Episode Transcript
[00:00:00] Speaker A: What is up guys? Welcome back to Bitcoin Audible. I am Guy Swan, the guy who has read more about Bitcoin than anybody else you know. This show is brought to you by the Blockstream Jade plus hardware wallet. Get 10% off with code guy the BitKit mobile wallet which is an on chain and Lightning non custodial wallet that is quite possibly one of the most intuitively designed wallets I've ever used on mobile. Also synonym is just building awesome, awesome stuff. And I am, I'm in the beta. Well it's not, it's not happened yet but I have an invite and I am waiting with bated breath. I think it's tomorrow actually for the beta on pub key so you will be hearing a lot about that very soon. And then lastly I am honored to be supported by the Human Rights Foundation. They have the Oslo Freedom Forum coming up. They have the Financial Freedom Report which this past one has a ton of details of CBDC and digital current government digital currencies that are popping up all over the place. And it is the resource for keeping up on the fight for monetary freedom. Plus they always have a ton of additional recommendations for great content, great places to learn, free webinars to, you know, to know how to hold your own keys fediment setting things up like they're just a wonderful resource. And if you aren't following the newsletter or just the Human Rights foundation in general, you definitely should be. I have been for I don't for as long as I've known about them. Links and details will be in the show notes. Now I have been shocked recently to find out that people have paid people know of Der Gigi's 21 lessons but that a lot of people who should have read this actually haven't read it yet or heard it. And yes, if you're listening this, I am talking about you. You know who you are and it is one of the most fascinating pieces.
[00:02:01] Speaker B: It's literally a collection.
[00:02:03] Speaker A: Gigi has a way with words and he put together 21 lessons. The book and the chapters that are available on his website is quite possibly one of the best like bite sized collection of aha moments that is out there. And it's such an easy and fun listen. And if you haven't listened to it in a long time or if you haven't listened to it at all, shame on you. But we're gonna fix that because I'm gonna reboot the three parts right here on the show and I think I'm gonna do a guy's take to follow it up, but I've got Bitblock Boom very soon, so it might not be immediately after, but I just, I just love talking about this piece and the things that he gets into. It's just a fantastic work. Now, if you want to hear my talk at Bitblock Boom, it will be posted on YouTube eventually. It usually takes a little while, but it will be. It's titled Painting a Picture of a Bitcoin Standard. And I'm using kind of the evolution of the monetary system, the different ways in which both gold and bitcoin don't scale, and what the core function of a bitcoin standard is in the context of direct individual exchange versus capital reserves and everything else. Just what does. What can we expect a global bitcoin standard to look like? And what can we derive from the history of the Internet and the history of the monetary systems that we know that we use today? And specifically what is being built today in bitcoin that I think is going to have a far, far bigger role and bigger impact that a lot of people I think are sleeping on. How can all of this inform a picture of what a bitcoin world, what a bitcoin financial system looks like? So I will have links in the show notes. If you want to go to the bitblockboom page or you want to join me at bitblogboom, I will be there. I'd love to say, hey, hang out and talk, but you should be able to find all of this right here. And with that, let's get into our reboot of the first chapter of 21 Lessons of the Bitcoin Rabbit Hole by Durgigi.
[00:04:26] Speaker B: Would you tell me please, which way I ought to go from here? Well, that depends a good deal on where you want to get to. I don't much care where. Then it doesn't matter which way you go.
[00:04:38] Speaker C: Preface Little Alice fell down the hole, bumped her head and bruised her soul.
Falling down the bitcoin rabbit hole is a strange experience. Like many others, I feel like I have learned more in the last couple of years studying Bitcoin than I have during two decades of formal education.
The following lessons are a distillation of what I've learned. First published as an article series titled what I've Learned from Bitcoin. What follows can be seen as a second edition of the original series. Like bitcoin, these lessons aren't a static thing. I plan to work on them periodically, releasing updated versions and additional material in the future. Unlike bitcoin, future versions of this project do not have to be backward compatible. Some lessons might be extended, others might be reworked or replaced. I hope that a future version will be something you can hold in your hands, but I don't want to promise anything just yet. Bitcoin is an inexhaustible teacher, which is why I do not claim that these lessons are all encompassing or complete. They are a reflection of my personal journey down the rabbit hole. There are many more lessons to be learned, and every person will learn something different from entering the world of Bitcoin. I hope that you will find these lessons useful and that the process of learning them by reading won't be as arduous and painful as learning them firsthand.
Introduction But I don't want to go.
[00:06:13] Speaker B: Among mad people, alice remarked. Oh, you can't help that, said the cat. We are all mad here. I'm mad, you're mad. How do you know I'm mad? Said Alice. You must be, said the cat, or you wouldn't have come here.
[00:06:32] Speaker C: In October 2018, Arjun Balaji asked the innocuous question, what have you learned from Bitcoin? After trying to answer this question in a short tweet and failing miserably, I realized that the things I've learned are far too numerous to answer quickly, if at all. The things I've learned are obviously about Bitcoin, or at least related to it. However, while some of the inner workings of Bitcoin are explained, the following lessons are not an explanation of how Bitcoin.
[00:07:01] Speaker B: Works or what it is.
[00:07:03] Speaker C: They might, however, help to explore some of the things Bitcoin philosophical questions, economic realities, and technological innovations.
The 21 lessons are structured in bundles of seven, resulting in three chapters. Each chapter looks at Bitcoin through a different lens, extracting what lessons can be learned by inspecting this strange network from a different angle. Chapter one explores the philosophical teachings of Bitcoin, the interplay of immutability and change, the concept of true scarcity, Bitcoin's immaculate conception, the problem of identity, the contradiction of replication and locality, the power of free speech and the limits of knowledge.
Chapter two explores the economic teachings of Bitcoin, lessons about financial ignorance, inflation, value money and the history of money, fractional reserve banking, and how Bitcoin is reintroducing sound money in a sly, roundabout way.
Chapter three explores some of the lessons learned by examining the technology of Bitcoin, why there is strength in numbers, reflections on trust, why telling time takes work, how moving slowly and not breaking things is a feature and not a bug what Bitcoin's creation can tell us about privacy, why cypherpunks write code and not laws, and what metaphors might be useful to explore Bitcoin's future.
Each lesson contains several quotes and links throughout the text. If I have explored an idea in more detail, you can find links to my related works in the through the Looking Glass section. If you like to go deeper, links to the most relevant material are listed in the down the Rabbit Hole section. Both can be found at the end of each lesson. Even though some prior knowledge about Bitcoin is beneficial, I hope that these lessons can be digested by any curious reader. While some relate to each other, each lesson should be able to stand on its own and can be read independently. I did my best to shy away from technical jargon, even though some domain specific vocabulary is unavoidable.
I hope that my writing serves as inspiration for others to dig beneath the surface and and examine some of the deeper questions Bitcoin raises. My own inspiration came from a multitude of authors and content creators, to all of whom I am eternally grateful. Last but not least, my goal in writing this is not to convince you of anything. My goal is to make you think and show you that there is way more to Bitcoin than meets the eye. I can't even tell you what bitcoin is or what bitcoin will teach you. You will have to find that out for yourself.
After this, there is no turning back. You take the blue pill, the story ends, you wake up in your bed and believe whatever you want to believe.
[00:10:12] Speaker B: You take the red pill, you stay.
[00:10:15] Speaker C: In Wonderland and I show you how.
[00:10:17] Speaker B: Deep the rabbit hole goes.
[00:10:20] Speaker C: Morpheus Chapter one Philosophy the mouse looked at her rather inquisitively and seemed to her to wink with one of its little eyes, but it said nothing.
Looking at bitcoin superficially, one might conclude that it is slow, wasteful, unnecessarily redundant, and overly paranoid.
Looking at bitcoin inquisitively, one might find out that things are not as they seem at first glance.
Bitcoin has a way of taking your assumptions and turning them on their heads. After a while, just when you are about to get comfortable again, Bitcoin will.
[00:10:59] Speaker B: Smash through the wall like a bull.
[00:11:01] Speaker C: In a china shop and shatter your assumptions once more.
Bitcoin is a child of many disciplines, like blind monks examining an elephant. Everyone who approaches this novel technology does so from a different angle, and everyone will come to different conclusions about the.
[00:11:17] Speaker B: Nature of the beast.
[00:11:19] Speaker C: The following lessons are about some of my assumptions, which Bitcoin shattered and the conclusions I arrived at, philosophical questions of immutability, scarcity, locality and identity are explored in the first four lessons.
Lesson five explores how bitcoin's origin story is not only fascinating, but absolutely essential for a leaderless system. The last two lessons of this chapter explore the power of free speech and the limits of our individual knowledge, reflected by the surprising depth of the Bitcoin rabbit hole. I hope that you will find the world of Bitcoin as educational, fascinating and entertaining as I did, and still do. I invite you to follow the white rabbit and explore the depths of this rabbit hole. Now hold on to your pocket watch, pop down and enjoy the fall.
Lesson 1.
Immutability and change I wonder if I've changed in the night. Let me think. Was I the same when I got up this morning? I almost think I can remember feeling a little different. But if I'm not the same, the next question is who in the world am I? Ah, that's a great puzzle.
Bitcoin is inherently hard to describe. It is a new thing, and any attempt to draw a comparison to previous concepts, be it by calling it digital gold or the Internet of Money, is bound to fall short of the whole. Whatever your favorite analogy might be, two aspects of Bitcoin are absolutely decentralization and immutability.
One way to think about Bitcoin is as an automated social contract. The software is just one piece of the puzzle, and hoping to change Bitcoin by changing the software is an exercise in futility.
One would have to convince the rest of the network to adopt the changes, which is more a psychological effort than a software engineering one.
[00:13:28] Speaker B: The following might sound absurd at first, like so many other things in this space, but I believe that it was profoundly true nonetheless. You won't change Bitcoin, but Bitcoin will change you.
Bitcoin will change us more than we will change it.
Marty Bent it took me a long time to realize the profundity of this. Since Bitcoin is just software and all of it is open source, you can simply change things at will, right?
Wrong. Very wrong. Unsurprisingly, Bitcoin's creator knew this all too.
The nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime.
Satoshi Nakamoto Many people have attempted to change Bitcoin's nature. So far, all of them have failed.
While there is an endless sea of forks and altcoins, the bitcoin network still does its thing, just as it did when the first node went online. The altcoins won't matter in the long run. The forks will eventually starve to death. Bitcoin is what matters. As long as our fundamental understanding of mathematics and or physics doesn't change, the bitcoin honey badger will continue to not care.
Bitcoin is the first example of a new form of life. It lives and breathes on the Internet. It lives because it can pay people to keep it alive. It can't be changed. It can't be argued with, it can't be tampered with, it can't be corrupted. It can't be stopped. If nuclear war destroyed half of our planet, it would continue to live uncorrupted. End quote. Ralph Merkel the heartbeat of the bitcoin network will outlast all of ours. Realizing the above changed me way more than the past blocks of the bitcoin blockchain ever will. It changed my time preference, my understanding of economics, my political views, and so much more. Hell, it is even changing people's diets. If all of this sounds crazy to you, you're in good company. All of this is crazy and yet it is happening. Bitcoin taught me that it won't change.
[00:16:03] Speaker C: I will.
[00:16:06] Speaker B: Alright, let's take a break real quick, hit our sponsor and we will come back.
Lesson 2 the scarcity of scarcity.
That's quite enough. I hope I shan't grow anymore.
In general, the advance of technology seems to make things more abundant. More and more people are able to enjoy what previously have been luxurious goods.
Soon we will all live like kings. Most of us already do. As Peter Diamandis wrote in Abundance, technology is a resource liberating mechanism. It can make the once scarce, the now abundant.
Bitcoin, an advanced technology in itself breaks this trend and creates a new commodity.
[00:16:57] Speaker C: Which is truly scarce.
[00:16:59] Speaker B: Some even argue that it is one of the scarcest things in the universe. The supply can't be inflated, no matter how much effort one chooses to expend towards creating more.
Only two things are genuinely time and bitcoin Sephedinamus.
Paradoxically, it does so by a mechanism of copying. Transactions are broadcast, blocks are propagated. The distributed ledger is, well, you guessed it, distributed. All of these are just fancy words for copying. Heck, Bitcoin even copies itself onto as many computers as it can by incentivizing individual people to run full nodes and mine new blocks. All of this duplication wonderfully works together in a concerted effort to produce scarcity in a time of abundance. Bitcoin taught me what real Scarcity is lesson three Replication and locality.
Next came an angry voice, the rapids. Pat. Pat, where are you?
Quantum mechanics aside, locality is a non issue in the physical world. The question where is X can be answered in a meaningful way, no matter if X is a person or an object. In the digital world, the question of where is already a tricky one, but not impossible to answer. Where are your emails? Really a bad answer would be the cloud, which is just someone else's computer. Still, if you wanted to track down every storage device which has your emails on it, you could in theory locate them. With Bitcoin, the question of where is really tricky. Where exactly are your bitcoins?
I opened my eyes, looked around and asked the inevitable, the traditional, the lamentally hackneyed post operative question where am I? End quote. Daniel Dennett the problem is twofold. First, the distributed ledger is distributed by full replication, meaning the ledger is everywhere. Second, there are no bitcoins. Not only physically, but technically. Bitcoin keeps track of a set of unspent transaction outputs without ever having to refer to an entity which represents a bitcoin. The existence of a bitcoin is inferred by looking at the set of unspent transaction outputs and calling every entry with a 100 million base units a bitcoin.
Where is it at this moment? In transit? First, there are no bitcoins. There just aren't. They don't exist. There are ledger entries in a ledger that's shared. They don't exist in any physical location. The ledger exists in every physical location. Essentially. Geography doesn't make sense here. It is not going to help you figuring out your policy here. End quote Peter Van Valkenburgh so what do you actually own when you say I have a bitcoin if there are no bitcoins? Well, remember all these strange words that you were forced to write down by.
[00:20:16] Speaker C: The wallet you used.
[00:20:17] Speaker B: It turns out these magic words are what you own. A magic spell which can be used to add some entries to the public ledger. The keys to move some bitcoins. This is why, for all intents and purposes, your private keys are your bitcoins. If you think I'm making all of this up, feel free to send me your private keys. Bitcoin taught me that locality is a tricky business.
Lesson 4 the problem of Identity who are you? Said the Caterpillar.
Nick Carter, in an homage to Thomas Nagel's treatment of the same question in regards to a bat, wrote an excellent piece which discusses the following what is it like to be a bitcoin? He brilliantly shows that open public blockchains in general, and bitcoin in particular, suffer from the same conundrum as the ship of Theseus. Which Bitcoin is the real Bitcoin?
Consider just how little persistence bitcoin's components have. The entire codebase has been reworked, altered and expanded such that it barely resembles its original version. The registry of who owns what. The ledger itself is virtually the only persistent trait of the network. To be considered truly leaderless, you must surrender the easy solution of having an entity that can designate one chain as the legitimate one. End Quote Nick Carter it seems like the advancement of technology keeps forcing us to take these philosophical questions seriously. Sooner or later, self driving cars will be faced with real world versions of the trolley problem, forcing them to make ethical decisions about whose lives do matter and whose do not.
Cryptocurrencies, especially since the first contentious hard fork, force us to think about and agree upon the metaphysics of identity.
Interestingly, the two biggest examples we have so far have led to two different answers. On August 1, 2017, Bitcoin split into two camps. The market decided that the unaltered chain is the original Bitcoin. One year earlier, on October 25, 2016, Ethereum split into two camps. The market decided that the altered chain is the original Ethereum. If properly decentralized, the questions posed by the ship of Theseus will have to be answered in perpetuity for as long as these networks of value transfer exist.
Bitcoin taught me that decentralization contradicts identity.
Lesson 5 An immaculate conception Their heads are gone. The soldiers shouted in reply.
Everyone loves a good origin story. The origin story of Bitcoin is a fascinating one, and the details of it are more important than one might think at first. Who is Satoshi Nakamoto? Was he one person or a group of people? Was he a she, a time traveling alien, or advanced AI? Outlandish theories aside, we will probably never know. And this is important.
Satoshi chose to be anonymous. He planted the seed of Bitcoin. He stuck around for long enough to make sure the network wouldn't die in its infancy. And then he vanished. What might look like a weird anonymity stunt is actually crucial for a truly decentralized system. No centralized control. No centralized authority. No inventor. No one to prosecute, torture, blackmail, or extort. An immaculate conception of technology.
One of the greatest things that Satoshi did was disappear.
Jimmy Song since the birth of bitcoin, thousands of other cryptocurrencies were created. None of these clones share its origin story. If you want to supersede Bitcoin, you will have to transcend its origin story. In a world of ideas, narratives dictate survival.
Gold was first fashioned into jewelry and used for barter over 7,000 years ago. Gold's captivating gleam led to it being considered a gift from the gods.
Gold, the extraordinary metal.
[00:24:57] Speaker C: Like gold.
[00:24:58] Speaker B: In ancient times, Bitcoin might be considered a gift from the gods. Unlike gold, bitcoin's origins are all too human. And this time, we know who the gods of development and maintenance are. People all over the world. Anonymous or not.
Bitcoin taught me that narratives are important.
Lesson 6 the power of Free Speech I beg your pardon? Said the mouse, frowning but very politely. Did you speak?
Bitcoin is an idea. An idea which in its current form is the manifestation of a machinery purely powered by text.
Every aspect of Bitcoin is text. The white paper is text. The software which is run by its nodes is text. The ledger is text. Transactions are text. Public and private keys are text. Every aspect of Bitcoin is text and thus equivalent to speech.
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof, or abridging the freedom of speech, or of the press, or the right of the people peaceably to assemble and to petition the government for a redress of grievances.
First Amendment to the United States Constitution.
Although the final battle of the crypto wars has not yet been fought, it will be very difficult to criminalize an idea, let alone an idea which is based on the exchange of text messages. Every time a government tries to outlaw text or speech, we slip down a path of absurdity which inevitably leads to abominations like illegal numbers and illegal primes. As long as there is a part of the world where speech is free, as in freedom, Bitcoin is unstoppable.
There is no point in any Bitcoin transaction that Bitcoin ceases to be text. It is all text, all the time. Bitcoin is text. Bitcoin is speech. It cannot be regulated in a free country like the usa, with guaranteed inalienable rights and a First Amendment that explicitly excludes the act of publishing from government oversight.
Buteon Bitcoin taught me that in a free society, free speech and free software are unstoppable.
Lesson 7 the limits of Knowledge down, down, down. Would the fall never come to an end?
Getting into Bitcoin is a humbling experience. I thought that I knew things. I thought that I was educated. I thought that I knew my computer science. At the very least, I studied it for years. So I have to know everything about digital signatures, hashes, encryption, operational security, and networks, right?
Wrong. Learning all the fundamentals which make Bitcoin work is hard. Understanding all of them deeply is borderline impossible.
No one has found the bottom of the Bitcoin rabbit hole. End quote. Jameson Lopp My list of books to read keeps expanding way quicker than I could possibly read them. The list of papers and articles to read is virtually endless. There are more podcasts on all of these topics than I could ever listen to. It truly is humbling. Further, Bitcoin is evolving and it's almost impossible to stay up to date with the accelerating rate of innovation. The dust of the first layer hasn't even settled yet and people have already built the second layer and are working on the third.
Bitcoin taught me that I know very little about almost anything. It taught me that this rabbit hole is bottomless.
Chapter 2 Economics.
[00:29:06] Speaker A: All right, that wraps up the first section of 21 Lessons of the Bitcoin rabbit hole. And if you haven't explored dergigi.com There are.
I mean that is a rabbit hole in and of itself and I highly recommend it. I'm a huge fan of Gigi's writing. And don't forget to check out the Human Rights Foundation Financial Freedom Report if you want to stay up to date on everything that's going around going on around monetary and financial freedom and CBDCs and excellent Bitcoin content, information and instruction on how to use the best privacy tools. The best, the most decentralized and censorship resistant tools they are. I mean that is what they do. The link will be in the show notes as well as to Durgi. Don't forget you can get 10% off your Blockstream Jade plus hardware wallet. It is a fantastic wallet. My favorite setup right now has been using Bluetooth on the wallet with blockstream green. It is absolutely seamless and I love it. And then of course the Bitkit wallet which is an incredibly intuitive just a beautiful UX for a simple on chain and lightning wallet that is self custodial and just works like you would think it works. Check it out. Details for all of these links to amazing resources are all in the show notes. I use and highly value every one of these so it is it is recommended sponsorship, partnership or no. They're great tools. With that we will be back here with chapter two in the next episode. Until then, take it easy guys.
There is no life without problems. Don't go chasing it. It's about choosing which problems you are willing to fight for, to build a life that means something to.
