 Welcome and I appreciate you coming down. Thank you. Thank you for having me. So originally how this was set up I had a call out on Twitter looking for people that I can sit down and talk about Keynesian versus Austrian economics and your name came up like a hundred times I thank you so much for agreeing to come on the show and I kind of really want to jump into it I have like two primary questions for you question number one What guy you interested in Bitcoin? Well, let's talk about that and then we'll go into What your definitions and differences between the two philosophies of economics? Yeah So what got me originally interested in Bitcoin was that I was interested in Austrian economics in the first place Even though I did my PhD at Columbia University and my PhD was not in Austrian economics. It was very much mainstream economics, I started reading more and more Austrian economics Books thanks to the Mises Institute's website basically and I found myself more and more interested in the concepts of that school in particular the concept of money and sound money and a free market and money and the monetary Results the results of monetary manipulation or central planning of the interest rate So these were issues that I was quite interested in in 2008 2009 2010 around which point Bitcoin came out and I heard about Bitcoin because of you know being interested in these Topic and initially, you know, I was quite skeptical of The possibility that Bitcoin could work. I wasn't really sure that it it could succeed. They could sustain Continuous operation for a significant amount of time. I thought it would be attacked But over time, you know, it continued to refuse to go away and I continue to learn more and more about it about how cryptography works and about the technical aspects of the proof of work and all of these Aspects of how Bitcoin is secured and how it's operated. And so I became more and more interested and fascinated with it Were you studying Austrian economics? Are you still in school or? Well, I was studying it on my own, but I wasn't really part of my Program for graduation. I wonder why they never teach you though. Yeah, very interesting question If there's supposed to be You know and an institution of learning. Yeah, and so What was your aha moment when you really understood Bitcoin like this is something? I think really primarily the moment that I realized, okay Bitcoin is something real was probably in 2013 in You know until then I'd been Hearing about Bitcoin as an obscure thing in the internet and I was watching it grow when I was continuously skeptical of the possibility That it would survive and in my mind there were you know several scenarios in which that I imagined would be fatal to Bitcoin and Because it was so small because it was so tiny. I thought, you know Some major event of bad publicity somebody who's dealing with Bitcoin gets thrown in jail Gets implicated in some criminal activity Rightly or wrongly and that's just going to be devastating for the market It will destroy the market or destroy the value of the coin probably destroy the security of the coin And so at that stage, you know, I was still skeptical of the possibility that this kind of economic System all of these economic incentives together could continue to sustain such a significant negative shock and then that happened around mid-2013 with the With with the Silk Road bust and so in my mind this was supposed to be what was going to Be the end of Bitcoin and yet Bitcoin didn't collapse. It didn't fail. In fact continued to grow and You know the number of transactions on the network continued to increase and the fact that it you know it Emerged from this incident stronger than before in arguably any technical Indicator you could choose was really the moment that I thought, okay, this is something serious There's there's a very good Alignment of economic incentives in this that has made me revise my initial skepticism and make me think that okay This thing has legs it can run it could be need to run for another decade or two or three or But when you When you understood it when you had a aha moment Were you viewing Bitcoin more or less as a means of exchange as currency? Or were you viewing it as something as digital gold which is a narrative today? You know, I think it's it's it's it's quite unfortunate that people see those two things as black and white Black and white and there's also as being distinct properties when in in in a very real sense the two properties are Inextricably linked that they're intertwined they can't be separated in other words anytime something is chosen as a medium of exchange It means that it is acquired for the sake of being exchanged later on so during that period. There's a period in Which it is held purely as a store of value so you can't be a medium of exchange unless you're a store of value and You can't be a store of value and you know to be a store of value is To then be used as a medium of exchange because the point of storing the values to later on exchange it so these two functions are quite Are very strongly linked that they have they have to come together and they're just how How money emerges on a market these are the properties of what makes something money basically For example the USD currency. Yeah. Yeah, and so Well, yeah, because I mean the only way that the dollar has Gotten its monetary status not quite is because it was backed by gold was backed by gold Yes, and it still is because you know the the central bank of the United States still holds a very large amount of gold No, it is not however the central bank of the United States is the one that holds the most amount of gold That's why the global monetary system was built around the dollar because of the the US Central Bank had the most amount of dollars after World War two But the Exactly yes. Yeah, that's that's the thing. So it's it's not About you know, the key thing is that government is not able to dictate what money is So no government has ever been able to pass off its own pieces of paper as money Successfully it has had to have these pieces of paper backed by a money That was either the choice of a market like gold or silver at certain points of time Or that it was backed by a currency that is backed by these things So today a lot of central banks have currencies that are not backed by gold But are backed by currencies that are backed by gold that have gold So the world's central banks still continue to hold the gold and so effectively the choice of the money in the market is still the market's choice and governments their You know What they try to do is to try to appropriate that choice. So that's why they confiscated the gold They couldn't just ban gold's monetary role. They had to confiscate it And that's why Bitcoin is so interesting because it is designed with one Prime directive and objective in mind, which is to resist confiscation and to resist Centralization and centralized control. That's what makes it so interesting. What do you say another interesting aspect is at least for now There's no bit the issuance is set in stone right for example Since they unpegged the gold The supply and demand issuance of the lease the USD as skyrocket like a quantitative easing a print of 2 trillion dollars with The money is simple mathematics. If you have more supply or what happens to the man ink decreases. Yeah for the market Yeah, that's that's a key concept that I discussed in my book Which is that ultimately Bitcoin is heading towards being the form of money whose supply increases at the lowest rate at the reliably lowest rate and It's going to go below the rate of increase of gold over the next few years. And so This arguably has been extremely important for gold as human if monetary role because this is what the thing that makes gold So different from all other metals that the a new supply is always a very tiny fraction compared to the Overall stockpiles so the supply of gold is always increasing in a very small rate, but Bitcoin is going to Start increasing at a lower rate. Yes, and eventually it tend towards zero So it's the first example of an asset of a liquid asset that we as humans have ever had That is truly strictly scarce in a meaningful sense because everything else is only scarce in a relative sense It scares in the sense of There's a limit on how much time we dedicate towards producing more of it, but Bitcoin is Strictly scarce that not none of it. No more than 21 of it can be made But as with other things, you know, no matter how scarce they are if we dedicate more resources towards digging for copper or gold Or silver or oil will always find more. We always continue to find what's gonna happen once the money awards disappear in the future Well, the way that I look at it is that you know If people value the service that Bitcoin provides then people will continue to Pay for Bitcoin blocks if Bitcoin block space continues to be valuable people will pay to get on it And so currently the way in which you pay for Getting on a Bitcoin block is that holding the bitcoins, you know the monetary What secures the network ultimately is that people hold the coins which gives the coins values And that gives the mining rewards value so that miners want to secure the network want to dedicate their electricity and Processing power towards securing the network because they know the coins would be liquid and they'd be able to sell them So as a holder you're subsidizing the network by accepting all the new inflation or all the new creation of Coins that is effectively increasing the supply therefore bringing down the price of the existing coins So currently the security of the network comes from the fact that the holders are willing to sustain the inflationary dumping of new coins, which you know today is in the volume of I think around five or six or seven million dollars a day New bitcoins that are being produced on the market. So as a Bitcoin holder, you know You're accepting that that stuff is chipping away at the price because that's new supply that's coming on to the market to meet the new demand so That's how it is being subsidized today. That's how Bitcoin security is being paid for today Primarily, however, I see no reason why people value the block space and people value the holding of the coins That they wouldn't be paying for the block space. And so they would you know, we saw it in December of 2017 We saw how a transaction fee market develops and I see no reason why it wouldn't develop in my mind, you know There of course if people decide that they don't value Bitcoin enough if the demand for Bitcoin declines and You know the price of one Bitcoin drops to five cents then arguably. Yeah Bitcoin security is going to be compromised and arguably it's going to be easy to attack it and arguably Potentially it would fail How but that's always the scenario. So I think there's no That's still the case whether you're going with transaction fees or whether you're going with the current mining reward Eventually if people don't value it, they're not going to pay for it and then the system falls apart But if people value it then they'll continue to pay for it Whether it's through transaction fees or through the reward and it will continue to operate So I don't see why transitioning towards a fee market should be any different or any any Any any problem for Bitcoin the what Bitcoin means is just to continue to have demand in both cases Where do you think the future of mining is gonna go with Bitcoin? Do you think we're gonna get smaller nanometers for like a six chips? You think it's gonna be cheaper electricity It's gonna hit the market like where do you foresee mining within this industry? I think the one important trend that is emerging from mining is that anybody who's using grid priced electricity to mine or to mine based on Fossil fuel powered plants is largely not going to be able to make a profit I think over several years There's quite a good reason to suggest that if you're mining with Equal if you're mining based on the price of electricity that is available in the major city Yeah, or in major industrial centers, you are almost certainly going to Be losing money. Well, not almost certainly but in the long run It's not going to always be profitable And I think that's something that's always going to be the case with Bitcoin because of the difficulty adjustment Which I discuss in depth in my book and I find them to be the most fascinating aspect of Bitcoin's economic design The difficulty adjustment makes it so that it's always increasing the margin It's it's always increasing the difficulty of finding the block rewards and therefore Making it less and less profitable for the miners So in other words, if you are able to be profitable mining Bitcoin at 10 cents per kilowatt hour today Then that that's a relatively cheap price. That's a relatively affordable price That's available to many people all over the world and everybody. Yeah It's going to be a very large amount of people that are going to be able to profit from it And so many of them are going to start mining at that price And so therefore the difficulty will adjust upward which is going to lead to The profitability of people mining at 10 cents to drop and then to be eroded away And so when push comes to shove like in the bear market as we've seen over the last year or so The only miners that continue to remain profitable are the ones that are Operating with energy that has a close to zero marginal cost Because in these locations, you know where the energy has no alternative use you have excess energy that's isolated stranded That can't be connected to a grid and can't be sent to a major city. That's energy That's practically free. So building mining installations around these areas is what's going to be profitable. So the Exciting thing about Bitcoin mining is that it's leading to more and more development around these isolated places And so that's going to lead to more and more Growth in all of these kinds of I saw like an interesting stat that because of Bitcoin mining We're actually finding out true price discovery of energy Absolutely, it's creating a global liquid market in energy where energy can now be bought and sold and Anywhere in the world because it can be converted into Bitcoin hashes and therefore monetized So anywhere in the world where you have a source of energy you can sell it effectively by Installing Bitcoin miners there and making them do the work, which is which is which can be a massive initial step towards capitalizing these Places towards building capital investment in these places towards utilizing the energy sources Bitcoin they're mining anything that's a proof of work chain, right? Yeah And so what's your thoughts now? They know on all these different derivatives now So we had like the big one the forked Bitcoin cash and they had your internal world that Bitcoin cash and yeah Yeah, yeah, whatever the BSV So what's awesome all this now? There's like shit ton of forks. I can't even keep up with me forks Yeah, that's that's the point. So I mean the more of that Bitcoin forks happening and the more they dilute their own brand So nobody now remembers what kind of fork is there out there and each one of them becomes just a stupid cult of personality around the person around it So essentially none of them matter and you know, this whole exercise has served to really Illustrate what is it what it is exactly that is important about Bitcoin? Yeah, and that is that nobody controls it. And so, you know, it doesn't it's not about the size of the blocks It's not about the block time. It's not about any one particular technical Decision that's not what makes Bitcoin important. What makes Bitcoin important is that no single person or entity is able to control it and to determine how it proceeds and so The problem with all those forks is that they all start off from the point that one person decided that this is the correct way in which We need to go And so that person decided to Fork off in that direction. So, you know, good luck to them because now all they have is Something that they control that they're going to continue to control. So none of them matter And so once you discovered or sort of reading more about Austrian economics and discovering Bitcoin How do you how do you see Austrian economics helping the global economy? Like why do you believe I want to say believe what kind of advice can you tell people that Austrian economics might be a better model than what we have today with Keynesian economics I mean, it's a difficult question to really answer. I think the The the the the prime value proposition as far as I'm concerned is that I think it's a better way of understanding the world It's a way that makes more sense. I think In my opinion if you spend a lot of time reading Both viewpoints, I think you'll come to the conclusion that you know, you're able to get a better grasp of reality by understanding the works of classical Austrian economists and Their way of explaining the world. So that's primarily the main Advantage the second thing is that you know, based on understanding this the unpopular politically unpopular conclusion that the Austrian economists come up with is About how the nature of the market system Functions because of the price mechanism and because prices serve to communicate knowledge and information And so the way that the market system functions has to involve people making their own decisions able to calculate their own Preferences and make their own decisions based on how much they Value their time and their labor and their different goods and services So in order for the market system to truly function people have to have the decision the freedom to take their own decisions Both in production and in consumption and so therefore any time somebody intervenes in someone's freedom Someone's economic freedom anytime somebody imposes a an economic decision on somebody else There's no escaping the the fact that that's going to be You know that that's First it's immoral because if you can't accept that those two people are both human beings And one of them gets to impose their will on the other you can't find that in any way moral and secondly It's destructive for economic value even if you think about it in terms of you know the benefits overall It's destructive towards economic value in the long run. So therefore they become libertarian that they lean according to today's political Political spectrum Austrian economists would be considered, you know, extreme libertarians because they don't believe in any kind of government intervention in individual economic decisions Including intervention in the market for money And so for me the most interesting aspect of Austrian economics perhaps the one that I focus on in my book is the analysis of hard money and sound money and versus easy money or Government-imposed money and the detrimental effects that have that that has on an economy And I think a lot of the problems that you see in the world economy today Can be explained through the fact that we have long term Money that loses its value in the long term that incentivizes people to think in the short term That incentivizes people to borrow more to spend more rather than save and invest for the long run Well, I saw in the Mises report before the average Life-length of a few currencies 27 years Yeah, all the currencies around the world and you divided is 27 years a survival rate of that Yeah, for me it scares me like you look at the buying power of the American dollar right now Circa like say 1960 compared to that you've lost a tenfold in buying power Yeah The inflation statistics don't necessarily reflect this pretty well because you know they change the kind of goods and because we need to understand that You know technology is always making things cheaper. So Money things are getting cheaper But if you follow Maslow hierarchy of needs the stuff that us we as humans need food and shelter Absolutely fucking going up exactly like Exponentially going up. Yeah inflation is not bad if you don't eat and don't live in a home It's like great. I got a cheaper fucking iPhone today exactly my rent is the skyrocketed Well, you know when they calculate the inflation they take into account the improvements in the processing power of your laptop So that because your laptop is getting Faster they take that as a drop in the price of processing power And so they average that with the increase in the price of food And so you come up with the magical two three percent inflation that they always get that but of course that's just completely arbitrary about what you define as a good and you know, it's Conflates the technological improvement and increases in productivity with the increases in the money supply and the monetary inflation Which is a long-run phenomenon and I think you know, it's useful to compare Prices of food and essentials over time. You see I think a huge increase over time And I think produce has been increasing dramatically year by year for sure Absolutely all the things that are easy to produce in mass quantities and so that includes junk food Yes, the price for junk food that drops and so people are happy to say, you know, you look at well Maybe French fries are getting cheaper or you know Soda keeps getting cheaper, but that's just industrial stuff. And so yeah, you get a bigger factory and you use more energy and you have more More industrial large-scale production involved. Yes, you can get the price down over time Definitely happens But that's not the nutritious stuff the food that's actually nutritious that requires, you know Actual people to take care of it and grow it over time and to maintain it Well, that's still extremely expensive I think it needs to become more and more expensive over time. Yes, and that that explains, you know, the deterioration people's health I think this is a very important factor I didn't get into this in my book But this is part of the new research that I've been working on since finishing the book the The you know the the prevalence of so much diseases so many diseases and obesity And is people think of it as just being a result of abundance because we eat a lot the reality is it's not really abundance It's it's poverty really because people don't eat real healthy nourishing food because instead they eat a lot of junk and so it's it's poverty and it's it's malnourishment and I think It's it's worth considering the relationship between the growth of this kind of food and the destruction of the value of the currency both in terms of the How much government has subsidized the unhealthy corn So I farming soy exactly all kinds of factory and intensive farming have been massively subsidized because they bring the prices of food down Yeah, and so help down play inflation Whereas and that on and that has you know Resulting people will eating more and more of that stuff plus you add to the fact that you know just the general aspect of what I call increasing time preference as a result of The decrease in the value of money as people realize, you know, it's harder to say for the future of money It's less likely to save it To hold on to its value people are less likely to think of the future and more likely to prioritize the present more and more And so this kind of decision-making leads to more and more unhealthy decision-making in all aspects of life And so you see increases in that as well as increases in Diseases and obesity and so on and I think it's it's it's really It's really very very telling to try and understand that through the lens of time preference It's it's my favorite topic in my book chapter five all about the relationship between money and time preference And I think it's a very important topic that People think they should really be thinking a lot more So let me ask you this question. It's you know let's I think in the crypto world, I've been in the crypto space for a while now and You know we live in this bubble, right? You have you know the Bitcoin or a maximum or minimum list and you have an open finance decentralized finance with Ethereum crowd and all these different camps and all them do you want to change the world great But we live this very tiny bubble You and I here are talking about the benefits of Austrian economics benefits of Bitcoin, but How can the majority of world benefit from this information? What can my mom do? What can my brother do? What can that person on the street over there do that? He maybe live only has $400 in state. This is the majority like that's the rest of what can they do with this information to benefit them For themselves, I should say I Mean to be perfectly honest I'm I don't think of myself as an evangelist for Bitcoin. I don't particularly care If people get on Bitcoin or not, I'm fascinated by it as an economic phenomenon But I want to make it clear to everyone, you know I don't care if you buy Bitcoin and I'm not here to find use cases for people So, you know the person on the street may not have a use for Bitcoin And I know a lot of people have no use for Bitcoin. They seem to be living their lives fine So I'm not going to be pushing it on people or Trying to impose it or try to find a way Where it's useful. I think Where it is interesting for people You know somebody were to ask me what's interesting about it I would say it's the best it's the most advanced form of money that has ever been invented And so if you're curious about understanding why I think you should first invest in reading about it Understanding what it does how it works Why it works how to own Bitcoin how to transact with it and then understand The technical and technological capabilities it offers you and I think this is a key point that you know with Bitcoin ultimately the real value proposition for an individual is The fact that this is a way to send money anywhere around the world send value anywhere around the world without having to go through Many of the traditional intermediaries and for most people this isn't life-changing But it's a good. I think backup emergency plan to have you know, you have a few hundred bucks Yeah stored in Bitcoin on a password somewhere might come in handy one day. You need to send money somewhere Or you see it, you know Well, you know Bitcoin or cryptocurrency in general they're being more or less used in places of need like we go back Yeah, economics let the markets decide, you know where the markets This natural equilibrium in Venezuela, right? We just had an interesting podcast the other day Talked about the volume in Venezuela. You look at Iran today. You look at Middle East, you know My wife is from Kuwait. We have a lot a lot of relative relatives over there High volumes in Middle East depending on where you are from Russia China. So places where it's a necessity They're using it. So over here in North America. We live in a bubble world. Yeah, I'm system You know decent government. Yeah, I'm not coming out knocking my door, etc So it's like what the fuck do I need it really? But those places I would say the majority of the world lives in some form of a dictatorship Some form of a government that has sanctions on what they can't can't do Yes, and you know, these lines are fuzzy pretty much everywhere in the world what it counts for being legal here is illegal somewhere else and So the main value proposition for people is a little bit of an insurance, you know To just have a little bit of money there for for for people in and I think People who think they have no problems in their own countries and with their banking system, but generally I always say, you know Demand for Bitcoin is an inverse Function of trust in global central banks. Yes. So as long as people I think, you know, the worst thing that could happen to Bitcoin would be a return to sound money I think, you know, the easiest way to kill Bitcoin We're not necessarily easiest, but I think the most effective Way to kill Bitcoin would be for governments to implement complete free markets in money probably a return to gold standard value prop Exactly if everybody can use Absolutely, if everybody can use physical gold and you know, we have global markets for the clearance of Physical gold and digital gold backed by physical gold You know, I don't Perhaps the demand for Bitcoin would decline massively, but as long as People as long as governments impose capital controls as long as inflation is a problem. You can continue to see it growing and in people finding more use in it. And I think the other thing is It's a legitimate Function of Bitcoin that people speculate on this use of case and I think this is people sometimes say well Bitcoin is only useful for speculation as if that's a bad thing. But I think, you know, speculation is an Essential function of markets. It's it's what markets are all about people are always speculating about Different value propositions and they speculate by dedicating their money and their capital towards Towards things that they think will outperform in the future and they're rewarded for making the correct choice And so Bitcoin is a speculative bet in a sense that people who are holding it are betting that in the long run It's likely going to prove to be a better system relatively to where it is today in the future It's going to improve compared to its competition so the speculation and a speculative demand on Bitcoin is a legitimate demand and I think people will speculate on it and The the thing that drives Bitcoin forward for me the most important is the fact that it's scarce And so the scarcity of it means that as people speculate on it nobody can increase more of the supply of it and so therefore inflate the quantity and Increase the supply and bring the value down and that's what that's what makes it more attractive as a speculative bet for more and more people We'll be what's your predictions in the next year or so within the space in general I've been generally I every year I make the same prediction Which is that Bitcoin is going to issue a new block every 10 minutes according to the schedule and I've been I've been doing pretty well on this. So I'm going to stick With this generally I I don't know This is really what I think matters the most in the space in general and in Bitcoin ultimately It's a very simple technology that does one new block every 10 minutes or so and if it continues to do that it continues to prove its reliability and The longer it continues to survive doing that the more interesting and compelling it becomes as a as a monetary alternative Cool. Thank you. Well, I appreciate you coming in. Thank you Yes, people want to get in contact with you. I know you have a book. How can they reach you? We're gonna get your book at yeah, so my book is the Bitcoin standard that's available at Amazon and I was now been translated to 12 other languages. So yeah, you can find out more about it on my Twitter safe and Dean SAIF EDE AN On Twitter and also my website safe and Dean comm and you can see my blog as well contains some of my recent blog post and also you can get my Subscription research on my patreon on patreon.com slash safe and Dean Cool, man. I appreciate it. Thank you so much. My pleasure. Thank you for having me. Cheers