The Blockchain Debate Podcast

Motion: Bitcoin will Attain Global Store of Value Status in 2040 (Jimmy Song vs. David Gerard)

December 19, 2019 Richard Yan, Jimmy Song, David Gerard Episode 1
The Blockchain Debate Podcast
Motion: Bitcoin will Attain Global Store of Value Status in 2040 (Jimmy Song vs. David Gerard)
Chapters
The Blockchain Debate Podcast
Motion: Bitcoin will Attain Global Store of Value Status in 2040 (Jimmy Song vs. David Gerard)
Dec 19, 2019 Episode 1
Richard Yan, Jimmy Song, David Gerard

Motion: Bitcoin will Attain Global Store of Value Status in 2040.

Guests:

Jimmy Song (@jimmysong) - debating FOR the motion
David Gerard (@davidgerard) - debating AGAINST the motion

Host:

Richard Yan (@gentso09)


This debate touches upon one of the most fundamental value proposition of cryptos. If any crypto can attain the status of digital gold, the coin with the longest history, highest market cap and widest recognition seems to have the best chance. And if there are serious obstacles, it’s probably important for investors, developers and operators of other alternative coins to know why.

Some of the highlights of the debate include real bitcoin usage in oppressive regimes and inflation-heavy countries; myths around mining centralization; nuances in fixing bitcoin code; whether irreversibility is a feature or bug.

Source of select items discussed in the debate:

Show Notes Transcript

Motion: Bitcoin will Attain Global Store of Value Status in 2040.

Guests:

Jimmy Song (@jimmysong) - debating FOR the motion
David Gerard (@davidgerard) - debating AGAINST the motion

Host:

Richard Yan (@gentso09)


This debate touches upon one of the most fundamental value proposition of cryptos. If any crypto can attain the status of digital gold, the coin with the longest history, highest market cap and widest recognition seems to have the best chance. And if there are serious obstacles, it’s probably important for investors, developers and operators of other alternative coins to know why.

Some of the highlights of the debate include real bitcoin usage in oppressive regimes and inflation-heavy countries; myths around mining centralization; nuances in fixing bitcoin code; whether irreversibility is a feature or bug.

Source of select items discussed in the debate:

Richard:

Hi everyone. Welcome to the pilot episode of the blockchain debate podcast, where consensus is optional and proof of thought is required. I'm your host, Richard Yan . Today's motion: Bitcoin will attain Global Store of Value status by 2040. This debate touches upon one of the most fundamental value proposition of cryptos. If any crypto can attain the status of digital gold. The coin with the longest history, highest market cap, and widest recognition seems to have the best chance. And if there are serious obstacles, it's probably important for investors, developers, and operators of other alternative coins to know why. Some of the highlights of the debate include real Bitcoin usage in oppressive regimes and inflation-heavy countries , myths around mining centralization, nuances around fixing Bitcoin code, whether irreversibility is a feature or bug. Also, make sure to check out our post debate poll after you listen to this episode. The poll is up on our Twitter account at block debate. We will decide the winner of this debate based on the percentage change in opinion as compared to the pre-debate poll results also on our Twitter account. Now. Without further ado , let's dive right in. We're joined by Jimmy song and David Gerard as opponents in the debate. Jimmy will be debating for the motion. He agrees that Bitcoin will attain global store value status by 2040 and David will be debating against the motion. He disagrees that Bitcoin will attain global store valleys status by 2040 a bit about Jimmy. Jimmy S ong is a Bitcoin developer, educator and investor. He is the author of the book programming Bitcoin. He is currently a Bitcoin fellow at the Blockchain Capital and a lecturer at the University of Texas. He is also a Bitcoin core developer. Lastly, he is what's considered a Bitcoin maximalist. That is someone that believes not only that Bitcoin will become an important store of value, but that no other cryptocurrency will come close to attaining such status. And a bit about David. David Gerard is the author of "Attack of The 50 foot Blockchain: Bitcoin, Blockchain, Ethereum, and Smart Contracts," a book in which he discusses the origin and development of Bitcoin, blockchain, Ethereum, and smart contracts - a series of inventions he considers very flawed and overhype d. He is what's known as a no-coiner, or someone that does not believe that cryptocurrency and blockchain provide real utility. And he believes that the fanaticism around both that has been built up in recent years will eventually die down, as reality catches up with their fans. Hi gentlemen. Welcome to the show.

David:

Okay.

Jimmy:

All right . Here we go.

Richard:

The debate will consist of three rounds. Round one consists of opening statements by both parties. Round two consists of questions from the host, i.e., me. And round three consists of questions from the audience on Twitter. In both rounds two and three, the questions will be clearly addressed to one side and ping pong followups are highly encouraged after an initial response is given. Let's begin round one. Jimmy, please give your opening statement.

Jimmy:

Great. First of all, I just want to say I'm actually a fan of David. And I agree with about 90% of what he says. I think blockchain technology, q uote unquote, is actually pretty hyped up and it's not really useful for anything. I think most, basically every cryptocurrency other than Bitcoin is a c entralized fiat-y mess. And I think we actually come from a very similar critical thinking viewpoint on that. The thing that I don't agree with him on is the store of value aspect of Bitcoin and specifically that Bitcoin is actually a very good store of value. It'll be interesting to see how he debates this because at least for me, it's already kind of attained a store of value status in the world today and there's plenty of evidence for it. But before I get to that, let's just think about what store o f value actually is. Unfortunately that term has been sort of mangled over the last hundred years or so, and we now call them investments. And essentially the reason why people want a store value is because their current currency is depreciating at a rapid clip. Now numbers that we typically see are the CPI or the consumer price index or the purchasing power of the currency that you happen to have and how much that's decreasing, but that's not taking into account a lot of other stuff like technological innovation and so on. So, the actual portion of the dollars that you have as a part of the w hole is actually decreasing more rapidly than the 1 or 2% that your government tells you. The other thing is that the world is on a dollar standard ever since Bretton woods in 1944 and especially since 1971, when the dollar s top being backed by gold, it's essentially become the de facto standard for the world. And it is not backed by anything. And as a result, a lot of people have used gold stocks and real estate as a store value. Now I'm going to focus on just one of those g oals, which has been used as a s tore of value for many, many years. The current market cap of all gold in the world is roughly about 7 trillion. About half of that sits in central banks and the half of the remaining is a n industrial use cases, jewelry and so on. So really, the portion that's used as a store of v alue, although you can argue some of the jewelry and so on is also being used as a store of v alue is you know, like if we ro unded u p somewhere around $2 trillion. That is about one order of magnitude, very roughly speaking away from Bitcoin's market cap. So in that sense, it's already 10% of the way there. And we can see in places like Ve nezuela, Iran, and so on, people are already using Bitcoin as a store value. So to say that it's going to be a store of value by 2040, I think we've kind of achieved it. And I look forward to Mr. Gerard's reply to all of what I've said.

David:

So as Jimmy says, and this looks into exactly what I had written beforehand , what we need to say, what global store of value means that's different to how things are right now. Or the question doesn't mean anything. Like in 20 years, we will definitely have one person in each of two different countries, so global, who call Bitcoin a store of value. So that would satisfy the question, but that's not different to how things are now. So we'd really need to be talking about wider adoption outside the Bitcoin fans who are the only people presently talking about Bitcoin as a store of value. The problem is you'd have to show systemic effects like more than negligible take-up in someplace. The problem is that Bitcoin really hasn't convinced the outsiders to get into it. In the past 10 years. The 2017 bubble got a lot of mainstream interest because there is no more interesting story in finance than number go up. But that didn't hold when it crashed. People were really into it for the U S dollar value. They didn't care about Bitcoin itself. The price went up in 2019 went up and down, but there wasn't the evidence of retail interest. They would be if that price was organic retail interest. It looked just like traders wrecking each other over margin bets , not interest in Bitcoin as Bitcoin. The market doesn't care about a coin's ideology; it only cares about the market. So also the volatility really hurts Bitcoin's credibility as a store of value in the mainstream . It looks a lot like a gamble, not as safe storage place and the volatility, you can say Gold's volatile too , particularly since gold was unhooked for money, it's been really volatile, but gold has on its side, thousands of years of credibility, cultural credibility and so on. Bitcoin just hasn't got that yet. It wants it, but it won't get it by asking for it or saying it's not fair that it's not treated that way because it just isn't. The burden of proof is on Bitcoin to prove to the mainstream that the idea is as good as Bitcoiners think it is. And I don't think it's done that in the last 10 years. And I don't see reasons why that will change in the next 20 as long as Bitcoin stays Bitcoin. Because the things Bitcoiners like best about Bitcoins aren't In demand in the mainstream or in the opposite of demand. So I think that Bitcoin's got not much to show as yet and everything to prove as yet.

Richard:

Thank you both for your opening statements. Now let's start round two questions from the host. So for the side for the motion or Jimmy, one common critique of BTC is the centralization of hash power as a handful of large mining pools control 50% or more of the hash power. You had mentioned in the medium post that pool participants can simply switch pools upon detecting an attack. But is there enough time for participants to react? There's word on the street that when similar attack happened to Bitcoin Gold, in May 2018, many participants in the relevant mining pool were unaware of the issue and didn't lead the pool in time to thwart the attack. How do you respond to this argument?

Jimmy:

Okay . First I want to respond to some of Mr. Gerard's points. He said it's not in the mainstream, that people don't really see it as valuable, that only really the techno nerds that are owning Bitcoin, they're the only ones that are using it. And I would beg to differ. There are plenty of use cases, especially in the third world. He speaks as somebody from the first world probably in finance, something like that. What we're seeing is a lot of uptake in Venezuela, about 10% of their entire population has emigrated away from the Maduro regime because the oppression that they're feeling. So, essentially what they've done is they've taken all of their possessions, sold them for Bitcoin, crossed the border over to Colombia and sold it back so that they can start a new life in Colombia. So that I would say is an excellent use case. Another one is in Iran where we're seeing a lot of people that are buying Bitcoin as a way to hedge against the fact that their currency is depreciating due to U.S. Sanctions against them. Another one is Turkey. there's a lot of them and you can clearly see evidence because there's either a premium in the countries that like Venezuela, Turkey, and Iran, where it's harder to get Bitcoin, and people are willing to pay that premium. And in places like Colombia, there's actually discount because a lot of people are crossing the border and selling them. Then in fact there're people that are trying to take that arbitrage where they could buy some Bitcoin and Colombia pump it back into Venezuela so they can make some money. So that that is prima facie evidence that there is wide adoption, that people are using it as store of value and people do care about Bitcoin itself. And that argument that people don't care about Bitcoin as it exists and instead of what it does for them, you can say the exact same thing about gold. People don't care about gold per gold , it's not the atoms that excite them or something. It's the fact that it's a good store of value and that's exactly what people are using it for. And the last critique that David had I think was about the market. How the volatility is discrediting it as a store of value. That's to be expected. There is no central bank of Bitcoin. There's nobody going around and trying to sell Bitcoin when it's too high or buying Bitcoin when it's too low. This is the function of every central bank and they've been doing that when, this is why I say we're all under a dollar standard because pretty much every central bank is trying to peg their currency to the dollar within a certain range and m anages to keep an illusion of stability when in fact the market is actually a lot more volatile. And this comes down to the fact that the dollar is the unit of account for everybody. And unfortunately t he dollar has depreciated significantly over the last 60 years. In terms of, the size of the supply there is 1959, there were about 280 billion U.S. Dollars in M2 m oney in existence. Currently, that is about 15 trillion. That's a multiplier of something around 50x. And during that time if you annualize that from the last 60 years, that ends up being about 6.7%. So by holding the dollar, your portion of dollars as the total supply of th em t o m oney is shrinking by about 6.7% a year. This is why people are wanting a good store of value. It's because the US dollar is expanding so much and why in p a rt, Bi tcoin continues to increase in price. It's because it is actually scares instead of being, e xpanded at a 6.7% rate every year. Now, as far as the actual question, one common critique about the hashing power, if you know actually how mining works...(Interrupted)

David:

Hold on, just a second, I just want to ask one factual question . Did you literally say 10% of Venezuela's population was buying Bitcoins ?

Jimmy:

No, I'm saying 10% have left the Maduro regime. Some of them have nothing, b ut a significant portion have.

David:

I'm not sure if it's a significant portion, but I know that the local Bitcoin volume has gone through the roof, but that's from negligible t o negligible. It's never been a systemic thing. A nd in Venezuela I would strongly question that claim.

Jimmy:

Do you have any ... I think t here's very good evidence that this is happening because there's a discount a nd Colombia and a premium i n Venezuela. So you can claim anything you want, but the fact that people are using it that way, it shows you that this is something that people want. And well, let me, can I answer the actual question that was sent to me? I wanted to reply to your c omment first . So as far as mining goes, you can switch. And right now there are pools have about 17, I think t he largest pool has somewhere around 17%. So you would need the collusion of three or four. First of all, none of those people can take the money that you already have away from you. The best that they can do is double spend. And really in order to double spend, you need to screw somebody over. And the only real people that you can screw over to take advantage of this because you need to receive a good or service i n return a re exchanged, where you can probably receive some dollars in return. And in order to do that, it's a very difficult attack to pull off because you either have to go into another crypto, which presumably is less liquid than Bitcoin, or you have to go back to dollars. If you have dollars, then you're going to need a bank account. And at that point you're going to know the exchange is going to know who you are. And so they're going to be able to sue you for this attack that you set on them. But regardless of the difficulty of pulling off an attack like that, you can actually switch pools . And with the new protocols coming with S tratum V2, what you can do is how each, each individual member of the pool gets to decide what the block is going to look like. And instead of being forced to take the block that the pool gives you, you can construct your own. And in that way, you actually decentralize even further because you're not going to essentially create a double spend on their behalf. Now, Bitcoin gold has a significantly lower hash rate than Bitcoin does. And the people that are running it are using GPU and so on. And it's a small portion of their entire portfolio of mining equipment that they tend to do. But if you're mining Bitcoin, it's a significant portion of what you're doing. And generally that's, it's a very low margin business. So the people that are doing it are watching everything closely and if they're suddenly mining blocks, and you know, in order to pull off an attack like that you have to m ine a block essentially that's not at the tip and you would notice this right away; or if you didn't notice it, then you're not going to get a reward for it. And it's an enormous risk. And there would be all sorts of lawsuits almost right away, if that were found out and they lost significant amounts of money or if they tried to do something like that. Fact of the matter is, it is an extremely difficult thing to pull off from a game theoretical perspective because the incentives are such that it requires a lot of collusion and it requires essentially bankrupting a n exchange in order to make it worthwhile. So, all that said, this is not an issue. And I've written an article in t he past, many articles in the past actually about mining centralization scenarios, and why it d oesn't make sense. And S tratum V2 essentially takes all of this off the table because each individual pool member gets to decide on the actual block that's being constructed and not otherwise.

Richard:

Thank you. Jimmy, do you have a response to that, David?

David:

Right. we have more than zero people trying to use Bitcoin as a store of value. That's what I said in my opening statement. I'm not convinced, I'm utterly unconvinced this is syste mic. You can say that there are individuals in given countries, sure, they're using it. I'm not convinced this is going to be a systemic effect outside of a very tiny number of people. This is important because when Venezuela was first touted as the use case for Bitcoin, the press was literally calling it, something that was actually significant on some sort of national level. And that just isn't true.The best evidence I've seen of the usage in Venezuela is actually, you should look this up in interviews, that e-currency HODLer from the Litecoin podcast did with someone, who was actually in Venezuela has this as their problem. They're using Bitcoin to get value out of Venezuela. The way it tends to actually work is wealthy people buy Bitcoin. Miners use the cheap electricity, get Bitcoins and sell for dollars. So that's a thing that happens and exists. More than one person's doing it, but it's not a systemic sort of thing in Venezuela. What they want there is dollars and only a very few people can use Bitcoins to get those dollars. The details of what Jimmy said, basically are correct. You know, Bitcoin is large. Bitcoin Gold is an insignificant old coin. No one cares about Bitcoin Gold, but I don't think Bitcoin is all that. I think the centralization is basically failed. I think it failed in 2013 because everything has its economies of scale, so you're going to get massive centralized pools because they'll be able to mine more efficiently. I really have trouble with calling Bitcoin decentralized. You'd have 70% of mining standing on one stage together. I don't think that that is more decentralized than say XRP fine, but it's not very decentralized. The main thing that stops them from abusing that is that they don't want to spook all the owners and buyers because you know, what could you do? You could trash the system. And that wouldn't get anyone anywhere. So I don't largely disagree with Jimmy's points. I think the main point is that I wouldn't call that decentralized , but the actual structure is talking about right.

Jimmy:

Can I respond to that? First of all , one of my co-authors for my other book, "The Little Bitcoin book" is actually from Venezuela, Alejandro Machado. You can talk to him about how Venezuelans are actually using Bitcoin. I've met plenty of people from Venezuela and all of them talk about how hard it is to get money out of Venezuela if you are leaving. And in fact, if you have it in cash, what ends up happening is that the border guards will search you and just take whatever gold or dollars that happen to be there. Whereas if you keep it in Bitcoin, you can keep it on your phone in a piece of paper or even in your brain, cross the border and sell it. In Colombia. This is the use case that they've found, and like I said, there is a premium in Venezuela. There's a discount in Colombia. It's very clear people are using it this way, and it's not just rich people that are mining. It's actually people that are crossing the border. If it was just mining, then it would just stay in Venezuela. Instead, it's people crossing the border, going into Colombia. There's a discount in Colombia. This is a fact. This is something that you can go look up and I don't think Mr. Gerard has really addressed that point. The other thing is, again, pools are individual members that are lending their machines so that they lower the variance of mining reward, by collectively sharing it instead of one person winning the lottery and so on. And that's the system that they have. It's not like they're all in one facility, as it seems that Mr. Gerard is under the impression of. In fact, a lot of it is all over the place and they tend to be very geographically scattered because the mining equipment tends to go to places where the energy is and not the other way around. Bitcoin mining has the advantage over other energy use cases in the sense that you can pretty much move it around to wherever the electricity is. So for example, a lot of the energy that's being used for Bitcoin mining these days is actually hydroelectric power, which tends to have excess capacity to the energy that they can produce. And because the transmission to the nearby city tends to be rather expensive. So it doesn't make economic sense to use all of that capacity. But you put Bitcoin mining fairly nearby and what you can do is getting money for that excess capacity by producing that energy and using it in a Bitcoin miner. And that's, that's typically how it's worked. And this is similarly true of a lot of energies, like a geothermal energy and Iceland and so on. That's how, so in a sense, it's more geographically distributed than Mr. Gerard seems to think, that I don't know if he's subscribing to the fiction that like it's all in China and like 90% of the mining is there. It's totally not. Even, even companies based in China geographically distribute a lot of actual miners all over the place because they go where the energy is. That's just the economics of how mining works.

Richard:

Okay. David, anything to add there?

Jimmy:

Only on the hydro point , what we see happening a lot in some places is actually completely excess energy, which is why so many miners set up in Quebec hydro had a lot of spare power. They don't now. They did before, but what we saw a lot in the Pacific Northwest and in upstate New York was Bitcoin miners would move into a town, they'd use the cheap hydropower. But the thing was that each area had a sort of specific quota, which they could get from the dam, which was a fixed amount. And you'd have the miners use up all the cheap power, and then the rest of the town would be put on having to ship in expensive power from outside of town. And they were not happy at all about this. It became a big problem. That is, even when Bitcoin was using clean electricity, it didn't actually make the demand go away. It just meant that they had the buy in dirty electricity cause it was displacing it. This was a problem that actually happened. I don't know about the actual regulatory mismanagement that those towns did. But that's, that's not Bitcoin's fault. That's the people that are managing the sale of the electricity or whatever. And regardless, it's not a problem w ith mining per se . It's just some bureaucrat that got something wrong and managed to sell it too cheap or something like that. That's not Bitcoin's problem. You're kind of casting, you're putting the wrong thing on trial here.

David:

Yeah. They eventually put a tax on crypto miner s .

Richard:

Okay. I think that's a good breaking point for that question. The next question is for you, David. Some of the arguments in your book seem to endorse Bitcoin as a store of value. For instance, you correctly point out that the coins limited supply makes it deflationary and coin owners will huddle instead of spend it because the coins values will rise in the future. Is this not directly supportive of the motion ?

Jimmy:

So what I said in the book was that this was the story that Bitcoin told itself. The theories of Bitcoin economics. I don't think that's actually how it works. Firstly, the argument is that bitcoin economics is basically a variant of Austrian economics. It's that we have this thing which will serve as digital gold. Now, conventional Australian economics wants gold, gold. They want gold. They don't actually buy the Bitcoin pitch that much, but Bitcoin works on this theory that you can turn, you can use this limited supply and it will make this money that will only go up in price. Now that has a number of problems in that deflationary economy seizes up. And when we were on the gold standard, you had manic booms and busts, which ( inaudible*: have been equal) between the great depression and which ended when we went off the gold standard. And the crisis of 2008, which was the biggest thing in living memory and was not much bigger than the typical downturn in the gold standard era. So the thing is the stories that Bitcoin tells about itself, the reason it went up in price was that it was bubbling. Those people were buying because other people were buying. That's not a sort of function of limited amounts of Bitcoin. It was particularly not a function because I don't see the market distinguishing that strongly between coins. Bitcoin is the biggest and most significant, definitely. But I don't really see a lot of difference for either the trading use case or the payments use case for cryptocurrencies in general. They d istinguish between them like it's apples. You might say, well that's apples and oranges, but it's not an apple m arkets. I t's fruit market. Traders will trade whatever c oin seems to go up. The consumer case will use whatever coin (inaudible: let move*) value. For the store of value arguments: That assumes that it will be reasonably easy to convert a t the other end. This requires demand. it has to have a use case other than being a thing you can sit and look at. Gold has been regarded as money without that, but again, gold has those millennia of cultural value attached. I'm really not convinced Bitcoin does, and I do think that is the thing that Bitcoin still has to prove itself on. The coin h olders, t he coin owners w ere holding the coins and not spending them because the price of a c oin was going up. But this led to Bitcoin's failure as quote, electronic p eer t o p eer cash, unquote, as Satoshi o riginally put it. At the moment its u se case is trading. I still don't think that it's s howing the store of value use case. I'm not sure that, that wasn't really a very coherent answer, but I'm not sure the question was quite a reflection of what I actually wrote. Possibly. I had to be clearer. There's a lot to answer there. I'm sure you have fun. Alright . We can argue about Austrian versus Keynesian economics, but if you actually study the quote unquote bust of the 1800s and all of that, usually the economists just compare, oh it went deflationary for a few years and therefore it must've been worse than 2008, for example, because it only went deflationary a little bit. Whereas in 2008, they printed like literally trillions of dollars. 1800s they did not. And that deflation was actually a good thing. It allowed savers to hold value better and all sorts of other things. So I reject this notion that the booms and busts of the 1800s were, one, more severe than the ones in the 1900s. They were much more severe in the 1900s. And, two, that t here were, because of gold or something like that. Oftentimes most of that was because of fractional reserve lending by w ild cat banks and so on. It was essentially money printing, the thing that we are trying to get away from that caused all of it. Regarding scarcity and traders, I think David's sort of thing seems to be that t raders and speculative sort of bubbles are the only real use case for Bitcoin. I would say that it's held its value pretty well. Since about 2011, if you at least measure in dollars, it's gone from something like a dollar to about 7,000 or a little under $7,000. It's held values really well. And like I said before what we now call store of value sort of investments, that's another word for it in the world today, the other things that we call investments are things like real estate and stock and things like that. And all of those things are just as volatile or tend to be pretty volatile. The, the real thing that he ask s ab out was, well, who's goi ng to tr ade it on the other end? You need to be able to sell it in order to use it for a method of payment or whatever. And fact is Bitcoin is actually really liquid, unless you're a whale with somewhere around like a hundred thousand Bitcoin or something like that, even then you could probably get liquidity at an OTC trading desk. A significant amount of Bitcoin can be traded in order to use it for whatever method of pa yment use case. And in fact, there are all sorts of services now where you can get like a credit card and it'll auto convert Bitcoin into dollars or Euro or whatever in order to pay for stuff. So in a sense, the method of payment use case is something that's already existing, right? Like I think BitPay had a credit card for a long time that would let you use your Bitcoin balance and they'll auto convert for you. So in a sense, it's already there. I did notice the carv e out for gold that David added, that it has thousands of years of history. And, and this is a point that I want to, wa n t to add, which is that Bitcoin has been around for 10 years and he's right that, go l d has a longer history. And a lot of the properties that we're talking about, a lot of the things that David's complaining about, it's not going to h a pp en overnight and 10 years is very short, relatively speaking for monetary mediums. The fact that we've come even this far is actually quite remarkable. And you know, as people get used to it, as people get more confidence in it, including people like David, I expect that as it lasts longer, people will trust it more. And really, I think ultimately what it comes down to for people like Mr. Gerar d is t hat they don't really trust it yet. And I don't blame them for that because it is fairly new, but as it lasts and as it overcomes a lot of the sort of attack vectors against it, as it proves itself anti-fragile over time, I expect more people to get to it.

Richard:

Thank you. So the next question is for Jimmy, again, irreversibility, a quintessential quality of Bitcoin has been asserted as an undesirable feature by your opponent because spenders do make mistakes and generally expect a chance for chargebacks. What is your response to this line of reasoning?

Jimmy:

I can totally understand that because in a way our nanny state has taken away all manner of personal responsibility away from us already. And we're used to sort of having sort of fallbacks or lenders of last resort and so on that give us some measure of safety but at the same time take away a lot of our agency. I believe in Liberty. I believe in freedom. I think that everyone should be personally responsible for their own stuff. If you, if you happen to lose like a hundred dollar bill on the street , there's no expectation that you should get it back. and that that should be the case. If you have like $1 million gold bar, too, if you lose it, it doesn't necessarily belong to you because you w ere irresponsible i n doing that. And that's what a Bitcoin kind of brings. If you have something that is very valuable, you need to have that much more in terms of, that much more responsibility i n being able to take care of it. The thing is, the thing that people a re, are really objecting to is that they, they want sort of like the best of both worlds. They want the freedom to use what they own, however way they want, and they want a backstop in case they happen to use it in a bad way. and that's impossible. I f you get all of one or all of the other, you either have a nanny state that can take the money away from you as in the traditional fiat system . If they accuse you of being a drug dealer or a child pornographer or something, they'll just take your bank account away. And that's something that governments can do right now. but at the same time, you have this backstop in case somebody, you know, like manipulate something or you might get justice in some way in case you make a payment to a merchant that was doing some fraud or something like that. Or you can have complete self sovereignty and there's no real in between. You can't have a system that has a backstop and where you're all in control. You either have a central authority that can execute both of those, which is security on the bottom end, but also the ability to take your money away, or you have neither, which is the self sovereign way of possessing. So there a re sort of two sides t o the same coin. I just w ant t o point out that you it comes with the territory. You either have personal responsibility and self sovereignty, or you don't have self sovereignty but you get that safety net that the government provides.

Richard:

David, Would you like to respond to that?

David:

Well, it is a design characteristic of Bitcoin that it's irreversible specifically. Certainly it can't be garnished by the government. So fine. That's part of the design thing, but that's why it's bad for consumers. And Jimmy's argument seems to be that the consumers are wanting the wrong thing. You can say why you don't like my product because you're morally dissolute, how dare you. So you can think that, fine, but it doesn't get people to adopt your product. It's not a good sales pitch really. What you see in the real world of society, which exists and has people living in it and doing things and participating as members of society with a whole bunch of expectations attached to that and so on. When someone puts out a new payment system, like say we'll pay by you tapping your card, where you wouldn't have to use a pin number. And when I first served that I went, what the hell, that's going to get just exploited horribly. So the way that they made people even dare use this thing was to offer considerable degrees of reversibility . You can repudiate up to, in the UK for example, such card system, you can repudiate up to, any transactions up to a day later. But most people don't because it turns out to be super convenient. I don't remember when I last used cash. I think it might've been last week sometime. Most of the time I just used the card. So that's me benefiting hugely from being part of the system and having it being a vastly helpful part of my life. There may be use cases for an irreversible system, but you end up with something as ridiculously, ridiculously brittle as Bitcoin is. Now, this was a design characteristic. It wouldn't be Bitcoin without it, but it is totally a problem for real use because all errors, fat fingers and fraud is final. If I pick your pocket from the other side of the world, those are my Bitcoins. Now, you're not going to get them back without considerable problems. It makes it hard to use. And even on the high end of store of value, relevant to today's question, it makes - custody is one of the hardest problems. It turns out like, how can you be sure you don't want to be digging through a rubbish dump looking for that hard drive? What do you do to store coins? Put them on a metal plate down a salt m ine or something. It's, it turns out to be really, really difficult because cryptography is so absolute. You've either got the key or you can try to come up with sort of multi-part schemes and so on. But basically Bitcoin custody turns out to be a super hard problem. Even if you write into t he stuff and you're trying to use it as a large store of value, cause at least gold is heavy and hard to move. So I think so irreversibility is there, it is a problem for the payment use case. I think it's quite a lot of why the payment use case failed, but not the entire reason, quite a lot of it. But I think that saying, well all you consumers are just morally d issolute, a nd that's why you don't like my lovely thing. Fair enough. You can think that, but it's not going to get you a lot of adoption.

Jimmy:

I think I pretty much agree there that consumers don't want to use BTC for method of payment either . I think the markets, like you could see that pretty much at every , any eCommerce site that takes Bitcoin, they do like maybe $50 a month in Bitcoin transactions. It people don't want to spend it because essentially it's competing against its own store of value property. If you have something that's going up in value or you're using as a way to store value in that spend, then you're not going to want to spend it cause the spending is the same as selling.

Richard:

Thank you. The next question is for David, a big part of existing and future success of Bitcoin is widespread social consensus. If we measure consensus via price support. It is clear that Bitcoin has gained substantial support. Despite falling prices of altcoins, Bitcoin has stood strong in this ongoing bull market - This question was written more than a few days ago - Indeed, an October survey by crypto Radar shows 6% of Americans own Bitcoin and another 7% do not, but plan to buy. How do you react to the growing interest seeming to form support of the coin's value? Is this wisdom of the crowds or madness of the crowds?

Jimmy:

I flatly don't believe that survey, unless they happen to hit a sample that happens to buy a lot of coins in 2017 because I'm not seeing evidence of the sort of mainstream interest there would be if there was mainstream interest. Retail volumes are right down on the dollar exchanges. I don't think it is, I'm not seeing evidence of this great support in the field, otherwise we'd be seeing a lot more retail v olumes than we are. This was literally the first I heard of the survey, so I hadn't actually seen it until I saw the debate prep earlier on. I would like to see a survey that wasn't coming from a c ryptocurrency advocacy organization, before I would start believing it. I simply do not believe the number that there are, some, that number would be about 15 million Americans owning Bitcoin. I flatly don't believe that. I'd want to look really closely at that survey. That number is just flatly implausible.

David:

I do believe that Bitcoin is the biggest crypto. It'll be the first a nd the last. So I see it as quantitatively different to the other coins, not qualitatively different. But I recognize this i s a point you could argue and I do think that if people just lose interest in cryptos then Bitcoin was the first, it'll be the last, there'll be something called Bitcoin for decades to come. Descendent from the present software and blockchain, as long as there are two enthusiasts wanting to swap blocks but I don't think there is much evidence of this growing interest or we'd be seeing a lot more retail volume than we are, and traders wouldn't be worrying about the drops in retail volume. Perhaps people are buying Bitcoin and holding it. Perhaps they aren't. But I just don't believe that there are 15 million Americans who are in Bitcoin.

Richard:

You're right. That survey is from Crypto Radar a nd not a mainstream publication .

David:

I will be looking at that survey because that number is just remarkable, and it definitely deserves a closer investigation.

Jimmy:

I would say that it's not traders that determine the price. It's actually the holders like the traders make local volatility happen. And that's definitely true, especially with the leverage that you could get on some places like Bitmex where you can leverage up to lever up to 100x and so on. But the people that actually give it the price, or at least a base price are the people that are holding right now, right. They're the ones that that won't sell right now. And they're, they're the ones that keep a floor or whenever it comes down to a certain price, then they go and buy more. So , in a sense, the history of Bitcoin over the last 10 years, there's always been local volatility and that's, that's been true for a very long time. But the overall trend of the base I think there's something called "the never look back price" or something like that where you know, it never goes below . It hasn't gone below something like 3000 since 2017, like mid 2017, like that's the amount of people that are actually using it as a store of value. All the volatility on top of that, I agree is probably traders and people leveraging and people playing games and stuff like that. But the people that are actually using it as a store of value that you can see with the consistent price rise. And to put it all on traders, I think is completely mistaken.

David:

You mean the holders are holding up the price by not selling?

Jimmy:

Yeah, which is true for anything.

David:

Yeah, true. This is why I don't worry ever about the idea of say if someone sees some of the Satoshi stash move, I expect everyone to just ignore it and keep on going because we already have enough whales who could crush the price if they wanted to and they don't want to.

Jimmy:

Yeah. And the Bitcoins have floated to them because they believe in it . If you didn't believe in it, you would have sold a long time ago. In fact, there were tons of people that did that, like say back in 2011 when it was like four bucks. They were like, Oh, I've made four times o n my money. I'm going to get out right now. And t his i s how markets work. It goes towards the people that value it more. That's a good thing.

Richard:

Okay. Thank you. Please note that the link to the survey will be posted on our show notes, so make sure to look out for that. And our next question is for Jimmy. So far, Bitcoin seems to have not encountered existential security issues like the DAO hack that Etherium sustained, but serious problems did occur such as the September 2018 bug that allowed printing of unlimited Bitcoins. In fact, the devs that first discovered the issue kept details of this egregious problem under wraps and simply pushed others to upgrade. What are your thoughts on potentially undiscovered critical bugs that could prove fatal to Bitcoin? And this was a point raised in one of your opponent's newsletters?

Jimmy:

All right . So with regard to the inflation bug that we found in September of 2018, that was like a CVE. It was a particular type of bug and it required a very specific type of transaction, that required a miner that was malicious to do it. And I wrote it up i n an article that I wrote way back then, about how difficult t hat would've been to actually e xploit i t, because it's an inflation bug, but it had to be a very specific type of transaction. And it w ould h ave been obvious to everybody else on that network. But regardless, the part of that was like keeping it under wraps and it's egregious and pushing everybody to upgrade and stuff. This is what's called responsible disclosure i n a software development. If you have a critical bug, you don't let everybody know because somebody may exploit it. What you do is you quietly tell the people that have that bug and this has happened across different projects. For example, there was a Bitcoin Cash b ug that was very similar and one of the core developers actually d isclosed that anonymously to the Bitcoin Cash developers as w ell. Because that's what's considered ethical. So I don't like this characterization that it was just sort of kept under wraps and like it's some secret society or something like that. It's nothing of the kind. This is the ethical way in which you're supposed to disclose vulnerabilities t o the software. All r ight. With respect to the, the actual bug, it was one very hard to exploit too. It was in a very small range of software that was out there. So there's a lot of different core software including, 0.13, and 0.17, and so on. The particular software that had that bug was within a particular range and it was a portion of the network, but by no means all of it. There'are other clients like Bitcoin and BTCD, and basically the core software for that range of time was out of consensus with everything else. And so in reality, it isn't that anyone c ould h ave just printed on limited amount of p oints. It w ould h ave been noticed right away by all of the other clients that w ere running the other software. It was out of consensus and this was putting it back into consensus. Because we have a lot of different software, in a sense, they act as checks and balances to the software that already exists. So there could be critical b ugs. Maybe it's common to all of them. It's possible something like that could occur. But those tend to be generally fairly unlikely. The things that we talk about with respect to bugs of this kind generally t hey're discover fairly quickly. So in, I think 2013, we had the Level DB issue, or actually I think it was Berkeley DB issue and essentially, something with the versions of those that caused an out of consensus mechanism; and essentially what people wanted to do economically, rationally was to continue one of the chains. And that's what we ended up doing. It was the older chain in that case. So, w hat wins out wins out, essentially the market kind of decided in that case. So, there could be critical bugs. I don't claim to say that Bitcoin is free from critical bugs, b ut generally, unless they happen to be the same critical bugs across all of the different software that's running on the network, I don't think it's going to prove f atal to Bitcoin.

David:

Jimmy is a programmer. I'm a system administrator. What he describes about the software development process is basically correct. Generally you want to do a coordinated disclosure if you can, so that you can distribute the fix before your bugs are revealed. Bugs happen. Software is imperfect. Humans are imperfect, never trust software. It's terrible. All computers are awful and everything is made of gaffer tape and string and we'll all die if it stops working, you know? So that's basically just the software development process. This is where the fact that development in a team is good, somewhat more centralization. I was not aware that the , there were actually a lot of multiple different variants of Bitcoin, that was sufficiently different that you'd have some variety out there, but that's good as well. So fine. So that's basically the correct answer. It bugs happen, but there are people on hand, that go, "Oh crikey" and dive in to fix it.

Richard:

Thank you. This next question goes to David. One issue with Bitcoin is this lack of allowing anonymous transactions. So this shortcoming in transparency, to some, makes it a leg-up to some of Bitcoin's competitors. What are your thoughts on privacy, and the various use cases Bitcoin has been deployed for things under the radar.

David:

I would think that those are two different functions that you're looking at. 'Cause the payment use case, that means it's easily, readily flowing cash. You'll have this somewhat with the more privacy focused coins. So the problem with those is that the payment use case for Bitcoin, there is a small payment use case. I wouldn't say there is no use case. It's a small case, but it's not going to be a big case because in that case you're talking about cryptocurrencies. And I do mean all cryptos in general, not just Bitcoin at all. They're substituting for better money. They're money you use when you can't use just dollars. We saw this with Bitcoins , first actual use case, which was the dark nets when people use Bitcoin to buy things that their government didn't want them to buy. So that was what got Bitcoin really taking off from 2011. It's generally acknowledged. So people went to privacy coins cause they worked out that if you're going to do things your government doesn't want you to do, then doing them on a permanent immutable public ledger with thousands of copies around the world is probably not very smart, and people are still getting busted for deals they did on the silk road. So they moved, tried privacy coins like Monero or something. So the problem there is when you try to interface back to the rest of the world and convert back into the actual dollars or pounds or whatever, or euros that you want to use in your daily life because there is almost no cryptocurrency economy as such. Functionally, it flows as a substitute for fiat currencies. The big troubles with those are, one, you'll see a lot of exchanges are now cutting off access to the privacy coins because t heir banks are telling them that if they deal in those things, the banks can't support them anymore. That's part of the mechanism by which such privacy coins will have trouble interfacing to the world of currencies, which will reduce their payment use case. Two, the volatility isn't very large. I don't know details, I've heard that there are side channel attacks more or less on M onero where its volume is so small that if you make a s izeable Monero transaction, maybe you c annot be identified from the blockchain, but you can be identified by the fact that you've made a transaction t hat sizeable, that the i nformation sort of leaks. I don't have an example at hand. This is something I've read about but it's something to worry about b ecause volume is quite thin in a lot of cases. Does that answer the question more or less?

Jimmy:

Yeah. I think David's pretty much right. You're kind of talking about a payment use case. I would say though that the first thing that put Bitcoin on the map, I think David's sort of characterizing it - as like nefarious activities on the black market. Actually, the very first activity that brought a Bitcoin on the map was WikiLeaks. WikiLeaks had all of its bank accounts suspended because governments have not liked that they were publishing papers publishing stuff that they didn't like it. So , essentially they cut off all the bank accounts and WikiLeaks decided to start taking Bitcoin. And Satoshi famously said, please don't, because we're an infant currency here and we're not going to be able to handle the heat or whatever. And he said, the swarm is headed towards us and all sorts of things like that. So in a sense, I think David is sort of characterizing the black market as this evil bad thing but in fact, it can actually be a very good thing especially if you live in an oppressive regime or something like that. Where you want to get stuff just to live even. And oftentimes like if you're trying to buy groceries or something like that in Venezuela, it's very difficult. You have to apparently go there exactly one day of the week. You're allowed to go to the grocery store based on your national ID number. And if that happens to be a day when the grocery store, when the food isn't delivered there, you're not g oing t o be able to get it. So really your only other option is to go to the black markets to buy it. So in a sense like what may seem very evil or you know it's just drugs and child pornography or something like that. It's actually like a way for a lot of people around the world to l ive. And so I don't like that characterization. That's something that I wanted to point out. As far as I know, I think David i s mistaken about Monero. Monero has confidential transactions, which means that they hide the amounts. So no matter how much it is, it could be a thousand Monero or 0.1 Monero, however much it is, that the transaction actually doesn't show how much it is. The way the cryptography works is that it hides that amount based on Peterson commitment. Once you deposit to an exchange or something like that, that can convert your Monero to something else then they would know obviously, and they would be able to credit you that amount. But like doing that sort of thing based on the number of exchanges you would need, like data feeds from all of them and complete transparency into all of their customers in order to figure that sort of stuff out, which I kind of doubt that anybody has that level but who knows. But regardless of that with respect to privacy, here's my opinion on it. I don't think it's that important. I think David's kind of hinted at it. The people that use it generally need it for darknet for human rights things in oppressed countries and so on. But other than that the vast majority of people that are using it as an investment or a store of value, which I define as the same thing. So in a sense, I think the market's kind of spoken: ZCash, Monero, Dash, XVG and even GRIN. They're all supposedly privacy coins. They haven't done very well in the market.

David:

I'm not that down on the concept of black markets. I do present it as a hazard. If you're doing things you government doesn't like, then the government won't like them. But I'm certainly fine with a bit of privacy. I'm not worried if you want to buy drugs; just use responsibly. But I do feel that it's a bit silly to leave a record of, here's the massive deal I did for the police to look at, and seven years later, that's not good operational security. There's a whole lot of issues and I don't have a strong view on it. I think for that, you're talking about a payment use case, not really a store of value use case.

Jimmy:

I totally agree with you on that point and I don't, again - the main use case is store of value. So I'm not sure how we're getting into this area of method of payment really.

Richard:

Great. Thank you both. So let's move to our next segment. This is round three: questions from audience members on Twitter. First question goes to Jimmy from DZack23: Does an increased number of people interested in BTC also increase the likelihood of there being a big enough disagreement within the community to cause a sustained chain split, i.e. hard fork? To what extent would this impede the path to global SOV status?

Jimmy:

Great question. We've already had a big disagreement that causes a fork and that was called Bitcoin Cash. In fact that was a large part of 2018 - the way to launch a new altcoin was to claim to be a new hard fork of Bitcoin, something like that. And we know what happened to BCH. They split again to BCH and BSV. There've been other splits since then. Generally they're money tends to like - it's never really like - it's very rare that you have like kind of an even split. The BCH fork is clearly the minority fork and you can see that essentially they traded decentralization for larger blocks and you can kind of see how it's worked out for them. And this is with a significant amount of backing from Bitmain and Roger Ver and people like that who spent a lot of money on their side trying to support the price and so on. It's currently, I think around 2.8% of Bitcoin's price, so that tells you sort of what, quote unquote, sustained chain splits look like. I don't think it's hampered the store value status for Bitcoin at all. If anything, what that split showed was that Bitcoin's anti-fragile. Bitcoin Cash hard fork happened in August 1st, 2017. Over the next, I think it was four months, Bitcoin went on an insane bull run all the way up to 19,000. So that tells you that the market was responding to the fact that it was able to overcome something that a lot of people, including myself, thought would be kind of fatal to Bitcoin is the split. In fact, it wasn't anything at the time. It actually ended up strengthening it and showing people that really it isn't decentralized, the centralizing all of that as BCH did is actually the wrong move. And that's not something that people see as valuable. The method of payment use case or taking out SegWit or taking out (inaudible) or having eight megabyte blocks being able to hard fork every six months. All of those features that BCH added or removed, the market did not really respond to or think was valuable. In fact, there was a lot of dumping of BCH and continues to be dumping various coins including ones that are coming out. I think there were at some like 84 different hard forks of Bitcoin . So none of those have really impeded Bitcoin's global, a global store value status.

Richard:

Thank you. And the next question is for David, it comes from Cali Haan: Bitcoin appears to be a negative-sum system, in which miner s tax the system, via sometimes high fees, and early investors can only profit from new money flowing in. If this is true, Bitcoin's main innovation then appears to be the automation of pyramid schemes. Do you agree?

David:

Surprisingly enough, not completely. This is sort of a problem for Bitcoin and I think that it can work a bit like a scheme where old investors can only be paid with money from new investors because there is no real economy around cryptocurrency. There's no circulating flow of income. No one gets paid in crypto is Bitcoin or any other coin? Mostly not. There's a bit, but it's not really much of a thing. So it's a way to work. It always works as a substitute for fiat. Now that means that when you have holders who can only cash out if there'll be someone else to throw new dollars in and miner s do tax a certain amount cause they have to pay their relationship with the bills in actual fiat money. I think the greater problem, the reason you get so many scammers is because you get, when you say words, whole new form of money or it's a new paradigm or this works completely differently and you can get rich from it, then this attracts scammers. And we've seen this in Bitcoin. There's lots of heartwarming decency of people who really mean well and want to do a good thing. And there's quite a few crooks, although these were crooks who'd been in other fields and then they discovered that this was one where they might find new naive people to exploit. One of the earlier ones was the butterfly labs, Bitcoin mining people who scammed people on miners , they didn't send out for six months after they mined them out, completely turned out that those guys had convictions for mail fraud, stuff like that. So you get a lot of serial scammers, you really gotta watch yourself. That's not a characteristic of Bitcoin itself, but it's sort of unexpected thing that will happen whenever you do an exciting new thing involving money. It's like a bat signal for scammers. I think that's more or less my answer to that.

Jimmy:

Yeah. I think I would largely agree with what David said there. There are a lot of scammers , although I think , they used to be in Bitcoin, a lot of them have moved on to ICO with Ethereum, and their own coin and so on. And that tends to be a much more fertile field of new suckers or whatever. But largely , I don't see Bitcoin as a negative-sum system, it gives you something that is truly digitally scarce and that's Bitcoins. And I don't think miner s necessarily tax the system. It's really, they have their own costs and the cost of mining one Bitcoin tends to trend towards the cost of one Bitcoin. So, you know, like this is the mining profitability that you have to calculate. And this is why not everyone goes into it. But the thing that I want to point out here is that this is looking at Bitcoin. If you look at fiat money, if you look at dollars , what are the taxes we pay there when, if you look at investment banking, banking in general, and all of the inefficiencies that are in the entire banking system. And the reason why London and New York happened to be very large cities that are very wealthy is because they are financial centers. That is the tax that we're paying for the dollar system. Think about it that way and really whatever taxes that you're paying in Bitcoin or a pittance compared at least on a percentage basis and definitely on an absolute basis like the banker. Like it's crazy to me that if you're sending money from Ethiopia to Kenya, which are neighboring countries in Africa, what you have to do is because there's no liquidity against each other currency, you convert to dollars and then convert back to the other currency. So every time like there are international remittances like that, you have, some banker in New York is making money. That's crazy. That's the tax that you're paying in terms of the current system, which is really the dollar standard where New York, London, places like that are real and like fat cat bankers are making money off the rest of us. That's the real outrage that we should have. And it's not an automation of a pyramid schemes. That's it. I think that's a really horrible characterization of what's going on. It's real digital scarcity. The pyramid schemers are out doing scams like HEX or whatever. And those are people that are deliberately deceiving people and so on. I think David's right, there are probably some people in Ethiopia and so on that actually think they're doing good, but they're actually scamming. So I agree like with a lot of what's said, but you think about the current system and what sort of taxes we're paying to bankers and people that are getting 100 million bonuses that like honestly are just really rent-seeking.

Richard:

Okay. Our next question is for Jimmy. It comes from rhyzom00. How would BTC attain an SOV status when it is entirely dependent on the electricity grid? Plus governments have all the tanks and armies.

Jimmy:

Entirely dependent on the electricity grid...Well it's not, because you can literally go and mine it on your own, if you have a solar panel, if you want it to. So you could be off the grid and you can mine it yourself. In fact, there are projects where you can use satellites. So you don't even need the internet or anything like that. So I don't think it's, quote unquote, entirely dependent on the electricity grid. It needs electricity to run. But our sources of electricity are all over the place and numerous and legion. And generally Bitcoin mining tends to go towards wherever it is cheapest. There're projects right now where they have and when you're digging an oil well or something like that, you have to flare up some of it, and all a lot of that energy goes wasted. They're figuring out ways to capture some of that energy, so they can run miners and instead of wasting that energy and polluting the environment. They're actually putting it towards miner s and making it more profitable to go and drill certain wells and so on. So I, I disagree with that notion completely. Governments have got all the tanks and armies. This is true. But governments are also very, very slow and they rarely act unanimously or all together, even within the government. There are all sorts of factions and things like that. Now , it is possible that somebody may pass a law tomorrow in the US and say, Hey, you know what? Cryptocurrencies are banned. Bitcoin in particular i s banned, something like that. And if you do anything with that, we will come and get you. First of all, I don't think that's possible. And there are too many people in government that have Bitcoin or have access to Bitcoin or know people that have access to Bitcoin, to think that that's a just thing to do. But even if they have tanks and armies, here's the thing about Bitcoin. It's not like gold. It's not physical. You could keep that stuff in your brain. There's no way for them to force it out of you. Whereas with a bar of gold, they can actually physically take it away. With Bitcoin, you could keep it in your brain. You could keep it on a backup. You could keep it encrypted, you could do all sorts of things in such a way that it's much more like getting you to fess up to a crime you didn't do or something like that. And it's very difficult for government to, quote unquote, take it away from you by force.They could try to stop a lot of it and they certainly have tried it , especially in different countries, but there's that just invites jurisdictional arbitrage. If one country bands it, then a bunch of people with a lot of their wealth will just go over somewhere else or do something else. And this happens all the time with tax havens is that people tend to go towards where it's favorable to them. And I expect that to happen. So governments have got all the tanks and armies, but you know, government at least theoretically is owned by the people. So if some at least in a democracy mean, I can't say the same for China, which is why the tend to be very authoritarian. But I don't think that's much of an issue.

Richard:

Okay . Next question is for David, from Mining SC: With the expected rise of space mining and commercial space travel, what does David anticipate that a good SOV will be in 2040?

David:

Well, firstly I don't expect space mining or commercial space travel by 2040. I think that's quite one heck of an assumption that needs to be proven on its own. There's space exploration has been substantially funded by, out of the military budget, ever since we started traveling to space in the fifties and sixties. There's no commercial market for it really. There might be a tourist market for super rich tourists, but it's not going to be a huge thing and I don't think it's going to be one that's going to be big enough to address this question.

Jimmy:

What will be a good store of value in 2040? I've got no idea. I expect gold will remain popular for at least the next 20 years. I expect real estate w ill probably go through a few more bubbles and crashes. I would say that we will still have an economy that's worth investing in stock market or whatever. Keep doing sensible things and saving money. And if you're betting on the collapse of civilization, t hen I don't expect Bitcoin to be very useful in the Mad Max (inaudible) punk f uture. So I'm not sure that would be a use case for Bitcoin really. But k eep doing what you're doing more or less. Anything less than that, assume that civilization will still exist and invest on that basis. I am not a n investment advisor, you may have noticed, but that's like my i dea o f investment is more visionary retirement in that order. I want a very small suburban scale. Can I respond?

David:

That's sort of my non-answer .

Jimmy:

So I think David's highlighting the fact that we really don't have a very good store of value and why Bitcoin is so exciting to a lot of people. There just isn't very much competition. I said earlier that the U.S. M2 money has increased by 6.7% every year since 1959. And if you look at what are considered traditional good stores of value, like real estate and stock and even gold, and you map out, say that Dow Jones index f rom 1959 to now, what are the returns that you get annually? It ends up being about 6.7%. So really it's just exactly keeping up with the monetary expansionism all over the world. And obviously US is actually the least bad of all of the other central banks. Many of them have completely collapsed several times since 1959. That's one thing real estate too, if you look at it on an annual basis, I think it ends up being about 5%. If you could get 6%, that's considered fantastic for real estate, especially over the long term. There really isn't that much competition for Bitcoin and why people want it as a store of value. And that's something that we have to really realize is that, there is a big gap in the marketplace for something that will hold value for a long term. And this is not by accident. The Keynesian ideology that David has hinted at all through this debate is that you need money flowing. And if you have something as a store of value, essentially what you're saying is this is a good place to park your money. And what they force you to do is they, what the system wants you to do is continue spending it so they don't provide good places to park your money or good stores of value. Stocks being one of the few places. This is why whenever the central bank lowers interest rate, the stock market goes crazy because they're front running. The fact that all of that additional money being printed is going to go into the stock market. They already know it's a direct correlation. So they're front running it. So in a sense, a Bitcoin is an excellent store of value and I think more people will realize that over time, especially in the next 20 years as people , by 2040 like people that were born in 2010 will be 30 by then. They'll have essentially grown up in the entire Bitcoin era. They'll not know a world where Bitcoin didn't exist. Unlike a lot of people that are alive today, they'll see it, they'll trust it a lot more. Like I said before, it's only been around 10 years at this point. Another 20 years. That's going to solidify significantly even for people like Mr. Gerard.

Richard:

All right , gentlemen, it's been a pleasure to have you on the debate. Any concluding remarks? You first, David?

David:

I expect Bitcoin to be around for decades to come. As I said, I expect I'll still be following it. It'll get harder and harder to convert it into ordinary money you can use. But that happens. I don't really have a lot to add. I guess we'll see what happens, is I guess what I'll say, I'm not seeing reasons for mainstream mass adoption in systemic quantities, like not just one or two people here and there, but something as noteworthy as, the sort of thing, the 2013 headlines about Venezuela were claiming. I don't expect that anytime soon, but I could be wrong. I will be delighted to be proven wrong, but I'll have to be proven wrong. It can happen.

Jimmy:

Yeah. I think you've kind of been proven wrong already. I think those use cases that you're talking about, there are people in Turkey, Venezuela, Iran that are already using it that way. And certainly if you're in a third world country, the reality of inflation and monetary expansion is a daily reality. One of my coauthors, Tim Ajiboye - he told me that the dollar was the most important currency in his life because in a way the Niara was just so unstable and so on. And he's now running a Bitcoin exchange in Nigeria and he's doing fantastic, because people realize like, even the Dollar is not that great a store of value, because it is depreciating at 6.7%. If you look at it as a total of the w hole M2 money supply, and people don't trust the dollar. And some people do obviously and they keep it in the Dollar and they use it as a method of payment and so on. But really that use case is probably not g oing t o happen for a little while. I think people are using it much more as a store of value, as a way to hedge against you know federal reserve just printing more and more money. I know we recently had something like $450 billion being injected into the repo market, essentially to prop up hedge funds, which is a sad reality of the crony capitalism and the moral hazard that we see in fiat money. So given all of that, I think as more people wake up to how money actually works, Bitcoin will take more and more of the pie of store of value. Eventually. I think it may become a method of payment and by then I expect something like the lightning network to make that sort of thing much, much more easy. But that's why I think Bitcoin is already kind of a global store of value and w ill continue to be more so, as we approach 2040. And it could be worse. They could be trying to save their money in Libras . We can talk about Libras later if you want.

Richard:

Haha, and I might take you up on that offer. Well, that concludes our debate. Thank you both for coming. Goodbye. Thank you so much for listening to the podcast. You can follow up with our guests on Twitter. Jimmy Song is @jimmysong, and David Gerard is @ davidgerard. As for me and the podcast, our Twitter handles are @gentso09 and @blockdebate, respectively. We look forward to bringing you more exciting debates down the road. Consensus optional, proof of thought required.