Jeff Booth, author, entrepreneur, and speaker joins me to chat about the year 2021 in review for Bitcoiners. Some themes we discuss:

• Where the narrative is going with Bitcoin
• Fiat denomination vs Bitcoin denomination
• How politicians and regulators are seeing it
• Community building
• Bitcoin wallets and services
• Bitcoin tech
• Dealing with fear

Links:

• Twitter: @JeffBooth 
• Site: The Price of Tomorrow – And the Era of Abundance 

Prior episodes:

• SLP191 Jeff Booth – Bitcoin & Our Deflationary Future
• SLP285 Jeff Booth Bitcoin vs Fiat “Extend and Pretend”

Sponsors: 

• Swan Bitcoin
• Hodl Hodl Lend
• Compass Mining
• Braiins.com
• Unchained Capital (code LIVERA)
• CoinKite.com (code LIVERA)

Stephan Livera links:

• Show notes and website
• Follow me on Twitter @stephanlivera
• Subscribe to the podcast
• Patreon @stephanlivera 

Podcast Transcription:

Stephan Livera:

Jeff, welcome back to the show.

Jeff Booth:

Thanks for having me again.

Stephan Livera:

So Jeff, lots has happened. There’s been so much, and I thought it was time for a bit of a year in review episode. So I guess, let’s start with some of your thoughts. What were some of the big items in your mind in the Bitcoin world for this year?

Jeff Booth:

It’s hard not to say El Salvador. That would be pretty big. And I think just besides that, it’s probably just the growing awareness of why this is so important. And I’ve talked about this so often pro with you, it’s an emergent network and more and more people understanding it is making it stronger and stronger all the time. And you could yell at it. You could not like it, but all of that energy is actually creating more awareness of why it’s so important.

Stephan Livera:

Right. And I think you are right to point that out. And it’s important, especially when you’re thinking about where are the average people, where are the everyday people putting their wealth? Are they storing it in stocks or bonds or property, which are the typical things that people would do? They’re not thinking first, store my wealth in Bitcoin. But where would you say people are at now? Is it more sort of, most people by now they know what Bitcoin is, but they might sort of think of it like, “Oh, it’s just one of the many cryptos and I want to be gambling on some meme coin or meme stone.

Jeff Booth:

Yeah. You know what? We should double-click on what you just talked about because when an economic system is failing and people are trying to figure out what’s going on, what they’re trying to do is escape the system. And in that escape, really what you could just say, their time is being eroded because money is just an abstract concept for our time. And they feel like they’re trapped and it’s getting worse and worse and worse. And so they’re hitting kind of two different sides, either fear and then blame on a whole bunch of the population. And then another part of the population is younger and typically, and if you said in altcoins is, “I’m going to make a million tomorrow in gambling and to try to escape that system.”

Jeff Booth:

And all of that is caused by manipulation of the system that will make that. And that will get worse and we can expect that to get worse. I think, and you know this, many of the people that are in Bitcoin and maxis were actually all in altcoins in the last round, and they realized… And understanding, I fortunately never was, but I do understand its appeal if somebody hasn’t done the work on why this is so important.

Stephan Livera:

Right. And I think it also goes to the way people talk about it in a lot of the well known press or in, let’s say large YouTube accounts that are talking about these things. I mean, for me, I’ve just stayed Bitcoin only since 2013, but that’s not a typical case. I think it was also seen that there was more experimentation of things like, whatever, Namecoin or various other ideas that came and went around there. But I think now, to your point, it’s that we’re sort of reaching this end stage and as people are trying to escape the system or in some way try to get ahead, they are being pushed into more gambling options or gambling methods of trying to get ahead, as opposed to just humbly stacking and just saying, “Okay, you know what? It doesn’t matter that I wasn’t in Bitcoin in 2009, what matters is that I understand this and where it’s going, and so then I’m taking the right action from now on.”

Jeff Booth:

Yeah. I’ll give you a perfect example of it. So when it was $8,000, my uncle, just because I was talking about it all the time and we’re close, he said, “Okay, I’ll do it and I’ll put some money into Bitcoin now. How much?” And I said, “It’s your choice, but you should put some of your wealth in Bitcoin. It’s important. It’s a safety boat for what’s coming.” And he’s here at my house tonight for a pre-Christmas dinner. But here’s what he said, he goes, “I wrote it up and then I sold it and then now I realize, why did I sell it?” And he got out at the top, but he’s buying as much and now he’s never going to sell it again as he understands. Because he is because he is used to measuring his wealth in Fiat terms. And he thinks everything’s rising in price and he just did well on a stock play.

Jeff Booth:

But now he realizes, now he understands, everything will fall in price against Bitcoin forever. And so it’s a very different mind shift that people are going through. And some people have to go through that. You have to understand what’s happening. And when you first come into Bitcoin, a lot of people don’t understand at the depth of what’s happening to the entire global currency regime that we’ve lived in all our lives.

Stephan Livera:

Yeah. That’s a really good way to put it because a lot of people have come from a stock trading mindset. And if they think, “Oh, you just buy it and you flip it for a 5x or a 2x or a whatever, and you take your money and run.” Because again, you’re fear denominated. Whereas, once you’ve learned, then you become Bitcoin denominated and you become more about how many SATs do I hold? And particularly, how many SATs do I hold in my own self custody that I control?” And I think it’s very important to hammer that point that you made, which is the price of things is coming down in Satoshi terms. In Bitcoin terms, the price of things is coming down. And that’s very difficult for people to accept because it’s like you’ve been driving in reverse your whole lives, and now all of a sudden we’re switching the gears and now we’re going to drive forward.

Jeff Booth:

Well, they’re two completely different systems. Completely different systems and they work opposite from everything we know. And so it’s really easy to measure the new system from the system you live in. And I would say that’s a mistake on this transition. It’s way bigger than people realize. It’s way bigger than people realize.

Stephan Livera:

Yeah. And maybe another way to think of it is, imagine if you’re walking on a treadmill and it’s providing some resistance, because you have to walk just to stay in the same place. The difference is with Bitcoin is like when you’re in the airport and you walk on those travelators and they’re walking with you, so they are speeding you forward. That’s the difference between Fiat and Bitcoin. You’re holding Fiat, it’s like, you are working against it. You’re paddling or you are walking just to stay in the same place. But on those airport travel ones, they are helping you. You just hold the scene and you can run with them or walk with them and walk even faster. So you’re getting even further ahead. So I think that’s maybe an easy way to think of it.

Jeff Booth:

And again, we’re talking specifically right now about the monetary gains people are going to win by it, but it’s way more important than that. If you look at the long arc of history through the system resetting, I think it’s resets because of the way we think and way we think and hard money used to, you weren’t able to gain velocity with hard money. You couldn’t gain velocity with gold because of the time to be able to transport it around. So what ended up happening is you put a fractional-reserve blend on top of it that had to have, because credit needs inflation to be able to run that system. And so it had to grow forever.

Jeff Booth:

And because nobody wants to take the pain of a recession or a depression to clear the excesses, and we will always vote for the politician who tells us, “No problem. We’ll just print more money.” And because they don’t say that they’re picking your other pocket to be able to pay for it. They don’t say that. And nobody votes for inflation. It’s just created. And it’s created an ever and ever increasing magnitude through debt that cannot be paid back. And so you’re monetizing that debt because it can’t be paid back. But because the entire system you live in is measured by that system, it causes all these negative externalities all around the world and people wonder what’s going on as it gets worse and worse and worse. And then you reset it, in Roman times, you reset it every 500 years. In more recent times, you reset it every 80 years through a world war or conflict.

Jeff Booth:

And because of technology, you’re going to reset it faster and faster and faster because we’ve always had technology, it’s just moving at a faster rate. And so that inflationary system that we believe in and we’ll vote for because it needs that system, it just keeps on getting worse and worse and worse. And then you reset it. The government say, “We promise we won’t do it again. We’ll set up Brenton Woods and this won’t happen again.” And then it happens again because of human motivation. That’s the thing that Bitcoin changes. So at a bigger level or a fundamental level, it’s something we’ve never seen as humanity before because you can have velocity of money through the 10 minutes windows. You don’t need a different system on top of it to gain that velocity.

Jeff Booth:

And we’re really early in that transition, but it’s like nothing humans have ever seen. So it’s easy to look at historical patterns and believe we’re going to fix it the same way we’ve always fixed it. And I don’t think that’s going to happen today. The car looked like the horses. It’s a different change. It’s a completely different change that people can’t grasp how big a change that is.

Stephan Livera:

To your point about making big changes and a difference of kind, a car is not just a faster horse. It’s a totally new thing. And I think if people were to look back historically at what happens when there’s a monetary collapse or some kind of reset, let’s say people who have done long-term contracts have to figure something out. So as an example, there’s millions of people around the world who have, let’s say, a home loan or some kind of commercial loan, and then they might then have to go back to a negotiating table with their banks because the underlying money has gone so low in value that they have to try to renegotiate something in terms of what they’re repaying, or they end up just paying back pennies on the dollar.

Stephan Livera:

Because their loan might be hundreds of thousands of dollars or even millions of dollars, but the real value of that loan has gone, diminished dramatically such that the amount that they’re paying back to that bank or that lender is just so much less. But if they’ve managed to correctly keep making the payment, i.e., they didn’t lose their job and so on, they now hold that property, that home, let’s say, as an example. So I’m curious, do you have any thoughts or any speculation on where you see that might go or how that might look?

Jeff Booth:

Well, that’s actually what gives a system it’s power? So there’s a whole bunch of people that would advocate for deflation, everybody in the world, and actually through their individual actions vote for deflation, because you want more for less. That’s why people buy an iPhone. That’s why people buy a new computer. That’s why you’re getting more value all the time. And on that iPhone has a whole bunch of value that you get for free. This program that we’re doing, this podcast on wasn’t available 10 years ago. And we use it because it’s free and it touches millions of people for free.

Jeff Booth:

That means that content, this content, this conversation before it would cost millions of dollars to be able to distribute this content. Now it’s free. The cost plummets and society wins as a result. And so we wouldn’t use this technology if we didn’t want that value. Nobody would consume the content if they didn’t want that value. And it’s free. And it’s increasingly free everywhere around, because what ends up happening is, goods and services moved to the marginal cost of production with technology. And the marginal cost of production is almost free. And it will move to free with artificial general intelligence.

Jeff Booth:

So on one side, we are all voting for that, but same people that are voting for that with their actions every day choosing that want their house to go up in value forever. It’s an inconvenient.

Stephan Livera:

[crosstalk 00:13:41].

Jeff Booth:

And the only reason their house goes up in value for, if you take the last 20 years before COVID is because you essentially created 185 trillion out of thin air to be able to increase GDP by 46 trillion globally. If you didn’t create the 185 trillion out of thin air, the house would go down in value and you would see what we’re talking about everywhere. You’d see deflation in everything. But it raises a really important problem that we’re dealing with as a society. Door one, if the fed kept tightening today, let’s call that door one, the entire world collapses because we live in a credit system and that credit system requires growth forever.

Jeff Booth:

Because if it starts to have deflation, if things turn cheaper and cheaper and cheaper, then you can’t pay back the debt. Debt explodes in real terms. But we all live in that world on top of that. And we pretend we don’t, but the banks are on top of that. So all the banks would close. All the grocery stores would close. The entire world is built on top of that inflationary system. And it would be complete havoc if you tightened credit, if you kept tightening and you’d cause a cascading collapse. And what people think is their wealth a lot of times in their home or something else would keep on collapsing and they’d go to the bank to try to get their money out of the bank. And their bank would be closed. It’s all credit. The entire thing is credit down to this end. There no hard money. So that’s door number one.

Jeff Booth:

And so you could imagine that no matter what governments do right now to say that they’re going to tighten, they won’t tighten for very long. Now, there could be massive chaos in between part as they tighten and then the ease. But door number two is, I keep printing money. And essentially, I’m making up, I’m changing the denominator of money and prices are rising in those Fiat terms. And that same inflation is wage deflation. And it can work to make the debt repayable cheaper, but the cost to society is enormous. And what you run is you’re essentially advocating for theft of money and a transfer of money from some people because savings and wages go down in real value to other people, to people who have assets or technology companies. And you’re driving it faster and faster and faster.

Jeff Booth:

And because there’s more people left out that win by that and different politicians emerge and they prey on the people who are left out, who had their pockets picked by that policy to say, “It’s not your fault. It’s those rich people. They are the problem. We’re going to tax them more.” And we’re going to take back control of those companies. If you look at what’s happening in China, we’re going to take back control of those companies and we’re going to put more of power in the State. But there’s no fix from that system through taxes.

Jeff Booth:

If you taxed a 100% of all the value of the companies in the US in 2019, you couldn’t pay half of what you printed. So there is no fix through taxes. So what those politicians would do is keep picking your pocket faster to be able to do this and create enemies, us versus them through that process. And that’s how you get through to revolution and war. And throughout history you see the same thing and we’re suckers for it. We are all suckers for it because we believe that it’s a people problem instead of a system problem. And so if I could encourage Bitcoiners on one thing, it would be, understand what other people are going through, because when people move to fear and they don’t understand Bitcoin and they’re paralyzed by fear, then they are likely not going to be open to a belief system that counters their belief system.

Jeff Booth:

Because what they’ll turn to instead is, it’s easier to believe it’s Elon Musk’s fault. It’s easier to believe it’s all those rich people’s fault than it is. It’s a system problem that requires a different system. So doors number one and two, what that you’d say is, it’s impossible to solve through doors number one and two. The system can’t solve itself. And what the beautiful thing about Bitcoin is, just like any technology that changes the rules, it changes the rules by drastically removing cost and opening up access to people left out. That’s how every technology enters and it’s actually a bottom-up movement. And when I talk about that emergent system, that bottom-up movement is actually a path from doors number one and two to door three that actually fixes or aligns incentives around a world that actually works better.

Jeff Booth:

And so people that really understand Bitcoin like yourself, understand us way more than a wealth transfer wealth gain. It’s about fixing the incentives of the world and being able to provide an abundant path forward for everyone.

Stephan Livera:

I think of it as an honest money. It’s going to drive accountability and responsibility to more of us that it will sort of enforce a kind of economic discipline on all of us. Whereas, maybe for many years, we are kind of the world has been living beyond its means. Has been living in a way where we lie to ourselves through using a Fiat system that, “Oh, this thing is affordable. You can do this.” When really we’ve actually been doing capital consumption. We’ve been subtlely destroying some of our capital equipment. And what we need to be a prosperous and wealthy and good society is wealth. And we need to use capital accumulation, not capital consumption. And so I think that’s big change. Go on.

Jeff Booth:

Yeah. Is a huge change. But again, in the system, if you have theft built into the system and it has to grow more and more, now imagine there’s a whole bunch of people that know, and 2008 provides a really good example. People talk about all of the same people still being in power and gaining tons of wealth by socializing the losses to giant parts of the population. But some people couldn’t fail. Kept their jobs, kept their bonuses, kept everything else and actually just got stronger as a result. So what that does is it changes the rules of capitalism. But what’s worse than that is it encodes those rules in capitalism itself because what it signals to everybody who knows, it says, “I can take massive bets.”

Jeff Booth:

And because they can’t allow a system failure, then I have a one way bet that I win, I win and I lose and the taxpayers are all going to pay all me owed and I win too. But it encodes that new rule in capitalism itself. And as a result, the free market is gone. When you’re printing money at this, there is no free market at all. It’s just all an illusion, but people believe they still live in a free market. And so you have, to your point, that you could hate Bitcoin and you could still gain value through Bitcoin. You could never buy it, but because you’re working on a system where all of the entrepreneurial talent is driving prices down lower and lower and lower, you benefit even if you hate it.

Stephan Livera:

Yeah. And so, I guess turning to what happened this year, 2021, how would you see the broader understanding of that amongst, let’s say politicians or regulators, what’s your take as we survey and look around the world? Are there any standouts there in your mind around politicians and regulators of society?

Jeff Booth:

Even this conversation, I think every time you do this, with not just me, but a whole bunch of others and a bunch of podcasters are doing this, it is breaking down what people used to believe to have them question deeper. And just think about politicians as, they’re just people. Some of those people will never understand technology. If you’re really old and you’ve lived in this, and all of your wealth and power is from a system that works differently, you’re probably not going to see technology is going to change the rules. You probably fight against it. But you get older and new people that talk about the truth get elected as a result of that.

Jeff Booth:

And when I said this as an emergent system, it is an emergent system. In Canada, Pierre Poilievre, he read my book three times. And same thing, he couldn’t get it at first because it was such a change from what he understood. And then he understood the inflation part, but he didn’t have a way to get out of it because the entire system is built on it. And so he was really trying to figure out how do you do this and how much power the existing system has and how they would come after people on Bitcoin. And I said to him, I said, “You’re either advocating for truth and for where humanity needs to go or you’re part of the problem.”

Jeff Booth:

And so it doesn’t matter if there is no fix through the system and you stay in the system to get elected because you can’t solve it. And so he’s become a Bitcoiner that’s public now that he’s become a Bitcoiner. And he, on his own time will determine, how do I move this forward? But the first step is, and again, he’s a really intelligent person, but the first step that everybody goes through is how do I fix it? He was looking for a fix, but he realized he couldn’t fix it from the system and then started to realize, “Okay, we have to advocate for it. We have to advocate for rules and be able to where the world’s moving so that we’re a part of this.”

Jeff Booth:

And that’s one example in Canada, but there’s examples. I spoke at the Austrian Central Bank, central bankers, leaders from around the world in that room. I can tell you how early we are, because that is just starting to be known. Now my phone is ringing off the hook. One podcast, and I sometimes say I try to say yes to some of the smaller podcasts too and everything. And one of those podcasts had 3000 visitors or 3000 views until 10 days ago. That podcast now has 335,000 views. And what’s happening is a lot of people are looking for what I’m saying or me. And those keywords are now driving the algorithm that are searching. And some of these talks are causing more and more conversations. It’s not just me, it’s Michael Saylor, it’s you, it’s a whole group of people, because when you tell the truth, it seems to spread.

Stephan Livera:

That’s right. And I think it’s funny because in some ways it just represents such a big shift. And so that is one of the difficulties of trying to convey this idea to people that, “Hey, deflation can actually be a good thing. We could actually benefit out of this.” It just runs so counter to what people learn from their Keynesian and monetarist textbooks and teachers at school and university, and even just in the media what they read. But despite this, it seems that some of the media are turning around. Some of them are starting to actually research Bitcoin and write well about it.

Stephan Livera:

Of course, overwhelming majority are still writing in very inaccurate ways about Bitcoin, but of course, that’s why we’ve got the likes of Bitcoin Magazine and various podcasts and other people out there who are trying to give accurate information, at least what they can and organizations like the Macy’s Institute who are trying to put out actually good quality economic and some political analysis as well. So I think maybe, it’s probably fair to say, at least in the English language material, if you know where to look, you can find good material on Bitcoin now, but I think it’s just going to take time for more people to get there. I’m sure a lot of those people who you were talking to, the Austrian Central Bank is not like they’re listening to these podcasts at least. Yes.

Jeff Booth:

Totally. Yeah. But they will. You’ll be amazed at how many people are tuning into these and following my work or other people’s work that is starting to feedback because it forces these questions at a different level. And people want to know the answer. That’s actually why, I’d say one thing that we could do better in Bitcoin, when you know it as well as you do, it’s easy to think everybody else does. They don’t. I can tell you, they don’t. And what we have to think about is, how did we learn the first time? What was it that broke through for us? I think you know what happens? When you’re polarising against somebody, very few people will actually be curious enough and remove their ego to be able to look deeper at what you’re saying.

Jeff Booth:

Most people will fight that and they’ll lock in their views. And when I say most people, that’s just how humans are dialed. So how do you break through is you have to speak in their language. And a lot of times in Bitcoin, once you understand something so well, you wonder why everybody else can’t see it. So it’s easy not to speak in other people’s language. If I just looked at friends who are just coming around to this now, and you know how long I’ve been talking about this. And when I say friends, really good friends that are really just starting to really get this. Takes a while.

Stephan Livera:

Yeah. I also think some of that comes down to user friendliness as well of the wallets and the apps and different Bitcoin software. And obviously, the interface that some of the exchanges and broker services provide. I’m curious your view on 2021, what was your view on some of those? Did they improve, did they make a meaningful difference in terms of that for your friends that you are trying to help onboard?

Jeff Booth:

Yeah. I would say a lot of… Do those friends know that yet? No. But some people, when you could have ETFs in Canada and some people started buying there, and that was their first entry point. Then they say, “Okay, maybe I should self-custody and I should learn more.” Now self-custody with multisig, and it’s easier to use, and you can have a hard wallet that’s easy to use. But your point is actually a really, really important point. And I encourage every single person and to think about, when first faced with a new technology, that technology typically looks clunky and it doesn’t emerge as fast. And that technology, if you looked at the internet through that lens, the internet, most people couldn’t forecast. I couldn’t forecast. Even though I built a business on top of the internet, many businesses on top of [inaudible 00:30:24], I couldn’t forecast what it would look like today and how it would be prevailing in everything today.

Jeff Booth:

But most people couldn’t do that at all. Because at the time, 1997 on the internet, it would, two weeks to down load a cat video. The use cases weren’t there. And then the ease of use the UX, all of the experiments, some of those experiments failing on top of the internet made it stronger and stronger and stronger because the next experiments created massive businesses tied into that network effect. That same thing is happening today on Bitcoin. And some people question the El Salvador bond, why did they do it that way? Think about it this way, it’s an experiment. I suspect it’s going to work. If it doesn’t work, the next one will work way better. And all of that is making the protocol stronger.

Jeff Booth:

The UX is getting better. It’s easier to use. There’s tons of innovation and people building to it. As tap root comes out, it’s already out. So it comes out and you’re building smart contracts on top of this and you’re building a whole bunch of technology on top of this, it’ll explode further and further and further. So we’re just really early in this, but 2021 sure made a difference. And one of the big differences was El Salvador using it as a currency means McDonald’s now uses it as a currency in El Salvador. And Starbucks uses it as a currency in El Salvador. And how easy would it be to move that into Canada or US or somewhere else? Because it’s an open protocol, really simple.

Stephan Livera:

Yeah. And the other cool thing with that is the likes of McDonald’s and Starbucks. I know McDonald’s in El Salvador are using OpenNode as their lightning provider to do payment processing. And I believe Starbucks are using IBEX Mercado who are a Guatemalan exchange, but also now setting up in El Salvador, obviously. And so then what would happen is that McDonald’s in other countries might then start saying, “Oh, how did they do it in that other country? Oh, okay. Let’s start looking at that.”

Stephan Livera:

Although, that is also important to think about in terms of stages of adoption. Here I’m thinking of my friend, Vijay Boyapati, or also Nick Szabo has also made this kind of argument or written on this kind of line of thinking, which is the whole store of value and then medium of exchange and then unit of account narrative. So I’m wondering how much does that play into your mind? Do you believe it will be mostly people using it as a store of value and only when enough of the world is actually holding some, then we’ll start, there’ll be more of a common medium of exchange use.

Jeff Booth:

So again, look to other technology or look to what technology does to be able to talk to that. And by the way, if you talked about Nick or Vijay, I would’ve believed the same thing. I did not see El Salvador, a country using Bitcoin as a medium exchange this early. Why didn’t I see it? Because I thought with the volatility that nobody would use it as a currency. Same thing, a whole bunch of people talk about Bitcoin, it’ll emerge. It’ll be a great story of value. And then it’ll become a medium of exchange, but here was the miss in that. And it’s typical a miss. And it’s actually, so if it can happen to me and if it can happen to, and I think about technology all the time, then it can happen to a whole bunch of other people.

Jeff Booth:

We look at other countries through our privilege. And remember what a technology does, or we look at other companies through our privilege. And so if you were Sears and Amazon came out and you controlled what products that the world saw, and they were all on your shelves and people buying those products reinforced how smart your people were in picking products. And then there was a vast, billions of products that couldn’t get on your shelves. And then Amazon opened shelves to anyone. And a bunch of those products started finding the shelves, finding digital shelves and you had unlimited shelf space. And then people realized, “Whoa, I can get this for this price?”

Jeff Booth:

That technology lowering that cost, what it effectively did is it lowered the access cost, the barrier cost for a whole bunch of people that were blocked out. And who used at first were the people that were blocked out, all the suppliers that were blocked out. And by using it, they attracted buyers. And that created Amazon’s monopoly today. And if you think about in systems, so this Fiat system, largely US dollar system that we have globally, there’s a whole bunch of people that benefit from that, or there’s narrow group of people and narrower all the time that benefit from it. And there’s a whole bunch of people locked out from it.

Jeff Booth:

El Salvador is one of those nations that is locked out of. So when you look at it, it’s something that lowers access cost, and if you think about their transaction cost in US dollars and all of the fees and everything else, and all of the brokers in between to be able to access an unjust system that somebody else can control and hurt you, then it makes more sense that a country like that would be first. And there will be lots of other countries that’ll join that. And as they join it, they’ll make it stronger and stronger and stronger.

Jeff Booth:

And so I think now you have two network effects feeding back on each other, one is a store of value. And one is a payment mechanism, medium of exchange. Now, and as that’s used as a medium of exchange, well, so three weeks, or four weeks ago, I wired a six-figure to India to one of my companies in India. It took three weeks. And my bank here couldn’t tell me where it was. The bank there couldn’t tell me where it was, the fees were outrageous. And I just thought I could pay all my employees directly with Bitcoin right now. What am I doing? What am I doing going through this. I don’t need the system. I can transact to it with people directly.

Jeff Booth:

And so it starts to break that down and I suspect it’s unstoppable. If you tie the same thing to what’s happening in El Salvador, you would rather have something that was up really upwardly volatile and increasing all the time than something that was guaranteed to lose value.

Stephan Livera:

Of course. Now, it’s not been a smooth ride. So let’s say you were a Salvador and you might have started with a small amount of SATS and then seeing the price run up like crazy and then gyrate very rapidly. At one point it went sort of 60K down to 30K, then up to 69K then down to maybe 42K or something. And now we’re kind of, I don’t know, 47K or something like that in US dollar terms that is. So I think that’s part of the journey of learning for any new Bitcoiner, as well as avoiding temptations on things like leverage trading and things like that where maybe when people are new they think I can make money on this thing. Where once you sort of become more savvy about it, the leverage that you’re using, if you are, is more conservative and you are much more about just humbly stacking, at least that’s how I’ve seen it. And I’ve seen that as a very typical progression as well out of people who I’ve been trying to teach about Bitcoin. I presume you’ve seen something similar, right?

Jeff Booth:

It pretty red matches exactly. But my uncles example, he did the same thing. Oh, it went up, “I should sell.” And then it went down, “Oh, I’m going to buy?” And now he’s going to hold forever. He’s going to buy every week and hold forever. It’s a pretty normal course in something that is moving like this. Now, I would ask you to look at any single technology company or the internet itself, but let’s use a technology company because it’s easier to see. How many people held onto Amazon from $5 until 3,500 or 3,200 [crosstalk 00:39:26].

Stephan Livera:

Oh, very few.

Jeff Booth:

No one. And because they did the same thing. And so they were trying to time or trade a stock rather than thinking the fundamental value because they always, again, it was predicting the future and it was moving faster and faster. And I still remember having these conversations with very, very senior executives at Google. Very senior executives at Google saying, “We don’t understand Amazon.” And this is early days. “They don’t make any money and everything.”

Jeff Booth:

And I said, “They’re losses and it’s cash flow positive are your profits one day.” They will take those too because once they move here, they could easily add advertising to their site and drive straight into your business, but you can’t add products to your site. The whole thing is a supply chain, everything out. So whether that happens now, but you can see that’s part of the drive that has created that. And it’s easy for people to miss no matter who you are.

Stephan Livera:

Yeah. It is important. And I think that’s a very useful analogy because people in their minds, when they are maybe newer to this, they’re expecting just a steady growth. They’re just thinking, “Oh, it should just steadily grow and that’s when I’m going to take some time to get some or learn how to use it properly. And until then, it’s not worth my time.” But as you rightly point out, many tech companies had histories that were very volatile as well. It’s not like they were just a straight line steady growth. That’s just not reality. Even for some of the biggest tech companies of the world today.

Jeff Booth:

Every one of them, every single one of the ones that you were talking about, the biggest today had draw-downs of 50% or more during their run-ups and multiple draw-downs, every single one of them. It’s not new for technology. The change from one system to another, it’s a feature of the system.

Stephan Livera:

Yeah. And this also is very reminiscent of the point that say, Michael Saylor would make about dominant digital networks. He was saying like, “Imagine trying to trade in and out of Amazon as it was going on the way up.” And it’s the same thing with Bitcoin. People are trying to trade in and out. It’s just foolish. It’s just take a position, lump sum and hold.

Jeff Booth:

Fools game. Fools game. Exactly. But it’s actually way more important than that. So that’s a good proxy to give it an example, but Bitcoin isn’t like Amazon, Bitcoin’s like the internet itself. It’s like all of the Amazon Google’s on top of that. It’s like the internet itself. And so imagine accruing all of that value into Bitcoin, and trading that for a Fiat money game for Fiat money win at some point in time, it’s ludicrous.

Stephan Livera:

It is insane. And so I think that’s one thing now, as we were talking about with El Salvador is obviously the biggest and best example of a country adopting Bitcoin, but I also think it’s also just about probably who holds a lot of the assets today. It’s high net worth individuals, it’s family offices. It’s these big investment, funds, insurance funds, pension funds. I think it’s about those individuals or entities transitioning a lot of their wealth out of the Fiat world into Bitcoin. Now, of course, the number of stock is the same, but what we’re talking about is the relative valuations.

Stephan Livera:

So people selling, let’s say, stock in this or property and then buying Bitcoin. Because obviously what we’re talking about is more and more of the people of the world holding, at least some of, or maybe high percentages of their investible net worth in Bitcoin, in SATS, right?

Jeff Booth:

Yeah. My house fell by half this year. But people think house prices drove up by 25%. That’s what happened. And that transition allows you to move from a system that must fail spectacularly to another system. Now, the people that go first, people like to say, walking across the bridge. What they’re actually doing is building the bridge as they’re walking across. And they’re building it wider and stronger and then more people are walking across building it wider. And so you have a transition from one system that doesn’t have to fail spectacularly into another system that can emerge. That’s what’s happening.

Stephan Livera:

Yeah, I love that. Because you could almost argue that in the early days, the likes of Satoshi and Hal Finney and Dustin Trammell and others who were early, they were walking, it was like a tight rope, you were walking this thing. And then now it’s starting to become more like a, it’s like a two lane bridge and it’s reasonably sturdy and secure. And over time it’s becoming bigger and bigger and more and more secure. And eventually, it will become one of those mega bridges that’s ultra secure, ultra sturdy, very stable, but it’s all being built out now in real-time.

Stephan Livera:

And that’s the most exciting part of all this because there’s all these different parts of the ecosystem, whether that’s the Bitcoin mining world, there’s the Bitcoin development world. There’s people who are focusing on, let’s say developing countries, the adoption in those countries. You’ve got people who are trying to help influence, let’s say pools of capital in the rich Western world to obviously take a position, take a foothold in this Bitcoin world. Also, wanted to get your thoughts if you have any on the Bitcoin mining situation. This year, obviously, I guess the big story is obviously the China ban’s Bitcoin mining. So any thoughts on that and any thoughts around Bitcoin mining just generally?

Jeff Booth:

No. It’s specifically when China banned Bitcoin, I had to have this conversation for years with Preston, before that happened saying that it’s guaranteed to happen because Bitcoin defunds communism. You can’t run a command control society where few people own everything. And everybody else is a slave to that system with Bitcoin. It’s a free market system. So you could see for sure that China would try to ban it at some point. Their seventh time trying to ban it. And this is probably the most pressing time. But you still see by hashrate that there’s still 20% or so hashrate in China.

Jeff Booth:

And what’s happened is it’s just gone underground. And trying to ban Bitcoin means you ban yourself from Bitcoin. It doesn’t stop. You see the hashrate expanded in three months, it’s higher than it ever was, as other distributed parties fill that gap and Bitcoin chases lower cost energy. And I suspect that over time that you’re going to see just energy is priced in Bitcoin. You are already seeing it, but energy specifically will be priced in Bitcoin everywhere.

Stephan Livera:

The world is going to Bitcoin ICE and I really believe that. I’ve been saying this for years, I believe we’re going to denominate our prices in SATS and we’re going to spend that. And of course, maybe that’s a longer term vision, and maybe in the short-term people will still use Fiat dollars or crypto Fiat, like crypto dollars or whatever, the tethers of the world and stable coins and whatever. But I think long-term, it is all going to Bitcoin. And so I think that’s the journey we’re going on. And I view it as, we’re out there trying to help educate, advocate, put the tools in people’s hands or in their heads in terms of how to think about this transition as well. Because as we’ve been saying, it’s such a big transition.

Stephan Livera:

I think that’s why I’m also such a big fan of the community aspect of it, the meetups and the conferences and the events that we do. So those I think are important to help instill the right Ethos and get the education out there about how to use Bitcoin and really use it for yourself. And so I’m curious if you have any thoughts around the current state of Bitcoin meetups, conferences, events?

Jeff Booth:

Yeah. If my request for podcasts or kind of three to five a day, or emails or any sense of what’s happening, it’s just exploding. And what I’d say though is, and you weren’t in Bitcoin 21, were you?

Stephan Livera:

No, unfortunately I couldn’t make it, but I am on for next year. So I will be there.

Jeff Booth:

I saw that. And you’re speaker at it, right?

Stephan Livera:

Yes.

Jeff Booth:

Awesome. I can’t wait to actually meet in person there, but if I could say about 21, it was the greatest love in the world. It was like Woodstock would’ve been in [inaudible 00:48:20]. I could not believe how fantastic it was and people I met and what that looked like. And so when you start to understand what this means, and you’re around a whole bunch of other people that also understand what it means, and most of those people are in it for a whole bunch of the right reasons and kind of path to where we’re going, it’s a powerful group of people and it’s just getting stronger and stronger all the time.

Jeff Booth:

And so that’s through the meetups, that’s through the different education that’s happening. I think I’ve been asked three times in the last two months on being an advisor or helping set up large Bitcoin only funds to be able to invest in technology. Because what’s available to be able to build on top of this layer is a extremely hopeful, extremely positive place where a whole bunch of investment is going to go. So it’s just accelerating and accelerating. It’s really exciting. But I say this, we and Bitcoin need to realize that when people are in a state of fear, it is easier to blame a person than a system. And the existing system is going to place people in fear. It’s already placing people in fear. And it has to get worse. And it will get worse whether you tighten or ease. It will turn people against each other. And so I’d say with that in mind, be kind because there’s a whole bunch of people that don’t know what you know, and we want them walking across the bridge with us.

Stephan Livera:

I think that’s a very excellent point around fear. Fear is the mind killer as the saying goes. And so when people are acting under the state of fear they can do things that they would never have normally done under normal circumstances. So I think that is a very important point that I think even I need to take that on board myself, because I think, especially for those of us who’ve been searching down the Bitcoin rabbit hole for years and years and years, you sort of forget what it’s like for people who are yet to even start that journey. And so that’s a very good point.

Stephan Livera:

Also, wanted to ask you about Bitcoin technology. So I know we spoke a little bit about, you mentioned taprooting things in terms of Bitcoin technology or potentially Bitcoin companies. Are there any ideas that you’re bullish on? You want us see more of that? I mean, maybe a few examples I could throw out there. There are some focused on say lending, Bitcoin lending or borrowing against your Bitcoin, or maybe some of those ones focused on providing a better user experience. Having like an app where it’s like Bitcoin and Tether and Lightning or in one, or there are some other ideas out there like using the Lightning Network to make a more censorship resistant VPN or Lightning Network podcasting and things like that. What’s on your mind in terms of companies or ideas? Are there any that you are interested in or hopeful that you want to see?

Jeff Booth:

So if I taint this, I ought be careful about because the whole point of this open network and ecosystem is there’s going to be a whole bunch of innovation on top of it. And some of it’s going to fail. And some of it’s going to tweet. Remember the PalmPilot here was an absolute failure before the iPhone?

Stephan Livera:

Yeah.

Jeff Booth:

The only difference is a couple years difference on technology. Really the only. So an abysmal failure and a massive success. There will be a whole bunch of failures of technology companies on top of this network, but there’s going to be so many successes. And each one is going to point the way to more and more success. If I think about the existing, if I think about Google, Amazon, or YouTube, all of these, TikTok, all of these programs that effectively say this, I win by aggregating content providers. And when enough content providers are competing for viewers on my site, then viewers keep coming back and they keep looking for more and more content providers.

Jeff Booth:

So I have billions or hundreds of millions of content providers essentially selling their soul to try to get views to viewers. Of which the monopolies give the top people maybe 1% and can shut them off any time. Oh, you’re out of the algorithm. You’re gone. So huge risk as a content provider. And the way that whole system works is an advertising system over top of it that essentially is monetizing those users with advertising. And so it feeds back on itself to feed. And the entire cost, and it takes a bunch of people to run that system. And that entire cost of that system is going to be eradicated by Bitcoin, in not just music, in YouTube, in a whole bunch of other industries, as the power moves back to the content providers. How? I could write a contract and say, “I need to be profitable.”

Jeff Booth:

But 90% of the value is delivered to you, to the content producer and forever I’m going to make 10. I could make a company designed around that. And then where would the content providers go? Likely if you made the UX easy enough, like YouTube made UX easy. And on top of the web, the content providers that were putting on YouTube trying to compete YouTube, they would also provide option and they would put it on your site. And then as more and more people did that, some would only do your site and more people would come and find that content there, and more people.

Jeff Booth:

And you’d have the same network effect, starting really small, they would grow and grow and grow and create a huge entity by sharing more value with the people who are creating the value. And so those types of business models are going to emerge on top of this network like crazy. It’s not to say that everybody’s going to get rich because the long-term trend on top of that is that trend reduces prices and reduces prices everywhere. But what it also means is, you don’t need as much because prices are falling everywhere around you. It means everybody is competing on this network is actually making everybody else’s life better by competing on this network.

Stephan Livera:

Yeah. I think there’s a lot to be seen yet in terms of how content shifts and changes, because what will become of the advertising model? And I don’t know, will it still be the main dominant method, or how will that change if we were to operate in more like a Bitcoin pay for service sort of option or just like podcasting 2.0 like apps. That’s definitely an interesting area as well. But I think it’s probably about time to wrap up. So if you had any closing thoughts there, Jeff, for the listeners out there, what should they be thinking of? And maybe if you’ve got any ideas around what you’d like to see for next year?

Jeff Booth:

Closing thought for everybody, if you have a friend that doesn’t own Bitcoin, just tell them to get off zero, put a $100 in it. Get a hard wallet, do $100. Do something to get them off zero so they understand. Once they’re off zero, they’ll start looking at it and paying more attention to it and start understanding why this is so important. It doesn’t take you taking them all the way down the rabbit hole to start, start them down the rabbit hole from the rest of the way and they’ll likely find their way down.

Jeff Booth:

What am I excited on this year? I think you’re going to see, what am I fearful for? Winter is coming on the existing financial system, no matter what. There is no way out. And it’s going to get worse and worse and worse. And that worse could come in forms of control that it growing as a result of your individual rights and freedoms going away or a cascading collapse, but one way or another that’s that is the end state of the existing financial system and it’s really important that people that don’t understand Bitcoin, start to move into it. What am I excited about? That same thing that will drive that at a first principle level and why people need to know is going to accelerate.

Stephan Livera:

Yeah. I think those are some excellent tips. Definitely for people out there, try and get your family and friends off zero, try and get them started, get them on the journey. And of course, everyone, get out there, follow Jeff, read his book. I’ll put the links in the show notes. And of course, Jeff is a well known character on Twitter and all around The Trap. So I’m sure you’ll see him around. And Jeff, it was a pleasure chatting with you. Thanks for joining me again.

Jeff Booth:

Really good to see you again.