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#68 BTC Bear Market Series Wrap Up | Exploring Unpopular Narratives and Reviewing Exposure

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In the last show of their Bitcoin Bear market series, Ryan and Terry talk about their main lessons from every guest. They also talk about the difference between what you’ll hear if you don’t look for answers and what you’ll find out if you do.

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Ryan: Hey there. Welcome back to the Bitcoin Podcast, . This is what it feels like at the moment.

Terry: Yeah, we’ve done a lot of Bitcoin. We said that we were gonna get it all out at once and yeah, so it’s been pretty dense. I’ve actually had some people reach out to me and go, how are you doing? So many episodes. And I like, because I’ve been sitting there ready to go for a long time. So we didn’t do all this in the last month. It’s been done over a period of about six months. But um, yeah, we just tripped ’em all out at once because it’s the best time right now, I think, to learn about it.

Ryan: Yeah. Fantastic mate. Just to hear from some incredible voices in this space, like guys that have really developed their own body of work in trying to understand what it is. And it’s amazing kind of observing the transformation that these guys have had, basically starting out as skeptics about crypto and Bitcoin and then that kind of skepticism has kind of morphed into skepticism in our, our current system and the current issues that exist with our monetary system.

And you can’t help but kind of follow that journey. Can you like start by kind of going, what is this thing, being curious about it really questioning everything and then it starts to make you question everything else. Doesn’t.

Terry: Yeah, I think so. And that’s definitely the journey that probably you and I both went on is six months of figuring out why is this thing not gonna. And then continuously kind of having to come up against the fact that there’s some things that you didn’t understand and potentially you’re wrong. I mean, the more that happens, it does make you second guess and go, Potentially there is a better way. And even though we know that there’s a lot to play out, gives me a lot of optimism to think that there are solutions, there are different things we could do and try. We don’t have to just keep doing what we’ve been doing for a hundred years and it’s getting worse.

Ryan: Yeah, yeah, yeah. And if only it was a sure thing, that would be nice, wouldn’t it? Because, yeah, no doubt. Like you can feel the enthusiasm coming from these speakers, and I know, you know, in the conversations we’ve had, there’s a lot of enthusiasm about what it could mean and where it could take things, and how it could create a new foundation for civilization basically to be built on top of that construct of being able to trade and being able to collaborate as human beings and having trust in the mechanisms that help us.

Would have big impact on what it can mean for us and the standard of living that we can have. And so no doubt there’s so much enthusiasm and we do wish that it was a sure thing, but it’s not. We know it’s not a sure thing. There is definitely some still question marks that we all have about what it is and how it could work for us, but so good just to hear from so many different voices and guys that have really done the work to understand it.

But then also they come from different backgrounds. They’ve got different angles in which they’re looking at it, different fields of expertise that they had previously. And then being able to kind of draw on that, but then also observe the patterns across what they’ve kind of said. You start to hear the same things on repeat and the kind of foundational truths and no doubt.

I know a big thing for me has been, I guess being cautious of where the group think. Exists around this topic because you do hear a lot of people regurgitating the same thing and oftentimes just for the sake of saying something, but then kind of looking at where is the source of those ideas. I know a lot of them mentioned the Bitcoin standard bys, ammos, and obviously that just highlights that everybody should read that book cause it’s probably the thing that takes things back to its core component.

and then it kind of forces you to question our existing system, our system that we operate in right now. But I really enjoyed just kind of hearing a few different angles. I’m keen to kind of explore what we took from each of those episodes today too. If you’re keen too.

Terry: Yeah, let’s do it. Let’s go through the biggest. From each of those thought leaders, how us influenced our thinking and what it means for us moving forward and what we’re.
Ryan: Nice. I wanna start with even before we kind of think about each of those conversations, what was the biggest insight or something that you took from any of those conversations? The thing that first comes to mind where you go, fuck, that was a light bulb moment for me.

Terry: I think the biggest one for me was with Jesse Myers. We were discussing Ray Dalio and, and the research that he’s done, and it actually is coming to the same conclusion that we keep making the same mistakes. Humans keep doing the same thing all the time, but. He’s looking at it differently and saying, okay, that just means that US is done and looks like China’s gonna be the next rising world power.

And this is something that doesn’t sit right with me about that. And I’ve been questioning that for a while, thinking, how can that be? Like how is the world gonna accept that sort of level of autocracy? And nobody trusts that country, so how is that gonna be what everybody all of a sudden just does? And maybe that’s.

Naivety because big, big changes like that have happened in the past. There’s certainly a slow shift towards that kind of thing, particularly from people like Ray. But the thing that Jesse said that really interested me was the thing they’re all missing, particularly these traditional finance folks that I guess are embedded in that current system.

They’re assuming that what is, is what will be, and the big thing, the rising superpower that they’re missing is the internet and Bitcoin is the native currency of the internet. That’s the big thing they’re missing. So that was a big one for me to really think about and go. Now that does make a lot more sense because that’s gonna allow everybody to trade and it doesn’t matter who you are.

The problems we have with Senior Ridge, the problems we have with people that are unbanked and can’t get access, can’t get access to this global economy. It actually does fix all those problems. And so when you look at what it is, what it is as a technology and what it could mean from that perspective, Plus how many people have come online just over the last 10 years, and that rate of growth, you kind of go, well, that might be the blind spot.
That was the most interesting thing for me. What about.

Ryan: Yeah. Uh, extension of that, like I know when I was reading Ray Dalio’s book and all indicators pushing, pointing towards the Chinese economy, basically becoming the superpower. And obviously when that does happen there currency becomes a reserve currency of the world. I was definitely reading that and thinking, geez, does a Western world really want to do that?
Do they trust the Chinese Communist Party enough to wanna go in that direction and have them pull the levers on the currency that kind of underpins the world economy and doesn’t feel ? That’s true. And so I feel like there’s definitely gonna be an exploration of what else? And if they get to the point where it’s like, you know, we don’t wanna deal with the US dollar, you know, like Russia obviously has quite potently lately.

It’s definitely a, a sense that they’ll look for something new and. Uh, which you might suspect would be that digital currency of the internet. I’d probably also draw upon the consolidation of ideas that Jesse Meyers touched on, where he basically just said, you know, this conversation is not about the technology, it’s about the money.

And really just highlighted a lot of things that we’ve talked around, you know, the difference between other cryptos and Bitcoin, but really just highlighted that the reason why Bitcoin is the. That we’re talking about is because what it means as a form of money and what that can mean for people using it and the utility of it.

It’s not about the sexiness of the technology like other platforms are. So if you just go, all right, if we want the best form of money, then you think about Bitcoin. If you want the best technology, you don’t. And so many people are questioning Bitcoin because of the technology. But like you said, it’s not about the technology, it’s about the money.
So yeah, I found that really interesting.

Terry: I think an extension of that conversation and worth exploring is, um, I’ll put this in the show notes if you’re interested in it. It’s an article written by Jeff Booth and he talks about the blockchain. And the idea is basically a blockchain can either be scalable, secure, and decentralized, but it can’t be all three.
It can only be two of those three. That’s the trier, right? So Bitcoin shows secure and decentralized and it left scalable for everybody else. And that’s kind of the gap that a lot of these other cryptos have gone to fill. Not realizing that when you look back in monetary history, what you need is you need a very hard base layer foundation for everything to operate off that is secure.

And if you can make it decentralized, it’s obviously better. And that’s the whole idea of the innovation. But if you try to be all three, if you try to be secure, decentralized, and scalable, You don’t do any of them well, and that’s essentially what’s happening with a lot of these other ones. You know, they move in the direction.

Corey Clipon talk about this. If you’re trying to do all three of those things, it moves you in a direction away from decentralized, towards more centralized. And that’s essentially what has happened and what is happening with Ethereum right now. It’s moved in that direction because it’s changed to proof of stake, which is a different consensus mechanism.

So again, going back through monetary. You look at it and you say, well, you need a hard base layer, and you build protocols on top of that, when you’re talking about how technology works, and even though it’s not about technology, it’s about money. So people want the best form of money. We’re actually using a technology to use that to make that money work.

And if you think about the internet, we’ve got T C P I P, which is the protocol. The Internet’s kind of based on the base layer of that. We all interact on HTTP, and that’s the internet kind of interface layout, and then we’ve got layers on top of that for email and those kind of things. We don’t even think about it like this because they’re kind of usable for us.

So when we talk about Bitcoin, what we’re saying is like that’s the plumbing, the most basic foundation of a new system of money on the internet. So that’s why I think people find it hard to get their head around and it has to be the one that people descend. There is one internet and it’s all on T C P I P. There was a battle for protocols. There was different protocols. We were battling that out early days. T C P I P won that battle, and then everything now is built on that internet.

Ryan: Yeah. Yeah. Which I know we’re gonna speak about the Lightning Network a little bit later on. To those conversations. We started with Robert Breedlove. He’s a deep philosophical thinker and yeah, I love listening to his story. He’s such an interesting man. What was the big insight or the most important thing you took from that conversation?
Terry: I love the analog between the number zero and its impact on mathematics calculation in trade and basically the impact it had on different institutions. And what I like about it is inevitably when you get into this space, if you’re really gonna understand cryptocurrency and why it’s here, you do have to understand the problem.

And it can be pretty depressing to talk about that problem all the time. like how broken the system is. And you know, I think Bri love used the term like corrupt theft, all that sort of stuff. And it can make you feel like a victim. And what I liked about Xero is that it helps you envisage what the slow impact of this innovation could be over the period of time and how it could just slowly break down these institutions.

And the analog there is Xero had this impact. Religion and religion had this kind of monopoly on the truth. And then because of zero it brought all this into question and it slowly kind of broke the back of the power of that institution. So obviously what we’re talking about here is the banks are very similar. They’ve got a kind of monopoly on the production of money and, and it could slowly change things just because of how much better it is for every.

Ryan: And what I love about that was those guys that started to adopt it and being able to use number zero to kind of, you know, change the way they did their calculus. It happened in business with merchants. They started to be able to do better in trade and people that adopted it. Started to prosper and then it had that network effect of everyone else had to kind of jump on boards and make sure that they were a part of that prosperity.

And because of that, there’s, you know, I guess this new life that kind of existed in an old broken system, that kind of meant that everyone had to come and join it. And so it wasn’t that there was this complete crumbling and resetting of the whole system, but there was this new thing that kind of evolved and.

Out of the soil there just sort gave people an alternative opportunity, an opportunity that they were limited to before, which you definitely feel like this is one of those things. So that was Robert Breed Love. Next you spoke to Nat Reau. The big one I took from that conversation with Nat was, I think it’s just really refreshing to.

If from someone that’s tends to be on the other side of the headline, someone that has spent time in the newsroom and really questioned the people in those institutions and where the knowledge is coming from, and really just calling out the fact that the commentators don’t necessarily understand what they’re commenting on.

they might be very well trained. And just like Jesse Meyers said, Stanford grad and he was surrounded by people that were really learning and understanding the system and economics and all of their training was in form of economics that limited their ability to see why or how it might be broken and how there could be a more simpler, better version of economics that could exist such as Austrian economics.

And um, she just called that out and. Most of these guys haven’t even specifically learnt around economics themselves. They’ve just picked up on what other people have said and probably inherently knew that anyway. But just to have that cold out from her side of things, and even just to visually put yourself in that newsroom and go, and so many of us can do this, we can sit ourselves in a room of people and go, how many of these people are actually informed on the subject matter?

They’re talking. Everyone wants to have an opinion. If you have to create headlines and articles and you want to harvest attention, get people to click, then you are just drawing from what will get people to click, and you’re probably going back and going, what made people click? Last time there was something happened.

What happened in the last crash of whatever it might be. And so yeah, it was good to kind of just step into that reality a little bit and go, oh, what would that conversation look like? Or how would those people be thinking? How were they trained? Where do the ideas come from that create the headlines and the articles and the conversations that people then have that has a huge impact on people’s sentiment, on how people are viewing what this might be.
What about you for that conversation with.

Terry: Yeah, same thing mate. Just really interesting to actually go through and tease out what the incentives are and underst. How that business model has changed. Ironically, as a result of the internet they’re having to. On a lot more different fronts. They’ve lost a lot of their sort of monopoly on the truth, those institutions as well.

So now they have to compete for people’s attention. Never seen an article that says Bitcoin grinds through another bear market that’s not gonna get any clicks. So it’s either Bitcoin is mooning or Bitcoin is crashing and it’s going away. There’s nothing in the middle ever and most of it’s noise. So that was just really cool to be able to talk through that and understand it.
And from NA’s point of view, I think she’s a really important person in this space because. She’s now a commentator as well. When people call on her, she knows how to play that game and give the news by, but give it in a way that actually makes people think maybe continually do a little bit more research. And I think that’s just really important right now because there’s just a lot of misinformation out there around this stuff.

Ryan: Yeah, and the misinformation and headlines around all asset types. Realistically, like we’re talking about Bitcoin specifically, but same is true for the property market. Same, it’s true for the share market. You know, every single market that exists, you’re only gonna get the extremities, pop it up in your feet because they invoke an emotion and make you want to click, and that’s their whole business model.

which, uh, is so important to understand. And then we obviously mentioned about Jesse Myers. Was there any other big ones you wanted to pull out from that one?
Terry: No, I think that was a big one for me. Like the rest of it I’d known and I really wanted to sort of share that with the. Understanding the sort of parallel between, you know, the volatility that you face in Bitcoin and the Oregon Trail and thinking about pioneering. I like that because it is describing your experience, right?

Let’s say you were buying this time last year, or you were buying, you know, up until the high, and now you probably think, oh, I’ve made this huge, huge mistake, but you kind of zoomed in like this short term timeframe and. . I just like the way he was kind of drawing that parallel and saying, you know, you’ve just gotta ask yourself whether you’re actually willing to deal with that volatility, but you’re not putting your physical health and your life at risk in that way.

It’s just an emotional thing, and the news just exacerbates it. There’s this concept of myopic loss aversion, and it’s basically the idea that the more you value something, the more likely you feel. When it goes up and down and the more your perception of risk goes up and Bitcoin trades 24 7 and the news articles just love talking about that volatility. So it is a real test of your investing metal. There’s a sick sadistic part of me that Kind of enjoys that. I don’t understand why, but I kind of like the fact that you earn your return now. You earn it during these periods and later on and Jesse said You’re gonna look like a genius 5% of the time. You’ll look like an idiot most of the time. 

I don’t know. There’s part of me that sort of goes, I like that cuz you’ve earned the game. Whatever the gain is, whatever you get out of it, you didn’t come for free. And everybody thinks that it is coming for free. It’s absolutely. You’ve gotta have a long term timeframe. You’ve gotta had enough conviction and you need to have done the work. So if in four years time that haring happens and everybody’s like five Xed on whatever it is, you earned it because you held it and you understood what it was. It’s not a get rich quit scheme. It’s actually the complete opposite.

Ryan: Which is again, is true for every asset, right? It’s the ability to stay the course for long enough to. It compounds. And like the thing that costs most people is the transition. It’s going, oh, this is now the thing. Oh, now this is the thing. And so it’s that ability to withstand that. And then like you said, when you’ve gone through tougher times, just like everything that you do, you know, you think about maybe there’s some sport that you play and you think about the grind that you’ve had to put yourself through to get yourself fit, to do the training or whatever it might be.

And then you’ve been able to have the win. It’s so much more valuable knowing the work that you’ve put in to get. And I think that is true with, like you said, with investing and going down this path, and I did have that image in my mind of that example of Oregon.

Ryan: The 80,000 to 25,000 slide that just happened was, uh, no doubt that period of a picture getting across to Oregon and having no infrastructure whatsoever, building a heart and having to harvest a paddock with my bare hands.
The image that came to mind as he was talking about that and uh, what’s just happened recently.

Terry: Yeah. The other thing I want to just quickly mention is I have to apologize. We mentioned VJ Boyer party would be coming on and I’d be sharing an episode of his. We had some issues with sound. I’m really disappointed about that because. VJ does a great job of explaining and giving a little bit more color to understanding the, the bubbles that happen in Bitcoin.

So Jesse did a great job, I think, of explaining what actually precipitates those bubbles when he talked about the halving cycle, consistent demand meeting, a supply shock causing a price rise, and then speculators traders jumping on top of that. That’s turning into a mania. . What VJ Boyer party does is he explains that within the context of this model called the Gartner Hype Cycle, and it’s basically this idea of like this kind of like this huge euphoria.

People sort of going up to a peak, gets to a peak, and then we just have this huge crash. This is what happens with technology, right? It happened with the internet as well. Huge peak in like 2000, and then a huge crash, and then it’s like trough of disillusionment. So we’re in that trough of disillusionment again, and then there’s like a plateau of new expectation or something like, And then it sort of slowly rises again.

And that’s what’s interesting is that four year halving cycle creates a Gartner hype cycle every four years because the small rise in price attracts a lot of people. I mean, that’s actually why we started learning about it. Cause we kept getting questions from folks coming into the program, folks that were listening, asking us, can you guys talk about Bitcoin?

And that’s why we started to do the work to understand it, right? So it draws people in in that way. And what happens? A lot of people that it draws in, they get shaken out during these times cuz they don’t understand what they bought. They just thought they were gonna get rich quick and they didn’t do the work.

So they get shaken out. But what does happen is that there are cohorts of people like you and I that do do the work and decide actually whatever happens in this next year is kind of irrelevant. I actually believe in this thing long term for various reason. So I don’t really care what happens. I’m not trading this thing, I’m gonna hold it.

And that sets the new floor for the next halving. And that consistent demand meets the supply shock again, creates the same thing. And that’s why Jesse says, you know, whatever, you know, in the next 18 months, this is gonna happen again, with or without you, you may as well understand it and just kind of not buy into.

Ryan: And I know it’s so true for me, the level of understanding and conviction. It now, and we’re gonna talk about how this kind of plays out for us and what we’re making, what we’re doing with it. But, you know, it’s amazing how there can be such a fallen price and, you know, I remember putting $10,000 into Bitcoin at $88,000 and, uh, you know, as it’s fallen to 25, almost a, a quarter of the value.

You know, had no reaction to that whatsoever. Still quite optimistic about it. It allows you to kind of detangle yourself from what’s happening right now. And then the final conversation, which I actually haven’t heard yet, so I’m excited to learn about what you took from this one ahead of time. Everyone else would’ve heard it by now, but the conversation with Corey Lipson, what was the big takeaway from that?
Terry: The big one for me is just really under. Where the scams happen and why they happen in crypto, and the difference between crypto and Bitcoin. We’ve just seen FTX happen, and that’s not crypto, that’s an exchange, but there’s parts of crypto that are wrapped up in it, right? So what he’s really kind of explaining is when you give people the power to print their own money, of course they’re gonna print their own money.

That’s actually the problem that Bitcoin’s here to solve. And so any other crypto essentially that has a bunch of people at the top of it making decisions. It’s the same problem that we’re trying to get away from, and so it perpetuates that problem, and it’s human greed. It’s not money. It’s human greed that makes it happen.

It was shocking to hear the venture capitalists in Silicon Valley and the way that they’ve approached it and actually watching what they’ve done to individuals who are, let’s say, not informed, just enticing people into these projects, pumping them up with marketing and selling out as people buy. Kind of despicable and very deliberate as well.

And he was pretty courageous guy. He’s been calling us out for actually the last couple of years saying, this is a scam. These people are scam. And if you’re in crypto and you think you’re getting high yield, you are the yield. You are exit liquidity for some VC who’s sitting in Silicon Valley making a lifetime’s worth of money off people like you.

And I know that sounds harsh, but just look at the facts. Look at the last four years and see all the coins that were pump. Nobody talks about Solana anymore. I haven’t heard anything about it. And that’s kind of how, what he was pointing out, and he’s coming from the other side of that, he said, I was in those meetings, I was there and I started to see this pattern and I realized, hang on, these people don’t give a shit about what crypto’s about.

They’re just here to make their own money. And a lot of parallels that he drew to around online poker, we talked about online poker and how that was unregulated. And there was basically a lot of scammers in that space until it got shut down. And a lot of those people, those same. Have now shifted into crypto cuz it’s the same opportunity, an unregulated space where you can do whatever you like.

It’s a wild, wild west and there’s not gonna be any repercussions, although that’s about to change. Cuz uh, as we are doing this, I think Sam Bagman fried of Ftx is arrested and it looks like he’s got about 160 years worth of charges to his name that he’s gonna have to answer for. So we’ll see what happens there.

Ryan: Hopefully there’s learning from this one too. No doubt. Like we’ve had members, we’ve had friends, people that have been impacted by this FTX issue and corruption. Ultimately, hopefully there’s learning from it, like from our perspective, from an individual perspective, just highlights this importance of self custody, not having your money held on an exchange, cuz the exchange is, there’s people, there’s humans, there’s people making decisions that can go.
and the whole purpose of this is to not have people interact with your money, not have those middle men, people that can basically just fuck it up. . And so the tricky thing about this has been really just a branding issue where people have just kind of bundled crypto, everything that’s kind of associated with it all in one here, and Bitcoin into that, ftx into that, you know, everything else into that and just gone, oh, look what happens with crypto.
Which is a bit of a shame because it stops so many people in their tracks from going kind of deeper and learning. Cause it’s such an easy way just to. Backend it and ignore it. But importantly, just to recognize, like you said, it, that FDX was an exchange. It was people backed by VCs making dumb decisions and you know, they created their own money.
They literally created their own money and then started trading with it and then created their own sense of value and then started loaning against it. And I know you’ve got a good example of this, don’t you? You’ve got a good analogy to kind of explain how this works.

Terry: Yeah, it’s potentially just a little bit long. So if you’re in the community, I’ll posted it up there for you to sort of read through. Um, so if you’re in the c. Just check the post that I put up there this morning cuz it kind of walks through this example and just sort of simplifies it a little bit so you can understand what the hell happened.
If I really wanna simplify it, I’d say Lynn Eldon did a great job of this. She said it, it was a Ponzi on top of a casino, Ponzi because what they were doing with the funds relied on more people buying in than selling out. When that’s flipped, then the game was over. The casino. Part of this is that if you are interacting with an exchange that.
All the tokens. It is a casino, right? So you don’t leave your money at the casino. It’s not a bank. You get it outta the casino. And that’s kind of the hard part of this is I guess we’re still conditioned to sort of trust these institutions, but crypto is not about trusting. It’s about a trustless.
Environment where actually you trust math and code and you actually take responsibility for your money. So it’s a very hard lesson to learn. But what I’d say as well is that FTX didn’t do anything that your bank is not doing. Your bank does exactly the same stuff. They rehypothecate your funds, take it elsewhere, do a whole bunch of sexy stuff with it, try to make more money, and the difference is when your bank fails.
They socialize the losses by printing a lot more money and devalue in the currency so everybody pays except the bank. So we privatize the gain when things are good. We socialize as losses when things are bad, and that’s why our currency has lost. The majority of its value since its inception, and that’s why Fiat currencies always go to zero.
What we’re seeing right now is what happens when there is no backstop. It sucks horrible for those people involved, but it doesn’t impact the whole of society. So guess what has to happen? Lessons have to be learnt, and that’s harsh for those involved. But the lessons that really need to be learned is those people that run these casino.
They need to be held to a higher standard and they need to have this mean something as well. So I don’t like the fact that it happened, but what I do like is this is what happens in a free market. And if you don’t let people stumble, they never learn. And we get into this situation where we’ve got a whole system, a credit that’s very much connected, and if it goes to ground, then everybody’s impacted.
Ryan: Which is a hard thing to chew on, right? Cause if I’ve got money on fdx, Let’s say I own Bitcoin, so I’ve got the right currency. I trust that I understand it. Listen to all these episodes, and I’m like, yep, that’s right. That’s for me. I wanna expose myself to that. And then you’re holding it on ftx, and then FTX is fucked up.
And then your currency that you have a claim on, not in your own custody, but under their custody, they’re fucked up and they’ve done that. You kind of want them to get bailed out. You want the central bank or the government to step in and do that so that I can get my money back. That’s the initial thought.
What we’re kind of saying is as soon as you do that, then you experience inflation, you know, loss in purchasing power because asset prices push up and you know, there’s all these issues that come along with that. Instead, we’re just saying, what if you just isolate just to just that? and that meant that they had to learn.
And so over time, institutions that were playing that role of the Exchange life fds was they don’t wanna go to jail. And they know they’re not gonna get bailed out. And they kinda learn from all those mistakes, which means that the population at large and the living standards for everyone at large get better.
Terry.01_01: and it requires these institutions to be more prudent and more public. With the way they do things, cuz the reputation now actually matters. Whereas what we have with the banks now is that we’ve got a situation where they’re actually incentivized to get as big as possible, as fast as possible, so that they’re too big to fail and they can just say the same thing every time.
Oh, well if we go down, the whole system goes down with us, so you gotta bail us out. Right? Because what it used to be was a whole bunch of community. The success of those banks, they were businesses that relied on the reputation. So if they kept taking these obscene risks, they’re gonna go outta business.
Nobody wants to do businesses with them. That’s not the reality we have now. We have these big mega banks, the central banking system that basically backstops them and it’s created these cartels of money and they kind of get to do whatever they want. So this is what we’re trying to get away from, and I think that’s why it’s so important to understand, like you gotta move in that direction.
You can’t take the old thinking into the new.
Ryan: Yeah, and I know Richard Werner spoke a lot around the importance of community banks in terms of the efficient allocation of. And if there is credit in the system, Richard Werner being the godfather, or the founder basically of quantitative easing. So everyone hates him for that, but also has a lot of insights around we should be working towards community banks so that there’s, like you said, operating like businesses.
There’s not exuberant amounts of money that they can just push in any direction, so you don’t have so much waste in the system. It’s a efficient allocation of capital. So it’s actually something we wanna move towards. I guess his philosophy around that. I believe in, even though he really fucked things up with the quantitative easing thing. But yeah. Yeah. So big one. You know, just on that front, Bitcoin isn’t fdx, crypto isn’t Fdx. Fdx is its own thing. It was facilitating the buying and selling of different cryptocurrencies, but it was an institution that stuffed up, you know, just like a lot of the big ones did in 2008.
the saying it’s the biggest kind of corruption scene since Enron as well.
So same thing, you know, groups of people that just made dumb decisions and things got outta hand. So important lesson. Don’t hold your money on those exchanges. Take it out, put it into your own custody. There’s options to put it onto your phone. Or getting a, a hard drive, a ledger USB stick basically, and putting it on there.
And this is easy to do. I showed my mum how to do it, took five minutes that first time, and then she rang me about a week later. She’s like, I need to move some more on into my phone wallet. And um, I was on the phone with her, but she did the whole thing. In a matter of minutes. And, uh, there’s that learning cost and uncertainty the first time you do it.
But as soon as you’ve done it, it’s easier than bsbn account transfer cuz you can copy and paste a address, in my opinion. So, very easy to do. The key thing is know you’ve gotta take responsibility. You gotta go, all right, am I willing to be the responsible party for my own property, my own asset here? Can I trust myself to do this?
And this is what we’re gonna work towards. Previously, you know, if something goes wrong, you can ring the bank. You’ll be like, Hey guys, what the fuck happened? Fix it. And sometimes they do. Uh, whereas this has really taken personal responsibility, which we advocate.
Terry.01_01: Yeah, it’s a great Spider-Man paradox, isn’t it? It’s uh, if you want great power, you have to accept great responsibility. And like we say, it sucks what’s happened. It really does suck and it’s not fair, but. Hopefully we actually get better from this and it kind of flushes out more of these bad actors. It creates a bit of a window of opportunity as well.
And there’s things that I’m really optimistic about right now that go completely against the narrative of how people are feeling about this whole space. As I said at the start, like. I’m becoming more and more sort of enthusiastic about this and optimistic about it, the more I learn because of kind of what I’m seeing by looking basically.
Cuz if you’re not looking for answers, you’re probably gonna hear this, right. Bitcoin’s last stands a big Ponzi scheme with the scam . No intrinsic value, greater full theory. All the stuff that we used to parrot as well. And you know, I can see as well, there’s a few tourists that have looked at a few of our episodes and rated us.
Laugh.01_01: Oh.
Terry.01_01: Said, you guys are talking about Bitcoin. You must be scammers. And if you’re a tourist, I would understand that because you probably haven’t listened to our Bitcoin series and you haven’t understood the journey that we’ve gone on. And if you have and you’ve got more information and you still think it’s a scam, please let us know.
Ryan: More of a traveler. I do appreciate that some of those have said, really love the podcast until you started talking about crypto. Appreciate they enjoyed the conversation till that point. Yeah.
Terry.01_01: And I could see that like, look, that’s exactly what I would’ve done as well. I would’ve said, okay, you know, I’ve, I’ve got my mind made up about that, and now they’re talking about that. I don’t actually identify with that and the people that are in that, so that must mean I don’t like this anymore. I’ll just encourage you to take a deeper look before you have the surface level opinion, because we’re not talking about.
Crypto, we’re talking about one thing, and you’re probably not even listening to this episode anyway, so don’t worry about it.
Ryan: No, not at this point, no
Terry.01_01: So what am I excited about? What am I enthusiastic about? Jesse Meyers put his finger on this when he talked about you just keep watching the trend here. And every time we have these big crashes, what happens is Bitcoin improves and gains. Its domin. Each time. And that doesn’t happen with technology. With technology, the incumbent starts to lose ground to the challenges that can move in a more agile, more faster fashion and pick up on little trends.
Whereas with Bitcoin, it seems to be that it looks like all these other sexy things are happening and it’s taking over and that sort of thing. And there’s another big crash. Bitcoin just grinds its way through, picks up share, again, gains its dominance again. And like you said, even Ethereum, it’s lost ground in Bitcoin terms, even though it’s gotten higher and.
and it looks like it’s growing faster. It’s actually gone down when it’s compared to Bitcoin in its own terms. And so you’re watching that and you’re saying, well, society’s doing its job. Society’s figuring out the same thing. It’s always figured out which is what’s the best form of money and descending upon that.
So these periods right now, it does show up all the bullshit really, really well. And if you’re looking for it, it shows the difference between the thing that you can depend on and everything.
Ryan: Which is a good call out too, because a lot of guys that have probably spent time understanding, investing in business, investing in companies, investing in shares, you do, the thing that you are wary of is when companies get big. They get bulky, they slow down, they miss things. And then there’s this other one that comes through and takes over.
The most famous example is probably Blockbuster being the star of the show, and then Netflix coming through and then dominating it. And then you start to understand that companies tend to have a a lifetime maximum around 40, 50 years. Public listed companies that is. And so a lot of people end up investing in index funds, for example, because you can’t know.
Which one will get become the biggest and for how long they’ll stay there. And even if they do become the biggest, there’s gonna be something else that tends to come and take over. You kind of think that that might be the same thing that would happen from a currency perspective, but it is different because it is more about if there’s a better version, everything goes to that.
So gold is better than silver. People stop using silver and they go to gold. Not completely, but for the most part. And so every time it has to be one step better than the previous. , everything will slowly move towards that, right?
Terry.01_01: Yeah. Yeah, and that’s the way it’s played out all throughout history when society has chosen its own form of. It when a money’s been forced upon us, which is essentially the experiment we’re in right now, which is, we’re kind of being told, if you wanna live here, you gotta pay taxes. And to get to pay taxes, you’ve gotta go and work for this useless token that’s got nothing behind it anymore.
Ryan: It’s not quite worthless and not quite that grim. But
Laugh.01_01: Yeah.
Ryan: zoom.
Terry.01_01: So that’s the first one, right? Continue dominance for me. The second one is the Lightning Network. Now, I would’ve loved to spend another two hours talking to Linda Elden about this, but you know, we really wanted to cover what was more pertinent at the time. And what I’d suggest is you start looking into a bit of Lynn’s work around the Lightning Network.
There’ll be an article or post in the show notes, but you’re interested in Lightning Network. It’s a huge development. It’s the layer that’s gone on top of Bitcoin to solve the scalability problem, and it’s doing it very, very well. So there’s some communities around the world like El Salvador, just recently in Ghana and Nigeria that are adopting the Lightning Network to use Bitcoin as a medium of exchange, but also to use Bitcoin as payment rails to better trade between Fiat currencies.
And this is such an important point, right? Bitcoin is the most superior payment network. For sending value across time and space that’s ever existed. And on the layer of lightning, it’s doing it literally at the speed of light way faster than the the existing sort of systems do. So you can now actually send somebody in Nigeria, Australian dollars, they’ll receive their native currency in Nigeria.
They’ll receive it in 10 seconds. And instead of you paying a 30% fee for the privilege of that and waiting five to seven days, you get it in 10 seconds, it costs you 10. So that’s huge, right? Cuz you think about those people that have been unable to trade, unable to store their wealth over in those developing countries, how you’re not gonna want to get on top of that because if you can start trading more with more people, then you can start building your wealth.
So that’s what I’m excited about. I’m watching that very closely.
Ryan: Yeah, and obviously the great thing about that is so many people in the world can’t get access to banking and what you often need to. Open up a bank account is you need credentials, you need a license, you need a passport. You need some proof of identification that so many people in the world struggle to get.
So even just opening a bank is a very difficult and arduous process, but they can get access to phones. Instead, and so they can now participate in the trade and this lightning network means that they can participate in the trade with people anywhere in the world at lightning speed. That’s really exciting, in my opinion, for what that means for, you know, just the third world and you know, developing nations.
Really eager to see how this plays out in the next five to 10 years.
Terry.01_01: Yeah, look, if they can make those work and those communities get to a sustainable level, there’s something called an alley threshold. Lanes how network effects work and when they start to work. And so I’m keeping ’em really close an eye on that because beyond this threshold, you can actually be pretty well certain, particularly when it comes to a technology that it’s gonna proliferate very fast.
And the lightning network’s gotten to a point where it’s looking like it’s pretty close in globally, how well you can use it. But also locally in those communities. El Salvador is the first real world working example and their early results in terms of that nation’s productivity, their energy production, the crime, all that sort of.
Is really, really promising. It’s not what you’re gonna hear in the media. You’re gonna hear the opposite, but if you actually do the work, you’ll see it’s going really well. So I’m keeping a really close eye on that. The other thing is that Lightning Network’s doing some interesting things with the energy industry as well.
It’s just mopping up a lot of inefficiencies that are happening there. So imagine paying for your energy like you used to pay for a prepaid phone bill. Your energy would be a lot cheaper because energy industries don’t have to actually cash flow you while you use the energy and then charge you for it.
it’s doing some pretty interesting stuff. It’s removing a lot of mess. It’s removing a lot of waste in areas that have a lot of mess and waste, and that’s only gonna be more interesting as it gets bigger and better.
Ryan: Yeah, yeah, yeah. All the inefficiencies that happen when there’s a secondary market for something, and then there’s all these layers that exist between the producer and then the actual consumer. And energy is one of those big ones where you think about how many different marketplaces are buying and selling energy that exist before it actually gets to you.
And so it sounds like there’s gonna be some direct lines there. That’s gonna be a huge cost. For people on the, uh, energy front, which is as we’ve kind of a big takeaway from a lot of these discussions for me has been the importance of energy itself in the underpinning of the creation of productivity and the creation of new technology.
The creation of just commerce in general. Something we take for granted now, but that’s something that’s really clicked for me. That energy as a source creates so much, which. I don’t know why I’d never really thought about it before. The introduction of electricity for the sake of machinery, for agriculture, for manufacturing in all these different fronts meant that people could do more.
Basically, they had more resources to work with, more inputs to create from. So that’s gonna be something that’s no doubt explodes over time, as well as this introduction of, um, more green energy sources too.
Terry.01_01: It makes sense, right? You have to trade your energy to earn a thing called. So it should be that the money took energy to create. It’s just literally as simple as that. If the money doesn’t take any energy to create, is it actually worth anything? It has to be grounded in a real world sort of proof of work, right?
So when I make money, it’s proof of work and the money I make should also come from proof of work. And that’s why energy’s so so important. And I know that’s probably sounds like a really abstract idea, but it’s really as simple as if you trade your energy for something, you want to know the energy that the thing that you’re getting for it is backed by energy as well.
Can’t just be someone click your finger and creates a whole bunch more of it and decreases the value of the thing that you just work to earn. Can’t be that way, cuz if money doesn’t, Then it’s very hard to cooperate. Like Bri Love said Money as a social network works really well. When money works, it works horrifically when it doesn’t, absolutely destroys trust.
And that’s why we’re actually moving out of a globalized world now cuz the money’s broken.
Ryan: Like you said, there’s some things that you find when you’re looking for answers and those things are really the big things that pop up. I’m curious to know, like off the back of these discussions and since we last talked about at the end of the crypto series, talked about like how we’re seeing it and what it means for us.
Has anything big changed for you?
Terry.01_01: Not really. I mean all the stuff that we talked about at the end of that Bitcoin series, I think still holds are concerns. The things that are headwinds, all those things still hold. So I would encourage you if you haven’t listened to that, to go back cuz I’m still keeping an eye on all those things like quantum computing and.
Understanding, you know, what the role of government’s gonna be. All those things are risks that you need to keep in mind. So that all holds. But in terms of use case, in terms of importance, in terms of whether we need this, that’s probably only really gotten stronger for me because all the issues we’re seeing since we started learning about this have only been exacerbated.
And that really just proves, I guess the point proves Satoshi NATO’s point. So that hasn’t really changed, and I just see Bitcoin as probably the most reliable. long-term savings mechanism. And when I say reliable, I mean I know how it’s gonna operate because people can’t do anything with it, right? We know the haring’s gonna happen.
We know there’s 21 million and we know that people are gonna jump in and jump on top of that and cause those mania and bubbles. So I look at that and I say in terms of the properties of this thing, It’s probably the thing you can depend on the most, even though perception is completely opposite. I look at everything else.
I’m like, all of that can be manipulated in different ways. And who knows? Government’s probably gonna try to do their absolute very best to co-opt and manipulate Bitcoin just like they have with gold. But as it stands right now, I look at it and say, if I’m gonna keep my money somewhere, I wanna know that it’s gonna be somewhere that nobody can tamper with.
Ryan: Yeah. I think the long term element of that is quite important too, because the reliability, like you said, is in the mechanics of. in the properties of it. Um, whereas if you’re thinking about as a savings tool, then your short term experience on that might not be positive. , you might be saving for a house right now, and if you put your savings for that house into Bitcoin, it might be worth less in six months or in 12 months.
And so as a savings tool, the timeframe of this is so critical, but as a long term savings tool, and it is the most reliable, it appears to us anyway, the timeframe being quite a critical part there.
Terry.01_01: Just think about this, right? Let’s say on a two, four year timeframe, you know exactly what the inflation rate’s gonna be, and you know that it’s decreasing. Period of time. And then any other asset, it’s gonna be determined by the price of money, which continues to fluctuate. One year ago it was 300 basis points less in Australia, and then within that year it’s the fastest it’s ever changed in history.
So that messes with the price of everything. It makes it harder to plan. And so all the volatility you’re seeing in traditional markets is cuz of the changing and the price of money. And so I wanna save into money that nobody’s gonna change the price of.
Laugh.01_01: You.
Terry.01_01: And when I say price, I just mean the inflation.
Ryan: Yep, which is true. You can rely on the fiat currency, likely being, or Australian dollar, US dollar, whatever it might be, losing its purchasing. because now it’s a constant that inflation is a constant. And so, yeah, I’d agree with that one. The other thing I think is also, you know, some of those conversations and even just noticing the developments that have been made with the Lightning Network.
So it was developed in, I think it started in 2017. Is that right around that time and then how far it’s come? I think it’s become a source of hope around it potentially becoming. All three functions of money, the unit of account, the measuring stick, basically that you can measure assets against the medium exchange, the things that we trade to be able to do business together, as well as that store of value, which where probably people see that.
It’s kind of the first thing that tends to. To become true, but over time at becoming that Medium exchange is probably the biggest part. And with the Lightning Network becoming such a powerful way for people to business and transfer money and transfer value, and then Bitcoin being the native currency of that payment rail, it just seems like it’s a good chance that that’ll become a medium exchange very soon.
And then it supports all three functions of that money, of what money needs to. . And so curious to know though, what would it take to change your mind? What could cause you to rethink things on this front?
Terry.01_01: Yeah. I think if governments do figure out a way to co-opt it, manipulate the market like they have with. And they’re definitely trying. They’re absolutely doing their best to manipulate the perception and the narratives around Bitcoin. Not just government, but also the banking system. Same thing, but that’s to be expected.
It’s threatening for them. I’m just betting on an open, decentralized network, just making it too hard for them in the end, like most of the time. That happens. If adoption declines, same thing. I’d be like, okay, that’s not great. If experiments like El Salvador fail in Africa, it doesn’t work out. They don’t, people don’t actually take to it.
They don’t start using it. It doesn’t hit that alley threshold. That would be kind of a bit of a thorn in the side. Absolutely. If there’s a hard fork in the code, so all of a sudden somebody does convince everybody to change it, and then the immutability of the whole thing goes away. And if Satoshi reveals him or herself, That would be a big one too, right?
He’s like, here I am. I’m gonna exploit God.
Ryan: It’s something that I’ve had in my mind for a long time around this. Like imagine if he did just pop up or she did just pop up and just had the ability to just siphon value, siphon money outta that system. Sort fuck it. I’m gonna double it. I’m gonna take it as 42 million.
Terry.01_01: Yeah, it’d be like suckers. But look, you know, it’s worth sort of suggesting though, because look, I always reserve the right to change my mind, and even though I’m really enthusiastic about this, I don’t expose myself to the point where I could nail myself. And put my family at risk. And I think that’s worth calling out because why I’m really excited about it is because it’s asymmetric return for risk.
So that means you actually don’t have to take a big risk to get a big return. And if you do, if you overexpose yourself, you lose that feature. Because think about it in two ways. If you take a small risk and you get a big return, awesome. But also if it doesn’t work out, you only took a small risk. But if you take a big.
Then now you’re in real trouble. And so I kind of wanna call that outright because I really believe in this. I’m really hopeful about it, but I’m not naive and I do understand risk. And it’s important to separate those two things. So as much as I’m an advocate for it, and I would love this to work, we’ve gotta live in the real world too, don’t we?
Ryan: Yeah, absolutely. And on that, Dependent on what your capacity is. And so you know, some people have more capacity than others, and the amount that you do decide to expose yourself to this and say, you know, I want to, I do believe in this. I do see where this is going. I think this is what it will happen.
Then you still gotta look at your position and go, How much of what I have am I willing to place upon those ideas, that ideology, those beliefs that you also gotta think about what is the rewards or the costs or the consequences that might exist with the other assets that you own. And it’s just about balancing those holes.
And like yourself, definitely haven’t sold everything up and become one of those full Bitcoin maximalist that says, I don’t need a house, I don’t need, you know, shares. I don’t need anything other. My Bitcoin definitely not quite at that point, and it is a relatively small percentage of what we have.
Everything else we’ve talked about before we started the Bitcoin series, it’s still true, still believe in that. It’s just that our topic of conversation has changed towards this at the moment. So a lot of guys are thinking that we’ve just said, fuck it to all of the old shit, all the old ideas. That’s all in the past.
Now. This is the new thing. That’s not true. . That is definitely not true. We are enthusiastic. And we believe in what it could do, but there is a difference between those two.
Terry.01_01: Yeah, has to be. Has to be. So yeah, don’t conflate those two things. And look, you know, in speaking to that philosophy, like philosophically, I think that’s why I’m really like it, because philosophically it aligns very well. It aligns with long-term thinking. It aligns with value. Equal sort of an opportunity for value.
It aligns with power to the people, not a few at the expense of everybody else. And it’s better for everybody. And it can create a world where global trade is a lot easier because there’s a neutral reserve currency that nobody is kind of manipulating, which means this is what the ironic thing is, right?
If the money’s trustless, then it’s easier to trust everybody. But if you have to trust someone, Then it’s harder to trust everybody . And so I want a world where it’s easy to trust everybody and we can actually all trade because that is wealth. It’s easy to look at this on the surface level if you are a tourist and say, oh, those guys let go of their ideals.
Absolutely not. I actually think it’s very well aligned cuz it’s all about storing your value, making your future better tomorrow than it is today. Bitcoin’s very aligned with that if you do the work to understand.
Ryan: it moves us closer towards like, what is a democracy? It’s like the ability for everyone to have a vote, and ultimately that’s what money does. It allows you to vote on things. Added to you. And so if everyone has an equal vote or has the ability to not have their voting power shifted or changed, then no doubt that’s a positive thing.
Nice man. Good stuff. Good series.
Terry.01_01: Thanks, man. It’s good to be moving on though. I’m excited to sort of be talking about a few of the things that we’ve been discussing more so when we started this around about humans, human behavior. Habits, all that kind of stuff we’re gonna be jumping back into to some of this, moving into the new
Ryan: Some powerful guests coming up
Terry.01_01: Yeah. We’ve got some absolute belters, like absolute heavy hitters in the space of behavioral science.
Ryan: Some of your true man crushes for a long time, It’s gonna be hectic.
Terry.01_01: Yeah. Yeah.
Ryan: Nice. All right. Good stuff mate. We better run. Good to chat and, um, see you on the next one.
Terry.01_01: Yep. Take these, you mate. Talk soon.