SLP140 Gigi – Bitcoin’s Gravity and 21 Lessons

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Gigi, Bitcoin author and curator of bitcoin-resources.com joins me to talk about some of his recent articles and the recent launch of his 21 Lessons book. We talk about: 

  • The gravitational pull of bitcoin
  • Key resources from bitcoin-resources.com
  • Lessons learned along the way

Gigi links:

Sponsor links:

Stephan Livera links:

Podcast Transcript:

Stephan Livera: Gigi, welcome to the show.

Gigi: Hey Stephan. Thanks for having me.

Stephan Livera: Look man, I know you’ve got a lot of awesome stuff going. You’ve got 21 lessons, you’ve got Bitcoin resources, you’ve got a bunch of articles, you come in and I’ve seen you’ve, you’ve done some great writing and some fantastic curating as well. And I know you’ve done a bunch of podcast appearances as well. But tell us a little bit of your journey. How did you get into this?

Gigi: Yeah, well it actually, it took me quite awhile to get into Bitcoin. I was primed to fall down the rabbit hole, but for the, for one reason or another, I just didn’t, you know? A couple of my friends around me, they yeah, they got messed up by Mt. Gox and they got got in quite early. And so I, I heard about Bitcoin quite early, I would say, but I always felt “ah no, I know it would never work.” I never looked into it. It’s just funny internet money and it’s just a bunch of gamblers and drug addicts playing around with internet money. And so it took me, I think it took me maybe like four touches with Bitcoin or something like that to have a second look. And the thing was just, you know, I mean, you’ve heard this story many times, but it just, it wouldn’t die. It wouldn’t go away. And so one day I just sat down and dove in and yeah, there was no going back from me.

Stephan Livera: And so what was it that tipped you over to actually paying attention? Like was there anything special about it or was it just repeated exposure in your case?

Gigi: Yeah, well, it didn’t take much actually. Once I realized that it’s insanely hard to kill, like once I actually realized how it works on the technical level I was kind of won over and yeah, ever since I’m playing catch up with all of you guys, you know, like years of experience in Austrian economics and I’m still catching up on that. So a big piece of the puzzle that was missing for me was just the economic side of it. And that it is actually new money and I didn’t, I didn’t know a thing about money. So for me it was just technology at first. And I was very sympathetic to the eth heads, so I was, I was very interested in unstoppable world computers and programmable money, so to speak. And I didn’t get the bigger picture at first. So that’s, I think that was the biggest block for me for like one or two years or something like that.

Stephan Livera: That’s cool. So we’re definitely going to jump into the economics aspect of it as well, but I’m particularly curious to know what it was that made you think Bitcoin just couldn’t be killed or is unlikely, very unlikely to be killed.

Gigi: Yeah. Well Hmm. That’s a good question. I think it was a couple of aha moments in a way. It’s just a very ingenious system and I really like the analogy of comparing it to a living thing in a way. And it is very similar to that because in essence it can bootstrap, itself again or like revive itself from just one cell in a way. And so just realizing how insanely resilient Bitcoin is did it for me, I, can’t pinpoint exactly to like one single thing. It was just one day it finally clicked. Then I was like, okay, there’s really like almost no way to kill it. You would have to kill pretty much everyone who operates a node and destroy all the hard drives and just destroy everything, destroy the whole world, then it’s gone maybe.

Stephan Livera: Right. And that reminds me as well. So one of your articles is proof of life and in that article you spell our tower Ralph Merkle, the inventor of cryptographic hashing and namesake of the Merkle tree. As you point out, he made this argument that Bitcoin is the first example of a new form of life. Now that might seem a little crazy to an outsider. What are you getting at there?

Gigi: Yeah, it is very crazy to an outsider. And it is, but I think it’s an interesting thought. And I think there are two ways to look at Bitcoin. It’s you can look at Bitcoin as a tool and all the people use Bitcoin to satisfy their needs or to to arrive at an end. And the other ways just to flip it on its head and look at Bitcoin as its own thing, as its own entity. And in a way Bitcoin uses us to fulfill its needs. And Ralph Merkle was the first one as far as I know, who did that. And I huge shout out to Brandon Quittem who wrote the the mushroom analogies and how to view Bitcoin as a mycelial network, a fungal network. And I think he was instrumental in popularizing this idea further in a way.

Gigi: And I think it’s, in a way it’s profoundly true and it’s simply true because just the incentives are set up in a way that you can view Bitcoin as its own thing. So it incentivizes people to use it because it pays people to use it and it pays miners for example. And it incentivizes all of us to be good Bitcoin citizens you know, be as self-sovereign Bitcoin citizen and it incentivizes developers to develop it further. And so it’s just a way of flipping everything on its head and fueling Bitcoin as their main driving force anyway.

Stephan Livera: Right. And that sort of reminds me of this concept I’ve heard of. Again, I’m not big into that whole community, like the rationality community or whatever, but they call this concept Roko’s Basilisk, right? So I’m not sure if you heard of that, but it’s like this idea where kind of like there’s this creature or monster in the future and apparently if you don’t do everything you can to help this monster get created, then it will punish you when it is created sort of thing. But this is like kind of a different analogy, but in some ways Bitcoin is almost like a self incentivizing system, right? Because the holders, they want to see it go up the and typically then they will take action to make the system more resilient. So what are some examples that you can think of there?

Gigi: Yeah, I think it’s, it’s not necessarily a new viewpoint. So this super organism viewpoint other people have compared to large companies for example, to the same thing. Like your company is also its own thing or, or a state for that matter is also its own thing and it, it acts in its own interest in a way. And so it’s just a different level of analysis. And I, think, one example in Bitcoin or there are actually quite a few examples, but you can also think about the open source nature of Bitcoin in the same way as biological gene transfer. Like if something you’ve horizontal and you have protocol gene transfer. So if other projects do something that’s insanely smart or insanely useful, Bitcoin will just absorb that feature. And again, the incentives are aligned in a way that developers will work towards the goal to include useful features into Bitcoin. And also if you just look at the history of the technology, it’s obvious that Bitcoin inherits for example, cryptographic hashes and public key cryptography and stuff like that. And so it yeah, I think the analogy to biology is quite an apt one and it’s very useful to think about it in that way.

Stephan Livera: Right. I see. And there might be some counter examples potentially, right? So there might be some technologies that may not be suitable for Bitcoin or they may never get into Bitcoin. So a quick example might be say Mimble Wimble, which is I think most people are kind of agreed that it’s unlikely that we would ever get Mimble Wimble into Bitcoin. It might happen on some shitcoin or maybe on a side chain or whatever. But even then, for me personally, the way I think about that is this more just like Bitcoin still has the monetary network effect and that it’s just so difficult to displace that. But how would you, how do you conceive of that idea? Like basically if there are certain technical things that for a technical reason cannot be implemented into Bitcoin?

Gigi: Yeah that’s a good point. I think there are quite a few things that will never be implemented. Since everything is about trade offs. You I mean we have the big debate now going on in terms of privacy on the base chain for example. And that’s a very obvious trait of you have to make you you can’t have full auditability in ECR disability if you have complete privacy. And, there are similar things. For example also how powerful your scripting language wants to be and you will never have a something that is turing complete because you will run into other problems as we saw in Ethereum and other chains. You will have to introduce something that will get rid of the halting problem and you will have to introduce a finite resource that is consumed during executions, stuff like that.

Gigi: And so you will always have to make trade offs. And I think as we all know, Bitcoin is very conservative in its approach. And I think the main trait of Bitcoin is reintroducing sound money to the world and having it introduced in a way so it can’t be stopped and just the simple sentence like can’t be stopped. It encompasses many things. Like, it’s per definition uncensorable and it’s it’s also outside of the law in a way because if you could stop it by passing a law and Bitcoin would have failed in a way. So it’s the, the pure fact that this thing was built so it can’t be stopped, it’s already encapsulates a lot of things in my opinion. And thus it also makes a lot of trade offs in a way. So you trade off, for example I mean Bitcoin optimizes for radical decentralization and that’s the whole point.

Gigi: And once something is decentralized, it’s really, really hard to change. It’s really slow moving because it’s just the nature of the beast because you would have to convince the whole organism or the whole network one by one, like one cell by one cell to change and that, yeah, except for very rare circumstances, this just doesn’t happen.

Stephan Livera: And what about the power of ideas and the relation to value, right? Like where is the value in the system coming from?

Gigi: Yeah, that’s, you’re probably way better at answering the question than I am. Again, I’m, I’m still catching up on my economics, but it’s, quite a value in itself is quite a paradoxical things I think I would say it’s, it’s very subjective and people value different things very differently. But I also think what I learned, and it’s also part of the 21 lessons I wrote is the value is subjective, but it’s not really arbitrary.

Gigi: Like if something is very abundant like Leafs or seawater when you’re at the seat it’s not valued at all. Like, if the cost of replication is near zero for example, and we see that in the internet all the time, the, tragedy of the comments in a way at the the problem that you can take information and copy that nearest zero costs, it’s very hard to monetize digital information, I would say. And it comes from that fact that it’s simply isn’t scarce. And so yeah, where the value of Bitcoin comes from, I think Bitcoin is able to do something that wasn’t, was not possible before and that inherently gave it value on. Some people realize that very, very early and ever since the first transactions that actually had a monetary value, and of course we have Laszlo’s pizza transaction there, but it was actually Bitcoin was actually traded before that for a monetary value. And ever since, like I think, the most important step in Bitcoin was the step from zero to something and everything else just snowballs from there. Because once the feedback loops, feedback loops of the system kick in as Matt Odell likes to say, you know, Bitcoin is designed to pump forever. And I kind of agree it’s a vicious feedback loop that will, I’m not sure about forever, but it will probably go on for awhile.

Stephan Livera: Right. And as you say, it’s this relationship between ideas and then the people who are putting that into practice. And then there’s the code in one of your articles actually Bitcoins gravity. You mentioned a little bit about the relationship between these. What is that?

Gigi: Oh yeah that was a fun article to write. I thought about that a lot and I wrote it shortly after the, we are all hodlonaut phenomenon. So I was mostly thinking about the tribal nature of the space and how in a way certain ideas take possession of people and Bitcoin back to flipping the whole viewpoint on its head. It’s, it seems to me that Bitcoin takes possession of you in a way, in to a certain extent. And, it’s really interesting how that is. I, I said that before and I think it’s just a hilarious thing because if you look at it technically you can’t really own Bitcoin, Bitcoin, like you can’t process Bitcoin because it’s just information. But Bitcoin I think can definitely possess you. So that’s, I just think that’s hilarious. Anyway I came up with the idea of this big idea of value feedback loop.

Gigi: So as far as I can see it, those decentralized systems, and I hate to speak in generalities here because for me Bitcoin is all, it matters and I think everything else pales in comparison. But of course there are some clones and there are some other systems that we see similar possession effects in those other systems in Ethereum for example, Oh, for god’s sakes we even see it in XRP, you know, we have a bot troll army that is religious about that. And it, seems to me that you have a feedback loop where people are one piece of the puzzle and you, you generate a network which generates value and nodes and people are part of this network. And once the, then the network grows, the value grows as well. And then the people get even more yeah. More feverish about it. First of all, they think they are right and their ideas are right and if the value goes up this, this vicious cycle, this loop of yeah, of conviction in a way starts. That’s the way I see it. And I, I definitely speak from experience because I it happened to me for Bitcoin as well.

Stephan Livera: Right. Because there are many more casual users of Bitcoin, but potentially as you’re saying that they’re on this journey where over time as they get exposed to more ideas, they build their conviction. What does that look like? That feedback loop?

Gigi: Yeah, I don’t have it at the top of my head, so it’s probably best to look into the article. But the general idea is that everything starts from an idea like Bitcoin. Satoshi had the idea to do it and he was convinced that he was able to do it and he wrote the code. And so then the network was started with one, node like, yeah, okay. Then network was started with two nodes actually. But the idea is that you, you put the idea into code, you run the code on the nodes and the nodes connect to a network and the network generates value and the value reinforces the idea. So that’s, that’s the whole loop in a way. And again, this is a vicious cycle which we can see very clearly, in Bitcoin.

Gigi: Like Bitcoin is very cyclical in nature and it has a lot of those feedback loops in it and it’s whole or at least parts parts of its security model are in this loopy nature. And yeah, I think it’s true for other projects as well. But as I also wrote in Bitcoin’s gravity where this idea comes from, all of those ideas, they kind of compete with each other because in the end you need to have a monetary token for the system to work. And in the end all monies fight for saleability and fight for liquidity. And it’s, it’s just a vicious battle. And the way I see it really is a winner takes all phenomenon in a way. Like the tail end is so long and so thin that it doesn’t even matter.

Gigi: Like all the altcoins in the long run will starve to death. And it’s simply because of this gravitational effect that the more people learn about it. They also realize that they want to use the network with the most network effects and with the most value with us. And I think Bitcoin is good enough for it to win it all. So not only that, I think it also can improve where it needs improvement. So for me it’s very clearly a winner takes all phenomenon in a way.

Stephan Livera: Yup. And another idea that came to me as I was reading your article is this concept of differing understandings of what Bitcoin is and how do we resolve that in a way where as you say, three people, if you ask three different people, they might have three different definitions of Bitcoin or they might have slightly differing ideas of what’s most important to them about Bitcoin. So how do you think about that?

Gigi: Oh yeah. I think about it all the time because Bitcoin truly is different things to different people. And it depends, I think on your background and also on your level of understanding. And I don’t claim to understand Bitcoin completely. I think it’s not possible in a way. I think it’s just too complex of a phenomenon to understand it completely and it’s too interconnected to many other complicated disciplines. And yeah, I would love to write about the more in a way because there are many different viewpoints that you can take that kind of make sense. And I think all of them are valid and it depends on how you look at it and what they do. I mean you can look at Bitcoin as simply a computer network and if you have a computer network background or a distributed computing background then this makes perfect sense and yeah, you work on one small piece of Bitcoin in a way, but you can, you can also look at it as a database for example.

Gigi: And this makes sense as well. It’s still, I can append only database which is very inefficient in database terms, but it does one thing very beautifully. You can also look at it simply as an asset that is traded. And if you’re a trader that makes perfect sense. You just look at charts all day and you try not to get rekt and you can also look at it as a, as a new form of money. And if you have a monetary history background, that also makes perfect sense. It’s, like Satoshi brought about that beautiful. You have to imagine it as some form of new metal that you can teleport via a communication channel and then Bitcoin becomes something very different. And I think a lot of people I’ve heard a lot of people talking about it, just viewing it as this gravitational monetary object that sucks up value.

Gigi: And I think that makes sense as well. It’s the way I see it. The internet, everything, the internet touched, everything that could be transformed to information and was transformed to information and the internet just ate it up. And I think the same will be true for Bitcoin. Everything that can be transformed into value, it will be transformed into Bitcoin. It’s one point in time at Bitcoin will just suck it up. And yeah, again, the biology analogy I like very much as well. You can view it as a living system and it has such a huge social layer that a lot of things start to make sense as well. All the quote unquote toxicity for example, and many other immune response things kind of make sense. If you, if you view all the toxic maximalists as the white blood cells of Bitcoin, then it makes sense that sometimes the system has an autoimmune reaction and maybe over does it a little bit. You know, and Bitcoin definitely is allergic to some things. That’s the way I see it.

Stephan Livera: Right as you mentioned, the so-called toxicity and the argumentation that that has happened within Bitcoin over Bitcoin’s history. But one other way to conceive of that or related is sometimes that’s how people actually learn, right? So we’ve learned over time. So I think until Andreas really popularized the saying, not your keys, not your coins, people might’ve just thought, Oh, Hey, I’ve got my coins on Coinbase or whatever. And I still hold Bitcoin don’t I?

Gigi: Yeah. These are ways we learn as well. Definitely. Definitely. And I’m, don’t get me wrong, I’m all for toxicity. It’s just I think it’s very misunderstood. I wouldn’t have it any other way. I even think it’s kind of tame in the Bitcoin world. I, have a very strong gaming background and you know, like there are a lot of 14 year olds that are way, way, way meaner than most of the toxic bitcoiners. I think it’s, it’s very important to be just vigilant. And I also think that this is still all of it is, is in a way, it’s not very important yet. I think all the bickering and the infighting, it’s, just I see it as a warmup to the end boss in a way because as I think you would agree, it’s about separating money and state.

Gigi: And I think we haven’t seen the big attacks on Bitcoin yet. I still, I’m convinced we’re still living in peace time. I think the only real war, quote unquote we had was a civil war and which resulted in the first contentious hard fork. But other than that, I think it was relatively, I’m surprised that Bitcoin, I wouldn’t call it smooth sailing actually, but it’s, it’s yeah, there weren’t real government level attacks or attempts at shut down as far as I know yet. And many people say it’s already too late for that. I think, again, it’s insanely hard to kill Bitcoin. So you would have to do, I think you would have to kill it in a roundabout way. You can’t really kill it in the dark I think. And so again, to alluded back to that toxicity, I think it’s, it’s very, very healthy to have a strong immune system and just to call bullshit out when you see it and just be very, very vigilant about how this protocol progresses.

Stephan Livera: Right. And you also mentioned in the article this concept around attraction and repulsion. So this idea that some people are more amenable to the idea of Bitcoin. So, obviously anarcho-capitalist libertarians, cypherpunks privacy advocates, they can more easily jive with the idea of Bitcoin, whereas a more socialist, most socialists and like most kind of statist types, they might not see as much of a role for Bitcoin. And so those people who are more repulsed by Bitcoin, let’s say just because of their priors, their existing beliefs and ideology and so on, is it that they won’t see what’s coming before it’s too late to stop it?

Gigi: Yeah. Well that’s a good question. I don’t know how it will play out. I’m a huge believer in I’m a huge believer in making Bitcoin so easy to use that it is indistinguishable from the current internet we have. And nobody really knows how the internet works in a way. Everyone uses it. And you don’t necessarily have to be philosophically aligned with the the main building blocks of the internet, like net neutrality for it, for you to be able to use it. And I think with Bitcoin it’s very similar. We are still in the early adopter phase. And I think those people that resonated with the main ideas of Bitcoin, they were very receptive to it. And it’s interesting again, because you have a bunch of different people that woke up to it early in a way.

Gigi: As you said, you have libertarians and also you definitely have a lot of cypherpunk early adopters and, stuff like that and technologists. But it’s, it’s interesting that yeah, it’s a mixed crowd of early adopters I would say. And as Bitcoin progresses and grows, I think it will get easier and easier to use. And in the end, I think it’s just like the internet, you will no choice but to use it today. You can’t really function in the modern world if you don’t have access to the internet. And if you don’t have a smartphone, you won’t get a job. You won’t get a job interview or you don’t function in the real world. And I think in like, I don’t know the timeframe, but maybe like 10, 15, 20 years, something like that, I don’t think it will take much longer. You will have to use Bitcoin in some way, shape, or form.

Stephan Livera: Yeah. It’s so difficult for us to explain now to people who they don’t necessarily see. It would be like telling someone, Oh, you need to run your own email server. Right? Like right now and for most people they’re like, well, I I just use g-mail or whatever. Why do I need to do that? And it just, to them it’s like an unnecessary inconvenience. Whereas in the Bitcoin world, it’s more like, no, you need to be vigilant. You have to watch what’s going on. You go to spend time, you need to get, you need to build your technical competence. That can you know, on the surface level, right? Obviously I’m one of the people helping push that idea. Right. But at the same time, on a surface level, that could be, that’s a big ask.

Gigi: Oh yeah, it is. And don’t get me wrong, it’s still kind of complicated. And it’s also, I think I think the, the biggest problem is that just all the concepts are so novel in a way, it’s really hard to wrap your head around. For example, just the private key. It’s, really hard to wrap your head around it if you’re not from the space. And if you don’t come with the technological background, because we never had anything like that before. Like there is a piece of paper or a piece of hardware or whatever, and if you leave me with this piece of paper for like half a second and I can take a picture of it, all your money is completely gone. You know, it’s very different. And I think we, we are just now coming up with solutions to these kinds of problems to revert back to the kind of physical nature of things so that we can actually lock it away in a safe and have multi-six setups where it’s not the end of the world if one key gets stolen and stuff like that.

Gigi: Shamir’s secret sharing for example, the way you have redundant sharded backups. And I think we need all, all of that for it to, to be useful for people. Otherwise it’s just too complicated. Not even from the technical side, but from the conceptual side as well because people are just horrible with security. And I think that’s one of the big adoption hurdles as well. Like operational security of people and just general security hygiene of people is so insanely bad that it’s just for most people it’s a really bad idea to hold their own keys. They have no idea what they’re doing and they will either lose access to the keys or get their keys stolen. And yeah, there’s still a lot of work to do. But then again it, it, it, it wasn’t very different like 15, 20 years ago with just computers in general and the web in general.

Gigi: And like in the web, everything was un-encrypted for example, everything was plain text. And you could go to whatever place. Like, if there was a place with wifi, you could just sniff all the traffic and read everyone’s email and get everyone’s passwords and so on. And I think it will just evolve all the time and get better and all those practices get better. I think it’s moving way, way faster. I think that Bitcoin is an exponential technology obviously, but I also, I even think it’s better than that. Like it’s an exponential technology build up on exponential technologies and it feeds up on the network effects that are below it. Like smart phones are still evolving. The internet is still evolving in a way. Like not everyone is online, for example. And we will get like a billion people online in the next couple of years and all of this innovation and all of this yeah, progress will feed back into Bitcoin and into the development of wallets and into security development. And I think we will not have to think about the same things in like five years time. I think, for example, like running your own node, using your own nodes, setting up your own multi-sig set up taking care of, like stamping your own private keys into metal. I think there will just be better and smarter solutions for that.

Stephan Livera: Yeah, I think so as well. I think a lot of the work will be done to make it, to put it into the background so they don’t have to, people didn’t have to think about it as consciously. One cool site I like that you’ve made is bitcoin-resources.com. I wanted to talk through just a little bit on how you came up with the list and you’ve got an a list of essential here and you know, the TLDR is read the Bitcoin standard and the bullish case for Bitcoin, right? But then, you know, each, each topic has some really nicely curated resources and I think the essentials are really good that you’ve got here. You’ve got The Bitcoin Standard, the ethics of money production by Guido Hulsmann and economics in one lesson by Henry Hazlitt. So it’s interesting as well that these are all more economic based. So you’re sort of saying, okay, look, if there’s three things you read about Bitcoin, you should read the economic thing.

Gigi: Oh yeah. I think that’s very important because again, I think it’s not critical to understand how the technology in the background works. It’s just like the internet in a way. You know, it’s how TCP IP works or how BGP routing works or whatever. It’s not really helpful to understand what the internet is and what it enables you to do and how it will change the world. You know, understanding TCP IP doesn’t really help you in just getting it in a way. And I think that most people have no idea what money is and don’t have a background in. I think most people still think that most of the money of the world is backed by gold. I think most people still think that the dollar is backed by gold, for example. And so learning about the monetary economics. And as the title of the book says, the ethics of money production, I think is insanely important to understand the big picture of Bitcoin. And I, think it’s way more important to understand the big picture and where we might be in like 10 or 15 or 20 years. Than to understand the technical nuances of SHA256 or any cryptographic hash function or public key cryptography.

Stephan Livera: Yup. And you’ve listed here a bunch of Bitcoin non technical books, right? And so you’ve got the little Bitcoin book, you’ve got Bitcoin money, you’ve got obviously the Bitcoin standard, Knut Svanolm’s book, Bitcoin sovereignty through mathematics, and now recently your new book, 21 lessons. So tell us a little bit about those books. Why are they chosen? And, we’ll get to 21 lessons as well. Obviously that’s your book, so, yeah.

Gigi: Yeah so Bitcoin resources was started as a private project of myself. And I was reading so much stuff about Bitcoin and I read everything I could get my hands on. And for me, it started with curating articles actually. And there were a bunch of articles that were just really, really excellent. You mentioned the bullish case for Bitcoin and I still think it’s one of the best articles to read. If you’re just getting into it and you did not have your aha moment yet, I think it’s, it’s just one of the best articles you can read. But there are a bunch of other ones that I really liked and I, I read re-read a couple of them multiple times and it just really helped me to drive home certain points of Bitcoin.

Gigi: So that’s how it started. It was just the the criteria for curation was that I have read it and I must have really liked it. And then it was on my list. And one day I just decided to publish and to make it public. And then it evolved from there. And I edit the books that I found very helpful. And when I started the project, there weren’t too many Bitcoin books around. So basically those are pretty much all the Bitcoin books I’ve read so far. And I hope to add, yeah, multiple other ones that just came out recently. Bitcoin clarity is supposed to be very good for example. And I still have to read them and the last, I don’t know, like six months or so, I realized that it’s just way too much work to keep it up on my own. So I open sourced to project and I’m still looking for contributors there. There are some, and there are some that helped me a little bit with the curation. But the project is also on github and if someone wants to fork it or create his own like Bitcoin resources site or help me out with creating the Bitcoin resources yeah, I’m always happy to take pull requests.

Stephan Livera: And one thing that strikes out to me is that you’ve got some of them organized into topics as well. You’ve got stuff like money, proof of work, why is proof of work important. Some people often think that’s wasteful, Bitcoin’s identity. Some of that is coming to more, you know, the philosophy of Bitcoin. What is the, identity of Bitcoin and how it’s like, it’s like a social revolution. Yeah. I like the way it’s set out there. But let’s now turn to 21 lessons. So 21 lessons for most of us has been a website up until very recently. And you know, it spells out a range of different lessons themed into different topics. Right. I think one of the themes is economics. One of the themes was philosophy and another one is around the technology. And tell us a little bit about where did this project come from? 21 lessons.

Gigi: Oh, yeah. Yeah, it actually came from a tweet, like one single tweet. I think it was Arjun Balaji who asked, what have you learned from Bitcoin? And many, many people responded and he had his own lessons that he learned. And I was just drafting a tweet and yeah, I think I wrote the tweet storm of like, 10 tweets or something. And I was like, I know that’s it. It doesn’t feel right. I probably should write them article about what I’ve learned from Bitcoin actually because I think Bitcoin is a very ruthless teacher in a way. You can learn a lot from Bitcoin, but it’s also a very humbling experience. So anytime that, that’s also the reason why I’m very hesitant to say I understand Bitcoin or anyone really understands Bitcoin because every time you start to think that, Bitcoin will humble you and you will realize that you haven’t understand. I haven’t understood it really. And so the subtitle of the book is what I’ve learned from Bitcoin and I forced myself at like halfway through pretty much. I forced myself to come up with 21 lessons obviously. And yeah, for me, the most interesting ones were the philosophical insights in a way. And that was the first part of the book and it was the first article I published.

Stephan Livera: Right. And that can be one of the most difficult parts as well for people to understand because some concepts would just be spelled out, right? Like this is what a SHA256 hash is. Or this is what this is what the most saleable commodity or the most saleable good is. Right. So that’s kind of very explicitly spelled out, but there are some other ideas that are maybe a little less easy to grasp for a precoiner or a beginner into Bitcoin. One example is the immaculate conception. What are we getting out there?

Gigi: Oh yeah. That’s a good one. So shout out to Marty Bent for that one for sure. Because I think it was when Tales From the Crypt was very new. He talked about that a bunch and I didn’t really get it at first in a way like it, it took me a long time to understand how important it was for Bitcoin to be born that way. Like kids, it was almost like a gift from the gods. You know, it’s, yeah, even though it has human origins, it’s still insanely important that Satoshi left. I think, I’m sure maybe it was Jameson Lopp or maybe it was Jimmy Song, one of those two said that one of the most important things that Satoshi ever did was to disappear. And I have to agree with that because as we see with other projects, if the founders stick around, they have a tremendous amount of influence.

Gigi: And that’s a centralizing force. And so I think Satoshi had an insane amount of foresight to leave the project behind. And when it was just a small little sapling in a way and big enough to grow up on its own, he stepped back and let others take over. And yeah, it’s just, I think an insanely fascinating origin story. And most of the people that are new to Bitcoin underestimate the power and the importance of this origin story.

Stephan Livera: And another one you talk about is immutability. So what is the value of that? Why is that important to Bitcoin?

Gigi: Oh yeah. I think that’s lesson one. Immutability and change. It’s lesson one because I think it’s, it’s the most important one. And it’s also the one I kind of learned the hardest in way. I realized after after a couple of years studying Bitcoin, I realized that Bitcoin changed me way more than I will ever change Bitcoin.

Gigi: And that was kind of a sobering experience and the sobering insight because I also think that it’s what’s drove some people mad in a way. Like there was some people that really want to change Bitcoin and it just will not give in, you know? And I think Bitcoin definitely has the potential to drive you insane. And I think we saw that a couple of times and I think that’s part of it. It’s just the way the system is set up that it’s, so insanely hard to change. As I said, it’s not that it’s completely unchangeable, that’s not it. But, it has this kind of swarm intelligence. And if the swarm intelligence is against you, then you just, you just have no chance to change it. And also the, the values that Bitcoin embodies in a way they, they have to Apollo to change your worldview I think.

Gigi: And once you, yeah, once you learn more about the ideas inherent in Bitcoin, I think your world views will be challenged. It almost doesn’t matter what your background is and yeah, that’s the interplay of immutability and change. I put change in there as well because Bitcoin is changing all the time. It’s like, there’s like the cells in your body, they change all the time and you’re not the same person that you were like a year ago. Like literally. And with Bitcoin it’s very similar, like every single line of code changes over time. And all of the components change, all the nodes change and the underlying infrastructure change. Like, you know, the cable and the cable set, the hard disks and everything else. And so it’s very it’s very interesting, I think that you have in a way and an essence or a soul of Bitcoin. That’s really, really hard to change. It’s like almost immutable in a way. And you have the body of Bitcoin and yeah, all the machinery that makes it work, that is changing all the time. And of course we have the truly immutable outcome as, immutable as it gets with the ledger entries and it’s in a way yeah, the, the thing that is produced by, by the living Bitcoin organism.

Stephan Livera: Yeah. And I’ll tell you why that can be one of the hardest parts to explain to a precoiner or a newcoiner as well, because they need to have some understanding of open source software and like software, how software contribution works. But then not just that, but also the fact that, you know, it doesn’t matter just what the developers write as code. It also matters what everyone runs. And that is a very difficult point to skillfully and succinctly articulate. What’s your view on that and every time you’ve tried to explain that?

Gigi: Yeah again, that’s a good question. I’m not sure if there is, like an elevator pitch for Bitcoin. I think there, there are like 20 or 30 different elevator pitches and you can give them to different people depending on the background, but I don’t think there is an easy way to explain the power balance of Bitcoin for example. Like you would have to talk about incentive systems, you would have to talk about the roles of miners and nodes and also how the ecosystem evolved over time and how everything is always subject to change in a way because mind you, a couple of years ago we didn’t have mining pools and we didn’t have GPU or ASIC mining and the so the whole system changed in a way, but it still has this very beautiful balance of power and I don’t think there is an easy succinct way of explaining it to someone that is rather new.

Gigi: The only way I can think of what I always try to do is to come up with analogies and analogies of the past. It isn’t necessarily related now to the power balance, but a lot of people I talked to the one of the first comebacks is always, yeah, the governments will just outlaw it, you know? And I think, one of the examples you can bring up there is, you know, we had so many things that were outlawed all the time. For example, during the prohibition, you’re not allowed to create or consume alcohol and people are brewing beer and schnapps and everything else in their cellars. So how do we want to enforce that? And again, I really liked the biology analogies. And you can also, for example, think of a law that says we outlaw all ants now, like in the whole country, all the ants, they’re outlawed. But, what do you want to do about it? And that’s how I feel Bitcoin, you know, it’s like, it’s very hard to get rid of it.

Stephan Livera: Yeah. And, I’ll tell you why I was thinking that just for me, even earlier today, I was trying to explain to some people and you know, and that was one of the points where it was difficult to articulate to them and at the same time, so again, like you don’t want to be overbearing when you’re trying to explain Bitcoin to people. You just try to let them come to you and ask and you try to answer the questions for them. But I do sense that sometimes that can be a turn off. The complexity can be a turn off basically. But I think part of it is, at least as far as I have seen it, is having that person become curious enough that they want to then go and read further.

Gigi: Yeah. Yeah, definitely. I think Bitcoiners in general, are getting better with it in a way. And I think we what I really like is also shill lightly, you know, because I think a lot of Bitcoiners had to learn that the hard way as well. If you, if you come on too strong and talk to everyone about Bitcoin all the time, people will lose interest very quickly because it’s just too complicated. It’s too much to take in. So I think yeah, to onboard complete newbies, it’s probably best just to, to give them some Bitcoin, just get them some mobile wallet and just transfer them like a couple hundred Satoshi or something and just explain to them, Hey, I just sent you cash and it behaves like a cash and it is cash or just try to use words that are familiar to them.

Gigi: But I think as just as you said, it’s like a journey and people will discover Bitcoin. I think when they are ready. And I, I think I wrote this also in the book at the very end. I think that you will get Bitcoin like the big picture once you’re ready. And I also think that you will get Bitcoin like with a small B, you will get your first Satoshis once you’re ready as well. And yeah, I think they’re coming like more and more resources are, are coming out every day. For example the Bitcoin intro resource that has a nice checklist where you can tag along during like you can have a standard Bitcoin journey. Like you start with a wallet and then you take care of your private keys and so on and so forth. But again, I think it will get easier over time. And I think also the onboarding will get easier over time.

Stephan Livera: Yeah. It reminds me of that saying, when the student is ready, the teacher will appear. Right. So it’s just like that idea that sometimes they have to be ready for it as well. And you can’t rush that. You just have to basically be available and be there to help them when they do ask when they do come to you. So let’s hit some of the economic lessons then. So what, were some of the lessons that you had to learn from an economic perspective?

Gigi: Yeah. Again, I also wrote it in the book, like I had zero economic background before I got into Bitcoin. Like I had no idea what money was, how I had no idea how money evolved. I had no idea about the gold standard, for example. I just, I just had all had to learn all of that on my own. And your podcast definitely was very helpful in that as well. Pointing me to the right people and pointing me to the right resources. So thank you for that.

Stephan Livera: You’re welcome.

Gigi: And yeah, so the, the first thing I, I had to ask myself over and over again is actually like, what the hell is money and why do we need money and why? Why did money actually came to be like, why was it invented organically? And just understanding that there are some things that are better used as money and that there are others that are really bad money helped tremendously in understanding Bitcoin and you basically go through the history of, of monies and the history of monetary goods. And once you start to understand why gold and silver were in a way that the schelling point of monies over over the last couple of thousand years it starts to make sense that it also starts to make sense that the current monetary system is just completely broken once you realize that, I think there’s, there is no going back there. It’s very hard to unsee that in a way.

Stephan Livera: It brings up that whole there’s a lot of libertarians who aren’t into Bitcoin and that is always very puzzling to me because to me, they should be some of the first people into this. Right. But I guess not at all. Not all of them are, I guess sold on the technology components or they have not dived into it because of again, the complexity is too much at the start. So what about this concept of don’t trust, verify? So that’s another lesson in your book, in the technology chapter.

Gigi: Yeah. I think that’s actually related. Why why more people that should be into Bitcoin because of their ideological alignment aren’t into Bitcoin. I think in general, the modern computational technology that we have is still very new. People don’t trust it very much. If you just compare it to gold, for example, gold is very trustworthy because it does like a 5,000 year track record or something like that. And it’s also, it’s not very complicated, you know, I mean, you have a gold nugget or a gold coin and there’s not much that can go wrong with it. And it’s almost like it’s pretty much indestructible. And with technology it’s the opposite. It’s very, it’s very fragile and I mean, can be, the systems get hacked all the time. It’s just it’s, it’s what you read in the news and it’s also what is true in a way like community systems are horribly insecure.

Gigi: And so putting all your trust and all your money into a computer system is kind of a weird thing. And I think you need to have a truly the technical understanding, understanding why you can do that. And I think I’m shifting your perspective from it is a like a computer system to it is a thermodynamically secured physical system really helps because that’s in essence what Bitcoin is. But, again, I think it’s also correct to be cautious and it depends on your risk appetite. Not everyone is all into Bitcoin and not everyone should be. I think it’s still very new even though I think it’s insanely robust, but we don’t even know, for example, if the cryptographic primitives we hold are secure, and that’s what I wrote about in in the lesson on trust. It’s called reflections on don’t trust verify because it’s really, really hard to trust computer systems.

Gigi: And Ken Thompson showed that in his very famous hack where he put a backdoor in a compiler, like he put a Trojan horse in a compiler that generates computer programs and he used this Trojan horse to generate a new compiler, which has this hidden Trojan horse in it. So it kind of sounds complicated, but once you understand that it’s, it’s basically a computer program that will infect all the computer programs just automatically and there is nothing you can do about it and you can’t even detect it. And so once you realize that all the computer systems that we use, they are prone to those kinds of attacks. I think it’s yeah, it’s understandable that people are skeptical and as I said in the beginning, we should be, we should have eternal vigilance and never let our guard down because yeah, computer systems can be hacked. They will be hacked. And I think every attack vector that exists in Bitcoin will be used at some point in time.

Stephan Livera: Yeah, that’s a really sobering point and definitely a good reminder for many listeners. And one thing that strikes me there is over time, Bitcoin products have had to evolve as well from a privacy and a security perspective, right? So we had hardware while it’s trying to take the keys away and take, you know, make the keys cold instead of making the keys hot. And then, then there’s this focus now on, okay, well we need it to be open source and we need a secure element, but the challenge is around having an open source secure element and then the challenges around having multisignature and having that as an accessible technology. And that’s still something that the Bitcoin ecosystem is working through that challenge now of how to make that easy. So there’s definitely some really important lessons for all of us there on continually upping our game in terms of security and also privacy. Now privacy is also an important one as well because I think that is an angle where you don’t have to be a libertarian to appreciate that. Like anyone can appreciate the value of privacy and that’s actually one of your lessons. So what are you getting at in your lesson here? Number 19, privacy is not dead?

Gigi: Yeah, it was, it was a rather optimistic take, on the whole privacy issue. I’m a huge privacy advocate and it’s also one of the reasons why I don’t use my real name just in a way because I can, and it’s in line with the Bitcoin ethos and I think it’s, it’s very important to just point out to people that privacy online is pretty much almost dead. So you should, you should do everything that you can to take back your privacy and fight for it and just use the best tools you have available and just don’t handle your data just because you can use a free service or something. And I think the the way Bitcoin was invented by Satoshi is a very nice lesson in privacy because still nobody knows who he was and a lot of people really want to know.

Gigi: So his op sec was really good and I think it is just a hopeful lesson that privacy is not dead if you, if you know what you’re doing. And we saw that also with the Snowden revelations for example. He was, he was able to stay private online that he was able to yeah, get the information out and do his leaks and he’s still alive. And I think if he wouldn’t have come out, publicly there, there is a possibility that he would still be somewhat anonymous. I mean that’s debatable. But he showed, he showed us that these privacy preserving technologies are insanely powerful and as far as we know, they can’t be broken and we should all celebrate that and use them accordingly.

Stephan Livera: Excellent. Well look, let’s leave it there, but let’s make sure the listeners know where to find you online and where can they find your new book? 21 lessons.

Gigi: So 21 lessons is available on all the Amazon shops. So I self published using Amazon. So your local Amazon shop should have it. If you just search for 21 lessons, Bitcoin, you should find it. I’m dergigi on pretty much everywhere. I also have dergigi.com where you can see my, my writing and some other things. And I’m, yeah, I’m most easily reachable on Twitter, I would say. So I’m @dergigi on Twitter as well.

Stephan Livera: Fantastic. Well, thank you very much for joining me, Gigi. I really enjoyed it.

Gigi: Thanks for having me, Stefan. It was a blast.

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