 Well, hey everyone and I we're live now welcome back to session two of Sailor Academies Bitcoin for everybody If you haven't seen the other videos, you should go back and watch it You should also remember that this is part of Sailor Academies PRDV 151 which is Bitcoin for everyone I'll make sure to put the links in the chat and in the description so you can find it You can go back start taking the course and catch up to us. These will be archived on YouTube for as long as possible And so just you know, make sure if you have any questions, you can put them in the chat If you want to keep the conversation going you can again leave a comment or join Sailor's discussion forums Which I'll put again in the chat, but well without any further ado, I'll hand it over to Stefan to get this going Thanks very much Mike. So Thank you everyone for rejoining us I hope you all enjoyed the first live session and for those of you who have not enrolled yet Make sure you go to sailor.org and search Bitcoin in the course You can find Bitcoin for everybody and so today we're gonna be talking through some of the material on unit 2 And so joining me today is the excellent and very well-renowned guest in the Bitcoin world It's Parker Lewis. He is the author of the gradually then suddenly series and he's working at unchained capital So Parker welcome and tell us just for listeners who don't know you just tell us a little bit about yourself Well first Mike and Stefan, thank you for organizing this event not just today, but the series. I think it's awesome I've been a foot through a lot of the coursework and I think it's a great asset that you guys have put together And I'm happy to be here quick background on myself. I work at unchained capital. I lead our business development efforts We think about unchained capital as as a Bitcoin private bank for people that want to hold their own Bitcoin private keys and for that universe of people we want to help them secure their Bitcoin better and help service them on the financial services side Kind of across our personal retirement business context before kind of getting into the world of Bitcoin I really came from a traditional financial services world So started out my career at Deutsche Bank worked in M&A in and around the financial crisis that was formative for me Then went on and worked in the restructuring space. So worked in distressed credit for a while Ultimately found myself working for a hedge fund. That's really when I went down the Fed rabbit hole And the quantitative easing rabbit hole and the Bitcoin rabbit hole and all three of those paths led to one for me and when I came out the other side Came away with the conclusion that Bitcoin would be the global reserve currency of the future And decided to start working full-time on Bitcoin And that's what ultimately led me to to move back to Austin, Texas where I'm from originally And team up with the the guys that on chain a few years ago and uh march forward from there Excellent and uh Parker, I think it might be also instructive for listeners as well Maybe if you could tell us a little bit on your journey of learning about Bitcoin What was that like and what were some of the materials that you used in your own understanding? Well, I had the the great fortune of being asked to go do diligence on a gold company up in Canada And one of my friends who works here at Unchained will Cole ended up connecting me with safety in a moose And so I think at that point in time I was somebody who Thought that gold was a barbaric relic had never really stumbled upon Austrian economics And my my path to bitcoin was really twofold. It was Getting to form a friendship was safe and having him help me really for the first time contemplate monetary economics But then having a framework or real life experience to be able to apply that not Based on what my own economics background would have told me but on what I had experienced in the real world And and at the same time that I was doing that I was also independently going through and doing macro research for a macro hedge fund And so as safe was helping me unlock Mental blocks as it relates to monetary economics and really Austrian business theory I was going down and peeling back layers of the onion as to what happened in and around the financial crisis Because I was trying to discern what would happen when the Fed unwound QE And you know didn't realize it at the time, but as I started to understand more about monetary economics I was independently going down that path of figuring out just what happened In the financial crisis and I came to the principle conclusion of twofold One that future QE was inevitable based on the construction of the financial system and the degrees of leverage And that was independent of Bitcoin But that it was the Fed was going to inevitably have to reverse course We're not going to be able to unwind QE and we're going to have to print trillions more I tell people I couldn't have predicted COVID, but it wasn't COVID It was something else inevitably would have caused an Exhaust and a shock and the Fed would have no Choice but to print trillions of dollars in their mind As that's kind of forming in my mind safe is helping me understand Different pieces of Austrian research that I should read or you know theory Picked up. So I'm going to win this bet that Phil put out picked up the book Hayek the author For those watching Phil Geiger Who's a Twitter shill bet who who would say Hayek first myself or Stefan But reading Hayek was formative for me the road to surfdom a few different essays use of knowledge and society as well as The pretense of knowledge and and really just started to develop kind of a very, you know First principle understanding of Austrian theory combining that with you know, then, you know Talking to safe about Bitcoin because I went from basically zero to gold to Bitcoin pretty quickly But the harder step was to to think start thinking about gold as money And as I paired those two pieces and having the benefit of forming that friendship was safe with my own independent research Of the Fed it all just kind of clicked You know at a moment and uh fell down the Bitcoin rabbit hole and didn't come back up I love hearing that story parka and so for listeners and viewers Austrian economics and you know people like Hayek and others form An integral part of the understanding of Bitcoin for many of us in the Bitcoin space and that Informs the perspective from which we write and speak about Bitcoin And so we can we'll see that when we get into some of the material from this section of the course section too, which is about Bitcoin investment and so Parker has a great series. We're going to get into some of that later. Um, but I think it might be good to start with this question of protection from fiat inflation, right? So We have to think through when we're trying to save money What is the thing that we should be saving into and how should we be thinking about? Uh, the inflation that happens in fiat money, right? Like the u.s. Dollar the Australian dollar the pound the yen etc Versus other kinds of things like if you're holding gold or if you are holding bitcoin So parka, maybe you want to start there? How do you? Think about that question of dealing with living in an inflationary world Yeah, I think maybe to start it's important to kind of create a a very clear delineation between saving value that you've already created and taking incremental risk and and thinking about, you know Where I draw that line of demarcation is if you have money You've already taken some risk and been compensated for it. You've invested your time Inherently there's uncertainty in that and that to the point where you get money you've taken risk up to that point The world of a fiat currency where where inflation where monetary inflation is manufactured I think there's there's certain people that disagree on this, but I'm someone who's firmly in the camp that inflation is a monetary function The you know how it is transmitted through an economy which we can kind of discuss is It is not necessarily linear But the Fed or the ECB or the BOE or the Bank of Japan and the People's Bank of China The central banks printing money is the root source of inflation. If not for printing fiat money monetary inflation would not exist that it's a it's a It's a function of central banks, but what that creates is A world where you create you take risk create value in the world Invest your time to deliver some value to other humans You get paid in a form of money and then from that point forward you're working with a ticking clock Where everything that you've created in the world to that point is now going to purchase less over time And it creates a really negative incentive. And so what that causes people to do is to To have that line blurred between saving Which is storing value that you've already created versus investing and putting that money at risk Because everyone is essentially put in a position where they feel like they constantly have to take risk essentially to stay in the same place and I think that the best analogy to use is A hamster wheel basically you've created risk and then you're forced to stay on the hamster wheel to to run in place And so people then confuse or conflate or the lines become blurred between Savings and investment where people say well, I'm going to take this money because it loses 2% a year and suddenly I'm going to you know, go buy a mutual fund to outpace inflation Or I'm going to go buy this bond because I know that my money is going to lose value And there are really negative reinforcing feedback loops when 100 percent of the people in society Are are forced into that position Not because that's the way, you know, a general economy should work But because a few people in a faraway land decided to print trillions of dollars But it is a reality and then people are forced to face that reality and make economic decisions Based on the fact that the money that they're Storing their wealth based on what they've already created in the world on a go-forward basis where where it slowly, you know Loses value, but then ultimately I think what a lot of us in the bitcoins space recognize That the end game for that is it doesn't just lose 2% kind of Had infinite and that's that's bad enough, but eventually people's Willingness to store value in a currency that constantly loses its value Eventually stops and that value loses its it's worth more precipitously at a certain point in time Yeah, that's phenomenal and The way to think about that is if you are an everyday person out there and when you earn your income from your job Or your business and then you save that into your bank account The reality is it's like a melting ice cube, right? So this is the analogy michael solar himself uses when he's talking about it it's like you're sitting on a melting ice cube and So the reality is in maybe in in decades gone by it wasn't melting so quickly But now it's kind of reached a point where it really is starting to melt a bit faster And so now we have to think about that more clearly we have to think about that because if we don't We lose purchasing power and that's really the way to think about it, right because it's not just about okay I have 100 dollars or 200 dollars. It's about what does that 100 dollars or what does that 200 dollars buy me? How many coffees or you know steaks or something water or whatever How many how what does that actually buy me in real terms? And so I think that is the important question to think about where I think it's important historically as well to think about The stages of our lives So typically when you're young or middle-aged you're earning your money and then once you reach an older age a more advanced stage You are now trying to spend down Because you might not be working as much and now you might be trying to spend down some of that wealth But then the question and the problem is what if you've been saving into something that's not Growing at the same pace that your money is going down in purchasing power. That could be a problem. Couldn't it parker? Yeah, absolutely. I think it's it's a There's a spectrum as to how significant that problem is and I think one of the ways that you know what you are just describing that melting ice cube effect is When you think about what the function of money is It allows you it's a medium that allows you to create value in the world and then convert it into a wide range of value created by others That I can do one thing in the day But then I can go and purchase the value that are created by 20 people because we've all decided to to operate and converge on a particular form of money within a local economy And if you think about what that means is you basically created value in the past and you're storing that you're deferring consumption into the future and You know, they're as safe described in his book. There's this this idea of time preference But you know, people can have higher time preference or lower time preference Which is kind of planning for the future and waiting the future more than the present But there's a reality the human time is scarce that everyone has a positive type preference So everyone would be inclined more so to to value Present consumption over a future even if people kind of wait the future in the present differently And if you've already created value in the world and you are living in a currency regime Where you're going to both defer consumption and the value that you created previously is going to decline You have a serious problem on your hands Because both human time is finite and your ability I think to your point Stefan Your ability to continue to produce into the future from when you're 20 to 30 40 50 60 eventually starts to decline And your ability to generate income does and and that becomes extremely penalizing for you If you're living in that world that as you're aging That then it's a double whammy that as your productive capacity declines Your purchasing power all throughout does as well and that there's a reality that everybody within the world today Whether they're doing it consciously or subconsciously are looking to find better ways to store their value for that precise problem And you know, you can historically humans have effectively perfected money They've been they've been hopping from monetary medium to monetary medium And and really what we've come to now I think is what that that that ultimate perfection of money is basically the The money of all monies and and required kind of what I think is required to be in a digital form to really be able to achieve You know what bitcoin has Exactly. And so maybe another way to put it is bitcoin is this monetary technology that achieves just what was simply not possible before because Gold had, you know, just naturally through the forces of the market had an inflation rate something in the 2% range one and a half 2% something around there where fiat Money depending on which one you're talking about Maybe the less bad ones might be really kind of seven or eight percent And then the really bad ones are 20 30 40 per year inflation And so the reality is for you the listener out there if you save, you know $10,000 in your bank account That might only be worth in real purchasing power terms might only be worth eight and a half thousand dollars after one year It could really be that much of a loss And I think what's happened is over this last year or two Think things have accelerated to a point where more people are now Forced to think about these things because governments have gone in a very expansionary way or fashion and so that means More it's on more people's minds where I guess historically Interest rates were higher and people were could sort of arguably say, okay Maybe the interest is making up for some of that inflation that I'm in effect paying so Parker, how are you thinking about that interrelation and that interplay between where interest rates are And then where inflation rates are Yeah, I probably think about it at a lower level Which you know, it's kind of coming back to this idea that you know inflation and how it's transmitted through an economy And in the in the principal way that it is in most developed world economies leases through a credit system but the What actually causes it is the amount of money that the that the federal reserve prints and so Or the ecb and the bank of japan because there's a reality that the the cost of interest For a dollar or a euro yen is it's simply dictated by the supply and demand of dollars And if the central bank wants to reduce the interest rate They can increase the supply of dollars if there's more dollars Floating around then somebody that wants to borrow them has to can can pay a lower rate But ultimately what drives inflation is in the last week the federal reserve has created 40 billion new dollars And that's a massive number In the last year it's between three and three and a half trillion dollars And that they basically created digitally and then everyone slowly figures it out And the way that they figure it out is most people aren't aware of those facts The way they figure it out is because the prices that they see in their local economies slowly start to rise Basically, they print the money on day one and then there's the effect of that that significant massive amount of Money printing or digital money creation then gets reflected in the The you know the value of real estate went up So then the the the rent for that real estate went up And then if the rent for the real estate went up then the grocery store That is operating in that piece of real estate now has to charge more for beef and bananas and cheese and so people and then and then the employees say hey I need to be paid more and so then wages starts rise, but it's all function of a root level of Decentral Bank printing money and they're doing that with an objective too lower interest rates to incentivize borrowing because their system is based on credit expansion and so People let's say in the mainstream economic world believe hey We can just you know toy with this highly complex thing that we call the the economy By printing money and control things And I think the people that experience in the real world that talk that think about these problems more on on a micro level Which is I produce X and value I want to consume Y for me and my family and that becomes more and more difficult for the majority of people as the value of their savings gets essentially destroyed and and what they end up Doing is they're they're basically put between a rock and a hard place where it's they they operate in this Rational world where their money. Yes does lose value, but imagine 100 million people or 300 million people Or billions of people making economic decisions with a gun pointed to their head Because that's essentially what the the fed basically devaluing People's savings underneath You know, typically pulling out the rug from them is and and everyone deals with that in different ways But that's the reality and and the challenging thing about it is most people are making those decisions Not knowing that that that's you know, there's you know, some person behind, you know, the Wizard of Oz screen Pulling these strings They were just reacting to local prices, but those local prices are all being driven by monetary manipulation Yeah, and also the other sad and unfortunate consequence of The government's intervention into the market for money is that it forces more people to now become some form of investor and speculator Whereas historically If they were living under a hard money standard, right? So imagine historically under a gold standard or imagine in the future someday when we're all living on a bitcoin standard People will be more able to save and what what what it is is economies modern economies rely on What's called division of labor and specialization of labor you specialize in the thing that you are good at You don't need to try to be good at every little thing because it's just too difficult The world is too complex There are too many different stages of production and too many different things that we have to specialize into things that we Are good at and unfortunately what's happening now is less people are able to do that because now to some level We all have to play the fiat debt game, right? Yeah, and I think maybe a different way that I would describe that is that money is what allows for the division of labor And that we we all I think intuitively again, whether we consciously or subconscious subconsciously think about We all Accept that there's benefits to trade That you know, there's certain things that people In an ideal world would prefer to do and would be better at and there's others that would be better at going and hunting And providing food than than somebody else And in that world where if you accept that that there's value to be gained via trade and specialization then There's value in exchange and money is the economic good that allows us to facilitate exchange But we aren't just going to enter into exchanges arbitrarily And so what ends up happening again subconsciously or consciously everyone Goes out into the world looking for the goods that best facilitate exchange And that there are certain properties of goods that allow for that to effectively facilitate exchange and coordinate economic activity to allow for the vision of labor to basically allow for you know hyper specialization such that people can Both at the same time do what they really want in the world And what you know what they enjoy at the same time convert that value into a very broad range of choice And that's one of the things that Hayek talks about where he says oftentimes money is believed to be this kind of the root of all evil But it's it's really the greatest source of freedom that's ever existed Because of that idea that it allows you singularly to convert your value into the range of choice And I tell people you know if you go into a modern grocery store Probably no fewer than 100 million people contributed to getting all those goods into one place so that you could You pick things off the shelf, you know mindlessly as you walk through Now the only thing that allowed that to happen was money And that what happens when governments print money Is that at a root level it distorts that economic coordination or communication To a point where it can no longer be facilitated at some at some point And that if you kind of marry that with this idea that people are constantly going out and looking for the the goods that actually exist in an economy To facilitate it in exchange that they're going to gravitate towards those things that that ultimately allow them To communicate with the rightest range of people on a basis where they know that the game can't be manipulated that their value is going to Basically be converted into a comparable unit of value that's created by others And that's where we ultimately arrive at things like gold or like bill coin that shares certain properties Which we can get into but but that it is something that happens very organically within the market Yeah, very eloquently stated. So in other words for listeners out there think of it like money is a very important coordination tool in our society and if we don't have A functioning and high quality money that has impacts on how well we can coordinate things in our society And that is so Important to us getting the groceries we need or having a roof over our head or having clothes on our back all of these things are very They are very complicated production processes And so in order to coordinate that we need a very good tool and that's what money is So rather than thinking of money as being the root of all evil or it's an it's a bad thing It's a tool that we can use in society and that we need it in society So now I think it's a good point to transition to some of parker's actual articles So in sailor.org if you go and sign up for the bitcoin course In that course, I've actually included a bunch of parker's articles in this section So that's why I wanted to also invite parker as a guest for this Livestream because he's the perfect person to talk about it. Now just a quick bit there about parker's series It's called gradually then suddenly now some of these articles So I've selected four for this course that you can see on the sailor academy Website But if you want to read the others and I highly recommend for listeners if you have not already go and Check out parker's full series. It is an excellent series in terms of explaining What bitcoin is and some of the important aspects around bitcoin So for those of you out there make sure you go and check out this series But now we're going to actually talk and enter into some of this Series and talk a little bit about some of these so the first one that we've selected is So I think the actual article is called bitcoin is not backed by nothing and it's this whole question around When people are learning about bitcoin a common question they might have is hey, what is it backed by so parker? How would you answer that question? First I would dissect what people mean by backed by because how it's how it's typically used is Is a reference that I'd say is is almost outdated to the point of being irrelevant which is Back, you know a hundred years ago And really the origination of the dollar it used to be a reserved back currency and The dollar was a fractional representation of gold And and it was backed like dollar notes were backed by gold and there was a fixed exchange ratio And you could take the the dollar note and then convert it into a certain number of units And that's how the origination of the term kind of let you know ultimately came to be And then and then it's you know, it's kind of evolved into a legal kind of obligation of somebody but but practically speaking it was the dollar was backed by gold and then in 1933 1934 There was an executive order the basic ban the private ownership of gold But the dollar was still quote backed by gold and then in 1971 Nixon basically Removed any backing of gold and the dollar effectively transitioned from a reserved backed currency to To essentially a debt backed currency And so I think that the first thing to note is that the dollar isn't really backed by anything one of the things that I go through in in the presentation is that I lay out a case or in the article later a case that the That the value of the dollar is really simply derived from supplying the man and the thing that creates scarcity in the dollar's world is the relative number of dollars that exist to the amount of dollar in on a debt But that in that equation That relative scarcity is also what ensures that more gross dollars will be printed over time And that that there's nothing there's no inherent monetary properties to the dollar. It is something that ultimately Was derived or came to be because it leveraged the monetary properties of gold So I kind of lay out that as a baseline and then what I kind of uh, you know would would argue is that Any form of money is really only tangibly backed by the credibility of its monetary properties that there are certain inherent properties that exist in certain economic goods that allow for certain things to be better or worse Forms of money to basically be better or worse at facilitating the economic function of exchange And that when you start to evaluate monetary mediums based on those set of properties Which don't necessarily go into all of them now But thinking about it as scarcity the the ability to to subdivide and aggregate and then the ability to transfer And there aren't many goods that share all of those properties But that certain goods fulfill those or have those kind of inherent properties In ways that are more functional for exchange than others And then when you start to evaluate Kind of the dollar versus gold versus bitcoin and evaluate it based on those objective set of properties That would either be more or less effective at facilitating exchange Then you start to figure out that bitcoin it's not that it's backed by a government or not Is that it has inherent monetary properties that lend very well To facilitating exchange and those being if I was to summarize them being that Bitcoin has a credibly fixed supply that nobody can create more of them And that everyone within the network enforces those rules It's not some magic because Because software codes dictates that there's 21 million It's that everyone that's voluntarily opting into this network is enforcing the rules And one of those core rules is that there will only be 21 million bitcoin Each bitcoin is subdivided in or can be subdivided into 100 million units So it can be Divided into very small units aggregated and very large units But then it's also able to to take those two properties of finite scarcity and divisibility and and the ability to aggregate and send that Property of scarcity over our communication chip And it's and it's really and I think about it as it has perfected on gold. It basically takes all of the the The strengths of both physical gold And the strength of the digital dollar and cast aside the weaknesses of both And so when I get into that piece about bitcoin is not backed by nothing It harkens on that idea of the credibility of bitcoin's monetary properties Are what tangibly back bitcoin if I was to to get one level deeper to discuss the three principal things It's cryptography And basically a private key encryption basically the keys that that can authorize whether bitcoin move or not mining and basically a connection to the real world and expend an expenditure of energy to basically make it very costly to write new history to the bitcoin ledger and then bitcoin nodes which are are facilitating this function of Transmitting and also validating transactions that basically ensure that everyone is holding everybody else accountable within the network That there's really kind of three key components that I would break down But ultimately what those three things do is they reinforce the 21 million is a credibly fixed number And if that number is credibly fixed then bitcoin as our friend instantly pompadona would say becomes the apex predator of monetary medias Right and so it essentially its money is competing against other forms of money and In some sense they compete on the basis of how credible and how strong their monetary qualities or properties are And so with bitcoin the main point is obviously the 21 million scarcity But then there's also some other related points as well So things like your ability to send it anywhere around the world At relatively low price point compared to the quality and the settlement level that your Assurances that we are getting when we send bitcoin around the world So in some sense we can say bitcoin provides us assurances that fiat's banking cannot provide So that's another way to think of that question. And so also important to think about how We are living under a us dollar reserve currency standard right now And it's not that we all Voluntarily ended up here. It's that certain steps were taken to sort of push us into this pathway and so Fiat money did not just arise out of the you know out of nowhere what happened is people were using gold and then eventually gold was linked to us dollar in some form and then eventually gold that that tether if you will was removed And now we've been free floating ever since Despite what some people still believe to this day that the us dollar is backed by gold. It's not really Right central. Yeah, go on it really isn't I think you you brought up an important point which I also Raised in the article is that it's always monies competing against other monies So that it's it's a recognition that there's nothing absolute in this world, but that it's you know I am evaluating monetary a good a versus monetary good b In determining which one of these two things is going to Facilitate the function of exchange better than the other and I look at across five or six or seven like all You know kind of basically waiting different things and and and not evaluating them in a vacuum And I would say for most people that are evaluating this equation. It is thinking about you know gold the dollar and bitcoin or Substitute out the dollar for any jurisdiction where you are And and then to say which one of these things how does it compare against various different Kind of inherent properties like how scarce is it? Scarcity isn't something that's absolute Well in in bitcoin it might be but historically that never was able to exist How how credibly do I think that that bitcoins? Supply really is fixed because what I tell people is the value proposition for bitcoin is that Each person has to evaluate for themselves whether that number is credibly fixed Whether potentially there could be inflation introduced in the future But if they're not evaluating it in a vacuum they're looking at it in a world where Their central bank and their government without doubt prints trillions of whatever units of currency And and when they evaluate those two things they would say, you know If I did work today and stafan wanted to pay me money and I knew that stafan could Make up the money and pay me tomorrow as well I probably wouldn't opt into that currency's regime and that's that's the stafan's point This was something we basically inherited But it wasn't something that we opted into voluntarily and now that there's another choice What we're doing and what everyone in the market is doing and I think this is something else that Most people probably don't even recognize but Every time a bitcoin And a dollar trade the exact same number of bitcoin and dollars exist in the world when they are traded on the secondary market and all that is changing is market participants Changing their preference as to which currency they want to hold and that the price of bitcoin and whatever your local currency however You're denominating it that is the output And the input is the market evaluating monetary properties And when people start to recognize that at that point of sale Nothing changed in terms of supply, but somebody made a decision as to which currency they'd rather hold And if you're looking at it in dollar terms or euro terms or yen or you on terms An appreciating value of bitcoin is a market consensus emerging that bitcoin is the standard of value Based on its monetary properties I love that point you were making about how the amount of bitcoins already exists right now Of course, there will be never be more than 21 million But as we speak today in march 2021 approximately 18.6 million or maybe 18.65 million or so coins bitcoins have been mined into existence So it's that you know 18.6 million coins versus let's call it Roughly 90 trillion of broad money around the world in us dollar terms That that's the amount of dollars that exist. It's really what it is is the relative It's our valuations of that that are changing because again as we were coming back to that point It's a coordination tool. It's a it's a tool that society uses to be able to plan And plan for the future and we sort of coordinate the use of resources into different industries Based on people's relative valuations of what they want So if a lot of people want, you know fancy whiskey or whatever then, you know The the stocks of the industries of the people who make that will rise, right? So it's it's just all about relative valuations in that sense and so Bringing it to the point about how monies are in competition with each other Let's move now to this article called bitcoin obsolete other monies So, sorry, I think it's called bitcoin obsolete all other. Yeah obsolete all other money So this is a great article And I think it's an important point to just talk about how monies compete with each other and why is there this idea of converging towards a best one. Why does that happen parka? Yeah, so I kind of I have a decision tree that I kind of lay out the article which is It's very there's a recognition that's very difficult If you know, especially in the world of cryptocurrencies, there's just thousand cryptocurrencies There's many different fiat currencies How do I know which one's going to be the currency of the future? And and it can be you can become lost in a You know sea of noise and what I try to simplify for people is kind of a More first principle way to think about it, which which follows this logic, which is Is money a basic necessity? Yes or no, and and what I kind of key in on there is Thinking about how many times you interact. You don't have to think about it at a fundamental level But just recognizing that you you interact with it every day and it's fulfilling a function for you might not necessarily Understand that an intuitive level, but it's coordinating academic activity And so it is a basic necessity and then the question becomes Is it a collective hallucination? Yeah, is money just a belief system because that's what then what even if they accept that money is a basic necessity And it's this thing that facilitates trade then they say, ah, but like I don't understand like why you know Why do people value this dollar? It must be because we're all hallucinating And and the answer to that is no it's not just a hallucination That people all have this common problem Which is exchange and if the problem is exchange It's how they carry their value forward into the future and how they intermediate a series of exchanges and once you accept that Money is not a collective hallucination. Then you start to say Does do monetary systems converge on a single medium? And people will look around the world and they'll say well, there's the dollar. There's the euro. There's the yen There's the yuan. There's the pound But if each individual evaluates how many currencies they interact with in a day They'll quickly recognize that virtually all of them only interact with one currency and there's a reason for that And that it's money is solving this inter subjective problem It's a problem that everyone faces, but it's inter subjective in the sense of If if if exchange is the problem exchange dictates that there's multiple people and so Money's converge on a single medium in one way that I frame it in the in the piece is more so that economics economic systems emerge from a common use of of a form of money of either that It's not that everyone converges on one form of money It's that the money itself allows economic systems to form that that people opting into the same currency regime Is actually what allows supply and demand structures to form. So it's is money a basic necessity? Is it is money a collective hallucination? No Do economic systems converge on a single medium or do economic systems emerge from a single medium? Yes, and then it becomes well, how do I evaluate different forms of money? And so that that comes back to this idea of monetary mediums converging or sorry competing And so when they you know just breaking it down in very simple terms is you know How scarce is a form of money? How divisible is a form of money? And then how transferable is the form of money and that when you start to evaluate everything in that ab test it's You are individually incentivized to convert your form of money Into the widest range of choice basically this idea that that economic systems converge on one or that monetary systems are monopolistic inherently Because you as an individual Have an incentive to convert your value into the widest range of choice. Basically you want the the greatest number of trading partners So you want to take your eight hours in the day and convert it into a billion people If you can or if you thought about it if you can convert your time into the output of a million people Versus a billion people. Which one would you choose? and and you would choose if you if Certain percentage of those people were in your local economy You would opt for the larger monetary network and that as each individual person joins The monetary network the combination of trading partners actually expands the value of that network actually grows And so it becomes it basically it's a snowball effect or feeds on itself the once a monetary network gains a certain amount of momentum once a Consensus emerges becomes much easier for new people to enter that network But then the value also is not linear The the value is actually exponential because the potential trading partners and connection points within that economy Grow very quickly from there. So it's kind of once you break down that logic you come to the conclusion that Very naturally as a natural kind of order of economic systems Money monopolizes and then when you start to evaluate and this is the reason why I believe Bitcoin absolutes all of the money is because it has perfected Supply it has a finitely scarce supply. No other form of money has ever been finitely scarce So when people are looking on that property of scarcity, nothing is better. Bitcoin is finite It's the only thing Other than human time at least on individual capacity that is finite It's ability to be divided into 100 million units and the reason why that becomes important And it can measure money or value better than the dollar is Bitcoin can measure You know the smallest thing it can measure, you know a grain of sand Or you know a bottle of water and it could also measure the gallows cowboys or liver pool as a soccer team So it's that idea that that bitcoin is capable of measuring all things in the world however large or small and then The kind of knockout punch for me is by night scarcity Infinite divisibility practically speaking to be able to measure all things large small And then taking those two properties and setting it across Yeah, setting across the communication. That's like bitcoin's mic drop moment So when you combine that idea that bitcoin shares both the combination of strongest monetary properties As well as the reality and again, this isn't how I want the world to be It's just the way that the world works that monetary systems based on the function of money naturally monopolize that those two things result in bitcoin becoming the global form of money and Obsoleting the other forms of money that exist today Phenomenal and another way to come at that problem or to think about that is to think Okay, if it really was all just an illusion or like a social hallucination Imagine if the world tried to adopt, you know toilet paper as money or some or grass or something like you can see Even if everyone really believed in it really hard, what would happen? Well, someone would be able to go and make more of it And then it would not be so scarce and then what what happens then it would now not be as Marketable, right? So what happens is in that sense it as park was explaining Money's compete with each other in some sense and they are competing in a way of who which one is more marketable more saleable and so they just naturally is this tendency towards the most marketable because you want to hold your your Wealth in the thing that's the most marketable if you're going to be holding it as a cash balance So that's one way to think about that now. We've got a question from the chat Christopher is asking are there any other emerging competitors right now to bitcoin and the dollar as the dominant currency? so I'll give my answer and then parker. Maybe you can give your answer. I would say look in short. No, I don't see any Real competitors to bitcoin right now because fundamentally I just don't see anything that has the same kind of qualities nothing That's this scarce this decentralized has this kind of level of ability for people to send it around the world It and it just takes some time to sort of dig further into that and understand why that is So parker if you've got a quick answer on that and then we can move on to the next points Yeah, I mean, I would also some of you either say no now for those reasons that The that monetary networks monopolize naturally and that that kind of the economic gravity is that You know as a function of self-preservation everybody kind of understands intuitively that They benefit from trade and specialization and they're going to seek out The singular tool that helps carry their value forward into the future And when they're evaluating monies, they're they're they're evaluating that money as a tool of self-preservation And that there's a very high consequence for choosing wrong in that equation. And so when each individual Evaluates that and makes a decision between a or b There's going to become a point where again today it might feel marginal In the future it's going to be very obvious And there will only be one because it's not going to break at 50 50 basically once network effects Start to feed on themselves and grow It's it's that idea that bitcoin obsolete all the money because it already exists. It's perfected. It's monetary supply So any other money can only have As good of a supply as bitcoin it can't have better. Basically finite is is the the ultimate kind of You you can't do better than that and because of that fact because bitcoin beat them to that place No other form of money will ever be able to have a credibly fixed supply Because the incentives to secure the bitcoin network and to ensure that that number remains credibly fixed will ensure that resources Also aren't devoted elsewhere to secure other monetary networks and over time more and more mindshare will gravitate around bitcoin and the monetary system which is actually being developed today by People coming in especially bitcoin stealing mindshare and as that process happens It's monetary network actually becomes more valuable not just because more people are joining it But because more infrastructure exists to move this thing called bitcoin around the world more easily more securely And as that happens it becomes easier to adopt and it just feeds on itself Excellent and so now we'll move on because we've got about 15 minutes to cover the last two pieces So I think another Interesting question that often comes up when we think about bitcoin and investment people are thinking Oh, is it is it a Ponzi scheme? Is it a pyramid scheme like the early people are in some kind of weird Decentralized way. They're dumping on the new people coming in and blah blah blah, right? So this is like a common concern that people when they are first learning about bitcoin They might have this kind of concern. So parker, how do you think about answering that kind of question? Yeah, I think first is recognizing kind of what is a pyramid scheme or what is a Ponzi scheme? And my piece is actually that well, it's a Ponzi scheme or sorry It was a bitcoin is not a pyramid scheme But when people think about a pyramid scheme, it's these, you know, effectively they're multi-level marketing schemes where You know thinking about it is you're selling a product And that ultimately your source of income is less from actually selling the product to end consumers Versus it is recruiting other members to the scheme and then being paid fees for recruitment. So that's a pyramid scheme So if somebody is paying you to recruit new people into bitcoin Like if you get new two new people to buy bitcoin and somebody pays you for that Like maybe you're in the realm, but that's not what's happening. So, um, you know, a classic example of this was like herbal life where the the U.S. government basically brought a case against it. They didn't actually use the term pyramid scheme But they basically described everything else about it And there's this idea that pyramid schemes fall apart because the ultimate good that they're selling Is practically infinite and there isn't an end market for it And so the people quote down the line and the way get Stuffed with inventory that decreases in value because there isn't an end market And there ultimately won't be enough people to add to the to the multi-level marketing scheme. So that's a pyramid scheme Ponzi scheme is basically a scheme where people Basically make up fictitious returns or purported returns and oftentimes the people that run a Ponzi scheme Bring in money from new investors to pay old investors to give this appearance that the purported returns are actually equal When you think about bitcoin bitcoin is neither of those things You know, there might be a lot of people that are out there saying how Great bitcoin is and that bitcoin is the apex predator of money and that it's going to take over the world, but Ultimately, its value continues to go up because of supply and I mean That bitcoin is up like if you think about it relative to a pyramid scheme Pyramid schemes fall down and break up because the end good is scarce and its value is very low And there's not a market for it in the case of bitcoin. It is the most scarce resource that has ever existed in the world It is finitely scarce Its value goes up because as a billion people are going to adopt it Its supply is perfectly inelastic. Its supply does not react You can have 100 million people or 200 million or billion or 7 billion people adopt bitcoin and no more of it can be created So it's it's this idea and and the people who are building Infrastructure for it. They're not getting paid to sell you bitcoin being paid to offer service And and and the price of bitcoin would not go up if there were more buyers than sellers So it's and the reason why there aren't more buyers and sellers is because of this property of finite scarcity So it's kind of I kind of break it down to say, yeah It's not a pyramid scheme once you start to understand the details of what a pyramid scheme is and compare it Kind of it really breaks down on that what it really is It's it's a monetary system that has has perfected a monetary supply and it's credibly enforced But but that clear delineation on either Ponzi scheme or a pyramid scheme is that you actually have a Resource that is finitely scarce and we're just in the process of distributing it and more and more people as knowledge Distributes are figuring out just how valuable In exchange a medium is that is both finitely scarce and that can be sent across communication And so it really dictates the the value from there excellent explanation there and Finally, we're going to talk about this idea that the government is going to ban bitcoin now You've got an article parka called bitcoin cannot be banned so What's the main idea? What's the main thrust here on this article? So the way that I would break it down. There's a there's a very important decision tree before you even get into that equation, which is You have to understand what is implicitly being said when someone says the government is going to ban bitcoin because If you think about it as an equation of does like first rewind and say does bitcoin work You know is bitcoin functional as money? If no government has nothing to ban Right, it just falls on its own way However, if bitcoin is functional as money And it in my opinion only is functional as money if it has a credibly enforced fixed supply of 21 million Then there are some Medium and good economic good in the world for the government to ban So if you think about it, it's like your your comment not yours, but people who who have espoused this view that bitcoin Is going to be banned are inherently or implicitly saying that bitcoin has a credibly fixed supply And so if you've come to the conclusion that bitcoin has a credibly fixed supply Then you've also developed some view and understanding as to how that's possible And I can promise you that if you come to that view On an organic or fundamental level as to how bitcoin has a credibly fixed supply You will not worry about the government ban it because you will understand that the only way that that credibly fixed supply is possible. It's because bitcoin exists in this In inherently an absolutely decentralized way. It's like a game of whack-a-mole Bitcoin both exists everywhere and nowhere It is it is censorship resistant and it's At its core, it's designed to route around All threats because there is no central point of failure And that what ultimately happens is that as it gets bigger It becomes harder To do away with And such that you know, basically it's like the cat's out of the bag You can't put it back in a pandora's box has been open And so what I tell people from a fundamental perspective is I think about this equation that the first kind of decision tree of You know, if there's is there something does bitcoin work? If no, don't worry about this question at all if you've developed a view Yes, and you can actually think about it But if you do you'll come to the conclusion that that can't be stopped But there's this reality that The government is only going to realistically realize that they have a Problem on their hands or that maybe that there's something too bad that they've come to that view that hey Bitcoin is functional as money at a point where bitcoin is far larger than it is today. So pick your Pick your number it's 2x larger 3x larger 4x 5x 10x And so any rational economic actor that has come To the perspective that bitcoin is a credibly fixed supply If posed with the question do I want to deal with that future problem of having a monetary medium That has increased in purchasing power by 2x 3x 4x 5x and then deal with the government trying to ban something versus Be the person that didn't Buy that and have their purchasing power increased 99 out of 100 people would choose to hold that and take that future risk And the one out of 10 would be like a central banker You know that refuses to see it of course Yeah, and ultimately It there's these stages of grief right so the people say oh, it's not gonna work or it's Oh, see it's not gonna be credible or it's not gonna be you know They're think it's like a stages of denial thing as well And I think the other important point as well is that it's a global world out there that there are many different countries And so while maybe sure some governments out there will try to stop bitcoin ultimately The list for the listeners out there you have to think and ask yourself that question Do you think all governments are going to coordinate to ban and stop this whole thing? Even though it hasn't gotten to that level yet that at that point and despite also Considering that other times governments have tried to ban things. It hasn't exactly worked, right? Yeah, I would say it's more likely that somebody that thinks that the government's going to ban bitcoin or that they can ban bitcoin And they don't understand bitcoin, you know well enough to to have babes Inform the decision in the first place and that that the more that you understand bitcoin the more that you understand about How the network is constructed and how it credibly enforces a fixed supply of 219 you understand exactly that point which is Yeah, I and in the piece I lay out kind of a prisoner's dilemma of like country a country b and whether or not Country a bans it and then country b is actually incentivized not to ban it because then capital inflows Will come to that country and there is this reality that each person thinks on individual level And something I mentioned before but it's that each individual understands that there's benefits to trade and specialization And if there are jurisdictions that are more friendly towards trade and specialization the free flow of capital People will move there if you think that that is not true People try to come to the united states every day and if the u.s Takes a you know a hard stance on bitcoin There's going to be some jurisdiction out in the world that sees that there's an opportunity And they're going to attract because bitcoin is both finitely scarce and you can it's basically taking physical scarcity and allowing for that scarcity to move anywhere in the world and and in that reality It's like, you know, yes india tried to ban bitcoin. This is something else. I brought up like the u.s band Private ownership of gold what happened? Gold increased in value or at least it didn't lose its value the dollar devalued against it Gold held its purchasing power through the next century. So I also think bitcoin is this phenomena that exists in the world A government can make it difficult to own but it's out there in the world and it's spreading like wildfire And the people that embrace it and adopt it They're going to flourish and the places that ban it just like we've seen In in previous, you know, whether you know, it's like india or china Be moving on to a silver standard rather than gold standard They're going to be sent back probably centuries and those people that are paying attention They're going to do what they need to do to get to a place where they can freely transact the bitcoin Because certain regulatory regimes are going to love it and welcome it and those places are probably going to be Where the people really value freedom Yeah, great explanations there ultimately those places that embrace bitcoin will flourish And it is the equivalent of embracing modern technology and using it in our advantage as we mentioned earlier It's a coordination tool. It's the best coordination tool. So we should use this tool And I think that is ultimately how this will go down So while there will be regulation and things like that, it won't actually get banned in my view Like in any kind of mainstream broad way Yeah, I think that for that for that reason where you know, india has tried to ban it Bitcoin network has no conception of india as a country and continues to work flawlessly You know billions of dollars hundreds of billion dollars are cleared and finally settled across the decentralized network every day despite that fact And so when when I think my expectation is when when a You know a regulator looks at this they are going to go through that math, right? Their first inclination is we should ban this like Brad Sherman the United States already said we should ban it He's a fool But as more people look at it they're going to they're going to realize The same thing is going to happen when india bans. It's not going to bitcoin's not going to go away It's actually that that statement that you have to ban something is the reinforcement that there's something that is working there And so you're telling me that this is a threat to you know central banks global monopoly on money Maybe I should get that that's something that SAFE says if your government wants to ban something you should probably You know when the government tried to ban Alcohol didn't you know weren't successful when they tried to ban private ownership of gold the value of gold continue Bitcoin is the most powerful innovation that that has come to be in anybody who's on earth's lifetime That phenomenon is so powerful that it's not going away. It's just going to You know water is going to find its way, you know the least path of resistance It's going to go to the places where it's most welcome and where people are most able to Freely trade and those places that are most able to freely trade are going to flourish and benefit more than jurisdictions that do the opposite Excellent and so look I think we're just coming now to the end of time So I guess we'll just kind of summarize the key points so for listeners out there you can subscribe and find the course ever at sailor.org and also listeners make sure you follow parker and check out his series gradually then suddenly because While I've listed some of his material inside the sailor course He's got a whole bunch of other material which you can go and read and you can also go and follow him online So parker, where can the listeners find you online? Find me on twitter parker a lewis And then you can also find on us on our website unchained.com Yeah, so yeah, so unchained capital com you can find the the blog series there And so for listeners if you haven't already subscribed to the course go to sailor.org search bitcoin in the course You'll find this course and of course you can find me you'll find me there And you can find me online at stefanlavera.com. I'll just hand it back over to mike Well, that's great guys. That was a great conversation. Excellent. I would just say Remember everything stefan just said but remember we'll be back on march 24th the same time For our next section section three of the bitcoin for everyone course and again. Thank you everyone for joining us Thank you for being in the chat. Feel free to leave comments join the sailor discuss the discourse discussion forums and we'll see you