YouSaid · the spoken record

Robert Breedlove

lines on the record: 246
first: 2021-04-17
most recent: 2021-04-17
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Changes the way we organize ourselves. And again, if we zooming back to gold as kind of the original governor to governments, or if they manipulated the money, gold would leave their country. That's why governments have taken relatively concerted action to go off of a gold standard. There's a great book on this called Gold Wars that outlines how governments have been waging a Cold War against gold for the past 50 years. Sort of renews hope for that free market governor of governments, and that is this digital gold that governments cannot stop or co-opt. So I think it's something, that's why I think it's such a big deal that it is. It's a new useful fiction, you might say, a useful fiction that's superordinate to the mythology of the nation state and government as the dominant institution in the world.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's the general thesis that microprocessing technology would devour our organizational models, the most important of which is the nation state. So I think we're going into this world where Coercion and violence is just much less rewarding. You can't The economics of violence are declining because of the low cost of protecting property, right? You can now Protect your monetary property in Bitcoin at orders of magnitude less cost than is necessary to run a banking network. So”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Regulators and others, and whether they're wearing their citizen hat, they're going to see this thing monetizing. They're going to be on the front lines of trying to regulate it, trying to control it. And I think what's likely to happen is they're going to start to adopt it to buy some of it. Even as an individual or possibly even ultimately at a central bank or sovereign wealth fund level, as an insurance policy against its success. And once you start to acquire something, and then you have a vested economic interest in its monetization, I think it kind of dissolves any of the power structures that are arrayed against it from the inside. So I've written a lot about this in a new series called Sovereignism, which is based loosely on a book called The Sovereign Individual.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“And in the digital age, that's why I think that's why internet out competes intranet, and that's why open source networks are going to eat closed source networks. So what Bitcoin would be in that lens is the ultimate open source monetary network devouring closed source central bank monetary networks. And Just don't see how No possibility of unilaterally stopping Bitcoin or destroying it. So They're more likely to regulate or tax it. And again, the other fallacy here is that a lot of people tend to think of governments as these singular indivisible entities that just move under one plan, but in reality it's a lot of people, right? A lot of people with loosely coupled interests and agendas and whatnot.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“The network owners, the owners of the closed source network, have to expend resources protecting it from competitors, and they have to expend resources imposing its rules because people, they're not voluntarily adopted rules. So you actually have to impose these rule sets. Whereas an open source network, which is something much more akin to capitalism in its pure sense, these are voluntarily adopted rules. So all market participants have agreed and consented to this rule set. So there's no enforcement cost and there's no turf protection because anyone can freely enter or exit the open network. That energetic reason, I think open networks out compete close networks.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Faster than I others might think they will, then they might try and ban it. But I think that ban will be largely unenforceable. They're more likely to tax it, which they already do tax it. They're likely to increase taxation of it. They're likely to try and make it more white market by actually tracing Bitcoin, seeing who has it, attaching identities to Bitcoin ownership, and making sure that they're getting their pound of flush on all the transactions it results in. But I don't think the other thing about this is... So we saw the internet outcompete intranets. That we could say that open source networks send to out compete closed source networks. And there's a really good reason for this. In a closed source network, Are costs associated with defending the network itself. You have to”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“They're more likely, by the way, since, and governments know this, by the way, too. The other thing that Causes the government to shoot itself in the foot is that if they ban something, they draw a lot of attention to it People are smart. I mean, people ask why. Why would a government ban it? Why can't I use this? So that's kind of typically be the last arrow in their quiver. They may try to ban it if Bitcoin really starts to monetize very quickly. And the power structures that they impose today start to dissolve.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“And this was a circuit court case precedent when the PGP attorneys actually printed out the source code on paper and presented it as evidence in the court, all of a sudden it became protected under freedom of speech and that it's just code is speech. Code is language. Therefore, at least in the United States, it's protected under the First Amendment. I think a government ban would be largely unenforceable, frankly, on Bitcoin. Being that it's pure information, if you suppress. Market actors from using it in one jurisdiction. You're just creating incentives for them to go elsewhere. And you're actually increasing the incentive for other jurisdictions to be favorable towards it because then they can create, they get to benefit from the tax revenue and the businesses and the innovation that's occurring in and around Bitcoin as a result”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, Bitcoin is an idea So governments that are really good at fighting centralized threats to their power, right, whether that's a currency counterfeiter or a competing nation state or business they don't like or an individual they don't like. You know, they can kill them, they can throw them in jail, they can use any number of course of or violent tactics to suppress it How do you point a gun at an idea Do you coerce an idea? And that's some anecdotal history here where. The PGP case, which in the United States the court was trying to classify it as munitions when we were shipping this pretty good privacy software overseas, government wanted to classify it as munitions and restrict that exportation.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“The general thought of how it is stopped, and this is the snag point that a lot of people get to in their explorations down the rabbit hole, is they just say the government will never allow it. And that becomes kind of their bottom. It's like, all right, Bitcoin's interesting, it's superior money, blah, blah, blah, but the government will never allow it.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Is similar to market actors zeroing in on a store value, right? They're experimenting with different forms of storing wealth across time. Some do better than others and eventually everyone ends up on the one that is best. That's what gold was. In terms of understanding Bitcoin, I look at it as a similar approach. And I'm actually, that is the main question I'm asking myself is how do you stop this thing? How do you turn it off? How do you end it? If you're a nation state particularly who has the most to lose in this transition. Is the attack vector by which they neutralize Bitcoin? I mean, that is the $250 trillion question. Know, I've spent five years thinking about this thing very deeply. I've read everything on monetary history. I can get my hands on.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“So science. Meaning that we're not proving hypotheses and that's what becomes the body of science. Science is whatever is left over as we disprove hypotheses, right? Whatever we can Empirically through experimentation, disprove gets discarded, and whatever remains, whatever theory remains, it hasn't been disproven is science, effectively. This process”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“That's why Bitcoin is so rigid, it's optimized for survivability and optimized for that supply cap, and it's pushing experimentation and other features that would increase its transaction throughput to higher layers. So I think Lightning Network is something that's very interesting. It's still early, but there's a lot of throughput already being used on the Lightning Network. Makes some slight trade offs in terms of the trust minimization of Bitcoin, you end up trusting these smart contracts instead to move the Bitcoin, but you pick up nearly unlimited transaction throughput. And that's how biology evolves. That's how the internet evolved. It evolves in layers. So I think Bitcoin, you can sort of conceive of it as the latest layer to the internet. And it's one that preserves this store value property better than any asset we've ever had.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“It to be used more broadly as a medium of exchange, it can't make trade-offs at the base layer to increase its portability, for instance. Even though portability is maybe kind of a misnomer because Bitcoin has extremely high portability, just doesn't have extremely high transaction throughput. So we could say you can move it pretty quickly anywhere in the world as long as you're willing to bid up for the block space, but you can't satisfy all the world's economic volume. You can't do 300 million transactions per second like you can on a centralized database like Visa. Bitcoin Needs to be this, it has to be a store value first before it can be a medium of exchange. So it has to protect the supply cap first before making any trade-offs for that. And I would argue that”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“That has to be the first, and this is all Bitcoin really needs to do to be successful, by the way, exactly what it's been doing for 12 years, virtually flawlessly, which is keep creating a block every 10 minutes and keep enforcing a supply cap of 21 million. As long as those two things hold It is sound money, the ultimate sound money, the most Inflation resistant money there's ever been. It's actually completely immune. It's taken unexpected inflation to zero percent. We know with perfect certainty what Bitcoin supply will ever be.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“The evolutionary path of money with gold is that it was first used as a collectible, it then became used as a store value. After it had stored enough value it became it began to be used as a medium of exchange and then finally when it was used widely enough as a medium of exchange it becomes a unit of account. We actually start to think in the money. Coins following a similar path Started out as kind of a collectible. Today I would argue it's a store value, one of the most effective store value we've ever seen. So that evolutionary path that Bitcoin's following is similar to gold. First a collectible. Today is store value. To be an effective store value, it has to optimize for supply cap.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Necessary for security, actually. And even these other cryptoassets that settle more quickly, they settle with less assurance of finality. So Nick Carter has a great piece on this, actually, called It's The Settlement Assurance is Stupid. It's really good where the gist of it is that there is more work being done in each block of Bitcoin, that it is less vulnerable to reversion. So it's giving you higher degrees of assurance that your settlement or your trade has occurred with finality, whereas other blockchains are much more vulnerable. And again, with Bitcoin,”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“I would argue that Bitcoin is kind of like the ideological synthesis of gold taking the monetary properties of gold and combining them with the internet itself And in doing so, it has essentially perfected the properties of money, right? You can't get more divisible, durable, recognizable, portable, or scarce than Bitcoin. So Satoshi has kind of, he left no design space for a superior technology to intercede and out-compete Bitcoin at this point now that it's established liquidity in the next one.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“That function tends to coalesce towards one solution. And so the short answer would be that for the same reasons, quantifiable reasons, right, like inflation resistance and liquidity and network effects, that we have one analog gold, we're only likely to have one digital gold. And I think the Bitcoin Cash fork proves that out empirically. It's a good case study because”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Network valued because of its liquidity and network effects. So any new entrant into the market for money will always incentivize to always choose the money with the deepest liquidity and the most network effects. This is why money has tended to be a winner-take-all market, because it's essentially a single purpose tool, right? It is a tool for Consider that tools are time saving devices, right? The shovel lets you dig more holes per man hour than you can with your bare hands. Money is a tool. There's yet another definition of money that lets us calculate, negotiate, and execute trades more quickly. So”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“So this is a good point of argument because a lot of people have countered me and said, Bitcoin cannot be absolute scarcity because you can fork it and create something with the same properties as Bitcoin or potentially even better properties, right? You create something with a deflationary monetary policy. That's what Bitcoin Cash was, actually. It forked Bitcoin with all of the same properties except for the block size that we alluded to earlier. The problem is that money is valued. Again, it's the good with a configuration of demand that is predominantly marketability. So it is valued based on its liquidity. That is, how many other trading partners are there in that monetary network? So it is a”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“A theoretical but unattainable state of the market where all market actors have all the relevant information about everything so that they can compete as efficiently as possible. And in a state of pure information, we have, I'm sorry, perfect information, we have perfect competition. And in perfect competition, we maximize wealth generation. So we're competing as freely as possible from coercive and violent impediments. And so I think Bitcoin, in that sense, is going to pull the world closer to a state of perfect competition than we've ever been before. Which would increase wealth generation to an extent we've never seen before.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Bitcoin, it is not possible. So no matter how much effort and energy and capital and operational expenditure we pour into the mining network, we cannot deviate from its fixed and diminishing supply curve from between now and the last Bitcoin being mined in 2140 because of the difficulty adjustment. It's constantly adapting to human action, actually. So the harder we pursue it, the more it recedes and then the less we pursue it, the more available it makes itself. And this is A real major breakthrough because it's the closest thing. Perfect information we've ever had in an economy. And perfect information is this.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“We've covered it became money because it was the most relatively scarce monetary metal, right? Its supply was hardest to increase over time. However, if we could somehow flip a switch today and make everyone in the world go out and start mining gold, we could increase the supply much more quickly. We could, you know, it's historic inflation rates about 2%. We could double that pretty quickly. Bitcoin.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Last one, which leads straight into this one actually is the most important one. Money, which is scarcity, and that You need to know the supply is fixed and safeguarded from counterfeiting and inflation, which. Counterfeiting and inflation are the same thing, by the way. Counterfeiting is criminalized inflation, inflation is legalized counterfeiting. So central banks today, when they say they're printing money, they're not. They're counterfeiting currency. That's a very important part. And Bitcoin, as I've argued in some of my writing, More than just an invention, it's actually the discovery of absolute scarcity and that we have unveiled a property of money that we will only discover once. And it's got really major ramifications for the world at large. So with gold, for instance,”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“That was a Bitcoin Cash Civil War, right? Was that particular piece? And ostensibly, they were saying, oh, we need more transaction throughput to buy more coffee and do more transactions. They were actually doing was increasing the size computing power necessary to run a full node, which would have theoretically compromised decentralization.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's like a fractal constituent of the whole network, right? The whole Bitcoin blockchain is comprised in a node too. Not the proof of work piece, but the entire transaction history. And so that's unique as well. And that's what makes Bitcoin the ultimate store of value is that you know with certainty what the total supply is and will ever be. And you know that your share of that supply is fixed. It cannot change. It can only improve, actually, if someone loses, you know, if the Satoshi stash is truly gone forever, the million Bitcoin never moves, then we're talking about a thousand Bitcoin out of 20 million instead and so on and so forth. As more people lose access to their Bitcoin, they're basically making a contribution to everyone else. It's anti-dilutive.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“So, portability, Bitcoin's pure information, it can move at the speed of light, can't get much faster than that, recognizability refers to the ability to verify the veracity of the money or its authenticity. So you can actually, when we used to transact gold, there were time-honored techniques for verifying that it was gold and not gold-plated lead, for instance. This is where we get the term sound money, a gold coin made a very particular sound when dropped from a certain height. You know, you've seen people biting coins. These are all techniques for testing the authenticity of gold. And with Bitcoin, we have something unique in that if you're running a full node, you can verify that the Bitcoin is Bitcoin, right? It cannot be tampered with. It cannot be faked. And in addition to that, as a node operator, you can audit the total supply of Bitcoin at any time, which is unlike any money in history. So you know with full certainty if you're holding.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“The other thing is there's a dynamic incentive. So every time you just destroy Bitcoin miners, you're creating incentives for anyone else with access to electricity to mine You're making the algorithm easier.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“So, information stored in a distributed fashion tends to be virtually infinitely durable. The example I like to give here is something like the Bible. The Bible is just distributed information. It's stored everywhere and nowhere, so to speak. And for that reason, it has outlasted empires. Bitcoin similar, right? You can't make changes to it unilaterally.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“And the average Bitcoin or wealth will say $300,000 Satoshis each, but that wasn't divisible enough maybe to buy coffee and do all these day-to-day transactions. What would happen? Well, we would increase this divisibility. So Bitcoin's perfected divisibility, the divisibility of money lets us transact across scales, right? We can buy coffee or we can buy a house. Durability is an interesting one. So, clearly, something like gold is very durable, it's resistant to degradation over time. Bitcoin is just pure information, but it's stored in a distributed format.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“As close to perfection as we've ever been. So, in terms of divisibility, each Bitcoin can be broken down into one hundred million subunits called a Satoshi. If that divisibility were ever a problem, which actually. Was a question that came up recently if you divide the world population by the total supply of Bitcoin, you end up at like 0.3 Bitcoin per person. Call it 300,000 Satoshis per person. What if that was not enough to facilitate economic activity? And the answer to that is Bitcoin can soft fork into further divisibility. So if Bitcoin ate all the money in the world,”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, yes. And another thing to think about here is that we think often in terms of goods or services, but actually everything is a service. It's not the physical properties of this pen that I find valuable. It's the services that it renders to me that I want to write a letter. This gives me to lay ink on paper and communicate information. So Value humans attach value as we alluded to earlier to services, not goods. So the properties or the services that money renders that human beings value are those five properties, divisibility, durability, recognizability, portability, scarcity. Metals best satisfied those services historically But Bitcoin as the most superior monetary technology in human history essentially perfects them.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“So we're attaching the concept of money to your point. Whatever tool best satisfies those properties of money or best renders those services we need from money.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a question as complicated as what is money? I think. You get a general understanding of money from a number of angles that we could say Bitcoin is the most superior monetary technology that has ever existed.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“So I say gold has been the governor of governments, or gold is geopolitical money, like it is the base layer operating system has been the base layer operating system for analog society So, it's always been about who controls the gold. Who makes the rules? In that context, it's why Bitcoin is so interesting, because it is the disruptor to this base level operating system that's functioned for all of human history”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Became more of an issue as we globalized. As we became more of a global society, we needed money that could move across space really fast, right? So we could trade in international capital markets So that drove Central bank to become the dominant institution of the world. And if you follow the flows of gold throughout history, I've been watching this documentary on World War I and World War II on Netflix. I think it's called World War II in color.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Portability wouldn't have been as much of an issue, right? We could have, and this is to say, assuming gold was still the most scarce metal in all these things. Portability would have been less of an issue. We would have had less dependence or need for a central bank. So I think it's kind of idiosyncratic in that we just happened to end up here on this planet with a certain amount of gold. It best satisfied the properties of money.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“That institution would not have arisen if the portability of gold was really high. If we could have somehow sent gold across a telecommunications channel, there would have been no need for a central bank. Everyone could have custodied their gold in any information bearing medium, frankly. And they could beam it around the world at any time. So this whole institution itself is rooted in a technological shortcoming of gold. So I think it's Another way to think about that is maybe had there been All the gold in the world today fills two Olympic size swimming pools. All the gold mined throughout all of human history. So there's not a lot. If there had been just like way more, there just been, I don't know, 20,000 Olympic swimming pools worth”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Know what's funny is that central banking was initially designed to be the custodian of gold, right? So they were going to custody the gold, issue paper on top of it. And then they would maintain you could trust the public stamp effectively. You could trust that the central bank had as much gold on reserve as they said they had, and they were supposed to be the trustworthy institution. So we went from placing our trust in a free market game theoretic process or trust in gold, and we began trusting this institution instead.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Until the problem with it is that it introduces the need to trust the custodian. So it's introducing counterparty risk in the form of the custodian. And now should that warehouse choose to increase the supply of paper notes to gold beyond its supply? So if it's got three tons of gold and it issues six tons worth of paper receipts, all of a sudden it's participating in a fraud. It's basically lying. It's representing that it has more gold than it actually does. And this is the pathway that we got into banking and central banking is we needed a convenience mechanism to rectify the portability shortcomings of gold. We needed to be able to move value across space, right? Gold was doing a great job and moving value over time, but not space. Paper currency gave us the ability to move value across space, but it introduced this attack vector for warehouse operators, which became banks.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Custody of gold was gradually centralized into fewer and fewer warehousing operations. This is because there are economies of scale associated with using gold as money, that if you centralize the custody, the warehouse owner can then issue a paper receipt called a warehouse receipt for that gold and then market participants can trade that paper as if it's good as gold and everyone has an option at any time to go and redeem real gold from the warehouse. So that system works.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“As good as monetary metals were and as good as gold is as money holding value across time, it's rather limited in terms of portability. It is not as useful for moving value across space. This is another definition of money, by the way. A social device for moving value across space and time. So to rectify this technological shortcoming of gold, we introduced, first of all,”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it prevents it through cost of extraction too. So if you want to go out and dilute gold holders today, you have to go out into the world and mine gold. It's a very expensive process. That process tends to find equilibrium where production cost equals a market value of gold. So if market value is $2,000 an ounce today of gold, its production cost is going to be around there. That's the natural market equilibrium. So that way gold miners cannot just dilute people over time. Whereas if you look at something like fiat currency, which we're jumping ahead a little bit, but its production cost is zero. So there's a reason the market value of fiat currency historically has always converged to zero because it's production cost is near zero. So the extension to that question might be how did we get from gold to paper currency? And again, this is rooted in the properties of money.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“We're never satisfied, right? We always want more of something, whatever it may be. So money as the ultimate token of obtaining that something is always scarce as a concept. But the problem with money is that if you can, as you alluded to, easily increase its supply, then all of a sudden you can compromise the scarcity of it over time. And you can rob people through inflation. So that's why the market settled on gold as money.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And to get to maybe dig a little deeper there. So scarcity, we commonly think of scarcity as strictly a supply property, where if there's not much of something, then it's scarce. But it's not actually true. Scarcity occurs when demand exceeds supply. So when there's more demand than the supply can justify, the thing becomes an economic good and it establishes itself a market price. So there's more demand for the thing than the supply can satisfy. The unique thing about money as a concept at least is that demand always exceeds supply. There's never enough money to satisfy everyone, right? Because another definition for money, it's the most marketable good. So it can be trade, it can be traded for any other good service piece of knowledge in the marketplace. So humans being what we are.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Historically, money's always been a technology, still is a technology or a tool. I use these terms interchangeably, and if you think of a technology as just a more sophisticated tool, effectively. To best satisfy those properties, monetary metals were determined to be the most satisfactory tool, the most divisible, most durable, most recognizable, most portable tool in the marketplace of the monetary metals, gold was the most scarce, as quantified by either its stock to flow ratio or its inflation resistance. So simple way to say this is that people always prefer the money most resistant to inflation.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Money is just going to be the good in any trading economy that has the highest proportion of marketability relative to utility. So today that would be gold. Gold has utility. It's used in electronics. It's used in dentistry and whatnot. But it's largely used as a store of value across time. And that's what it's been used for 5,000 years. If we say gold has a $10 trillion market cap, maybe $2 trillion of that is its utility value or its actually demand for use in computers and industry. And then $8 trillion of that is demand for its use as a store of value. Money, the marketability aspects of money boil down to five services that money can render. Money needs to be divisible, it needs to be durable, it needs to be recognizable, needs to be portable, and it needs to be scarce. So I'll gloss over a lot of history with this and just say that”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the first Most serious answer comes from the School of Austrian Economics, and it defines money as a universal medium of exchange. So, this would be any good that is used. And used purely for purposes of facilitating exchange. In the configuration of demand for any particular asset, it's bifurcated between its utility, which is something a service that it can render to you in real time, whether it's if it's water, you're thirsty. That's the utility of water is that it can quench your thirst. Whereas the marketability would be the expectation of future exchange that other people would want this asset in the future to trade it for whatever they may have.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, as you know, that's my favorite question. Is the name of the show I just launched, the What Is Money Show? Clearly, we could say the Bitcoin rabbit hole is what's led me to explore a lot of these ideas in depth. And I think as we've demonstrated today, it goes well beyond just the economic sphere when you start to think about things like exchange and morality and time preference and civilization. So, I love the question what is money? I think it is the key to incepting a deeper understanding of the world into people, that if you actually just start to ask Seemingly simple question, it services more and more layers of truth. I recently just wrote a piece. I think I have. 30 something answers to this question.”
2021-04-17 · Lex Fridman Podcast · #176 – Robert Breedlove: Philosophy of Bitcoin from First Principles · IDENTIFIED FROM THE TRANSCRIPT · source