Bitcoin, Inequality & Morals

Welcome to the Stefan Livera podcast focused on Bitcoin and Austrian economics. Be a better Bitcoiner by learning more about the economics and technology of Bitcoin. Today, for episode 79, my guest is Misir Mahmudov. He's quite prolific on Twitter and has a great ability to articulate Bitcoin from an Austrian economics context. He's also done a great Prior podcast appearance on MightyBent's show, Tales from the Crypt. Also, his older brother, Murad, was one of the first guests on my show, SLP8. In this interview, we talk about Bitcoin, how to learn about it, inequality, Bitcoin and morals, and more. But before that, a few words for my podcast sponsors. So first, Kraken, one of the largest and most secure exchanges in the world. Over my years in Bitcoin, I've been impressed with the way Kraken operate in terms of offering strong security and acting ethically in the space under Jesse Powell's They're one of the longest standing Bitcoin exchanges, they're consistently rated the best with a high quality platform, they offer some of the best liquidity in the industry, they've got high trading volume and low fees with no minimum or hidden fees. Kraken have twenty four seven support, I found it extremely fast to go through the sign up process as an individual, and then on the institutional and business solution side, they're also quite popular with institutions, funds, asset managers, trading firms, crypto and Bitcoin businesses. They offer the highest available API rate limits. And there's a Kraken OTC desk. Kraken also offer margin and futures trading, so to learn more and sign up, go to the Kraken link in the show notes. Next up, Unchained Capital. Have you looked into Unchained Capital? They're a Bitcoin financial services company offering a really cool two of three keys multi-signature vault product. You can use Trezor or Ledger wallets, and you still maintain control with your two keys and reduce the single point of failure risk. Multi-signature helps protect you against the proverbial five dollar wrench attack, as you can distribute your keys I've set up a vault with Unchained and I found it super simple and easy. Customers who create an Unchained vault also get three free months of access to Safety News, Bitcoin Standard Research Bulletin, which is a fantastic resource for my listeners interested in Austrian economics. Unchained also offers Bitcoin collateralized loans, allowing you to get USD liquidity without selling your bitcoins, meaning you don't trigger a capital gains event. You have to consider your own scenario, but this can be tax-efficient for a hodler, enabling them to continue their hodling. Rather than selling bitcoins, while a loan is outstanding, your bitcoin is stored in a dedicated multisig address under collaborative custody with Unchained. They would hold one of the keys, you hold a second, and Unchained's independent third party key agent would hold the third key. So to learn more and sign up, go to unchained-dashcapital dot com. On to the interview. Misir, welcome to the show, mate. I have, you know, it's been a pleasure to chat with you here and there, and, you're very prolific on Twitter.

Hey Stefan, it's a great honor to be here. and I'm a huge fan of your podcast. I think you're doing a great job, and I hope that you continue doing this.

Well, thank you. Yeah, look, I, I think, the listeners might not know this, but I just wanted to say thank you very much. You were actually my first Patreon supporter

I think, I think people, if they, if they have the chance and they are a listener, they should definitely consider, consider that 'cause it's definitely worth, worth that small amount of money compared, relative to the value that you provide to the space.

Oh, well, thank you very much. Yeah, look, I think, I think you've got a really great story as well. Like you've, you're quite young and you've got this really strong interest and knowledge around Austrian economics, and I think the listeners would love to hear more about how you came to love Learn about Bitcoin and Austrian economics. So tell us a little bit about that story.

Yeah, absolutely. So in university, I studied financial economics, but unfortunately, this experience was pretty much devoid of any Austrian theory. And I feel like it's very unfortunate that not only do universities solely teach like Keynesian, status quo economics, but also teach it in a way where this approach isn't even questioned in any way, and the concepts like fractional reserve banking are just taken for granted as As if that's the only way it can be. So unless you do your own research and learning outside of class, it's unlikely that you will come to appreciate Austrian economics today. I think that's the reality. And unlike a lot of people, frankly, I wasn't a gold bug. I did appreciate a lot of like libertarian thinkers, but didn't really get a strong hold of sound money back, back in the day until diving into the Bitcoin, Bitcoin rabbit hole, yeah. And with regards to where I learned Austrian economics, it was pretty much-- it was, it was because of, because of Bitcoin. And, I think I had been rather, eclectic about learning, Austrian econ, and I feel that it is very difficult to truly grasp the value proposition of Bitcoin. Without ending up identifying as an Austrian, identifying with the Austrian school of economics, and,

because like strictly limited supply of bitcoins, somewhat akin to that of gold, is perhaps the single most important property. And Yeah, I was thinking that I could, just, talk about some of the resources that I've used to approach, both Bitcoin and Austrian economics. I think those kind of complement each other as you dig deeper into the rabbit hole.

Excellent, let's do that.

So, I think the best way to go about this is to kind of build up, your way to more demanding works, so I don't think it's the most optimal way to dive into, human action per se, even though it's a great book. But like if you just give it to the, the newbie, it's probably not going to be, very effective. I feel like today the most engaging and motivating way to learn about Austrian economics is through the prism of Bitcoin. And frankly, I think that Bitcoin is the most promising and effective implementation of the dis-dis-discipline in the modern world. I'm not urging anyone to totally drop gold just yet, but considering the many advantages that Bitcoin has over it, I think it's definitely worth everybody's time to look into it. So, yeah, provided what I just, said, I think it's a good start to, Maybe, yeah, for sure, read Saf's book, The Bitcoin Standard. I think, I think it, it gives a really good overview of the history of some of Austrian concepts like time preference, et cetera, and also gives you a peek into what Bitcoin is all about. and maybe also watching some videos of, Andreas Antonopoulos, because like, like we have to be honest, like we live in, in the modern world, people. They have such high time preference that they can't be bothered to sit down and read a three hundred page book, so at least until they realize that this is something really huge, which it is, I believe. I mean, bit-bitcoin and Austrian econ. So I think, watching some of his videos would definitely be a good start. And then with, with regards to actual, Austrian literature, I think a pretty good start would be, some works by Georg Guido von List, who I believe was a guest on your podcast. I, I really appreciate his work. Yep, episode fifty one. Every, everyone should listen, listen to that one. "Ethics of Money Production." It is very, very succinct, very to the point, and I think it's accessible to most readers without any Any considerable amount of like knowledge about economics or anything like that, I think it's, it's a very great book. Also, one book that helped me out a lot, is Theory of Money and Credit by Mises. it's probably the other book that I would recommend. It's not that hard, but a little bit, more dense, however, still pretty accessible. Misir dot org, is a website by Misir Institute. It's a great resource with huge amount of, free books on the, on the topic, and I think the equivalent in the Bitcoin world would be, the Satoshi Nakamoto Institute by our friends Pierre Rochard and Bitstein. Very, very, Of ve-very valuable resource, everyone should listen to it. I think some people, and myself included, they really enjoy listening to podcasts or like watching videos. And of course, one of the podcasts that helped, helped me out a lot was yours, as well as your videos on YouTube, the, especially the early ones. They give a ve-very good, introduction and even maybe an intermediate level understanding of Bitcoin and Austrian econ.

Well, thank you.

Also, I, the other podcast I re- I really like is This one by Jeff Dyst, who I believe was also a guest on, on this podcast, and his podcast called The Human Action Podcast. Really, really fun listen. And yeah, I think, I think those are, that's a good amount of resources that anyone interest, even mildly interested in the topic should pursue. And yeah, I think that's a good way to go about it.

I like that because it's difficult for somebody to just give them human action. Obviously, we typically don't recommend that for newbies. Typically, the newbie books that we would recommend are things like Economics In one lesson and so on. But for a, a Bitcoin person, yeah, you're right, I think they need sometimes some videos of very motivational, inspirational speakers, and that's why Andreas makes a lot of sense. And What about now on the, the Bitcoin side? Would you say it's mostly things like the Nakamoto Institute, and that was where you kind of learned most of that, was it mostly just podcasts?

Yeah, no, I think I'm, I'm, I'm quite a-- I'm a person who likes to listen and watch a lot, so I, I did, I did the whole Andreas' videos, then, all the different podcasts, Marty's podcast, Tales from the Crypt, and another great listen, but I think every single one of these podcasts is different in the Some of their are more, succinct, like yours is, it's never more than an hour, but it's always to the point, and if you want the information, and if you don't have that much time, but you want to get the, the most important stuff, that's very good. If you want more of a relaxed, more like- A different atmosphere, there are other ones. But, yeah, no, I think what Pierre and Bixen are doing is also great. They are, they have been great ambassadors to Bitcoin and Twitter. Twitter is definitely another resource that I think is kind of necessary if you are going to be interested in Bitcoin and Austrian econ today, because all of these people are there and they are very much accessible. They're, they're, you can message them, and I bet that most of them, most of the time, they're going to reply, because they are not here. They're here to s-spread this message and do the best thing for the world.

Excellent. Actually, one other question that just came to me now as well is, there are some people within Bitcoin who don't consider themselves Austrians. So a quick example might be someone like Nick Carter. Do you have any thoughts on, some of these other schools of thought within Bitcoin?

Frankly, I haven't given this topic too much thought, so I don't know. I, I kinda feel like it's impossible to really appreciate Bitcoin and not- Not ending up at least appreciating Austrian economics, because it is so neglected in the modern world, and is the fact that it is neglected is perhaps, manifested in the different,

The different, not so optimal ways that the economy has been, playing around, playing out in the, in the last thirty, forty years. And I think that even if you don't identify as an Austrian, you should definitely consider reading the major works by, by the, by the authors, authors. Excellent.

So look, let's now talk about some of the work you've recently been doing. I know you recently wrote a thesis around the gold window closing and the impacts on inequality. So tell us a little bit about that.

Yeah, absolutely. I think that one of the only opportunities that I had to learn about Austrian econ, in college was writing my senior thesis. And the topic that I chose was how did Nixon's cancellation of the convertibility of the US dollar to gold affect the wealth inequality in the United States? And basically just a little intro, like despite the fact that the US economy has seen steady positive real GDP growth over the last fifty years, the wealth inequality has only been rising since the 1970s. And as we all know The, that is around the same time when the, when Nixon dropped the gold standard. And for example, in 1971, the wealth share of the bottom 50% was around 3%, and by 2016, it is only 1.2%. And in the same time, the wealth of the share of the top ten percent grew from seventy percent to like seventy-eight percent. And there, there's a lot of numbers here because this was an empirical, empirical, Thesis, but I think it really shows, all the things that we talk about, all, all of these theories that we always discuss in actual, in actual, data and actual real world terms. So I think that it's important to say that closing the gold window had a series of long term implications and domino effects on the function of the US economy, and the most significant result of the cancellation was the removal of natural limits on credit expansion. A gold standard basically acted as a limit force on the amount of credit that was created, and the resultant, increase in the supply of money has enabled various things that is, such, such as surge in levels of debt, decreased private saving rates, reinforced the grow- the growth of the stock market, which w-whose, which, and the stocks are mostly owned by the wealth, wealthier, part of the population. And I think it also ex- Accelerated the purchasing power of the dollar, of course. So the hypothesis of my, thesis posited that the increase in the amount of total credit market debt result-- resulting from the cancellation has enabled a widening, of the wealth inequality in the US, and, the results were quite staggering. Unfortunately, I can't share this, thesis in public just yet because of the university policies and whatnot, but I am really glad that I- I have the chance to be on, on this platform to s-sho-show some of these results. and for example, the, the way I, went about this essay is by, this thesis is by, approaching it from three, by analyzing three different wealth groups: the bottom ninety percent, the top one percent, and the top zero point zero one percent. so, yeah, as we already said, 1970s, close, Nixon closes the gold window, and what's interesting is that by the end of 1970s, we see that the wealth share of the bottom 90% is, has started to decrease since, and up until today. And the wealth of the top one percent, and more importantly, the wealth of the top zero point zero one percent, so like the ultra wealthy, has been increasing at even a higher rate. And like the R squared values for like, if you run the quadratic regressions for this, are insanely high. They're like in the ninety, like ninety-five percent or something around like that for the top zero point zero one percent. So like these correlations are very strong. And as I already said, like the, the variable that correlated the most with wealth inequality was total credit market debt. And, the relationship, frankly speaking, the relationship for the bottom ninety percent wasn't as strong as the other ones, but I think it makes sense because the ultra rich are usually the ones who benefit the most from, these policies of credit expansion. And What's also interesting, I think, another thing to point out is the fact that basically the rise of the wealth of the top ten percent is to a great extent due to the rise of the wealth of one percent. And that is in turn due to the rise in the wealth of the zero point zero one percent. So it's literally the ultra wealthy that are benefiting the most and bringing to with them the other top ten. For example, like there's another great paper by Suess and Zuckerman that delves into this, and it shows that the rate at which the wealth of the top zero point zero one percent has been increasing since nineteen eighties is much faster, literally the fastest, than any other wealth group that make up the one percent, like in the top one to zero point zero five or top zero one to. So basically I mean, you get the idea. And I think another thing that's also that I took out from this, from working on this, research paper was the fact that Credit expansion really, creates this flow, of value into the stock market, and I think credit expansion is often cited in many different, works as, one of the m-major causes of rising prices, of rising prices of, in the stock market. As the newly extended credit is often provided to corporations that buy their own stocks and etcetera, etcetera. Like even in Human Action, I think Misir, talks about this and he argues that credit expansion enables a reduced market interest rate that increases the profits and the prices of the stock market, Yeah, and lastly, I think that it's important to say that, like, the Gini coefficient and the stock prices, they show a very strong positive correlation. Which kind of just says that like people, the, the more prices, the more stock prices increase, the, the more wealth inequality there is because Like the, the bottom 90%, they don't own that many stocks, I believe they own only 7% of the stock market, which is the reality of things, and they don't, so they have to basically rely on their salaries, and they don't, enjoy any of the profits that are made by the stock market, rises, by the rising stock market prices. And I think that basically the final research of my, the final result of my research showed that the wealth share of the top one, and especially of the top zero point zero one percent, had a very strong positive relationship. With the total credit market debt, when adjusting for time, and that, that says a lot because all of this is only possible in the mo- in the world that we live in today, like this isn't going to be possible in, in the world where Bitcoin is the money that we all use. So I think that's something to think about for sure. And that was a little long, but- No,

that's fantastic. I think, so I'm with you there. Like I think we definitely do see much more credit expansion, and that has driven winners and losers in this overarching kind of game of life, if you will. The people who first have that credit, or in the Austrian- And perhaps those closest to the monetary spigot receive the new money and can benefit from that to the disadvantage of latecomers or people who receive that money later. But it might be also interesting-- The Cantillon effect,

right?

Yeah, exactly, the Cantillon effect. And it might just be interesting to explore whether there are any potentially benign explanations for this and why they are accurate or inaccurate. So a quick example might be, well- The world's population is expanding, we have better technology, the influence of one major CEO, for example, is, is rightfully much greater. They can actually influence the production for many, many more, you know, big multinationals, they might be commanding an even larger workforce. So I guess these are a couple ideas that I'm curious, do you have any thoughts on whether, or another example might be demographics, so around- And sometimes some of these statistics are difficult because there are other demographic factors changing, for example, the family size. So family size numbers might change. That's a quick example. but yeah, do you have any thoughts on that or on whether there are benign explanations for this? Well, yeah, I

mean, of course, this isn't, we, we aren't able to control for every variable to, like, prove that there's causation or anything like that. I think that There should be more research done into this. Like, this is a very, very neglected topic. Like, obviously before writing the thesis, I had to do some research, and to be honest, there aren't that many papers or works that are written about wealth inequality and how that relates to the monetary policies, that are, That are enacted in, within our economy today. So I think it really deserves more attention, and I think that it, it's also fun, it's also fun if you are into Bitcoin, then You should definitely look at how, how you can, you should definitely start thinking how Bitcoin as a form of sound money, arguably better than, the gold standard, is going to, what kind of Impact it will have on the future economy, yeah? And how that will affect the inequality.

Yeah, I think a big factor will be the massive reduction in the amount of credit and debt based businesses that we will see. We'll see much more equity based businesses, we'll see much more people just saving up and then doing a business as opposed to this kind of cheap credit model that we have seen over the last forty years. But I suppose one challenge that, now again, I, I, you know, I agree with you on this, but one challenge that we You might face if you're talking to somebody who's say thirty or forty years old, there may be a guy who's been in and around VC investment, software entrepreneurship. In their view, the last kind of whatever forty, fifty years since nineteen seventy-one and the closure, closure of the gold window, that Has historically been an aberration, but a person who is today thirty, forty, fifty years old, they might have grown up in that thinking, "Oh yeah, that's normal. This is how you just make money. This is how entrepreneurs do things."

Yeah, no, absolutely. I think that a lot of people, they always talk about, "But inflation is necessary, like, at least like two, three percent of inflation is necessary to, prop the demand, to make sure that the economy is running, everyone has jobs, et cetera, et cetera." But I think A very good argument is that, like, we could easily like exist and function well as a society, as an economy, in a deflationary environment because Like the prices can adjust and yes, it might not be as popular when you, when you don't get a raise, but like in absolute terms. It's, it's still the same, nothing really changes, it's only that you are able to preserve your wealth into the future and you're not being diluted at all times. And another thing probably is the fact that It's, it's all about the time preference. If people aren't incentivized to spend their money today because tomorrow it is worth less, then they're going to be more willing to, collect money over time, save up. And make more long term investments, because now they have, they simply have more time to think about the pr- and make prudent and wise decisions about their finances, about investment, and like ultimately, I think that is going to have a much A much better sustainable long term effect on the economy, creating more sustainable jobs, cre- increasing the GDP, et cetera, et cetera, as opposed to just you going out and buying junk food and things that you don't need, just because you know that you have to spend it, you got your salary, and if you don't spend it today, in a couple of years, it's not gonna be worth as much

whatsoever. So in your view then, what's your perspective on future wealth and income distribution in a Bitcoin standard world?

Yeah, absolutely. Like, I think that it's interesting to think about equality and inequality. I think that absolute equality, and especially equality of outcomes, is a very populist idea, and it is very difficult to come to terms with the fact that scarcity is the major driving force in the world. Like, if everyone could have whatever they wanted, whenever they wanted, in abundance, then, like, what would be the point of working? Like, everyone would be demotivated because everyone has everything. But you kind of have to understand that Scarcity and competition, they're the most natural thing, and they are there, and you just have to live with that. And like also the fact that humans, they also, they always find a way to compete, like even If you give everyone the equal amount of resources, humans are so ingenious that they will always find a way to form hierarchies, compete, and assert their dominance and prove themselves. So it's kind of like- It's still, it comes down to the same thing. So inequality is only natural, and I think that, like, the most important takeaway with regards to how inequality will look like within true free market or the world where people are using bitcoins, is that they will be able to store the product of their labor into the future, which is unfortunately very difficult or outright impossible for some people in the world today. And yeah, like as we said, as I said, like the bottom ninety percent, they own like very little, share of the total stock market, so they simply don't have access to a relatively, better, form a relatively better asset that is a relatively better preserving wealth asset, such as the real estate or the stocks, they just, they just don't have access to it, which, and even it's kind of ridiculous to expect them to be able to operate within that environment because they are, they specialize in one thing, they, they can be whatever, a dentist, a doctor, like why, why should they go out of their way and dabble in stock market trading or in real estate? Investing outside of their actual job, that's like, that's not the way it's supposed to be, like, you know, just the amount of efficiency that can be achieved by having every single person specialize in one thing and do that thing best as opposed to trying to do five things at once just to be able to, preserve their wealth into the future, it's just like the efficiency gains that can, we can achieve by Having sound money that allows people to not worry and sleep well, I think are very, very underappreciated.

Precisely. And the big point that has- In recent decades come up, is this whole concept and, you know, people in finance talk about it, is this idea of the chase for yield. So they sense that if I leave my money in the bank, I will steadily lose two or three percent per year or more. And I need to do something with, about that. And it's pushing everyone into the stock market, and that, as you mentioned, can also be part of the driver for the massive flows into stock markets.

Yeah, no, I think that as we, as Bitcoin becomes more mature and as this industry, as the infrastructure grows and all that I think that Bitcoin will not only start, biting into, like the, the wealth that is stored in currency, in other currencies, in worse curren- in currencies that are worse than are not sound like Bitcoin is. I think it will also- Take up some of the, real estate and stock market as well, because a lot of people use these vehicles simply as just, wealth preserving assets. They don't like, they, they don't live like, like a lot of rich people, they own a lot of apartments just because they know that they will kind of be relatively stable in value throughout time, at least. I mean They, they are assuming that, but they don't live in them. So once again, that creates a lot of inefficiencies. So I think if you give them a form of money that preserves its wealth and What's more, very important, like a lot of people, people will be saying, "But how does it preserve itself? It's so volatile, it can't." But it's, that's, I don't think that's the right way to think about it. Of course, a, a money that is only ten years old, that is sovereign, that is so young and It is open source, it takes time for it to become, to become stable, and we have seen that over the past ten years, the volatility rates have been steadily decreasing, and this is, this is a long-term project, this isn't an overnight thing. And, it's also really important to think about the fact that the supply, like your ratio. If you have one Bitcoin today, you have one out of twenty-one million, and in ten years' time, it will still be the same. So that is, I think a better way to think about it, as opposed to looking at the volatility of the price, of the short term price.

Excellent. And, and like the point you're making about how many of today's wealthy, high net worth individuals, they will use things like some of these apartments in, you know, around the world, Sydney and London and Hong Kong or wherever.

Vancouver.

Yeah, yeah, exactly. And now the, the thing that's happening, and we're seeing this a little bit now in Hong Kong, is some of the wealthy individuals in Hong Kong have Some of their wealth out because of the concerns about China and the extradition laws. So do you believe that is another driver then for wealthy individuals to now start considering Bitcoin more seriously?

Yeah, absolutely. I think that, it's not wise to really look And try to assign one event or even one property of Bitcoin to, to the reason as the reason like why the price will appreciate or why this will be the reason. Because it's just so, interdisciplinary and it, it serves so many different things that it's even difficult to, describe what it really is and it's hel- it is able to help out So many different people in so many different ways that, yeah, but I think that that's def- definitely, part of the value proposition, the fact that it is sovereign, the fact that it is, resistant to all kinds of attacks, and it allows you to, to be Your own, your own boss in terms of who gives you the approval to, do, to do whatever with the, the money that you, have. The sole ownership and the right of, you know. I think another thing that, before we move on away too much from the topic of inequality another interesting thing is how people always talk about like the distribution and, like the, the wealth distribution, like in a world where we have bitcoins, How, how will the wealth distribution really manifest itself? Because like, we have people who own a lot of bitcoins who bought bitcoins early. I think that's kind of, unwise to say like, "Oh, yeah, but these people, these whales, they bought in 2013, that's unfair." Like, that is not unfair, because when those people were investing- Their sums of money into this market, the risks that existed within Bitcoin were much higher than they are today, so they were re- they were, rewarded for taking those risks. And I'm sure, like, even today, I talk to many people and they're like, "Ah, no, this is very risky." I mean, they, they haven't done their research, they don't know anything about it, but like, back in the day, they would just laugh at you. But yeah, but with regards to the inequality, I think that there will ultimately be less inequality, wealth inequality, especially in the long run, with Bitcoin as opposed to the world today, because like even the whales who own a lot of Bitcoin will sooner or later have to spend, spend their, their bitcoins and Unlike in today's world, you can't create more of them, so you can't just like arbitrarily redistribute them as you please. In Bitcoin, I think the wealth is redistributed in the most meritocratic way. Whoever works will be paid in Bitcoin, and that way they can save their money over time and not be diluted, which is Unprecedented, and I think this is going to have a significant impact, good, positive impact on the world.

Say, look, I mostly agreed with you, and I think one thing that I'm careful about is just to recognize that there will still be inequality. It's just that there will be some that is in a meritocratic way, as you say, that there will be a meritocratic inequality. Oh yeah,

of course. Yeah. Yeah. I mean, you can't, like, as I already said, like, inequality is natural, like, inequality is necessary for the progress. Of civilization and humanity, but the way you-- that you come to that inequality is the, the important part. Like with Bitcoin, the way that inequality is achieved is, through hard work, is through entrepreneurship, but in the modern world, a lot of the times that this inequality is achieved is not optimal and is outright not fair.

Right. It's achieved through graft and politics as opposed to through meritocratic behavior and skillful entrepreneurship. Entrepreneurship or skillful investment, that kind of, behavior. So, yeah, interesting stuff. And I think, there was another topic I was interested to discuss with you around Bitcoin and morals. So, what's your view there on what kind of system is Bit-- is Bitcoin going to push people into what we, you know, compared to what we have now?

Yeah, so- The way I like to think about, and the way I even decided to kind of approach this topic, is because I think the beautiful thing about Bitcoin is that, once again, because of how multi-faceted it is, it lends itself to a great number of analogies, metaphors, juxtapositions that help people see the benefits of this system. Like we always speak about, Bitcoin is all these different things. It is stored energy, stored time. It is an unconfiscatable asset, borderless money, all these different things. And it is true, it, it is all these different things. And I don't think that or like, then another like cool thing, like the way people, different, different people describe, Bitcoin, for example, like Brandon Kudam calls it like the mycelium, and I, I don't think that this is a coincidence that That you're able to see, Bitcoin through all these different lenses. I think that, we always talk about consensus, and we always talk about how we come to a shelling point where we are happy what, with what Bitcoin is and the way it works, but it's kind of hard to, difficult to understand what this consensus means. And I think a way to look at this is by considering Bitcoin as a manifestation of human values, basically seeing it as a system of universal morals so to speak. Like even if you look at it, through, like, I don't know, the vices in, in the sense, like If you look at gluttony, for example, like you, it makes you think like of low time preference. You, you want to save your Bitcoin because it will appreciate in price over time, and instead of-- and you should, you should basically sit on it instead of wasting it on junk food and overeating or like sloth. You can't be lazy in Bitcoin, you have to take responsibility, you have to own your private keys. It's not like in a traditional world where you can just lose your credit card and go to a bank, like the cost of doing that is very expensive. greed, greed is probably my most favorite, it's my favorite one because it's very interesting. Because greed is known to corrupt people very often, it's a very strong force. and greed is the reason people steal, lie, and do other, do other reprehensible things. But I think that Bitcoin has this such a strong appeal, Because it is able to align with the fundamental human values. And with regards to greed, like how does that make sense? I think that deep down everyone knows that stealing, hurting, and doing all these things is bad. But it's just such a, such a tempting, force because people are, they always want more power, they want to better their lives, that they fall, prey, they fall victim to, To greed and they act upon that. But the most beautiful thing is that Bitcoin is able to, paradoxically and just so ingeniously use human greed as a way to protect against, Against greed itself and protect the social consensus of human values. That I just think that Bitcoin encodes, all these universal values that people from different cultures have agreed upon from time immemorial, and it puts them into algorithms that aren't prone to, as much human, human component and that human, factor that is so, vulnerable and- And it's so, so often, fails in, in, in, in spite of the best intentions. So I think as long as humans are greedy and kind of distrustful of each other, or in other words, as long as humans are human, Bitcoin should thrive. This is, no, I mean, this is more on the like the just philosophical, psychological side of things, but I think it's just something to think about. Like, Bitcoin aligns with What people around the world most of the time think is right and what is wrong, and it's just like, you can't, like, I mean, it's very hard, like, Bitcoin makes stealing very difficult, Bitcoin makes lying very difficult because everything is verified, Bitcoin minimizes trust, so it- uses these, human components that are kind of almost innate to us, and it all, it programs them into the system that everything functions without having to, Without having to be vulnerable to this human factor once again.

Yeah, look, I think I can think of a couple of practical examples of what you're saying as well. So a couple, a few obvious ones, any current holders of Bitcoin will be very, very highly incentivized to not go for any changes to Bitcoin's twenty-one million supply cap. So that's the obvious one, right? The most obvious one. And then there's, then there's other ones as well, right? So anyone who is a holder of Bitcoin now has some incentive to care about protocol changes. They're gonna care about changes that may impact on the ability of, their node to, say, verify the full supply of Bitcoin, any changes that may come that might make it easy for other people to steal Bitcoin and ruin the system. And I also liked this concept of the Mexican standoff. I've seen, Bitstein tweet this as well. He was saying Bit- Bitcoin is like this Mexican standoff because everyone's watching each other because they don't necessarily trust each other.

Oh yeah, no, absolutely. I think that one- Once you start learning about Bitcoin, and especially once you start owning some Bitcoin, that changes, that re-reforms you as a human being in terms of your incentives and in terms of your behavior, is that you become like a PR agent, but not in the bad sense of this word, but in the most positive sense of this word, that you are you are trying to spread this message, and this message isn't-- you're not just trying to sell something to somebody, but, I mean, if they spend enough time, they will realize that you're not trying to sell them something random, but you are actually trying to- better their life outcomes and, hopefully, potentially make a world a much fairer place. But yeah, everyone is incen- once you ha- you own some, you are incentivized to Spread the message and educate people, which is, which is quite beautiful.

Fantastic. And I know you were also interested to discuss about some of these ideas around Satoshi as, as the potential single point of failure. So tell us a little of your thoughts on that.

Yeah, no, I think that as time goes on, we really, we really are able to better appreciate everything that Satoshi has done, and especially the fact that he disappeared, perhaps that was the one of the most important things that he did. Because- Because that basically enabled him to not, be a single, a, not only a physical, point of failure, but also not be a, an ideological and directional single point of failure. Like some people, they always say, "Arg-- they, they try to argue that Satoshi wanted it this way, or this is his vision, and this is how it's supposed to be." But I think that's That's a prime example of an appeal to authority, and even if we, for a second, entertain the idea that something is what Satoshi wanted, really wanted, I think it is quite obtuse and perhaps dogmatic, or at least naive, to believe that whatever Satoshi said almost a decade, no, more than a decade ago, was the most optimal implementation of Bitcoin. And like Similarly, it is also kind of narrow-minded to think that throughout all this time, Satoshi himself or herself or themselves, hasn't changed their mind. Like it is true that without Satoshi, we all wouldn't be here, we wouldn't be having this conversation today. However, at the end of the day, it doesn't really matter what Satoshi believed at that point because so many different things have changed, so much time has passed, and,

Like the optimal way to go about things always changes and we need to be able to adapt. And clinging on to what Satoshi said in a ten-year-old, forum post is Definitely, like people shouldn't put so much emphasis on that, because especially a lot of people are going to try to use that to their advantage. And once again, Satoshi isn't an all-knowing, omniscient being. They are also a human being. They aren't a god, and- It is therefore unwise to just like blindly follow whatever was said back then, because they are basically not infallible, like some people say they are. And I think there's Bitcoin, the real Bitcoin is whatever the social consensus is, not what Satoshi said it was or whatever you think Satoshi meant it was, is the, the selling point that at this point in time, it is constantly evolving and becoming more and more antifragile, and Satoshi couldn't have possibly predicted every single development around Bitcoin that has and will change or threaten it during its lifetime. So once again, like, you just need to Think through this before you ascribe so much value to these little things, you know. And I think that we should also consider that Satoshi disappeared. For more reasons than just to avoid being this physical point of failure, to like, you know, say, they said that they, they say that like he did that in order to avoid the fate of BitGold, DigiCash, that, basically had to close down because Their creators weren't, were not pseudonymous, they weren't anonymous. I think that he also left to avoid being a single point A failure in the sense of direction that Bitcoin takes, and I think that was very much, purposefully done. Like, had not Satoshi disappeared, his opinion Intentionally or unintentionally could have such a large influence that it would, it could be counterproductive to Bitcoin. I, I don't wanna pick on any projects or people, but like, thankfully Satoshi spared us of having a Vitalik whose like decision making or his mood or wha-whatever this, this extrinsic factor that can have such a, take such a big toll on the actual project. Like, so, Bitcoin is so much more than just one person, and I think that having a single leading project, a single person leading a project, even if nominally. Makes the project a lot more vulnerable, and people, people like, we have to realize that people are, they always love, people like the average people, they love to follow somebody. And they like to believe in that one person, make a cult out of that person rather than the project itself. And no matter how smart that person might be or how great they are, like they're still fallible. And most importantly, like the human is fallible and the human's nature is corruptible, like, you know, not because a person is good or bad, but only because they're human, and they are, they are They often are exposed to these different things. Yeah, that's, that's, th-those are the kind of thoughts that I had about, about this topic.

Yeah, it's interesting the idea around cult of personality because it's even if somebody was incredibly intelligent, some super genius person, and they were, you know, very high upstanding moral person, if the government knows who they are, they can choose to come after them and take their family, right? Or do something, and, and then at that point, you've got some- Somebody who is now owned, right? The, you know, a government or a business could influence protocol decisions around Bitcoin, and that, you know, could have led to all sorts of, kind of negative pathways, and many of these negative pathways In some of these shit coins, they just may never actually happen because here it's that whole problem of, you know, the Warren Buffett saying, "You only see, you only realize who's swimming naked when the tide goes out," right? Yeah. So many of these shit coins will never get to the point where, you know, a government needs to go and kind of co-opt the leader of it, but it's kind of prudent in that Bitcoin doesn't have that person.

Yeah, no, absolutely. I feel like these people who use Satoshi's name or like they- try to ascribe so much value to it. It's just like these methods, they are often just so dishonest, but yet effective. They're, they're effective with some people in order to like defend your righteousness, and it enables one to like easily dodge difficult questions by simply replying, "Oh, Satoshi said so. Yeah, there must be..." Like, "Are you trying to... Are you questioning Satoshi? You think you're smarter than Satoshi? No, I'm not, but I just don't want to." Fall prey to, once again, this appeal to one person. And like, I think that the important takeaway is like, don't make idols. Provided enough time, you will be disappointed in them. And once again, not because they're necessarily bad or good, but because everything constantly changes. And I think the quote that goes, you either die a hero or you live long enough to see yourself become the villain, is especially relevant, like Satoshi probably must have been aware of, of this, of this point. Well, I think wasn't,

that was in The Dark Knight from, I think around 2007 or 2008, so it was around that time.

Oh, yeah, good, good one, good one, yeah, you should. No, I think it's, it's just fascinating, and we are, and so we are so lucky to be here at this time,

A lot of people say that, "Oh, yeah, I missed the train, I missed the boat, and it's too far gone now, there's no point, like the price is too high." And they are just Unfortunately, they are incapable of just, im- just trying to even daring to imagine how big this can be and the fact that the total addressable market is so big and This, I think, I think we're just very early, and it's every, everybody's, it's worth everybody's time to learn about it, and at least do their own research.

Yeah, that's, that's definitely a, a big point as well. Many people, when they are new to Bitcoin, they think I'm late, and then even you listen to stories of people who have been around and they got in at like 2012 or 2013, and they feel like they, they, they themselves were late. They were late.

Yeah, no Yeah, no, I'm just saying that everything is relative and there are, there will be people who will be coming later and they will be saying the same things. There will be people who I, I think there will be people who will be buying it 50k and they will be, and they're right now saying it's too expensive, but the FOMO will pour in and, I mean, that's just, that's just how humans work, they, they don't want to, like, although they say Everyone thinks that you should, everyone claims that they, they buy low and sell high, but it's always the other way around, and it's all cyclical, so we just have these cycles, and we just need to embrace that.

So, Misir, tell us a little bit about what you're working on at the moment, and what you're thinking about. You know, have you got any ideas for article, articles coming up or research?

Yeah, absolutely. I think it's always in the back of my mind, like there's no, no date that I spent not thinking about Bitcoin Listening to podcasts such as your own, which once again I think is a, is a great resource that everyone should, take advantage of, if they're not doing so already. But yeah, I'm al- I'm always on the lookout for, new ideas, always brainstorming. And trying to find, I think one thing that I'm really passionate about is trying to optimize, the way, to onboard people into, this space and to, the, to find the most effective, the most succinct way to, communicate the value proposition of Bitcoin to them without them losing the interest within, within the first five minutes because it's such a, such a dense yet Such a fascinating space. So yeah, I think we always need to be thinking of find, of finding those most optimal and most accessible ways of, bringing in more people and not necessarily, alienating them, although some people deserve to be alienated, they're like scammers or whatnot. But I think a lot of people are willing to listen, it's just that you have to find the right approach and not too, not be too demanding in the beginning. I think that's, that's, that's, that's what's on, always on my mind.

Yeah, so it's interesting because many of the early people were cypherpunks, and then the next wave was libertarian people, and so obviously people like you and me come from a more libertarian Austrian angle, so it's quite easy for us to kind of see the value, but I think, a good example is someone like Alex Gladstein, who himself, he's not a libertarian, right? He's more of a progressive. He's, you know, and he is able Speak to them in a way that's a little bit more, it resonates more with them. Do you have any thoughts on that?

And that, yeah, and that's the most beautiful thing about Bitcoin. I, I always keep saying that Bitcoin is so interdisciplinary that you can talk about it in a plethora of ways to all kinds of people, and there will always be something about Bitcoin that will appeal to them, exactly that kind of person. Like, it doesn't matter what their political status, it doesn't matter what their religion is, what, what, anything, what their color is, all of those There are things that are able to-- about Bitcoin that can literally better their lives in various ways that they want to hear about, that they are willing to listen, listen to you talk about, and it's just about finding that right approach. Like, when, when you-- I feel like when you, when you're about to tell the story of Bitcoin to some person, you should really consider their background, what they like, what they don't like, what they do in life, what they're, what they're- Interests are, and then kind of try to-- This isn't about being facetious or trying to sell something, it's about just considering how Bitcoin can help them, because I am almost sure that there are There is a way that Bitcoin can help all different kinds of people, so that, that, that is very important, I, I believe. Before you try to, like, I don't know, shout at them and tell, you have to read Human Action. You didn't read the thousand pages, don't talk to me yet. Like, I, I, I mean, I, I love the book and I really, really identify with the Austrian school, but we, we are taking this thing mainstream, and we can't expect all these people to, you know, like, do all these things that We, we just need to, optimize for these people to just get on the boat, get on the same boat as us, and really see the, the main stuff, because like, once again, we live in such a world where, time, the, the attention spans are so small, people are always interested in different things, but we, we need to get them on board, and if we are going to take this mainstream, we, we shouldn't be too harsh on them, you know? Like, we should, we, we should sometimes give them a break, but We should, we should optimize for them not being too alienated. I know it's very important for, for us to, keep to our standards and our,

the, the, the, the certain important things that can never change, for example, the twenty-one million, like these things, yes, of course, I understand that the real Bitcoiners will always fight against all the scammers that try to sell them their shitcoin or, try to change some parameter of Bitcoin which isn't going to fly. But just some people who are Who are willing to listen, I think that we, we, if we, if we're ta-takin' this mainstream, we should consider what they care about, who they are, and then kind of accommodate them in that sense, you know?

Look, I think it's part of it is just meet them. You've, you have to meet people where they're at. That's probably the way I would summarize it. Yeah. Yeah. So yeah, look, Misir, I think that's pretty much it in terms of, topics we have for discussion.

do you

Yeah, no, I think the best place that they can find me and contact me is on Twitter at misir underscore, mahmudov. M I S I R underscore M A H M U D O V. And my DMs are open, and I'm, I, I'm gladly, reading them and replying to people, so you can always ask me stuff. So yeah. Once again, thank you so much for inviting me. This was a, this was so much fun and once again, a great honor to be in the same list with the people who are doing God's work. And I, I'm, I'm a huge fan of your podcast.

Awesome. Thanks again for coming on the show, and I'll speak to you soon. Thank you, Stefan.

See ya.

Alright guys, I hope you enjoyed that discussion with Misir. make sure you are subscribed to the podcast by going to stephanlivera.com. On there, you can see a link for an Android or iTunes or RSS sign up. Make sure you're subscribed in a podcast app, makes it much easier to just get the episodes as they come out. also note, I'll be in San Francisco for Bitcoin 2019, so the conference is on there. that's, the main time that I'll be in the USA this year. So if you're Make sure you give me a DM, let's meet up. I'll be around that week, so I'll be flying in on Sunday the 23rd and flying out Friday the 28th. So if you're keen to meet up, just give me a message. and lastly, if you are interested to advertise on the podcast, make sure you give me an email, stephan livera at PM dot me is my email. Thanks for all the help you guys give me with sharing the podcast as well. I see that on Twitter, so thanks very much for that, and I will speak to you guys soon.