0:00 Jeff, a warm welcome back to the Bitcoin Infinity Show Summer Edition. Nice to have you here. You too, my friend. Yeah, I'm recording not from my normal studio here, but I'm in a house we're renting in Sweden here over the summer. And I haven't used this equipment before, so I hope it's, I hope it will be up to par. But with that out of the way, how are you? Well, what's going on? I'm great. We're both at summer homes. Yeah, yeah, you're up in Canada. Yeah, how's Sweden in the summer? It's beautiful. The weather's been very kind to us here. A couple of rainy days, but mostly just sunshine and way more manageable temperatures than in Spain for sure.

0:44 And I bet the same is true for Canada, like in comparison to Miami. Same is true. Same is true. And I spent a month in Europe before this and caught that heat wave and it was nuts. Yeah, it was great to see you in Prague, by the way. Yeah, you too. Good fun. And one of the reasons I wanted to have you on was this announcement of Orange Use, which is Lynn's project mostly, I think, but you're involved in it too. It's a strategic reserve thing, but not in the way people think. So what differentiates Orange Use from the other more fiat-minded ones? yeah and and and what it's actually uh the partners of ego death came together um and created this so it's it's lin is a partner to us in in this but it's so it's not one more than any others but but what ended up happening in the in it is you know what i've been saying for over and over forever right that move more of your time into bitcoin and it reflects back to you you're living in the honest protocol and you start to see opportunities in the honest protocol and it takes some time. But over time, you start to see everything that's happening. And so that's what we did with EgoDeath primarily. So we could, so I, Lynn, Nico, Andy team could move our time to invest in companies that were building on top of Bitcoin as a monetary protocol and and and and as a to build build forward we should get into some of that because i think it

2:19 ties into some of the stuff you want to talk to to as well on on how we see it as a as the base formation of a new internet but let's get into that later so we started doing that we started investing in privacy we started investing in a whole bunch of things that were needed to keep Bitcoin decentralized and secure and become the not an asset and the new system that would reprice everything. So we had a very different view of what Bitcoin was. And we started investing behind that. And we started to that started to feed back to us. So we started to so we started to see that. And we did and we sort of see some of the best entrepreneurs in the world who had similar aligned thesis that they to be able to build to be able to build on top of Bitcoin.

3:10 From that view, we did monthly. So we raised our first fund, which was $25.5 million. That first fund, at that time, remember what was happening. Most of the venture capital, outside of a few Bitcoin-only company, a Bitcoin-only venture capital, was all investing in tons of venture capital in Chitcoins and all the nonsense and everything else. Essentially, really an attack on Bitcoin. And there was a tiny pocket of venture capital that was aligned to Bitcoin. That alignment, so from that first fund, which has had really a lot of success, we don't have one failure of a company in that first fund. Lots are growing, some are profitable already and growing really fast, led to our second fund.

3:53 The second fund was oversubscribed. It was spent the $100 million, it ended up being $104 million to expand and invest in Series A. Along the whole time that we were doing that, because the people who trusted us with their money and thesis who believed in us, we wanted to make sure that we were doing what we said with them too. And so we did, we did do and did monthly update calls with all of our investors. And a lot of them move, started moving more and more of their time, Bitcoin, and they could see what we were seeing, right? We would do calls and we'd go really deep on certain topics or a new investment we made.

4:35 And through that and through some of my podcast appearances and other appearances, we started getting inbounds from those same investors. And those investors made their money in fiat, in a business like a Main Street type of business. And some of these were really good businesses. And they started asking, how do we move? I own Bitcoin. I buy more Bitcoin all the time. I have this business, but it's in fiat land, right? How do I move more of my time to Bitcoin? Same question I get often, often, often, and they could see this growth through our fund. And that kind of became the nugget of the idea. And so what it turned out to be is some of those businesses would actually sell to us at a lower price, a lower multiple, because that way they could be together with a company that was buying more businesses, kind of becomes a growth engine, permanent capital vehicle, diversify their risk because it's not just one company now, it's many, many companies and have the upside of something that would bring talent and capital together to do something.

5:44 And that became the genesis of the idea. So the idea actually was really from our LPs, from that consequence on how they could move more of their time into Bitcoin. So as we germinated on that idea, what we realized is, wow, because we also, you spend in Bitcoin, I spend in Bitcoin, because we think in Bitcoin terms, and we have a bunch of investments and different things that are in Bitcoin, we could also not just do that. some of these companies, we could really easily get them to accept Bitcoin. We could shine a light on what they're doing differently. And we could take essentially Main Street into Bitcoin rather than the financialization of the Wall Street and the financialization. So it operates very different than a typical private equity firm. Typical private equity firm comes in, levers up a business, and that cost of capital, especially when interest rates go up, breaks these businesses, right and so there's this and and there isn't there isn't a vehicle right now besides now orange juice that actually builds kind of we're going to own businesses forever we're not looking to flip and sell them we're not looking to juice them and then sell them we want to we want to look at our own businesses we want to back founders who who think about building forever who are generational And so interesting. And we know we've hit the mark on this or how we know we've hit the mark on this is from the first launch last week when we first launched it.

7:11 We've already had 37 businesses reach out and we had some before as well, but 37 businesses. And and it's all this very similar message. My parents or I have owned this business for 60 years, 50 years. We never thought we were going to sell. This is the first this is the first financial treatment. that feels aligned with what we want to create and what we want to pass on. And so it's been crazy powerful. So we have just massive inbound funnel to hopefully do really good work and drive Bitcoin adoption faster through a vehicle that is not a financialization product, actual business product moving Bitcoin into the real economy.

7:54 Yeah, what sizes are these 37 businesses? like how big are they like what can we expect there so they're all over the map right right now so if you if you have a funnel that then then obviously a lot of people will reach in and some of the businesses are too small for uh for for those but they're like some five dental practices a flower business a trucking business a lots of different ones we're targeting between between one and 10 million in free cash flow per year out of these businesses. And probably the more the sweet spot would be three to $10 million in free cash flow from these businesses.

8:35 But it actually the opposite end of what you see today So today there all of the AI businesses and you heard me say this over and over and over again But in artificial intelligence prices fall to the marginal cost of production Marginal cost of production of a line of code is zero, right? And so you have all of these people investing in AI, thinking it's Amazon or Google, and they're massively over-investing in those companies. and pulling money from really well-run companies that you can buy reasonably, that are kind of mainstreet businesses, those are resilient businesses.

9:15 So we're not in these high, high growth businesses. We're looking for stable companies, great founders who want to keep running their businesses. And what would you say to, like, I mean, Saylor famously sold some of his Bitcoins after having promised that he never would. So what would you say to critics that say this is just another fiat game and this is still in the fiat world and we don't believe you? Like, how would you address that? And I can imagine that a lot of people in what you just described feel you said this and then did this. Like, if you looked at Sailor's interviews a long time ago, they're very different than digital capital.

10:00 It's completely different. And you could see the pivot to a different to a different version of his reality. Now, and that's I've had a debate with him directly on that topic that that's not that it's not aligned. These things can't go together. I've been very consistent with my message that the systems are opposite. Right. The natural state of the free market forces prices down through productivity gains flow to you. And the only thing that could that could back that is something that's outside of that system that that doesn't get captured by that system. So two opposite systems and inflationary money. So where does the money come from for the inflationary system?

10:41 It comes from stealing from you and you know this well. So I've been very consistent on this is what I want in the world. This is what I want for my kids. And here's where I'm going to spend my time. People can watch and see if I get captured. Right. But, but ultimately, but ultimately all of the nonsense of even what's going on right now, you'll only be able to see through somebody's actions. You'll only be able to see through over and over and over again, what they, not just what they say they do, what they do. And, and so, so let's pull that thread a little bit further on this, this example. Most people today that call themselves Bitcoiners who are Bitcoiners and complaining about everyone else spend most of their money in fiat.

11:25 Just about all. You know this, I know this, and I try to spend as much as I can in Bitcoin. So the very same category of people that are complaining about everyone else are making the existing system stronger through their actions of spending in fiat. Because their dentist doesn't take Bitcoin and this person doesn't take Bitcoin. or the person is, even if they do, they're converting it back to fiat right away. So the majority of the world, if that's true, and it's certainly true, is still talking a good game to everyone else, dividing everyone else, and still doing the same thing that makes the system stronger over them and everyone else. And they think they're leading. And the only way to really lead is to actually move your time and energy and spending in Bitcoin. And I'm not judging anybody here. I'm just saying it's ironic that people are doing this while giving all of their time and attention to fiat and thinking it's somebody else. So now pull on that thread. These businesses will be moving to Bitcoin. They'll be moving and accepting Bitcoin. They'll be driving Bitcoin.

12:22 Now what's the risk? The risk is if and or when this goes public, now are we captured by a different machine, right? That we change what we say we're going to do. We stop accepting Bitcoin. We start are playing fiat games or are we consistent with a long term strategy of permanent capital? And what I suspect we will do and what I hope we will do, what I will do is a long term strategy for permanent capital that makes these big really that turns these businesses into Bitcoin businesses and more people spend in Bitcoin because they can. Yeah, I mean, I think what you touched on there is the crux of the problem, because As soon as fiat is involved, you have all these malincentives that come with it.

13:08 And it's within Bitcoin itself, like Hodlanoff's articles explaining what happened in Core, for instance, and all the funds that have been granted to developers and how they misalign incentives. I mean, that is a huge problem. What are your views on that? So I agree. So here's the problem. I've said it a different way for seven years, exactly the same thing. In 5,000 years, if we've never lived in the free market, and we know for sure that the free market is productivity flows to people, then it's not those people, it's us, right? And so what you're saying is everybody chases the money.

13:51 They tell other people they shouldn't, well, they themselves will. And so it's, by the way, what I just said, it has to be true. So take that into your student of Austrian economics, right? A bunch of what Mises said in Austrian economics talk was right. And it was always right. Before that, there were different versions of the same thing through most religions, right? Always the same thing. But what happens? People cheat. And people cheat. And because they have the money and other people follow the money, and other people follow the money, The money subverts what's right.

14:33 And what's right, those people look crazy or stupid or the small minority and they can't overcome the monetary machine. All you're saying right now is that version playing out on Bitcoin. And by the way, for Bitcoin to succeed, it has to go through this. Why does it have to go through this? Because it has to go through us. It has to go through each of us moving our time. And if it has to. Not good, bad, everything else. Us changing from a system that has always been based on theft, that's always had control, that's never been a global free market, to one that is. And each of us has a vote. Each of us has a choice.

15:15 But Huddle Nuts articles and many things before in the history are the same thing. Mises and all the Austrians looked crazy to people who were chasing more money through money that was being printed. and they could make those people look crazy in a fringe movement because all of the education systems and all of everything else went to where the money was. So if that was true, and it's always been true because we've never lived in a free market, then it must be true now. And it must be, and that must say it's us. Yeah, I absolutely agree. And it's kind of dark, like a dark outlook on humanity that we all get fooled by these short-term gains and that we prioritize those even.

15:59 But it does make sense from an evolutionary perspective. I mean, no one can have an infinite time preference. It just doesn't work that way. So how do we get people to be more principled in general? I mean, education is one thing, but yeah, maybe I'm leading this in the wrong. The obvious path to take this conversation is how do we protect Bitcoin from this stuff? And how does it relate to the battle playing out right now with Bip1.10 and all of that? Like, how do you see that? What role does this battle play? And yeah, what are your thoughts around that?

16:43 Again, conversations like this that are nuanced can go so many places and people will cut the version that they want and create something different to remove the nuance. And so I don't even know where to start on this. Let's say you and I. You and I are, I consider you a good friend and you are not exactly like me, right? You have a view of the world and that view reflects back to you. I have a view of the world and it reflects back to me and it bumps into a whole bunch of other views of the world which make up the construct of our reality And we will so believe our view of the world against everything else And those fights, all of it, all of the good, bad, the reflexive action, somebody does this, creates an opportunity somewhere else to do something different.

17:38 That reflexive action of all of us, trying to matter, trying to create a view of the reality that's consistent with what we believe as our beliefs are changing is the messiness of human action. It's in that human action through this. So people will move. So I could yell at somebody all day long. They're an idiot. It typically doesn't get them to move. It typically gets them to harden in their position. And so I try not to do that. I try to let people be where they are and not make judgments of who they are and just be me. And not that I wouldn't make mistakes, but be me unequivocally who I am and say, and tell the truth as best as I know it at any given moment. And in my life, that feeds back as a positive network of a whole bunch of people that sometimes take shots at me too. Right. And, and, and when, and when, and if they, if they did, it comes down to one of two things, two things, their view of the world or my, of their view of what my statement was is wrong and they need to vent or so it didn't do anything to me.

18:44 It didn't say anything about me or something actually what they said was right. And I update my I update my view and understand more. So I just again, I don't take any issue with any of that nonsense. I just know I know who I am. I try to and I try to feed the best version of me. I also know for sure that eight years ago, nine years ago, 10 years ago, I was living in a different paradigm. Equally true as today. Different outcomes, different outputs, different inputs, different outcomes. But I had no idea how big and important Bitcoin was.

19:25 I was living in fiat, thought I was contributing to the world in the best way. Tons of friends who did the same, and I had no idea. So if I could change through that path and now understand this, how could I look at myself eight years ago where most of the world is today and say those people are stupid? No, of course you couldn't. And of course you shouldn't. I mean, but I think we're alike in that way. We don't attack people, but we do attack bad ideas. I mean, that's what we're in Bitcoin for. Yeah. And one of the greatest things about Bitcoin is the consensus mechanism and the way this is. You get to see the entire range of debate. And most Bitcoiners are critical thinkers and you know that there has to be an attack because the two systems are opposites.

20:17 Right. So so now that critical thinking inside a inside a consensus mechanism with and I want to be careful here because I don't think a lot of people in core believe that they're attacking Bitcoin. I think they believe that they're saving Bitcoin. You might have a view that they're wrong, right? Or bad people or any, I don't think you do. But there's a whole bunch of different views in this that from that view would be right from their own view, right? But ultimately, the market is going to decide this and the market being us. yeah and the market i mean one of the things i love about bitcoin and that made me fall in love with bitcoin is that it hands out humble pie in in droves it it hits you in the face with humble pie like it did for the bcashers for instance they had to eat a lot of humble pie and the ones who did are welcomed back but the ones some of them stick to their guns and still think that bcash is the thing.

21:18 And I mean, this upcoming fork, if we're talking about the nuance here, there's many ways to see this. And I think the BIP-110 side, like I'm not a perfect representative of it, but I think it has boiled down to, is it possible to do a minority soft fork or not? Is it possible for the hand grenade metaphor, right? We're going to do this. And if you're a miner, you're missing out on 15% of your revenue because we're going to or potentially because we're going to throw away your blocks. So I think a lot of people from the core side see that as a bluff. And it's very hard to get an objective view of what's actually going on and what the actual chances of success are for either side.

22:08 I personally, in this fight for integrity reasons, and I don't care about whether I'm quote unquote right or wrong because I don't base my views on outcome. I base them on principles. So I'm on the side that I think is morally correct to be on. And I think one of the things that have sort of evolved into this whole thing is that this could be a very good reminder to the miners and the big, big dollar companies in Bitcoin who's actually in charge, which ought to be the nodes. And as I remember the block size wars, BIP-148 had a huge impact on that and SegWit did not have consensus and the threshold for miners was way higher.

22:54 And still, history has sort of been rewritten as that the miners just happened to flip the bit and signal for SegWit when there was a clear incentive from the user-activated soft fork that they would suffer economically if they didn't. And I think a similar scenario is playing out now. I don't know if I'm right or wrong, but as I said, I'm not basing my opinions on it on outcome. So if I have to eat a humble pie afterwards, I guess I have to. People keep asking me, what will you do if you fork off and stuff? And I don't even think about that until the forecast happened and until I saw what happened and take in that information, because there are so many unknown unknowns and so many variables in this.

23:43 So it's very hard to get an objective view of, okay, I was wrong about how Bitcoin worked in this particular way or I was right about how Bitcoin worked in this particular way. I cannot know that until I see this whole thing play out. So what are your predictions? Do you have any predictions or do you have a similar view of it? what's yeah so so again here's the nuance in in just that view of you so i've said many times i'm aligned with this movement i'm aligned with this no i see i see risk in it too i when i when i when i just go back to my mental model 5 000 years we've never lived in a global free market if if bitcoin is stays decentralized and secure then it imposes a global free market not maybe Which means it has to come up under attack from all of these things.

24:36 And it must continually be attacked by all of these things because the entire monetary system that we measure money through and credit base note that is non-existent, that exists because we give it power that seals from us. All of the money is in that system and we don't know it. I want to advise the broader way you know it. And so if I think about that attack and what it would do to and all of the types of things it would do to try to go back. If you couldn't kill Bitcoin through, it's bad for the environment. China is going to stop it. We're going to regulate it to death. If you couldn't kill Bitcoin and it kept on going, you'd have to co-opt it.

25:16 You'd have to do so. So the things that a whole lot wrote, the things that I've expected for a long time are just things are just natural evolutions of this thing. Does it stay decentralized and secure? And and and then I asked myself the next next question. question. Today, if most people are measuring Bitcoin and price go up and most Bitcoiners, including most Bitcoin, I forget that 99% of people who don't understand Bitcoin, most Bitcoiners, the 1% are measuring in price go up because they're trying to feed their families and they're trying to buy a house and they're trying to everything else. They're not measuring it in the free market. They're measuring it in price go up and fiat dollars so they can take these actions and do this and be the new rich people And that model of reality which if you told people two different things one that matches their reality prices always go up.

26:09 Here's a Bitcoin, it'll go up faster than other prices versus the natural state of the free market is deflation and prices should fall. They'll always believe the former. That will give the attackers greater power to co-opt Bitcoin because it's us. It's not them, it's us. And so, so, so all of the things that I would see or expect to see in all of these fights, this fight has to be inside, inside ballgame money. It has to be, right, to be able to try to, now, let's use, let's use core as an example, an example here. But, but of course, if that was the case, you would infiltrate the network, right, to try to move this network into something else. Of course, of course you would.

26:52 Now, if you change that network, because I'm not saying everybody in core or anybody that funds core are bad actors. I'm not saying that at all. I'm saying a centralized group of people that has more influence than other people in designing the rules, of course, would be subject to this. And it would be really hard to know if you were being manipulated. If you were part of that, it would feel like these are my friends. This is where I'm getting paid. This is everything else. It wouldn't, you're not necessarily a bad actor. You just, this is such a complex topic that no one's ever lived in the free market. So it would match your pattern and you would be able to susceptible to all these things.

27:35 Now do the same thing on knots. You move from this group to another group that are smaller. You could argue the same thing there. How do you protect it from that? And so the nuance on these debates is very nuanced because we've never lived in this type of free market that Bitcoin imposes if it stays decentralized and secure. So that decentralization and security is a critical, critical thing to keep. Now, from that lens, I'm completely aligned with you. Completely aligned with you. What are the risks? What do we do? How does it? Because it means this might look like the battle, right, that we have to do this, but the real battle is coming later. Or there's another battle and there's another battle.

28:16 And to win the war is going to be a series and series of these battles to keep it decentralized and secure. And that thing, while everybody's giving their energy to a system that steals their energy, is going to be constant. Yeah, I love this decentralized and secure mindset because for me, there was a specific point in time where I started viewing Bitcoin as sufficiently decentralized and secure. And that was the outcome of the block size wars. After that played out, I was like, I was sure that we won this battle. This means that we can win every battle. It is sufficiently decentralized.

28:57 The people were in charge, not the big money. And so my question would be, given the outcome of BIP-110 now, in what scenario would you stop viewing Bitcoin as decentralized and secured? And in what scenario would you view it as, OK, we are decentralized and secure? Like, is this battle of a big enough magnitude to be a litmus test for decentralizedness and secureness? I have a hard time formulating the question. Yeah, so again, I could argue that both ways and should argue you should steel man both sides.

29:38 Let's just say the core version of that and you transfer all of the power to a very small number of maintainers. Is it more decentralized and secure or is that a risk? And of course it's a risk, right? Let's just be honest with that risk. Now, Luke is, if I look back at Luke's proof of work, I believe he is incredible and he's seen things. If you go second order, third order effects, he's seen things far before other people have seen things and has evidence and a body of work that shows that shows that evidence. He's genius in this. But then the other argument, who else and what does that create, is it is just different centralization, right?

30:19 And let's be honest with that right now. Is there enough there? So what does the new thing look like? And it can't be one thing. It has to be multiple implementations with multiple people. And I'm going to tangent this for a second. What I think is happening in Bitcoin, and it's not just on this, it's on mining, it's on everything else, is as something becomes more centralized and the power, it creates a reflexive action from people who know the decentralized security matters. And it takes time for that reflexive action to play out in the market. So you have a time that things are consolidating and then people are getting, and then people get, what the hell, this isn't my Bitcoin, which creates an opportunity in the free market to create something else, which is the reflexive action from the central control.

31:09 And all of the fights that happen are that playing out. Yeah, I completely agree. But like, sorry for picking your brain so much about this, but I'm thinking more of the specific scenario of BIP-110, which is more like nodes versus miners than nodes versus core. Like, so would you view Bitcoin as more or less secure given one of the two outcomes? because if mine are... So simply, simply, and I'll go simply, then I'm going to go for an explanation on what I think are some of the things I believe went wrong to get here.

31:49 So simply, if nodes don't matter, Bitcoin will not be decentralized and secure. Nodes need to matter. You need to voice your, that you matter in this network. I believe like you believe, Bitcoin is us. It's the best of us encoded into a system for the best for us. We know also that many people will cheat because people cheat. Otherwise, we wouldn't have lived in the non-free market. They don't call it cheat. They call it, if I can get something from somebody else for my family, I'm going to do it before somebody does it to me. So they call it something else. But we know from human action that if we've never lived in a free market, then it's us. Bitcoin has to resolve against us. And this is part of it resolving against us and whether it wins or not, it has to keep doing this to be able to win.

32:40 It means there has to be all these fights for it to win. But I believe nodes matter and nodes have to matter to keep this decentralized and secure. Because if it's somebody else, if it's that group of miners, then that is the attack, then that's the attack factor. Now I'm going to go into something that I think caused a lot of this stuff. And it caused a lot of this stuff because because people's view of the free market is not the free market. And so you had core, maybe decent actors trying to stop things like Mara, including other stuff to get paid more. Fair? Yep.

33:21 And how do we stop this kind of end around in putting stuff in Bitcoin's blockchain? Or that would be, maybe it didn't happen exactly like that, But that's going to be a really good way to say we have to stop this. And then you'd have a whole bunch of developers saying, yes, that is dangerous for Bitcoin. We would agree with that being dangerous for Bitcoin. And then the solution to how to stop it. But the solution was to a problem that actually didn't exist. Because the free market for mining, I'm on the board of Core Scientific, which was the largest Bitcoin miner. And they went broke and I joined the board afterwards, but they went to Bangkok. But why? Because they didn't understand the free market and what's happening in Bitcoin.

34:04 And Mara will likely go broke. And why? Because the free market in... And so the problem doesn't exist. And here's why. The block reward is enough all the way to 2140 in a free market that miners will mine Bitcoin. They don't need fees, right? The block reward's enough. Why? Why? Because so everybody is trying to get more fees into Bitcoin to protect minor to protect miners. Well, what that does if you're a miner like that is is you invest a whole bunch of capex into a spot. You have high cost energy and you're trying to pay for your capex and energy and you're trying to get extra money. your transactions to pay for that. And what it means is you don't move to the lowest cost energy while others move to the lowest cost energy. And the longer you stay put in your big capex with high cost energy, the faster you drive yourself off a cliff because you're mining for a loss. And the market, the free market perfectly resolves the centralization of miners because they can't centralize because the free market constantly rewards the person with the lowest cost energy and the new equipment.

35:13 So the very nature of trying to get extra transactions in to protect your aging fleet into high-cost energy stops you from doing the things you need to do as a miner to be successful. And then a whole bunch of people decide big mining is a centralization risk. Let's solve it this way. And the solve didn't need to even happen. It would have gone away. that's and so but take the nuance of that debate right nobody's ever seen a free market what it looks like why why mining can't centralize in a free market it can only centralize in a manipulated market and and and and but we've always lived in manipulated markets you can understand why a whole bunch of people would be oh my god we're it's it looking one step out right then the thing right now instead of two orders out thing right now oh my god we got to do something now it's urgent and they actually create more pain no i totally agree i mean like the i think the the narrative that we have to care about the money miners make is dangerous even because i should i as a bitcoin user shouldn't even have to care about that because the the difficulty adjustment algorithm is there to make mining a zero-sum game.

36:34 It is to make Bitcoin for the Bitcoiners and not for the fiat-minded people. You're supposed to lose fiat, but gain sets. And that's the entire thing. So, but carry that forward. Just so you know, in the free market, that's the way every market looks, not just mining. It's just mining is experiencing at first. AI looks like that. Everything looks like that in the free market. In other words, there can be no monopoly in the free market because the incentive is essentially the free market says thou must create value for somebody else on their terms to to win and then when you create value that margin is exploited by somebody else trying to create more value than you and that's what's happening in mining right and that's what's happening and that's what will happen in every industry because of bitcoin and so you'll make so the companies that are truly successful will make a tiny little bit from providing lots of lots of value or for a short time they'll make a lot until somebody else steals their margin yeah that's what yeah that's what that that's where we are going because of bitcoin and where we're but but all of this is really hard on our mind because we've never seen it before and so so it would be that's why i keep going back to these wars these or battles must come over and over and over and over again the battle creates and The centralization creates a risk and then the resolve to the risk and not all resolves will work.

38:03 My intent might not work, right? But the reflexive action of knots to something that some people see as a risk is the free market moving at risk. And then that battle, depending what happens, we learn and the thing and we learn, don't learn. Some people fail, other people have success, and another battle emerges. Yeah, no, that's, I mean, I always try to push this point that some people say that the free market will solve it, and they mean, by the free market, they mean the fees. But people buying hardware and running software is also the free market. It's all a part of the free market.

38:45 So you just nailed it. So when people say fees on the fee market, well, at the very same time, more is moving to lightning, more is moving to federations that don't require fees. The fee market for this, I don't believe. I don't believe it's required. The block size is enough in a free market. The block size reward is enough and it will be enough because they're mining at a loss. And they will fall out of the market and new participants in Africa and all over the world will replace them at lower cost energy. Yeah, I absolutely agree.

39:25 And in the long run, I mean, when after 2140, if you have a Bitcoin stack, you're incentivized to mine just to secure your stack. Like there are so many other incentives to mine. And there is stranded energy is the obvious one, like where mining is a sort of a byproduct of what you're trying to do anyway. so there will always be enough incentives the only the only real risk i see is something mechanic i talked to mechanic about the other week which is something i had really hadn't thought too much about and that is the the the fact that the hash rate is so high now if all of those miners went offline at the same time so you have a great drop in a hash rate and you don't know when they will come online again and you don't know where they will allocate that's that's sort of a risk thing but anyway i i wanted to pick your brain about the is the specific game theory here in this scenario sorry for bringing this up again but like just to hear your views on because the the way bip 110 could be bypassed by the miner like if it's if this is about user activated soft forks or minority softforks in general and how they play out.

40:40 So if the movement is small enough, the miners can just ignore it. But if enough nodes are signaling for it, then they run a real risk of losing income by ignoring it. So the question becomes, where's the threshold and what lessons do you learn afterwards about decentralization and security? Like, how do you see the game, the prisoner's dilemma thing playing out? I'm sure you heard it described as a prisoner's dilemma type scenario. The one miner starts signaling and then the other follows. Yeah, and I think that's exactly, I think that's happened in the last one too, in PIP 144.

41:24 If enough, that's the question. Do enough people know? Do enough people activate? And I want to be careful here because they might know the same things you do, right? Same things I do. And they might not feel totally secure with the solution yet. So, and people on PIP 110 knock Giacomo for this, right? And people in core knock Giacomo for not taking a stance. And I love the guy, right? And I love Mechanic. And I love a whole bunch of people across the entire spectrum. And you can disagree with one of the things, but still the overall body of evidence of their work and everything else.

42:08 And what I think certain people are saying is it's not ready for me yet, but I like the people, I like what they stand for. And I know another battle's coming. Some people are in that camp or not ready yet to be able to, what's the solution? Not just the immediate solution. What's the solution to make sure that stays decentralized and secure and they're not there yet? And I think on BIP 110's side, that what you just said is we have to get enough people over this because it matters so much. And from that view, it does, right, to say decentralized and secure, but might be pushing away some of those people because they're asking a different question.

42:51 They're asking, how do we resolve this on a longer term basis? And what does this look like? Am I ready to jump now? So I actually think when I say the reflexive action, I think there's way more people in the middle here and there's on the edges and it requires all of it. It requires people that are fighting hard, right, on both sides. But there's way more people in the middle looking to what does Bitcoin mean to them in this? And on both sides they getting pushed away by the nonsense of the edges But if I just take your point at face value if I just say just the game theory of more people voting their interests if their interests are that decentralized and secure, obviously helps whatever that side.

43:41 Yeah, we'll see in a couple of weeks here what happens, I guess. And I think it's very hard to draw any conclusions from the numbers we see now because they're sort of irrelevant. It's when push comes to shove, that's when miners are actually incentivized to not show their cards until the very last minute. So we'll see. Yeah, we'll see. And I think my thing on this is there is a whole bunch of really critical people. Bitcoin's bigger than all of us. It's more important than all this. But there's a whole bunch of people that I consider really critical for Bitcoin and that are really great voices that I don't want to see their voices diminish in something that they may end up being on something that is the wrong side.

44:32 Not the wrong side, but the wrong side right now. And many more battles are coming. Yeah, I'm sure of that, too. Like this will be a constant battle. It's like that Reagan quote, like freedom is for every generation to fight for. Otherwise, we will get sneakily co-opted by the so-called elites. And again, but the irony of that statement, what you just said, the crazy irony is we're talking about co-opted from the elites. Well, we're giving them more of their energy. So it's our choice to live in that matrix. And we think it's somebody else and it's us.

45:14 And so the only real break to that, the only real break at this down to the sand is move your time and attention to the honest network, spend more money in the honest network, remove it from the dishonest network as much as you can. And from from that view and realize most of your friends won't. They might even say they will, but they won't. No, then that's absolutely true. And that's also why I advocate first and foremost for people to accept Bitcoin for their goods and services. Like the revolution doesn't happen before that. Spending is fine, but accepting is the real deal here. Otherwise there's no, there's nothing to spend it on. Like it starts with.

45:55 And so what you, what can you do as a business and that, and what, to what, to that. I funded a business building apps and I funded it because my daughter's boyfriend wanted to mentor him and create this. Well, every app he builds, he gets into the app store and everything else. And then the apps he builds, he adds lightning to it at a way lower cost. And he does that to essentially, he needs that app to work. So you have these locked in systems and Google and Apple, right? And he has to get into the system, but then he has a different way in to add lightning to be able to get the app way cheaper.

46:42 And he does it on every app. And that type of momentum creates an incentive for people to use Bitcoin because it's cheaper for them. And that type of idea, I love the idea because it moves Bitcoin. It's a tiny little thing right now, but it could grow and it's good. And all of these impacts move more of the economy to Bitcoin. Yeah, that's wonderful. I think it was in I heard BTC Sessions say in Prague that he had he used to have discounts for people using Bitcoin for his services instead of fiat. But he's changed that model completely. And now he punishes people using fiat by adding 50% cost for like that's your that's your fiat usage punishment fee and i really like that framing totally yeah and bt says then is like is one of like he's excellent in this regard we know many friends who are excellent in this regard they spend they they accept they and and they'll they'll they'll give a framework for other people to understand and do this do the same and then more people will copy it yeah it's like that that thing we talked about in madeira when we did the whole free madeira thing that it's more important to properly orange pill one restaurant on a street than to try to orange pill all of them.

48:01 Because if one can set a good example, then all the others will follow because all the Bitcoiners go there and spend their money. So they'll be more profitable. They'll make more money because everybody goes to the restaurant. They want to support with their money. yeah absolutely all right this conversation has taken a lot of turns where do you want to go next like what else what else are you excited about at the moment in in bitcoin or in anything else yeah no no it's i i think i see this evolution playing out over and over and over and again And the simple thing is, and until we change or a majority of even a strong minority changes and is always spending in Bitcoin, that'll drag the rest of the people over because they'll show what's happening.

48:54 That is the reflexive action of this nonsensical system creating value. And the value gained, that expression or that view of what's happening is just very early and is playing out. It's going to feel chaotic. I think the because we I said at the beginning we should probably come back to it. You know, my my speech and in Vegas, right, and how I talked about Bitcoin as a protocol and that nugget of what Bitcoin is, a decentralization security and the way that works is a critical part or critical part. But a protocol comes in layers and delivers more functionality through through. And then then Saylor put an article out that was very different than my framing of that that took it back into digital capital.

49:42 Essentially, he borrowed my framing, but changed all of the the new the the framing to something that looked completely different. And and again, it's just fascinating to to to watch the very same thing with the nuance. And everybody believes in or many people believed in that framing because it matches their digital capital. Let's let's just look at what that let's look at STRC and through a lens of what's happening in the market today. And so you offer 11 and a half percent interest rate. And many Bitcoiners will sell their Bitcoin and take the 11 percent interest rate. Are they bad people? No, they're not bad people. Their prices are going their prices are going up and in in in term and fiat dominated terms.

50:27 and they're trying to keep up with the prices rising. And so if you offer them that dollar, they'll take the short-term dollar and believe they're safe inside that. What does that do? Now it creates a lie. Where does the interest get paid from? Because Bitcoin doesn't allow it. It doesn't have any interest, right? Prices fall against it. And so you've taken Bitcoiners into SDRC and then more and more and more. And so you've created more of a liability that then you have to either sell shares in that that vehicle to be able to raise the cash, to be able to dilute shareholders to pay to pay that or sell Bitcoin. And both things put a drag on Bitcoin price as you're doing it.

51:11 So it creates the opposite flywheel. I put something on Noster a while back, but I said, if the treasury companies don't understand Bitcoin's money, right, the only way they're going to get away with what they're doing is for the real economy to accept Bitcoin. Because the underlying thesis of the 40, 45% IRR that they're building their model on fails in less Bitcoin's money. So the very same thing, and you can see it through human action, naturally people will take that. They won't spend it. It'll create a liability, which creates sell pressure on Bitcoin as you do this. Lots of people will do that. And so if I were Sailor in that case I would be funding the ecosystem of this being decentralized and secure and its money and privacy tech and everything else I would be driving into open source to make sure this is money instead of what he doing because it the only thing that allows his vehicle to be able to have an IRR that he has in building his financial model And now going back to him borrowing my four versions of people, the system changing it back to digital capital, it's nonsense, right?

52:26 What I said is Bitcoin is decentralized and secure, and that's the protocol layer at the base. And layers on top extend through different use cases without the base layer failing. It stays decentralized and secure. And that layers on top like Lightning or Spark or ARK, and the number of layers to provide this as money. You could take any one of them. You could say Spark is more centralized underneath that. But coordinated with lightning and arc and other other things, then it's then it's there's no one single choke point. then through things like Fediment and Cashew and adding privacy on top of this. If we think that the wars are coming now and you can see how Clarity Act and all of these things are moving to stablecoins, which is more and more people giving their energy into a system that steals from them, that system has to still attack Bitcoin and it has to do it through forgetting this battle right now, the next battle. What if you were what if you were a public node, right?

53:31 A Bitcoin that is staying decentralized and secure or wanting to spend a Bitcoin and it had to go through something that wasn't truly private that could be captured. You know it will be captured. And so it requires, so some of the different layers, not in another coin, require privacy to be able to be built on top. So this is a critical step as Bitcoin moves forward. It's playing a long game, but what ends up happening again in the free market is people who are ahead of where the market is going and build the things we need before we know we need them generally do well by delivering us what we didn't know we needed.

54:13 I mean, this is also part of why I don't trust the big players or why I trust them less than your random anon on Twitter that is mining in the desert somewhere. As soon as you grow too big, there is a risk of being captured by the fiat system in one way or another. And that's so scary. So how do you prevent yourself from being captured by the fiat system as you grow and as you get into bigger and bigger sums of money? So are you talking me, myself?

54:53 No, more in general. Like it's not a personal question. It's more how do you view that? Like what's the best defense against state attacks as you grow as a business, as a person, as an entity, as an economic entity, say, so to not be captured by the fiat system. So let's use instead of me right now, let's use an example from today. I don't know when you're going to publish this, but Jack Mauler's 21 Capital and Tether was the CEO of 21 Capital. He just stepped down, right? Yeah, I saw that today. Who today resigned.

55:33 And people have been asking me for a long time what Jack is going to do. And I couldn't tell them. But what I said over and over and over again is Jack is a friend, a really good human being. and I think as he understands this, he's going to do what's right for himself and Bitcoin. He is not going to take the money. But I can't say that. And if he took the money, it's not like lots of people take the money. Most people will take the money. And so what he just did by resigning from 21 is in a version of my integrity is not for sale. And he might have been in before that, he might have thought, okay, I can change the system from there. He might have believed like, I'm not going to change and I'm going to press and I'm going to change it from within here.

56:20 And when, and I suspect, I don't know this at all. I haven't talked to him yet, but I suspect that when he realized he couldn't change it from within that structure, he had a choice to make. And he made the choice that is lined with his principles and Bitcoin. And I love him for it. Will that choice happen again in the end? Will it happen to me? Will it happen to everyone? It'll happen to everyone over and over and over again. And everyone's going to face that choice. No, and it's a beautiful example. Like, I was very happy to see that. It's a sign of strength, in my opinion. I mean, I just watched the video once. I don't know any nuances of it. I didn't know very much about 21, except that it's a Wall Street thing, and it smelled like Fiat. If it smells like Fiat, it's probably Fiat.

57:09 But yeah, changing things from the inside is very hard. I mean, I was in Bedford earlier this year and visited Peter McCormack for his conference there. And he told the story about him trying to go into politics and changing the local Bedford politics. But he sort of gave up on it because it was horrible and all too bureaucratic and big to do anything, really. and and uh yeah the bitcoin has told them that already but yeah so this is the same thing that happened to me with in canada right and i tried really hard from the inside from from political institutions to to move this and from my book to everything else to speaking to going and i just realized i'm just wasting my time it's my or or not that you wouldn't change one person or two people. But the infrastructure and everything else that came from that system protected that system and that and that system came from broken money and all of that came from and there was not there was no taking it out. It had to be a different system design and it had to be some more of my energy needed to go into the new new system. But it took me a long time to figure that out.

58:22 Yeah, it took me half my life. I'd say like that. But it is the sly roundabout way that Hayek talked about. It is exactly that. It has to be that. It cannot be anything else. We need to build the tools to route around the thing. Otherwise, the thing will not go away from it. It cannot be changed from the inside. It's like the empire has to fall. Darth Vader has to convert back to the to the light side of the force. Like there's no getting around that. It's so interesting because when you when you realize that, and this is why privacy is going to be critical. It's going to be critical to provide a look at what's happening.

59:03 And just speaking of Jack, he tried to do a lightning transaction in, or somebody tried to do a lightning transaction in the UK and it flagged and said, you can't do this until your KYC light. And so you can see the government reaching in everywhere because it has to just try to stop And so you have to have the other tech that is privacy to be able to stop that intrusion on your individual rights and freedoms because it's coming. And why is it coming? Because you have productivity exploding, which means prices should be falling at a crazy rate. And the existing system has to capture that productivity and then some.

59:43 And so every minute you're spending in the existing system, you're contributing to this thing, taking your individual rights and freedoms, but you don't know it. You think it's somebody else. No, I agree completely. I mean, it's like when you see people topple those surveillance cameras in big cities and like, oh, here's the revolution. They don't realize that they're paying for the new cameras. Like they're just reinforcing that they're making the system stronger by trying to fight it. Yeah, they go home, sleep at night, and there's all new cameras the next day from the money that was printed to be able to pay them that came from those same people. There is no escape from the system holding you captive.

1:00:26 You have to choose the new system and then choose by spending and contributing your time to the new system. Yeah, you have to opt out. There is no other way. So which brings us all the way back to it our individual responsibility each of our individual responsibility And it not what somebody else does They can do whatever they want It's our individual responsibility to move our time and from there. But you can also see why this is going to be so hard and it's going to play many, many battles from here and in the future because we haven't lived with that responsibility before.

1:01:07 it's it's way easier to believe somebody else is to blame than us no exactly it's the spider-man thing like with great powers comes great responsibility there's like no there's no way to route around that so i'm curious the word bitcoiner like what does that mean to you what is a bitcoiner is how much of a purity test do you have to go through to call yourself a bitcoiner like so i again i don't like there's there's just levels of understanding of this and there levels of understanding for me. So I don't think once you have a label, so what ends up in group, out group bias, you can see it in the BIP 110 quarter debate right now. These people are good, these people are bad.

1:01:49 And all nuance is gone, not realizing that there's good people, mostly good people on both sides of this. So I think the label itself and then the irony of the label is most Bitcoiners are still contributing most of their time to the fiat world, while at the same time yelling at those other people who don't understand it. That's the critical irony in this. So the consensus mechanism and how we're moving through this new paradigm is I try to fight against labels because I know the labels can capture us. I belong to this group and this group is different than this group and I wouldn't belong to this group unless I thought it was better than that group. So I don't think there is a universal right now what a Bitcoin era is. That's a good answer. I like that answer.

1:02:45 But I still think you know one when you see one like John Attack, for instance, in El Salvador, is obviously a Bitcoiner like through and through living on a Bitcoin standard, contributing to Bitcoin in many ways and just doing all the things. I mean, the way I see it, you can always become a little bit more of a Bitcoiner. There is like, the rabbit hole is literally bottomless. You can always stumble down further into it. There's like endless, which is why I never get bored with doing content like this. I don't get bored with it because there are new things to explore forever and things we haven't figured out yet. It's such a vast ocean of new things or new ways to look at the world.

1:03:30 So who knows where it will go. Yeah, so that I agree with completely. And when you see the change in you through this, you wonder how many other changes that you don't see yet. Right. So I used to believe this. Here was my pattern. And I believed it completely. Now I see something totally different, produces different results. And I believe it, right? What else don't I see? What are the... And so I think what you'll find with a lot of people in Bitcoin is they're so curious about that.

1:04:11 And they're constantly curious. They're willing to hold on to an idea, but they're also subject to, wait, my idea could be wrong too. And there might be a different way to attack this. So it's such an interesting going back to if you went back to a group of people, the people that are there inside this overall, overall are generally maybe I'm doing the same thing right now. But curious about the way the world works and how their role is that. And especially for people who take further steps down the rabbit hole. Some people just stop and say, okay, I have this. I'm protecting my downside and a changing world.

1:04:52 I'm just, it's an asset. For people who go further, I think they're like you, like John, like many. They're so curious about kind of how they fit into that and what that looks like and where that takes them. So it's just, personally, I love this. I'm the same as you. It's just such a fascinating ride to see what I didn't know, what I know now, where that's going to take things. Yeah, there's so much to learn. Is there something you've learned throughout this journey, like the last year, say, or like what's the latest new thing? you've learned from from being in Bitcoin and exploring the space.

1:05:39 I guess what I would I'm going to say something different that if it's OK, the the what what I would expect in a world that has always told me how to live and is moving more and more into into AI and adoption, I would expect the very nature of my reality to face pressure in beliefs that were inserted in me from somebody else. And the more I've spent time in social media, the more I've spent time in the fray of that, I would expect that more because the system would have to look like that. And there would have to be, forget advertising, forget kind of the manipulation of your mind. So which thoughts are mine and which thoughts have been inserted by somebody else?

1:06:22 I would expect to face pressure on that constantly. So that would mean I would have to stay in quiet. I would have to have to really understand and think deeply about some of these things. But it would if that was true for me, it would be true for every other person I'd ever met because they're on their phones all the time. They're on TikTok. They're on all this stuff feeding back into the algorithms that are feeding on their time. And and so I guess what I would say is I'm aware that these things that are in the world that are in other people have to be in me, too. If I'm using the same technology, I'm using the same thing as this construct is changing. And that itself, that rabbit hole goes forever.

1:07:06 Yeah. Do you ever take walks and stuff without your phone? So like, are you ever unavailable? All the time. Yeah, all the time. I meditate every day as well. I spend a fair amount of time in quiet and then try to try to get for myself, choose without the noise. What is it really all about? What's really important at the end of the day? I'm not going to be here forever. Did my impact touch other, with me being here, did it make a difference in other people's lives? Yeah. Questions that all too few ask themselves. Absolutely. Yeah. I mean, this has been a wonderful chat.

1:07:47 I love talking to you, as you know, and I think the feeling is mutual. I hope it is. We have. It absolutely is. And we're looking forward to doing many more of this in the future. I don't know when I'll see you next. Maybe Helsinki, maybe El Salvador. Yeah, potentially Helsinki. I'm not sure. I'm not sure on that one yet, but that looks like a good one. Are you going to go to New Zealand? It looks like it, yes. So if not, how about Lugano? Are you planning on that one? Giacomo's asked me a bunch. When is Lugano? It's in the end of October.

1:08:27 I'm flying back on the 25th, which is my 50th birthday. So you get to celebrate that a bit too if you go to Lugano. Wow. Wow. Kids today. Imagine Bitcoin's 50th birthday. That'll be something. Yeah. Yeah, so I think it's on the 23rd and the 24th of October, but there will be stuff going on there the week before and the week after. And it's a beautiful place. If you haven't been yet, you should see it. Yeah, I haven't been there yet, and I really need to go. Yeah. So maybe this is the year. We'll see. I know you're flying around just as much as me. I mean, even more, I guess.

1:09:08 this this pinballing around the world takes its toll after a while you get conference fatigue but yeah all good uh is there anything we haven't talked about that you'd like to talk about no i think i think all good just until next time but it sure Sure was great seeing you, my friend. Right back at you. And yeah, see you in the next one. Where can people find more information about this orange juice thingy, by the way? Orangejuice.com is the website. And yeah, and if somebody has a business that might be interesting for this type of strategy, we'd love to. That domain wasn't taken, orangejuice.com?

1:09:51 Yeah, isn't that awesome that we actually have orangejuice.com? I can't believe Tropicana doesn't own it. Did you buy it from Sailor? I mean, he used to collect those. Anyway, always great to see you, man. See you in the next one. Until then, this has been the Bitcoin Infinity Show Summer Edition. You should like, subscribe, and brush your teeth. And bye-bye for now. Thanks for listening. Thank you.