never verify that there's gold or anything back in your paper, and if you're a trading partner at a nation-state level, you can never verify that your opponent or your trading partner can actually pay their dues, right?

Do they have the gold back in their claims? You can't verify these things. You know, there's even skeptics as to whether there's gold in Fort Knox, like we just don't know how far this goes, and the ability to do it with a $35 computer, where it's plug-in SD card, and you're done, it's incredible.

And I think that's what, you know, what this technology is at large really does, is it leverages at asymmetric power, and it's not only the ability to transact and send value over the internet, but it's got the scarcity element combined with it.

So, it's kind of the benefit of both of those toolkits. It's kind of the, you know, paper money. I've often referred to it as a Lightning Network on top of gold, right? It started as being a method of payment that made it divisible, it made it easy to transport.

It was kind of that payment solution that was built on top of gold, but the problem is the base layer could be co-opted. Whereas with Bitcoin, the base layer is extraordinarily expensive and difficult to co-op, and therefore your layers that are built above, it's that strong foundation that makes sure that everything that's built above

is as secure as the layer below. - Hmm, and it's that visibility like you were saying, it's just, you know, you know how much there is and you know whether what you've been sent is verified or not, and it's as simple as that.

It gives an enormous amount of confidence, certainly for me. I have my Bitcoin, I know that that's mine, I know I can't be touched and I know what share of the pie I own, and you can't do that.

And I just think that once people get that bit, because there's so many amazing things about this technology, but really for most people, I think what it's all gonna boil down to is scarce and that they can verify it.

And I know there's amazing other parts to it, but for most people, just that is enough. And getting them over that hurdle will be enormous. So if we can do that, and people do, which I think they will, where do you see this all going?

Do you know, where do you see this as a big picture? 'Cause it's still tiny now, where, you know, where there's definitely a few geeks and weirdos to chat on the internet, and we find this stuff into the fascinating, but most people just don't care.

- Yeah, no, I agree. And I think, you know, I try to contemplate where this is all going, and I do it both from a philosophical, but also a technical perspective, and I'm always trying to look at the different angles.

Where could this go? What are the possibilities? Where my current thinking is, and, you know, granted this evolves on a regular basis, but certainly where I'm at at the moment is, from a technological perspective, I can certainly see Bitcoin achieving a reserve asset status.

So something that actually sits in the vaults of nations around the world, of large institutions and people as a savings vehicle. I do see Bitcoin as a quintessential savings technology. And I think, you know, from a level of, you know, one of its characteristics, one of its features, is that it is extraordinarily difficult to change.

And, you know, that unchanging nature of it is important. However, it does also somewhat constrain it to being a, you know, it does take a long time to evolve. The market tries to find ways to evolve the system, but I do see it kind of calcifying sooner rather than later.

And I guess when I look further down the line, I think there will be challenges with getting it to be a form of money, so to speak, as in day-to-day cash. I think that it doesn't mean it can't be done.

It doesn't mean like technological solutions, like lightning network and side chains and things like that can't make these things work. But at the moment, based on the current technology stack and the fact that I think it's gonna calcify sooner than people think, my view is it will certainly have the potential to be a reserve asset.

And if it does move to the level of being a reserve asset, I believe most people will be unable to transact on the base chain because as the fees are basically, you know, priced in cetoshis per byte, there will be some technology that brings the bite size down, but at the same time it's gonna get very expensive

for people to use the base layer chain. And I actually think that if it's gonna be any form of money, there's a very, very strong reality that most, the average person, the average day-to-day user of that money will probably very rarely use the base chain 'cause they just simply won't be able to afford it.

So that means that layers like lightning network, and we've seen this with a lot of Jack Mallor's technology, which is excellent, you know, Olympus and all these things where it's fiat to lightning.

And the full integration of that exchange process, but people can exist entirely on lightning network. And, you know, lightning is the first iteration of what I'm sure will be many, many versions of this kind of technology.

But my longer-term view is I think it's gonna be a reserve asset, it's probably its most likely destination. I think there's some challenges and some roadblocks to getting it to be money, money.

However, it is what I would classify as a strong monetary asset. So it does command that monetary premium, whether it can actually become a money-like item, remains somewhat of a question mark in my longer-term view.

And I also think that there's a, if we do reach that status, there's a very good chance that miners will become a nationalized entity. And we're seeing this in some parts of the world. You know, there's certainly interest from large corporations in the US.

There's interest coming in from places like Iran that are starting mining facilities of Venezuela that are doing this, whether to circumvent sanctions or just as a, you know, to accumulate, whatever it is.

And I guess one fear I have longer-term is if those miners do become, because power and energy is a centralizing force, proof of work in general, always centralize. There's not really anything you could do about.

It's kind of the nature of the beast. And power and energy is a very centralizing force 'cause the economies of scale, distribution and all that kind of stuff is not easy. And a lot of these power plants and power sources are actually nationalized in parts of the world.

And the big challenge I see is that the incentives of a nation-state actor are very different to the profit motors of mining corporations we have today. And if profit is no longer the motive, it can change the game theory.

So the incentives kind of work until they don't. Now, we don't know how this all pans out, but I do think that mining will become probably a nationalized interest. And that could be good, right?

That competition between nations could be a positive thing. But we also know that there is tensions that go on between nation-states. And if we're using this as a day-to-day money and we're putting our life savings into Bitcoin, generally you want a little bit of diversity in who's actually running those mining farms.

And you kind of don't want the incentives for them to be to censor you at their own cost rather than profit-motivated, which is where it is today. So I guess what I'm certainly watching for is whether we ever see a transition, I mean, we're talking long-term here, but will there ever be a transition of those incentives structure,

particularly as the block reward comes out of things? And mining becomes increasingly centralized, which I do at the moment, C, is the trajectory. We could evolve past that, but it's certainly something I'm keeping my eye on.

- Well, sure thought long-term with mining, integration into everyday items. And I don't mean like stupid shit, like toasters and that kind of stuff, but in terms of using things like that, heating either like heating pools or greenhouses or vertical farms or, I don't know, very long-term,

you have it that in breaking systems in heavy vehicles that then that energy will be used to run miners, who use the energy that's already being used for something that's actually going to mine coin and it only has to be a tiny amount.

But if you have that spread throughout the world and many, many devices in many, many homes, it will make it so that it's less easy to centralize. 'Cause I agree with you to some extent that obviously the people with deeper pockets and who have access to the cheapest energy and have access to the chips and have access to the miners,

they're always gonna do better than your average go. Like if I go and plug in a miner now or I go and buy a S17 or whatever the latest model is, it's gonna take a few months for it to come from China.

It's gonna be outdated before everyone else's because I get it last and I'm gonna pay five, six times more from my energy, from my home than they will. So those sort of issues, they're definitely not to be overlooked.

But what's your thoughts on, you know, like to say, integration into everyday items? - I think my honest opinion is I think it's very optimistic to think that that's gonna be competitive.

And if you think about, I mean, at the moment, we've got a one megabyte block size. I do think that will probably evolve down the line. I think that's, my view is with Bitcoin that core proof of work, pure proof of work and the 21 million hard cap deterministic supply.

And what Bitcoin is, the chain, that kind of is Bitcoin, right? Everything else, and Andreas has talked about this as well. Andreas and monopolist. Everything else is largely up for debate and can be swapped in and out, right?

The proof of work out, all this kind of stuff, it's their cogs that can be swapped in as required. So my view is that the block size is probably also one of those things. I don't know if that'll trigger people, but I do think that that's one of those things that could evolve if needed.

If we get enormous demand and we can move it to two megabytes safely and still retain a healthy fee market, it makes perfect sense, right? Provide more incentive for miners to mine. But what I do think is there is a limit to that because you don't want the block sizes to go up because otherwise you reduce node decentralization

and things like that. But if it was efficient for us to be heating our homes and our pools and our beds and whatever else with CPUs, we probably would have been doing them a while back. The reality is that we're much better at using things like oil heaters and there's just better ways to achieve that power distribution.

And we already, if you actually price out many of the ASICs that are on the network at the moment, a large majority of those ASICs have actually never mined a coin in their life. So they've contributed hash power and everything's probabilistic.

But when you actually mapped out across all the ASICs and somebody's farm, many of the ASICs have never mined a coin. They just provide a cumulative sum, which it gets distributed across the mining farm.

So if we assume that we have a CPU and heating everybody's house and everybody's pool and we distribute it across hundreds of thousands, millions of CPUs around the world, what's the actual likelihood that any one of those is gonna even pay for the electricity that they're mining?

I think that the actual cost incentive will be so low that it actually, why would you just use a more efficient heating mechanism, right? You actually lose more money by using a less efficient heating mechanism in a CPU, which if it was actually useful, we'd be using it for machine learning and artificial intelligence and stuff already.

So I think-- - I'm thinking more actually ASICs than the CPUs because yeah, but they're not particularly efficient and also-- - Right, an ASIC, when I say CPU, I mean an ASIC. - Yeah, okay, no, no problem.

- Yeah, yeah, yeah, yeah. - And also that these people I would imagine would be joining pools rather than going alone. You'd have, like you say, it definitely doesn't make sense to just plug one in and go alone.

You need to be part of the pool because you could plug a hundred of these things in and you'd run them forever and never get the block rewards. So the pools-- - Yeah, so I think it's one of those things that it's a possibility.

I'm certainly not using as one of my likely scenarios when I kind of map out future pathways. I think that the most, if I think about it from who would win in a competition and we know mining is highly competitive, I think that's a setting up miners to use waste energy and waste energy could be renewable.

It could be things like geothermal, stuff that can be export. You know, you can set these things up in Iceland and you get the benefit of the cooling, you get the geothermal, but otherwise can't be exported as power.

And when you're exporting that power to the Bitcoin network, you're removing the coal miner from over there who's got a higher expense than you. He gets wiped out. At the end of the day, I think that using, utilizing waste energy, you know, oil flaring, - Yeah, so you've seen Steve Barber,

what he's doing with a gas flaring and all of that and they have these-- - It's quite the stuff. - It's amazing. - And you know, that's what we need, right? And I do believe that that's what makes Bitcoin mining long-term sustainable because I think at the end of the day, the actual energy is most likely to end up free.

We're gonna use technology that largely is free and it will also promote renewable-type projects that would otherwise be infeasible because you've now got a consistent reliable base load, which is one of the problems with, you know, many power operations that they don't have the feasibility because they don't have the initial setup

and reliable base load. Well, Bitcoin provides a reliable base line power load. So, you know, I think that those mechanisms will out compete many of the smaller mining systems and I don't think that people will be willing to pay the premium when they just don't see the return coming back from, you know, home heating systems

and the like that use AC as the core heating technology. It could happen, but I'm not yet convinced of the economics of it. - Yeah, no, I think that's a fair point. And maybe it doesn't happen at all or maybe it happens not in homes, but maybe it's in a hospital shopping centers or something like that.

It may be something like that where you have enough to heat and they have enough money to throw at it. It could work or they're near cheap energy or something like that, it can be integrated.

But I think you're right, you're just running it off grid because it's such a competitive market is probably the most pure competitive market in the world mining. I can't think of anything else that is as would.

- I would agree with that, yeah. It's going to be fascinating to see. It's going to be-- - And also, I think mining is such an amazing, and again, it's one of those elements that people who've never gone down the rabbit hole struggle to get their head around, the notion of mining, it's always the question again,

I don't get mining, I understand the 21 million, I understand this, I don't understand mining. And it's a hard topic. It's a really, really complex part of the network and how it functions, but it's just so important.

And you're right, it is one of those amazingly competitive free market phenomena that you just, I've never seen anything quite like it, it's fascinating. - It really is. I think you may be see that as a potential issue, it centralises too much because we don't know how the game theory would work out

because currently it's kind of the game theory at the moment, but as far as I can see, it's just use human greed to secure a network if we look at it in basic terms, which is very, very clever.

- Absolutely, it's one of those simple, but elegant solutions to a very complex problem. - Yeah, I think it's so simple that people can't see it, it's almost too simple. But I think it's a fair point and a lot of people are worried about the centralisation, we will see how that plays out.

I have one issue that I'm worried about with Bitcoin and really it's my only one because I actually believe money will be fine, but privacy is the issue for me. And I understand why privacy can't be perfect at the moment and we need that.

We need to be able to verify the supply, but is this something that concerns you, privacy? - Most definitely, and I've said a number of times that I think privacy is the biggest debate of this year at least for Bitcoin.

From a technological perspective, I mean, everything else that I see with Bitcoin, I mean, there's three curve walls for the Bitcoin system, as far as I'm concerned. The first one is mining, which we've gone through.

The other one is the governance mechanism and how things actually evolve over time because if you calcify too soon, you can end up in a situation where, you know, privacy doesn't get solved in the way it needs to happen or there's particular scaling tool sets that need to happen or integration of things that enable, you know,

SegWit was one that enabled Lightning Network, you know, this technological calcification. It's good from a monetary perspective, but it may also relegate Bitcoin because it just can't compete on other elements.

And, you know, the reason that Bitcoin is likely to overtake gold is because of its technological benefits. And I'm not, you know, I'm not ignorant to the fact that if we assume that Bitcoin can overtake gold, which got 5,000 years of history, something can overtake Bitcoin, right?

But nothing is permanent, everything is temporary and it works as long as it can. So there's that element and privacy is another big one. And, you know, I really don't like the narrative that chain analysis is evil.

Even, you know, it's sure they may be, they may be aiding and abetting parties that we don't particularly like and kind of going into the ethos of Bitcoin, but chain analysis is a free market phenomenon.

It's a response to demand and that demand happens to be a weakness in Bitcoin's privacy solution. And sorry, this is not just relevant for Bitcoin, this is relevant for all blockchains that don't have that focus area.

So I'm certainly of the opinion that privacy is one of the biggest debates and one of the biggest technological improvements that Bitcoin needs to focus on. And as it gets more intertwined with the financial system, which we're starting to see, we're starting to see movement towards that, we're seeing big hedge funds

and, you know, big name investors starting to get involved, the question of is it private and is that acceptable? We'll certainly start to come under extreme scrutiny. So I'm with you that it's a really key issue and it gets harder and harder.

The more entwined Bitcoin gets with the traditional financial system and we're seeing that accelerating much faster than we're seeing the privacy solutions being developed. - I think what you're saying about chain analysis, I mean, personally, I have no time for anyone who's involved in those projects

because it is trying to attack something that I care deeply about. However, I do kind of see them as a net good in a weird way because it does make us step our game up. Like if we didn't have anyone and no one's really paying attention to this stuff, then if we didn't have someone trying to de-anonymize

and push us, then maybe we wouldn't develop these privacy solutions as quickly. I guess you can sort of see it two ways. And then to your point of change, everything ossifying and not being able to change things.

Again, yeah, it's important that we get this privacy stuff sorted. And I think really, if you know what you're doing, even now, you can be private. But it's hard. - It's extremely difficult.

- Yeah. - It's hard. It is not something that you'd probably have to spend six months to a year in the space obsessing and really think deeply about how you use this stuff. Make sure that coin selection is done properly, that you have different wallets where you've got coins from different places

and everything's got to be put through Whirlpool and all this. It's too much for normal people. - It really is. - It really is. - It's just horrendous. It's really like at point blank, the user experience is completely untenable and it's something that does need to be fixed because even if you get all of your UTXO management right,

which is hard at the best of times, right, you've got to get your UTXO management right before and after the event. And even with all of that done, you may have gone through tour and you may have gone through all the different protocols.

All you need to do is leak your IP address to one particular website that you happen to have running in the background and that your privacy's gone, right? The asymmetry of how many mistakes you can make, which is pretty much none, it's just not useful, right?

The average person will just say, what, no way, I can't do that. - Or they would try it and fuck it out, basically. - Absolutely. And more importantly, they would get it wrong and they wouldn't realize that they've got it wrong.

So you know, there's lots of elements to that. And to your point before about, you know, Chain Alice is pushing us forward, I haven't seen it great. And it's also a reason why, you know, I'm of the opinion that the vast majority of altcoins are indeed worthless and going to zero.

However, they also push the envelope, right? They force Bitcoin to innovate without competition. We stagnate and we all just sit pretty, right? You need that competition. You need these additional minds working in the space, rightly or wrongly, right?

It doesn't really matter what their motivations are. If you believe in Bitcoin, there's technology, there's ideas, there's concepts, there's research, and there's a challenge directly to the network to say, well, you need to improve this and you need to deal with these things.

It's a motivation, right? And you need them without competition, you stagnate and you get your rest on your levels. And it doesn't matter whether it's Bitcoin or a company, you need competition to really thrive in a free market.

And I think that's really what we're seeing play out with many of these frauds. - Yeah, and to your point with those altcoins, I only hold Bitcoin. However, I don't have an issue with people, like you say, it's important that people try things.

If we didn't try things, we wouldn't have had Bitcoin. So it's important that all these things are tried. And I almost see altcoins as actually weirdly, I know they're trying to compete with Bitcoin, but I see them as kind of like a marketing department because without all the blockchain hype stuff that went on in 2017,

you wouldn't have had so many people flood into the market. You wouldn't have had some of these hedge funds and people prick their ears up because it's blockchain technology. When these coins die, which 99% of them will 'cause they're just bullshit, then these people who invested in those,

they might five years down the line go, well, hold on, Bitcoin was around them and it was this price. I invested in these other altcoins 'cause they were faster, cheaper, whatever their narrative is and Bitcoin's still around.

And I almost do see that as, first of all, a marketing department and second of all, if they do come up with something useful and good, most of the time we can just go, oh, we'll have that cheers and we just integrated into Bitcoin.

Again, yeah, I think you're right. - Yeah, I agree with that. I think they do do that. And that's my story, right? I started off not buying Bitcoin and it was actually just getting into the space and you get in for the quick riches and you end up staying for the changing of the world and changing your mind.

And that's exactly how I got here, right? Bitcoin was the thing that really sucked me in when I finally came to terms with what we're here for. That's what stuck with me. And to be perfectly honest, when I look at things like, you know, in many Bitcoin circles, you'll often hear people say, oh, you know, everything's a shit coin.

Oh, but Manero and Decred are okay, right? There's lots of people who kind of have that secondary bias. And it's well founded. And the truth is I was talking to one of my good friends in the space and he's got a great model where, you know, Bitcoin and in my eyes Decred as well are these just incredible savings vehicles.

They completely reshape the notion of scarcity and they are the ultimate savings tools. Something like Manero, right? I consider, to be honest, when I've got 50 bucks in my wallet in cash, I consider that very different to the money I've got in my savings bank account.

And I also consider the money in my bank account different to the gold that I am, right? So you've kind of got these different tiers of how you save money and how you spend money. And with seamless exchange, you could comfortably swap in between these things.

And if you happen to go to the shop, so you want to go and buy something with, you know, that you want your privacy for, you can do your atomic swap, you swap your Bitcoin for your Decred or your Bitcoin for your Manero and you can use Manero like cash in your wallet, right?

I'm not saying that this is necessarily how things go, but I don't see any reason why if you've got a number of these high assurance, high security, long-lasting, well-tested ledges, that they can't actually serve different purposes.

So I do actually see a world where, you know, I project Bitcoin to be number one, probably for here to invite him. It makes sense to me that it remains top-down. But I don't necessarily think that it has to do it alone.

And I think that you can have competition that also compliments Bitcoin and they actually benefit each other the existence from that regard. And I think that's really, really powerful. And, you know, a lot of Bitcoin is will crucify them before, but I think that there's value in understanding

that having competition and having two different companies that deliver and compete the same thing, the same service, you're going to get a better product from both of them. And I think that's really important to translate that logic and that sanity across to this space.

- Yeah, well, what you're saying with like atomic swaps and stuff like that, if you hold Bitcoin and we're saying, you know, a lot of Bitcoiners will agree that really at the moment, this is going to sort of reserve asset, basically.

If these fees do go up massively anyway, you're not going to have so many on-chain transactions unless they're huge. It's almost like settlement layer. So like you're saying about the spending, it's so hard to be private with Bitcoin at the moment.

And Monero is pretty damn good. You know, I don't see an issue with using, like you said, these other sort of systems for what they're specifically designed for. You know, Monero can't do all the things that Bitcoin can do.

And I wouldn't put a large store of money in there. But if I wanted to send something privately, do I swap into Monero and send it? If this is if somebody actually takes Monero, because that's the other issue is, you know, more people are going to use Bitcoin than they will Monero.

But if someone does take it and you want to be private, it is the better system at the moment to do that. But then you swap back into Bitcoin because it's safer. So it's, you know, you use the tools that are at hand.

And like I say, all I hold is Bitcoin, but I don't have any issue with people using anything else because, you know, a hammer's useful for hammering, but it's not so good as a screwdriver.

You know, you have to use the tools that are useful at the time. - That's right. And, you know, in particular for the Decred project, they've got a deck implementation that's underway, which is all over Lightning Network.

And you can basically swap in and out using atomic swaps with Bitcoin, Decred. And I think Monero doesn't have atomic swap capacity, but it's something that I know is on their radar. You know, Lightning is super quick, super cheap.

There's the every potential you can actually swap in and out of these things trivially. And let's give this thing 10 years. I mean, you look at where we've come in the last 24 months and it blows me away.

And when you think about what we're going to be able to do in, you know, years beyond that, the best privacy solution for Bitcoin may be swapping into something else, doing a loop transaction and swapping back out.

And because you then have lots of people doing this, you actually end up with a system where you've got mixes and you've got these, you know, you don't need many of these high assurance chains.

You can end up with reliable privacy security, the whole package, and all of those networks benefit from the transaction fees or people swapping it out. And then there's a cumulative benefit.

But again, you know, it's one of those things. We don't know the reality of things, but what I'm not open to is closing down and saying it's Bitcoin only. If it doesn't make sense to me, at least until we, you know, we've still got a long way to go.

Bitcoin's going to be money. We've got thousands of years of this thing. And we're going to see a whole lot of it play out in our lifetime. So things will change, things will evolve. And to be honest, it's great to be long for the riot, you know, seeing money be rebuilt in front of us.

It's so interesting, isn't it? I mean, you said earlier, you came for the money and basically you stayed to see the money change. And I mean, how I wouldn't say lucky because it's a lot of time and effort that goes into understanding this stuff and being able to really see what's probably going to happen.

But I mean, how amazing is it that we get to see this unfold? This is just, it's made my life that was, I was sort of thinking, "Ah, there's nothing interesting happening yet. There's nothing, I want to be part of something interesting."

And, you know, the internet was cool, but that was kind of, you know, I grew up with it, really. And I kind of felt like you just had all these big corporations and the only way you'd really, you know, you just have the new Apple iPhone coming out every year.

And there was nothing that interesting. And everything was centralizing. And small businesses were getting harder to run. And it just, I felt quite pessimistic about the world. And now, I just think like, "Oh, my God, what we're going to see over the next 20, 30 years?"

But it's going to blow our minds and I'm so happy to be part of it. Yeah, absolutely. I mean, to be honest, I look at this space, I study this space every single day. And, you know, to the point where, I mean, I've just been writing code for the last, I taught myself how to write Python and started writing a bunch of scripts

to look at on-chain metrics for Bitcoin and Decred. And it just, you know, for Bitcoin in particular, when you look at the on-chain behavior of it, it's just the most organic thing I've ever seen.

It's truly remarkable seeing the psychology of people play out in data over the last 11 years. You can see the different phases. You can look at how miners behave through each of those cycles.

Like, it's just incredible to see the data come out of these changes. I mean, they're basically reporting their heartbeat every block. And you get to see how it all plays out at the time.

It's just truly something captivating. And, you know, I remember Pete McCormack said on one of his podcasts that it's like sitting in the cockpit and just watching the world change around you.

How can you not be just completely glued to it, right? I get it, I'm 100% with you. And I think it's the right time, the right technology, the right place. And it really excites me to see what the world, you know, how does the world change from a low time preference perspective?

And that's really where we're going with all of this, right? If you subscribe to any portion of the Austrian School of Thought and the time preference element, when you look around and you see the way the world works at the moment, it's actually disgusting how high time preference it is.

There's just no concept of longer-term thinking. And it's just destructive. But when you kind of enter this space and you really absorb it, you actually do feel, you feel like there's something else coming, right?

You feel like we're going somewhere positive. And it's certainly something that, you know, I'm in my 20s, right? And kind of seeing where the world was going and, you know, and where I think the next 50 years of my life, what it's going to look like with and without Bitcoin is just two different worlds, two completely different streams.

And, you know, that's something that you've got to be excited about. Mm. Let's get a little bit deeper into this low time preference because, you know, some of my businesses will be fairly new to Bitcoin.

And I think you've touched on really probably one of the most important things in the space and really, like you're saying, one of the things that it couldn't change the world the most, really at its core, is time preference.

So can you dig in a little deeper and talk about how you think that it's going to change the world? Sure. So, I mean, the notion of time preference is whether you are willing to delay present-day gratification for some kind of longer-term investment, where you know that if you were to invest value into something,

be it a project, be it a business, be it an actual investment, if you allocate your capital to something that doesn't necessarily, you know, you don't get the satisfaction of it today. You don't go and buy the hamburger today.

You put that money into a stock or a house or a business or whatever it is because you know that further down the line, you're going to have a stronger income stream. That money will, you know, compounding interest and at the end of the day, it comes down to the notion of compound interest

and knowing that you can build additional value for your future self. Really at its core, time preference is a trade you make with your future self and you make a decision today as to whether you want to benefit future self or you want to benefit yourself today.

And in a very large portion of the way the world works in the moment, particularly in the financial sector in the way that, you know, money is handled by governments and central banks. In general, the idea is that because money is cheap, we can borrow from our future self at almost no cost.

There's no real implication from borrowing a whole lot from yourself. However, you still take on that debt. And when I say, you know, we're talking about at a macro sense at a societal level.

So when society is continually borrowing from its future self, eventually you've got to pay that back. And instead of actually paying it back and kind of understanding the dynamics of borrowing must be repaid, borrow, repay, and you build value by borrowing from tomorrow, but not over extending.

We've got to this point where interest rates and banks can just be bailed out. There's no recourse, there's no accountability for that behavior. And well, if someone's going to give me a loan at 0% interest, then you better believe I'm going to pray and spray and just hope that we all

need to do is land one of my investments on something and I pay back all the debt, right? So I may as well just pray and spray on across a whole bunch of investments and do minimal due diligence because I don't need one to hit.

And, you know, if we take it the flip side and we take it to a gold standard type system, which the reality is very few people in living memory have been through a genuine gold standard, there's discipline there because if you spend that money, it's gone, right?

It's got physical backing and if you spend it, it's toast. So you are more likely to protect that capital when there's a scarce resource, when it's really hard to come by that money. In general, your preference is going to be to make sure that if you borrow from future self, you pay them back with interest, right?

You want to make sure you put that capital to good use because you don't want to lose it, whether it's in a failed business venture or a failed investment. You are incentivized to do the due diligence, you're incentivized to protect capital, and in a world where money is cheap, free and has zero interest rates,

there's no incentive to protect that capital. And if you multiply that psychology and that ethos across a globalized society and you run that experiment for, in this case, 20, 10 years in particular since '08, you end up in a system that's extraordinarily over leveraged with there's no accountability.

And at the end of the day, they know they're going to get bailed out anyways. And it's the average person that really suffers from that whole system. That's kind of a core of it, it's incentivizing the world to make better decisions today to benefit our future self.

Things like climate change would have been solved in a low time preference methodology, because we know we're going to make more money from it in the future. We're going to have a clean environment, we're going to have renewable energy, but instead the vested interests are, well, let's just keep with the system to regard.

There's no incentive to innovate and change. Yeah, and I think you see that in every walk of life, because if you're borrowing money, first of all, that money's devaluing over time. So the more time it sits in your bank account and you do nothing with it, every second, you have less purchasing power.

So therefore, the only way to stop you losing that purchasing power is to throw it into something and, like you're saying, I hope that that actually makes some money. So rather than taking your time and really thinking about what you're going to do or just saving

over a long time, rather than borrowing, really planning out starting a business or investing in something and then go for it with real money that you actually own. You're just borrowing, borrowing, borrowing, and that's happening not just with businesses, but with families.

So every person I see around me is mortgaged up, cars on finance, phones on paper month, nothing is owned anymore, everything is borrowed. And then what happens is that person, rather than owning objects, those objects own that person, that is a global phenomenon, which is touching every single person and it's become normal.

And you have these governments who, their incentives are just to get in next four years, just get in, stay in, do what looks good and try and make it so that we stay in. But don't bother about fixing something that's, you know, we're going to reap the rewards

20 years down the line, like you're saying with climate change or these sort of things. Just do what matters for four years and fuck the future. So what you're saying is that really the root of all of that is time preference and hard money or sound money.

And that is at its core, what has made the world into this plastic, fantastic ship show that we're seeing and that everyone says, how do we get here? Well, maybe that's how. Absolutely. And, you know, I think there's two references that listeners, you know, I would recommend.

And it's, I just think that some of the most powerful things I've ever seen. One is the website, WTF happened in 1971. And you can just see in graphical format, from the breaking of the gold standard, just the opening of a chasm of inequality of we're still producing stuff, we're becoming

less efficient, just an absolute draining of human productivity into the hands of the few. Even though everybody is working as hard as they've ever worked in their life, they are seeing less and less reward for doing that.

And that comes from so many layers. But at the most, it comes from the devaluation of our money. And your money is time. It is time that you have spent, you have sacrificed parts of your life to work in a particular job.

And, you know, you've traded your skills and your time for that money. And then for somebody to arbitrarily print it and just manufacture it at no cost, and therefore dilute you out of the system and actually just, I mean, I personally view inflation as theft because it's taking away the time that you have spent and invested.

And, you know, people say hard earned money, it's true. The problem is the money is being debased at a great rate of not, especially right now. And all things aside, yes, coronavirus and what it's done to the global economy, there's no question it's unprecedented, it's shocking, right?

It's just amazing what it's done in such a short period of time, shutting everything down. Well, sorry, the government response to it has been, you know, is really what causes it. But it's amazing to me that almost no companies, small, large, very, very few of these companies, and even fewer individuals have any money for a rainy day.

It was within a month that basically come to the same, that's it. We're done, we're out of money, we have no more money, we're completely out of our books. And it's a shame because a lot of just individual people are, and even businesses are living paycheck to paycheck, and that is a really, really hard existence.

And it's not fair and it really doesn't have to be that way, but it's been constructed in that way. And it's really something that I think understanding time preference is how we start to escape that into something more positive and really thinking about the longer term.

And you know, for me, I know I was learning about climate change and things from very, very young, right, from early schooling. And to this day, it still sticks with me as one of the most important things that we need to be focusing on. And it's just amazing to me that we see in our political sphere that the interest is

just, it's almost non-existent. And to me, that's just baffling. It makes no sense, and something has to change. And the more I've looked at this problem, it all comes down to, there is no accountability for money. And I think that's really where the focus needs to be to rectify it.

And it would be interesting to see how this world changes if this happens when Bitcoin becomes more used by more people and we receive fear, currencies becoming less and less used or completely collapsing. And therefore, the role of governments and what they do, they have less control and

that people have more control. It would be interesting to see how quickly we solve some of the issues that we see because, like you said, you've been learning about these things from a young age, so as most of our generation. And if you ask the average person, "Do you want to solve these

problems?" Well, yeah, I do. Well, I can't because I'm only one person and we have to rely on governments to solve the problems, which we know they're not going to do. Well, if we suddenly can all communicate globally and we can all send value to projects and see directly where they go,

and we're free from that aggression, actually, we can solve a lot of problems very, very quickly. Yeah, I agree. And I think that's what's so important about Bitcoin specifically is, it's going to happen whether you like it or not. And the halving is an amazing example of this.

It really doesn't matter what the line, what the miners think and how leveraged up they are. That difficulty adjustment, when it halves, you better believe it's going to punish you if you are overleveraged. So it's this amazing system of naturally finding equilibrium that is just so

sorely missed elsewhere in the world. And the fact that it always seeks equilibrium is it's a really, really amazing thing. And it's going to happen whether people like it or not. Bitcoin will continue to tick. Even if the price was to dump to zero, there will still be people

buying that thing the whole way down. The network will never really die. It will keep going for a very, very long time. And I could say you can keep going as long as human incentives remain the same, which by and large has been forever. So until the human race really changes, I don't see Bitcoin

changing anytime soon. It's been amazing catching up with you. It's been a long time in the making. We never did get a chance to go over that there and I know the other side of the world, but this has been great having a chat about all this sort of stuff. Is there anything else that you'd

like to touch on? You've gone through, I think, mainly the macro landscape. We've gone through sort of golden Bitcoin and how cryptocurrencies and Bitcoin can potentially change the world.

Is there anything that you feel we've missed or that you wanted to cover? I mean, look, I think at the end of the day, the reason that I, why I love to come onto podcasts like this and why I just put all my analysis and stuff I just do free is because I do think that

there's an education side to this whole space that is really, really important to take seriously. And the work that you're doing, the work that a lot of these podcasts are doing, and people who are putting out these analysis and these websites that chart things up and give

people the insights that they need into this technology. And just people writing articles on medium, I think it's extremely powerful. And I think that the open source nature of this is just, I know when I'm writing my code, I would certainly, I rely on other people's code, right? I pull it

out of GitHub, you link it in, you start writing code off the back of it. And it just saves me so much time. It allows me to get so much more done. And my way of giving back is saying, hey, and by the way, there's no guarantees on my code, but here it is. Someone wants to come in and have

a look at it, tell me how to do it better. You know, that kind of side of this space is just incredible. And I think it is part of the ethos that is so attractive about the space is it's people sharing their knowledge, sharing their skills, and helping to build something as a cohesive unit

together. I think that's really, really important. I think it's one of the real powerful elements of this technology. And I think Bitcoin is going to force the hand no matter what happens. And at the end of the day, it all comes down to the people behind every single transaction that make this

whole thing tick. And you know, that's actually what I'm really bullish on. I'm bullish on human intelligence and us delivering something, whether they want us to or not. That to me is really, really exciting. Yeah, I completely agree with you. Where can people find your code? Where can

people listen? Because I think you've got your podcast running still, you know, where can people find the information you're putting out? Because again, like you're saying, this is all about collaboration and informing people. And I know you're doing a lot of it. There's a few areas you can

find me now. I'm slowly branching out, but you'll find me on Twitter at underscore checkmating. So I put out a lot of my analysis there. That's probably the easiest place to find me. I've also got a set of masterclass that I've done on on-chain analysis. If you're interested in understanding

just how Bitcoin ticks over and what some of these metrics are. If you look for ReadySet Crypto, we've got a playlist there that's all Bitcoin on-chain masterclasses. So getting a bit of a feel for how the data is interpreted and things like that. And we've also got a podcast called Rough Consensus,

which is me and a couple of my mates who, again, we're all anonymous. We've never met each other. And we just kind of talk stories and pretty much conversations like this and bounce ideas around and try and hash out ideas live. So that's a lot of fun. But they're probably the three main ports

to call this point. Brilliant. I'll link all of those in the show notes. And like I said, it's been brilliant chatting to you. Hopefully we'll do it again soon. Thanks, man. It's been a real pleasure to be here. All right. Well, thanks so much for your time. I'll link all of that in the show notes.

And also, I've been learning some Python myself as well. So I might have to just reach out and ask you a couple of questions because it's tough when you're getting started. Absolutely. It's something that I've learned in recent years, but it's immensely powerful once you get there. So

it's a good skill. Absolutely. All right, then. Have a good day. And we'll speak soon. Cheers.