Balaji Srinivasan - Bitcoin and Ethereum, Crypto Oracles, and More | The Tim Ferriss Show | Transcription

Transcription for the video titled "Balaji Srinivasan - Bitcoin and Ethereum, Crypto Oracles, and More | The Tim Ferriss Show".


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Start (00:00)

We have an important preface, an important caveat, an important disclaimer before we get started. And here it is provided from my lovely lawyers. Here we go. I am not an investment advisor. All opinions are mine alone. There are risks involved in placing any investment in securities or in Bitcoin or in cryptocurrencies or in anything. None of the information presented today or really anytime since you might be listening to this anytime is intended to form the basis for any offer or recommendation or have any regard to the investment objective's financial situation or needs of any specific person that includes you my dear listener. So everything you're going to hear is for informational entertainment purposes only. And with that said, please enjoy. This episode is brought to you by Athletic Greens. I get asked all the time what I would take if I could only take one supplement. The answer is invariably Athletic Greens. I view it as all in one nutritional insurance. 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And for the last few years, I've been sleeping on a Helix Midnight Lux mattress. I also have one in the guest bedroom and feedback from friends has always been fantastic. It's something that they comment on. Helix Sleep has a quiz. Takes about two minutes to complete that matches your body type and sleep preferences to the perfect mattress for you. With Helix, there's a specific mattress for each and every body. That is your body, also your taste. So let's say you sleep on your side and like a super soft bed. No problem. Or if you're a back sleeper who likes a mattress that's as firm as a rock, they've got a mattress for you too. Helix was selected as the number one best overall mattress pick of 2020 by GQ magazine, Wired, Apartment Therapy, and many others. Just go to Take their two minute sleep quiz and they'll match you to a customized mattress that will give you the best sleep of your life. They have a 10 year warranty and you get to try it out for 100 nights risk free. They'll even pick it up from you if you don't love it. And now my dear listeners, Helix is offering up to $200 off of all mattress orders and two free pillows at These are not cheap pillows either. So getting two for free is an upgraded deal. So that's up to $200 off and two free pillows at That's for up to $200 off. So check it out one more time. At this altitude, I can run flat out for a half mile before my hands start shaking. Can I also do a personal question? Now what is the next time I have time? I'm a cybernetic organism living this show with a metal empress killer. Hello boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of the Tim Ferriss Show. I'm going to keep my preamble short because we are going to run out of time while before we run out of subject matter with today's guest. Bologie Srinivasan, and I'm sure that that pronunciation could be improved at Bologie S. That's B-A-L-A-G. It's not a G. It's a J-I-S. Is an angel investor and entrepreneur, formerly the CTO of Coinbase and General Partner at Andreessen Horowitz. He was also the co-founder of, acquired by Coinbase Council. That's with a S-Y-L acquired by Marriott, teleport acquired by Topia, Topia perhaps, and Coincenter. He has been named to the MIT Technology Reviews Innovators under 35. That was in 2013. He is the recipient of a Wall Street Journal Innovation Award, many others, and holds a BS, MS, PhD in Electrical Engineering, and an MS in Chemical Engineering, all from Stanford University. Bologie also teaches the occasional class at Stanford, including an online MOOC, that's massive open online course in 2013, which reached, as I understand it, more than 250,000 students worldwide. You can find him on Twitter @BologieS. I'll get it right this time with J-B-A-L-A-G-I-S, and you can find much more about him on his website, Bologie, thanks for coming on the show.

The Concept And Impact Of 1729 & Balaji'S Views On Media And Investments

What is the significance of 1729? (06:02)

Great to be here, Tim. I thought we would start with a number, and that number is 1729. As I understand it, that's not in reference to a date, but you use that number quite a bit. Could you please provide a bit of context for how you've used that number and why you've used that number? Sure. I'm actually going to be launching something at that domain, probably by the time this podcast is published, hopefully. That's a domain What does it refer to? It's not a year. It's the first number that's the sum of two cubes in two different ways. What that refers to is basically the Ramanujan number. Strinivasa Ramanujan was India's greatest mathematician, and kind of like India's Einstein. It has a romantic story in the sense that he was extremely poor and wrote these letters to mathematicians around the world. He had just self-taught math from a textbook. He wrote these letters to mathematicians around the world, and most of them ignored him, just thought he was a crank. One guy brought him out to England, this guy, G.H. Hardy. With thought, this guy has to be a genius because he don't want to make up these equations. Ramanujan began a rampage through mathematics and has people still, to this day, going through a page of his notebooks for an entire mathematical journal issue. He just wrote down all these results that were true, but he didn't provide the proof. You're just into it the result. Where does 1729 come from? 1729. Unfortunately, Ramanujan died very young, very young. People think it's because he was away from his food, the warm weather of India, and so on. Basically, on his deathbed, Hardy came in to try to cheer him up. He said, "In Ramanujan, I came in on a taxi and the license plate is very boring. It's 1729. On his deathbed, Ramanujan still had the wit and faculty to say, "Oh, that's not boring. It's the first number. It's the sum of two cubes in two different ways," because he's on a first-name basis with every number. That's the legend of Ramanujan. If you're seeing Goodwill Hunting, I have. Goodwill Hunting was based on that. There's actually a book that was turned into a movie called "A Man, a New Infinity." It's a very fun movie to watch. It's engaging. I don't know how factually accurate it is. There's pieces. Actually, the number is in there and so on. To me, for many years, actually, before joining Anderson Harbitt's, what I was going to do is turn the MOOC course that I had done in 2013 into a global talent search, because just like you have the Hubble telescope looking for dark matter around the universe, I thought of the mobile telescope. The telescope provided to us by mobile could help us find the dark talent in the global south, the undiscovered talent. Basically, that's not just a global south. That's Eastern Europe. That's Russia. That's all the former Soviet countries. That's basically the world that all these people who didn't have a chance. I think of that as something that I've wanted to do for a very long time. That's what I was going to do prior to joining A6 and C. For a bunch of reasons, I joined A6 and C and C and C and C and C and C and C and C and C and C and C and C and C. I'm coming back to the path not traveled and doing this "global talent search." The idea is that basically we who have been fortunate enough to have some resources or winnings, we can offer a hand up to all these people, bring them into the global economy, level them up, give them what we know in terms of education or teaching or what have you. All of this stuff can be delivered. I know it sounds like a cliché, but at scale over the internet. You produce it once and you can replicate across millions of people. This is what I'm doing next and hopefully by the time the podcast comes out, this will be live knock on wood. Amazing. There are these seeming pillars of influence. Pillar may be too strong a word. I think we'll want to explore a few of those, including Lee Kwan-yu perhaps. We'll get to that. For people who don't know who that is, we'll explain because good God, what a figure and what an influence. Before we move it further ahead, what was the subject matter and the intent behind the MOOC that you taught?

What was the subject matter and the intent behind the MOOCs (Massive Open Online Courses) Balaji taught prior to joining Andreessen Horowitz? (10:21)

The subject matter, the title was Startup Engineering. The concept was that it was basically the class that I had had before doing my first startup. It was a time capsule back to somebody who was into math or into just technology in general, but was just completely naive about how to actually run a business or anything like that. When doing my first startup, this is a first approximation, but I thought that the primary difficulty would be calculating difficult integrals. I was like, "Okay, that's the hard part and everything else is kind of basic," whatever. We can knock that out before breakfast. Of course, that's not the case. As often turns out. As often turns out, that's right. The thing is, as I was a career academic for many years, and in academia, there is a high premium placed on novelty of results, technical difficulty. There's some good aspects of this. You do, in math, you learn how to think rigorously and go premise, premise, premise, conclusion, really interrogate your results. There's seemingly obvious things that aren't actually true mathematically when you actually go and work them all the way through, famously the parallel postulate of Euclid is not something you can just take for granted. You get different geometries if you assume different condition there. You think rigorously in academia, and then you think, "Okay, well, that's the entirety of the world. It's just technical difficulty." It's not. This course was meant for teaching the philosophy and all the nitty-gritty details to go from a command line up to a website with payments, with JavaScript, and all the types of stuff. You learn computer science in academia. You don't really learn software engineering. There's a thousand details in how that works, which are useful to get, number one, like Git and stuff like that. Of course, the reason you don't learn those things is they move fast. You have to keep updating it. So, that was one piece. And the second piece was the philosophy of startups, meaning what is the different student startup versus small business? Or why is this happening now? There's a piece of recent history, for example. Do you know what the NSF-AUP is? I do not. I'm not even going to try to pretend. Sure, sure. So, National Science Foundation had this thing called the Acceptable Use Policy in Place for many years, and it prevented commercial traffic on the internet. How about that? So, the dot coms. Do not know that. Yeah, the dot coms that we know and love are actually not feasible until, I think, about 1991, plus or minus one or two years, but I think it was 1991, they repealed the AUP. And the reason people fought it, they said there was going to be spam and porn and malware on this commercial internet, and it was all going to be broken. Because before that, it was like an academic and military internet. Everybody was sort of a quasi-trusted user on it. You had to have a dot mill or dot edu domain, right? And then they're like, "Oh my God, all these crazy people are going to get on. This is going to be..." And you know what they were right? All that stuff did happen, but the benefit was worth it. The downside was mitigated by, I think, the upside on those of the birth of the commercial internet. And that's something which most people don't even know how that came about. It really was something where one rule was holding back all this innovation. That's something that's made a deep impression on me. So, stuff like that was the kind of stuff that I tried to convey in the course, alongside the nitty-gritty. I think most of the time, that kind of stuff is not taught in the same place, from the same person, with one coloring the other. I think that's part of why the course was popular. Thank you. It was a very comprehensive answer. I love comprehensive answers. Been looking forward to this conversation. You're very good at teasing out the details. And we may end up teasing out the details on all sorts of things in this conversation, including some of what one of our mutual friends described as, one of several "bologisms," including the line, "imutable currency, infinite frontier," or maybe frontiers in immortal life. I'm giving teasers to people. So, it's a bit of a cheap trick, if you'll excuse it. Another one, this is from, we'll just say, "anonymous." Although, I think this sentiment has been echoed by a few people I chatted with, which you may enjoy, which is something along the lines of, in a quote, "bology will end up on one side of a firing squad, but I'm not sure which side." Okay, that's funny. I'm very peaceful. I'm extremely peaceful. I just want to put that out there for the record. Go ahead. He's very peaceful. And I think that part of what fascinates people about you is how often they would consider you prescient. And often that comes with a degree of fear, not of you, but of the consequences of you being right. And I'm thinking of, for instance, a quote, I think it was on January 8th by the co-founder of Rome Research. You probably remember this one. And I think it's at C-O-N-A-W, if I'm getting that right, which was something along the lines of the most terrifying words in the English language, our biology was right. Okay, so I'm planting those seeds just because we're going to come back to why some of the things you've predicted accurately have in fact been terrifying. Before we do that, if you want to say something first, we can dive into it. I will offer just a little bit of color there, which is... So what he's referring to is specifically my predictions on COVID and the pandemic and so on, but then also more generally, a bunch of unheated predictions or things that I've said, and the people would be like, "Ah, that'll never happen." And then this kind of happens. And so it's not so much that it's always bad predictions. It's not always just Cassandra. I like to think that I look for large deviations so that you can actually get large upside as well as large downside. And so folks who I think who followed me on investments have done reasonably well, but there's both. We'll see. There are both. And Cassandra, for those wondering, that is a mythological reference, correct? Yes, that's right. Given the gift of prophecy, but with the condition that no one would believe her. So we will come back to some of these predictions. And is it... I want to say I just heard you say COVID. Most people would say COVID. Does it matter? Is one correct and one not? I mean, it's an acronym. I've heard it pronounced both ways, COVID or COVID-19 or COVID. So I don't like COVID. I'm going to roll with it. We'll come back to that. Now, before we started recording, and you and I have chatted before, we were chatting, but I thought it would be kind of fun to kick the ball around in the conversation about podcasts because you have opinions about the state of media or mainstream media and perhaps even the future of media, which I'd love to dig into at some point. But you had some perspectives on the podcasting world relative to perhaps other ecosystems.

Balaji’s thoughts on the state of media (particularly podcasts), how product is merit and distribution is connections, and more (16:57)

Could you just provide your first... I don't want to say postulate. That's me trying to get fancy. No, no, no. Yeah. All right. Please go ahead. Yeah. So basically, let me give some definitions first. So here's a one-liner that took me a very long time to understand. So product is merit and distribution is connections. For example, a great blog post that nobody sees is a great product with terrible distribution. Conversely, a really dumb article or whatever that is a piece of content that is in a feed that is seen by millions is a terrible product with great distribution. And these are actually essentially disjoint things. Sometimes you can build products that have distribution built in, like social networks or payment apps where they're inherently viral. That's why people like them. But most of the time, these are disjoint things. And you have to put as much thought into the distribution of the product. If you're selling chairs or something like that, it's not enough to make a good chair. You need to think about, okay, how do you get to Walmart? How do you get to this distributor? How do you get on Amazon? All those types of things are critical parts of making it work. And Peter Thiel has this good line, which is that distribution is the thing that just engineers don't get. Part of the reason I think they don't get it is that it's based on "connections." So it can't be just reduced to math or at least parts of it can be like your contribution margin and so on. But it is something where a lot of it is "networking" or "knowing somebody." And people don't usually put thought into this. But when you walk into a convenience store, why are some energy drinks pulled up all the way to the front? Like five-hour energy? Why is it in the checkout aisle and why others at the back? That is not an accident. That's a bunch of distribution relationships and deals because people are hyper conscious. The store owner's hyper conscious is the fact that being up front near the checkout is a great spot to move inventory. And that's actually more valuable to be there than at the back. This is a negotiation with them. Okay, what's my point? Point is that I think an enormous amount of our media ecosystem today is actually something where the product is terrible, but they've got a lot of great legacy distribution. So again, a software analogy, think about Microsoft or Oracle, which makes a database. Any engineer who's listening to this, the database is okay. But most people, if you're starting from scratch, you'll use Postgres or an open source database or a combination of some kind. So Oracle has kind of a bad product or a declining product in many ways, at least relatively versus open source competition. But it has great legacy distribution because it's got its hooks in all of these enterprises. The salespeople know them. It's also hard to extract it to pull it out. How does that relate to the podcasting thing? Well, if you think about distribution, not just for sales or for companies, but for ideas, media creators can have great content, which is great product, or they can have lots of followers or lots of influential followers to show the quantity and quality respectively of their distribution. And podcasters, when two people tend to do a podcast together, they tend to have comparable distribution. Because they have comparable distribution, X hundred thousand, Y hundred thousand or X million, Y million followers across platforms, not anyone platform, right? That actually is, it's almost like the Wild West where both people come to a saloon armed and armed society, polite society. Sounds like something that should be put on the license plates here in Texas. Yeah. And what I think it's done is it's changed the culture of podcasting. The thing is, when everybody's kind of comparable in distribution, the culture has changed to one of politeness back and forth, give and take, as well as the long form nature. The contrast to this is like a journalist versus a subject. Podcasting is peer to peer. Journalist subject is hierarchical. There's a journalist, a corporate journalist, an employee of immediate corporation, and then there's the subject, as in, you know, the subject under the microscope or the subject, and there's a king in their subject. And that word or subject to, that word subject is such a revealing word. It gives away so much. The journalist said the subject under the microscope. And the thing is, the journalist subject relationship, when the journalist interviews the subject, the journalist can edit, they can pull whatever quote they want, and they have the distribution that the subject doesn't. They have millions of folks who will read their thing. The subject can just squeak and can't get a word out, it's wise, you know, they can yell all they want, but it doesn't do anything. No one listens to them. It's just boom. That's why people used to say never argue with a man who buys ink by the barrel. You're writing a little letter to the editor and they've got, you know, they're rolling off the printing presses, right? It's as if you've got millions of drones that you can just hit enter and boom, just push software updates to, and this person can just talk to the people around them. Because that's what media is, media scripts, human beings. If code scripts, machines, media scripts, human beings, even in ways that we don't fully appreciate, you know, that's why people spend so much in advertising. You might think advertising doesn't convince you of something, but it just sort of reminds you that Coca-Cola exists. And then you're at the street, you know, maybe I'll get a Coke. That's how words are picked up. That's how vocabulary is picked up. A small example, if I said postulate like eight minutes ago or nine minutes ago, you might say postulate two minutes ago, right? That's a small example, right? That's not bad. It's just how we should think about it. Point being that once we are equal on distribution, then we can actually speak to each other as peers. And it's futile to try to argue with someone who has way more distribution in this hostile, you just need to build your own distribution, which is much more possible in the internet age. I agree with that. I agree with the, if we were to put it in in delicate terms, these mutually assured destruction, element of civility. I think there are also a few other contributing factors. One is that many journalists working under a masthead have the air cover, right? They have the air cover of not only the reputation, whatever that might be, it doesn't need to be the most prestigious publication, but the they have the reputational cover. They also have the insurance cover, right? The errors in omission policies in actual insurance, those clauses within actual insurance policies, and some degree of legal protection by their employer would be one. Another is that very often podcasters have experienced having their quotes cherry-picked or have been on the receiving end of a hit piece. And therefore, I think are just more sensitive to inflicting that on other people. Exactly. Empathetic. Yeah, they're more empathetic. And I would say that you see that very clearly, you see a shift sometimes, not always, in journalists, and there are many spectacular, wonderful, diligent, ethical journalists out there, some of them are very close friends of mine. In those who are, say, tending towards the kind of cynical, cherry-picking side, once they launch, this is how it usually or often happens, their own book. And now suddenly, they are at the whim of other media and other reviewers and other critics. They really, for the first time, sometimes get a large dose of their own medicine. And often that can can stem the tide a little bit. I would say last, not to get podcasters too much ethical credit, although certainly some of them and many of them are ethical. I think that it's very difficult to cherry-pick when you're interviewing in long form. Not only that, but both sides can very easily record. So there are a lot of factors that make it a friendly or format. Although, I will say, I have had podcasts that are highly produced try to pull a fast one on me before. And not that this is terribly relevant, but that was how I learned to listen and pay attention to my dog very closely, because it was one of the few times that this woman walked in. This is pre-COVID, as many years ago, to interview me with a producer and so on. And my dog growled. Wow. The dog growled. Molly growled. And that almost never happens. And I apologize for her growling and continue with the interview and very quickly realize that I was being led into a trap. And I just stopped the interview. I said, "Yeah, I think that if this is how you're going to approach it, we're done." And it turns out, if they're on deadline and they have a highly produced piece and they have a lot of employees and mouths to feed, that is actually a reasonably strong move, assuming you can afford to do it. It's just to not play ball, just to walk off the field. And so a lot to be said about media. Oh, absolutely. I mean, the thing is actually the non-answer, the ignore, the block is actually quite effective as an individual and even more effective if practiced by a large group of people. There's the site that if you saw, did quite well on Twitter and is like a minor hit. And I think you're going to see much more of that where essentially the issue is that a journalist versus subject, it's almost like a traveling salesman who goes town to town and runs a con on this person and the next person and the next person. There's this great book called The Journalists and the Murderer that actually documents. Have you heard of this? No, I have it, but that's a hell of a title. Hell of a title. It's actually in the modern library is like, I think, top 100 books of the 20th century. It's called Journalists and Murderer. It's by a former journalist and essentially it talks about how there's like this really brutal killer and a journalist who interviewed that killer and then published a story that was like a huge misrepresentation and the killer was like so mad, they sued the journalist and the jury actually ended up sympathizing with a murderer over the journalist once they understood what the journalist had done. So it's a phenomenal book. You should read it. Actually, you know, I'm going to read you the opening of it because it's so good. It's by Janet Malekam of the New Yorker. Okay, ready? Famous opening. Every journalist who is, this is her quote. Okay, it's not mine, but it's, all right. Every journalist who's not too stupid or too full of himself to notice what is going on knows that what he does is morally indefensible. He has a kind of confidence man praying on people's vanity, ignorance, or loneliness, gaining their trust and betraying them without remorse. Like the credulous widow who wakes up one day to find the charming young man in all her savings gone. So the consenting subject of a piece of nonfiction writing learns when the article or book appears his hard lesson. Journalists justify their treachery in various ways according to their temperaments. The more pompous talk about freedom of speech and the public's right to know, the least talented talk about art, the seamless murmur about earning the living. Okay, so I want to offer but by Janet Malekam of the New Yorker. So I wanted to say that's that's a journalist on corporate journalists, basically. For those who want to, there are two sides to this coin. And I want to say for those who want to further educate themselves on the dark arts and those gambites they might fall prey to, there's also a book called Trust Me I'm Lying by Ryan Holiday, which covers a lot of this, including the tactic of getting an email to 20 minutes before a piece is going to be published, asking for comment, which of course is intended to not elicit any comment or panic you, or other tricks. I'm going to be commenting on you whether you provide a quote or not, therefore you should do A, B, or C. But that's a good book on some of the dark arts and don't lose your place. I don't think you will because you seldom do. But this also lends all the more testament to those journalists who can withstand and methodically counteract these powerful incentives and motivations to actually do good work where they don't get sucked into this vortex of perverse incentives. So I do want to say that the people who are actually able to stand in the eye of the hurricane and do that, I give a tremendous amount of respect because it's hard. I understand what you're saying. I do think that the structural incentives in the profession now are such that you've got someone who's literally just swimming against the stream. And I think actually part of the issue is that it's a profession in the first place.

Balaji wonders if we should be cautious of relying on a standing media to deliver us the news of the day — or if there are better, decentralized options. (29:57)

And what I mean by that is, you know, like the founding fathers talked about how a standing military was a bad thing because you'd have this Praetorian class that was armed to the teeth, and there would be again subjects. And that Praetorian class was in drills, it had its own esprit de corps, its own sense of self, and would increasingly go contemptuous of these civilians who they watched over, you know. And that was a recipe for bad things. So that's what they preached against a standing military. Now the US basically didn't have a standing military for a long time until essentially the permanent wartime mobilization of the 20th century, especially World War II. You know, before it was like, you know, the ideal was to have citizen soldiers. Like if you've seen the movie "300 World," the Athenians come out and it's like, you know, I'm a potter and I'm a baker or whatever, and they grab an axe and go to war, but they're not permanent military. Now whether we can get back to a standing military, or rather away from a standing military to a citizen military, I think that's going to have to wait till mid-century when it's all drones, at which point that it's all computer programming. And actually, so that's, I know that's just a cast-off remark. So within the next 30 to 40 years, once we get to the sort of asymmetrical warfare where the cost of offense is much lower than the cost of defense with armies of drones, is that what you mean? Yeah, I think, I think basically sometime mid-century, maybe more, you know, and if you followed the, just as a footnote on a footnote, but the Armenia Azerbaijan conflict, right, which was heavy on drones, you know, that's a glimpse of the future warfare, you know, the future's already here, but it's not evenly distributed kind of thing. So I do think that eventually, once you get full automation of everything, it'll actually be just drone on drone and then, you know, people will surrender rather than have the civilian skill. It actually might be more ethical in some way. There'll be obviously a transitional phase. The transitional phase of human versus drone will sort of be like early in World War I, their cavalry charges versus machine goodness, my cavalry were just kind of this outdated way of war that quickly went away. Human versus drone, human versus robot will be like that, I think, and then people will quickly be like, okay, we just need robot versus robot. Anyway, so leaving the standing military bit aside, because I don't think that can be solved in the short term, by analogy, there's a concept of standing media. Standing media is, again, like a Praetorian class or a select class, a quote elite, that among themselves, practices certain behaviors that the average person can't. And what's interesting is NYMag had this thing a few years ago, like the media on the media. And it was, let's see if I can find it. Here's it, this survey, right? Okay, I'll just find you the exact thing. The media on the media July 24, 2016, 9pm. One of the biggest things that they all agreed on is journalism's biggest blind spot on its coverage is groupthink. We draw from a limited pool of people who generally have a similar background class or simply unable to see the perspective of people who are not like them and tend to drive out those who don't sit in. Now, I actually understand this coming from academia. I could see how that epistemic bubble happens. It's ironic that the people who complain often most about filter bubbles are actually complaining about the plural, because there was just one filter bubble that they controlled, and now they're annoyed that there's more than one. They've competing filter bubbles. It's competing filter bubbles, exactly. So the way I kind of think about this is the answer is not reform. The answer is not to tell these professionals, "Hey, go in journalism better," or, "Hey, you're doing a good job. This guy's doing a bad job." I think that's been tried for a very long time. I think the answer is radical decentralization in several ways. One critical way is everyone a journalist. So citizen journalism as opposed to corporate journalism. So this way you don't have a media corporation that's literally running billboards declaring itself to be truth incarnate. Let's exaggerate. That's literally the slogan of one large media company that shall go and name. It runs a billboard saying it's the truth. And yet these media companies are basically the big ones are nepotistic endeavors. They're passed down from father to son. They are everything that they castigate technology for being, which it isn't. They're these kind of inbred sort of things. And no one ever points us out. No one points out that the owners of these papers are actually just literally father to son kind of endeavors, which is not happening in tech. You don't get... People found their companies in tech. So the alternative to this hereditary dictatorship running these media corporations is everybody writes. And you have local expertise, you have chemical engineers writing on chemical engineering, and you have biologists writing about biology, and you have computer scientists writing about computer science. And they do it as a duty, not for profit. Meaning that it's actually the fact that there is this corporate business model there, basically currently incentivizes them to go for popularity and the number of clicks as opposed to truth. Now, you might say, are you against profit, etc. No, I'm saying that the citizen journalism part is one important component. Let me give two or three more. A second important component is decentralized cryptographic truth. And this is a big concept. I'm not sure I'm going to be able to do justice in a few sentences, but I'm going to try, which is to say, it is now possible with cryptocurrency for a Israeli and a Palestinian, a Chinese person, a Japanese person, a Democrat and a Republican to all agree on the state of the Bitcoin blockchain. Regardless of your political views, your geography, people agree on how much Bitcoin someone has. Okay, globally. This is an incredible triumph because, you know, a trillion dollars, forget it, I mean, a million dollars is the kind of thing that people will fight over and disagree on and so on. There's essentially no dispute on who owns what BTC. And that's the kind of thing that people tend to have large disputes over a trillion dollars people tend to fight over. They tend to try to fake history, they train to forge things, all the type of stuff, right? The point is that once you can develop consensus algorithms that can get people to agree on what Bitcoin someone had at what time, you can extend them as we're doing to get people to agree on what property somebody had at what time, so what stocks, what bonds, what real estate, what this with that, which is again, another huge component of the kinds of things people fight about. And then less obviously, you can extend that to what events happen at what time. So what device recorded this temperature in Kansas on this state? Or what hospital uploaded this medical record to the blockchain at this time? Or what was the price of this house that was sold in this area? Or what crime was reported by this victim or this police officer in this area? All of these feeds of data right now that are happening in these kind of disparate silos, you put them together into something I called the ledger of record, which is a global feed of cryptographically time stamped history, undelitable history. And it's kind of like Twitter in the sense of when people are referencing whether something happened, they're like, "Is that tweet real?" And you go to the permalink and you want to see whether someone actually does it. That's imperfect for many reasons, one of which is that Twitter can man in the middle it, another is that the person's account can get hacked and they can post to someone else's happened last summer. With cryptography with digital signatures, that going into all the details, that offers not a perfect set of checks, but a much greater set of checks on this comes much harder to falsify history. You can't delete the tweets as Twitter can do. There's a lot of things that come into it where that feed becomes incorruptible. It becomes an indelible ledger and it comes cryptographically validated. And so what I think in crypto, this is called cryptoracles. The point being that you're no longer lying on just pure humans, fallible humans, tell you what is true, you rely on decentralized cryptographic truth rather than corporate truth. And this is already the kind of thing which is the input to smart contracts, handling millions of dollars. I think we're going to scale this out for the next 10 years. And this is actually the alternative to a few folks in Brooklyn trying to determine what is true for the entire world, which simply doesn't scale, not that it ever did, but it's very obvious that it doesn't. All right, let me pause there. A lot to digest is more I could say. That is a lot to digest. So it'll be very interesting to see what happens to long-form journalism that is pieces that would take possibly weeks or months of time, dedicated time to produce, but putting a bookmark in that we can always come back to it. Just a quick thanks to one of our sponsors and we'll be right back to the show. This episode is brought to you by Wealthfront. Did you know if you missed 10 of the best performing days after the 2008 crisis, you would have missed out on 50% 5, 0% of your returns. Don't miss out on the best days in the market. Stay invested in a long-term automated investment portfolio. Wealthfront pioneered the automated investing movement, sometimes referred to as robo-advising, and they currently oversee $20 billion of assets for their clients. Wealthfront can help you diversify your portfolio, minimize fees, and lower your taxes. Takes about three minutes to sign up, and then Wealthfront will build you a globally diversified portfolio of ETFs based on your risk appetite and manage it for you at an incredibly low cost. Wealthfront's software constantly monitors your portfolio day in and day out, so you don't have to. They look for opportunities to rebalance and tax loss harvests to lower the amount of taxes you pay on your investment gains. Their newest service is called Autopilot, and it can monitor any checking account for excess cash to move into savings or an investment account. They've really thought of a ton. They've checked a lot of boxes. Smart investing should not feel like a rollercoaster ride. Let the professionals do the work for you. Go to and open a Wealthfront investment account today. You'll get your first $5,000 managed for free for life. That's Wealthfront will automate your investments for the long term, and you can get started today at There are a few things that I would love to get your opinion on, perspective on, and I'll give a preview of the two. One will be current forms of self-defense, whether preemptive or reactive, while we're waiting for the future to be evenly distributed. What can we do in the meantime to protect ourselves or counterpunch if we're being potentially mistreated by members of the media?

What can we do to protect ourselves as we wait for the future to be evenly distributed? We dive deep into everything from achieving financial independence to auditing our social ties to securing our privacy with a pseudonymous economy that could diminish the effects of cancellation and discrimination. (40:27)

After that, I'm going to ask you about for yourself keeping a ledger of predictions, much like you've recommended people to write out the bull bear and base case of joining a company and then checking themselves. Let's first talk to any particular strategies or tactics for defending oneself. I have several. The first is maybe the least obvious, which is you should radically produce your expenses if possible, because financial independence is upstream of individual independence and ideological independence. If you're in lots of debt, if you're not in debt, but you're just spending every dollar you have because you live in an expensive area, then you are extremely conformist because, "Oh my God, you lose your job and you have no savings and you've got this high consumption." You just have to stay in line for everything. Now, if you want to live like that, go ahead. If you don't, the first thing to understand, I think, is that it's much easier to reduce your costs by 5x than to increase your top line by 5x. It's possible to do both, but it's almost deterministic to reduce costs if you're willing to do it. You go to or and you do a spreadsheet and you optimize your personal runway. Your personal runway is what it sounds like. It's very obvious, but just extends to corporate runway to individuals. It's your savings divided by your burn rate. Here's the thing. The moment that you move to, let's say, Bali or some very inexpensive locale and start living like a grad student, and of course, this is most applicable for people earlier in their life. It's harder for folks with families and what have you right. I recognize that, but even then, it can be done. There's a Reddit group called LeanFire, Financial Independence, or Terror Early. There's Mr. Money-Mustaches folks who do this kind of thing like household budgeting. But as an individual, it's actually relatively easy. We do now, and this is actually even easier in 2021 than it was when I first started recommending this. You get a remote work job at a good tech company. That could be any company, of course, but let's just say tech is pays well or whatever, if you can get it. But a remote workable job, you move to the cheapest place that you can tolerate that's good. There's actually some really great places that are cheap and warm, especially now that remote is feasible. Basically, all of Latin in South America, if you have to be in an American time zone, for example, and big chunks of Canada, if you like the cold, and of course, the Midwest and what have you. There's huge areas of the map that have opened up thanks to remote. If you do that, and if you cut your expenses, 5x, now you go from just as a thought experiment, let's say you're making, I don't know, 100,000 years in engineer, and before you're in San Francisco and you're burning 90,000 of that a year or something. That's actually not insane. A lot of people do exactly that, because the rent is so high. Now you go to some rural locale or even overseas, and now you're actually only burning, let's say, 50k a year, 40k in tax or what have you, and then like 10 or 20k, let's say it's 60k, 20k in expenses, because you just cut it all the way down. Well, now every year that you work, you have basically built up, because if your income goes away, your tax goes away as well, every year that you work up, if you're spending 20k a year, you have 40k in savings, if you just do out the math, earn 100, spend 60, bank 40. If your spending is 20, then you have two years of personal runway added for every year that you work there in this simple toy example. And that means that you don't need to accept angel financing, you can sell finance, you can just, for every year you work, you can take two years off. It's basically a way of getting personal financial independence, like a deterministic path to doing it. Now, of course, you're no stranger to this, you've been talking about this stuff forever, the four-hour work week, and this is not unusual for your audience, but I think that the perhaps somewhat novel is connecting this to ideological independence, because it means you can't be canceled. You can just ride it out, like the Square Jod Chad, yes, from the memes I'm talking about. No, no, I don't. What is the Square Jod Chad? Okay, okay, this is very, very online. But if you Google the Chad, yes, it's like someone being like, "Oh my God, I can't believe you believe this," or whatever, and the guy's like, "Yes." And then he's just not backing down at all, just totally firm Square Jod Chad. You never seen this? No. No, it's all right. I didn't know who Taylor Swift was until like four years ago, so I'm a little sheltered it would appear. Yeah, it's like it comes from, yes, Chad, nor your meme here. I'll send you the thing. Anyway, I'll put this in show notes for people right next to Drone Warfare. 99% of your audience is, maybe it's obscure, or maybe it's, I don't know, but we'll have to see. Anyway, the point is, how do you do the Square Jod Chad? Yes, it means you have to be able to, you know, you're not backing down, you accept what consequences may come, because you have planned for the future. You know conflict may come, and you have essentially banked up. And so that's, let's call that one piece, right? Financial independence. Right. And it requires, not the state, the obvious, but it requires, or may not even require, courage, the less fear you have. Right. If courage is acting in the face of fear, if you have minimized the risk or the damage of being canceled, or any type of media retribution, you have less fear to overcome. It just makes it easier, like you said, to have that ideological freedom to hold the position. That's right. The second thing is, if you read books like Beautiful Trouble, do you know what that is? I do not. Okay, so that's like, I feel like I'll be saying, I don't, and I do not, a lot in this conversation. Please continue. No, no, no. It's a beautiful trouble, is an awesome window into another world, which is, it's sort of like, you know how, it's a handbook for activists. And so you sort of learn, when you read it, you'll be like, whoa, I recognize that from this event, and I recognize that from this event. And you start to realize actually how much stuff you read in the paper. Some part of it is sort of from corporate PR. But another big chunk of it is from activist PR, for example, taking a laser pointer-ish thing and shining a logo onto the side of a building. There's various kinds of stunts like this. But the one that's relevant here is, there's this concept called spectrum of allies, where you've got people who are at, let's say there's five categories, strongly supportive, weekly supportive, neutral, mildly opposed, and strongly opposed. And your goal as an activist is to recognize you can't just move people from plus two to minus two right away. What you do is you try to find some incident or thing that is bad, and then you go and you put a microphone to everybody, and you force them to comment on this person or the sensitive like, can you excuse this horrible thing? And you try to force them from a, you know, a plus one to a zero or it happened, right? Now that is actually a very premeditated thing. One way of visualizing it is it's an attack on your social network. Okay, this is a premeditated thing. It's not like a organic thing. And it's spectrum of allies. And one way of thinking about this is you have a social network supply chain. Okay, so visualize yourself, you're a node at the center, and you have your employer, let's say your CEO, you have your investors, you have your employees, you have your customers, right? There's all these nodes around you. I'm talking about from like a tech startup context, but you can of course generalize this to something else. And those nodes can be colored, you know, let's say they're gray or blue or red, they can be colored according to their ideology. And the most important thing about your social network supply chain, and this is not obvious, it is what periodicals they read and respect. Because those periodicals have root access to their brains. If a periodical suddenly says, you know, let's say the Wall Street Journal, and you've got a bunch of Republicans surrounding you, for example, right? The Wall Street Journal suddenly says you are bad. All of those people who read and respect the Wall Street Journal will suddenly like the zombie like turn their eyes glowing red and start excommunicating you, or they'll move in the spectrum of allies. So the guy who is on the fence may quit. The person who's really strong and strong supporter might move to what the minimum contractual obligation is. And so the attack, it's like a mortar that lands in somebody's social network neighborhood. That's what negative presses, negative presses, an attack on your social network. Now, how do you mitigate this? Well, first, as I mentioned, you're like a quote sovereign individual, you're financially independent. So if people pull away, it doesn't matter. But second and more important, you need to actually identify where likely attacks you're going to come from, and make sure you actually choose your friends, your employees, everything, such that that's actually robust to foreseeable kinds of attacks, right? You robustify your social network supply chain in the same way that a judicious person who runs a manufacturing plant is thinking, okay, China has some supply chain risk. You are thinking, okay, that person has social network supply chain risk. I think they would go south in this event. And then you might want to get them off the board, or you might want to not hire them as an employee or have them a contractor. And that's actually better for them as well, because they may or may not know it, but they're basically like the Manchurian can't. They've got like a remote chip in their brain. And there's like this when you're denounced. Okay. And now we have it actually relatively good in the West. And the term canceled by the way, it's actually very juvenile. It kind of comes from like TV shows being canceled, like cancel cultures like teenagers complaining about it. And this sort of elliptical way of complaining about it has made its way up to 30 and 40 and 50 something discussing this topic. But the original term for being canceled was being purged. That's what they called it in the Soviet Union and the People's Republic of China and so on, right? And it could well be said that in the Soviet Union or the PRC, an editorial was a prelude to an extrajudicial execution. You wouldn't just, you know, get canceled and lose your friends. You'd lose life, liberty, and/or property. You'd be shot or jailed or certainly expropriated or all of the above. Sent to a labor camp in the Cultural Revolution. Correct. And the other nodes in your social network might be as well. Like if you were, you know, a member of a family that had a known capitalist rotor in China, not really very good. It was possible just like people come back from being canceled. Deng Xiaoping was actually purged three times. His son was thrown through a window and, you know, looked during the Cultural Revolution and was in a wheelchair for the rest of his life. So, I mean, this is the kind of stuff that happened in other countries. It got even more violent than it has so far in the US. But we'll see what happens, you know, with that. Anyway, point is that, you know, so that's a second mode of defense versus personal financial independence and second is collective independence. You want to really think through who the nodes are that are associated with you. By the way, one interesting consequence of this, if you flip it around, is if you have a monochromatic supply chain, there's basically nobody, for example, at the New York Times company who reads and respects Breitbart. So Breitbart has zero effect on the New York Times company. No node there can be mentoring candidate by them. But the New York Times company, absolutely, on if you go to Breitbart's like extended social network supply chain, there's absolutely folks, you know, whether it's ads or other kinds of things that read and respect in YT. So, A can publish articles, no effect on B, but B can publish it and it has an effect on A. Another example is if Xinhua, Xinhua daily, and by the way, I'm not saying anything pro or con about Breitbart and my team just make an observation of fact there. Another example is Xinhua net, you know, in China, the Chinese, you know, people's daily. If you're Chinese and they denounce you, your whole social network supply chain is like, whoa, the government just announced this guy, you're in trouble. If you're in the US, nobody even reads Chinese or even cares. Hey, these guys are totalitarian. Who cares? Or at least that's what folks, you'd be able to brush it off. And so it's more than just quote, red or blue or whatever. It is, there's other colors to it, right? Whatever you assign the color to the CCP or what have. And so, you know, another one might be if Al Jazeera denounces or Russian state media denounces you. You've got vulnerabilities to different kinds of things. If you were a Russian expatriate, you might be much more concerned if, you know, RT suddenly started going after you, then if you were just some random, you know, American or even a Chinese person, go ahead. Let me pause there. Well, I was thinking we could be curious to hear what else you have thought about for yourself in terms of self-defense. If there are any tactical recommendations and just also to come back to one of the examples you gave with reducing your expenses by 5x, would you not? So it's a combination of questions. You can take them in either order. But if you were employed by a tech company, whether that's a Google or Facebook or otherwise, is that not a significant vulnerability in the system? Well, financially, if you maintain your job, you can withstand, say, public denouncement or media denouncement. But the company may not have the same willingness. Absolutely. Absolutely. So let me get to point number three. So point number three is I gave a whole series of talks on this and I've been thinking about the technology for it as well, something I call the pseudonymous economy. So the thing is that real names weren't built for the internet. Real names are actually a technology. In fact, real names are stolen base in many ways. Even the term real names is stolen base. It's better called a state name or a social security name because it's a global identifier. It's an identifier that anybody can type into a database and pull up all kinds of information on you. And this is something where historically past cultures understood that giving out someone's real name was actually very bad, you know, or knowing it, you had power over that person. The reason is that if you read this book seeing like a state, seeing like a state. Yeah, seeing like a state. This is a great book by Yale University Press that essentially talks about how names were developed to among everything simplify the process of conscription. So rather than oh, that guy over there with brown hair, which is an analog identifier that could refer to a bunch of folks and those imprecise and said to say, John Davidson. And that first name last name was a it's not perfect. It's not quite as good as a number, but it's a reasonably good digital identifier where you could go down a list and cross it off. And the thing is that that would not just be conscription, but you couldn't have even executed like Leninist redistribution of property very easily without those lists. It was all about the list. Literacy is what actually enabled a big chunk of it on the list of names. That's guys rich. That guy's not rich. Take his property, et cetera. So the point being that the alternative to real names or like a single global identifier and everything is pseudonyms, search resistant identities, which people are already using at large scale. There's 400 million pseudonyms or pseudonymous users on Reddit. And by the way, there's a distinction between anonymous, pseudonymous, and real name. Anonymous is totally disposable identifier. That's like the culture of fortune. That actually is kind of a, pseudonymous like Reddit is a persistent pseudonym that accumulates reputation, but that is at a distance from your global identifier. In general, what I think is the, you know, the piece of Westphalia at the end of our 30 years internet war is going to be- Hold on pause for definition. If I could click on, do you say Westphalia? Yeah. So from 1618 to 1648, Protestants and Catholics slugged it out over religion, but also over power. You know, who's going to rule the Catholic church, you know, or, or, you know, Martin Luther's guys, disciples of Protestants, very bloody war, lots of killing. And it was basically centralization versus decentralization, you know, along other things. And eventually, the truth that came about was the so-called piece of Westphalia, which established the modern nation state. I was just thinking how, how happy it makes me that you thought I might even know that. I'm so honored. So thank you. But please, please continue. I don't want to, I don't want to take us off track. But just that just that just it made my day that this made my day. I don't mean to drop an obscure reference. And there's lots of lots of areas of history that I don't know about. But this is one that I think about a lot because it's highly relevant, I think, to the present day in many, many different ways. Arguably, the 30 years war arose out of the introduction of the printing press, because you could go and mimeograph, you know, all of Martin Luther's stuff and spread to people. And that's how, you know, you did the software install, boom, into people's brains. And that's Protestant Reformation distribution, you know, took off. So this technology gave rise to this huge fight that essentially redrew the map. And the concept of the nation state was born out of that, which is, okay, you don't have these transnational entities that just can have influence everywhere. Instead, we're going to have these geographically defined areas that have a sovereign government with a monopoly of violence. And a religion can't just walk in there and just start washing people around. There's like a lawful government. That was the truth that people came through. You stay in your lane, I see in mine, just out of all the bloodshed and to stop the bloodshed. So I think we've just began, hopefully there's not bloodshed or not much of it. I think we've just begun. People think we're ending it, but I think we've just begun the global internet like Cold War, where all of the social networks currency networks compete for ideological and economic dominance around the world because they can just spread virally back and forth like this. And everyone will be trying to cancel each other and whatnot. It's going to be this crazy, crazy thing. You know, for example, one thing I anticipate will happen sometime in the 2020s is, I think in some country, probably the US for lots of reasons, I think the cloud will burst. And what I mean by that is something, you know, like Treasury was just recently hacked with the solar winds thing. People don't know what they got. They could have gotten every tax return. They could have gotten all kinds of very sensitive stuff. And it was hacked with what? I'm sorry. Oh, solar, solar winds is sort of the name of the hack. And the scope of it is not fully understood. It's like this total onage of all kinds of government systems. And this is not the first time this has happened. It's also happened at the government of Texas and so on. So for them, not pointing at any particular entity. The main thing is when there's a recent hack of Ledger, the crypto company, their database was just blasted on the internet. And you could actually, you know, I wasn't a customer, but people could see their name and their home address on the internet. And they're like a crypto fanatic who has a hardware wallet on there. What a nightmare. What a nightmare. Oh my god. And so it is like this thing where, you know, you don't, you can't easily change your home. I mean, some people can suddenly have guys in track suits showing up at your house. Potentially exactly. It's like a rank order list of who holds crypto. Really, really, really sucks. May lead to home invasions, other kinds of things. Very bad piece of information to have out there. It's an enriched list. So it's hard for, you know, the thing is even discussing it, I hate bringing more attention to it. On their hand, it's also something which has important consequences. And one of the consequences is that shows it's not a theoretical risk to think about what these hacks could be. So far, people have talked about hacks kind of in the abstract. But once a government database is hacked and all of this surveillance on us is just blasted out on the internet, the cloud bursts, you know, whether it's what does that mean? Like by the cloud, all Facebook DMs rain down, all slacks rain down, something like that. Rain down meaning are suddenly searchable and available. Certainly searchable and available. Consumption, wiki leak style. Exactly. Now, when that happens, the defense that people are going to now it'll cause all kinds of crazy stuff. Basically, it's not so much that you'll see fires and electrical outages and so on. But like all kinds of social damage will be caused, low trust, relationships broken, all that type of stuff like the tearing of the social fabric. Go ahead. Well, I was just going to say not to mention that even if you feel like you have nothing to hide, and this is an issue with a lot of surveillance act bills and things like that. If suddenly every lawmaker, every member of Congress has dirt on them, I mean, the destabilizing effect is non-trivial. It's not trivial. Now, there's an argument that when everybody's naked, no one is. Some people may not. Right, right. Sure. But it doesn't all happen at once. That's the thing, right? It's not all discovered simultaneously nor distributed simultaneously. Exactly. That's right. And if you look at what happened during the Sony hack and so on, this is like a preview of that. And so the answer, I think, is we're going to need to build a pseudonymous economy where over the medium to long term, you separate out your real name, your earning name, and your speaking name. And in fact, you have multiple earning names and multiple speaking names, just like you have multiple usernames at different sites. Crypto is a crucial component of this because it allows you to earn pseudonymous and with a recent innovation that I haven't coded it up, but I've got the white paper level description of it would let you transfer reputation from one student into another. So one issue right now, just to frame the problem is you may have a bunch of reputation followers or karma, for example, under a username, even a pseudonym. If you boot up another pseudonym, it starts at absolutely zero, which is one of the big things that stop people from doing it. Let's say, you know, for example, you have a large Twitter following and you boot up a new pseudonym. That pseudonym starts with nothing. And so it takes you time to boot up like a new following. That's a whole effort that deters a lot of people from doing it. They're starting all the way from scratch. And I thought about this problem and how to, because the thing is that with cryptocurrency, we've actually solved this where you can set up a username and another username and you can use Zcash transfer money from one name to another, pseudonymous. So money can be transferred. Reputation, though, didn't seem to be. Until I realized that actually you might not be able to do it for followers, which are non-fungible, that I say one person is not like the same as the other. But you could do it on a site like red, where you had karma that was accumulated. And so someone who had 10,000 karma under one pseudonym, just like you use Zcash to transfer digital currency, Zcash is basically like the truly anonymous version of Bitcoin, truly private version of Bitcoin. Just like you use Zcash to transfer cash from one name to another, you could use Zkarma to transfer karma from one username to another and thereby reboot under a new username. And that username would have no common history. But people would be like, okay, that's a 50,000 karma person or whatever the number is, clearly that somebody who our community, as seems to some extent, has been up-loaded a lot. Perhaps we should listen to what they have to say, because they felt they had to go into a pseudonym for this. And of course, you could do this with not just a global karma, but subreddit-specific karma. You accumulate all this karma in the, I don't know, the historian subreddit or the mathematician subreddit or something like that. You have something controversial to get off your chest. You can say it this way. That's one dimension of the sedonymous economy. I think another dimension is basically that people, just like you don't give out your password, you know, I think it's going to become less and less and less common for people to give out the mapping between their physical body and their usernames online. Like you may not even tell your wife, you know, just like, you know, people often. When you mean physical mapping, that just means you're not going to correlate those two things for someone. That's right. Exactly. Right. So essentially, it will be considered a faux pas. And we're already moving towards this, right? Like there's this, this YouTuber, whose name I forget, who's like, shick, is that he's like a faceless guy, like faceless horror or something like that. What's his name? Don't I'm talking about? I don't know, but we'll, we'll find it and put it in the show notes. Okay. Yeah. So, this guy's name. Corpse husband. Corpse husband. I heard of him. Okay. C-O-R-P-S-E husband. Corpse husband. So this guy with this super deep voice, he sounds like this, you know, like, like, like, like, I can't even, I can't even mimic it. This guy with the super deep voice is never shown his face. So corpse husband, basically, you know, he's quasi anonymous. He's given away his audio, but not his video. And, you know, I think that stuff like that, I mean, what's, I think what's going to happen soon, sooner than we think, probably by 2025, 2030 latest, is you'll have filters on your Zoom that are not simply like, oh, my background is San Francisco or whatever, but audio and video filters so that you sound and look like a different person. And that will be like the equivalent of clothes. The FBI informant filter, something like that. Or it's just, just something where people don't need to know who you are. And here's where I think why I call this a piece of us volume. I think at the end of this, Rainbow is not the right metaphor about this journey. Student MD stops both discrimination and cancellation. So it is, it's not ideal, but it is accepted and widely used by people of all political persuasions. And so it's sort of like a mutual disarmament where you can't cancel somebody. The only thing you can do is judge them by what they're saying. You can't discriminate against somebody. You don't even know what their immutable characteristics are. And so that's actually, I think, an acceptable truce to many parties. Not a great one, but it's the total opposite of bring your full self to work, Google stuff, or whatever. It's actually the total opposite trade off, which is minimum necessary self. And I think this goes hand in hand with a future world where there's more tasking, more micro work, less full time jobs. And so on, some of the stuff, obviously you've touched on many times. All right. So there are lots of questions I could ask, including what are, we've talked about what it stops, but not what it produces or what side effects or perverse incentives could come into play with a synonymous economy. I think we might get into that, but I just want to ensure that I don't miss asking a question. And this is really a meta question of sorts. And if it's a shitty question, you can tell me and we'll do something else. Sure. I had, for context, as you mentioned, or maybe as I mentioned, I think it was on January 30th of 2020, is there's a week after the lockdown in the city of Wuhan. You posted a tweet, what if this coronavirus is the pandemic that public health people have been warning about for years? And you ended up predicting accurately many things related to COVID. You have certainly been a participant. And in some respects, by participating a predictor of many developments in blockchain and cryptocurrency.

Roam Research co-founder Conor White-Sullivan once said: “‘Balaji was right’ might be the most terrifying phrase in the English language.” Eerily accurate early speculation about the COVID-19 pandemic aside, how would Balaji strategize a sizeable investment made today? (01:07:29)

And for that reason, I had a laundry list of questions related to different types of possible predictions that you might have. But I thought a broad strokes way of checking all of those boxes might be, and tell me if this makes any sense, or if you're game to try this, is to actually talk about investing. And just to say, if someone handed you a hundred thousand dollars or a hundred million dollars today, and you had to invest it, how would you even think about that? Because I think by answering that, it might actually begin to speak to some of your predictions in the upcoming years. Sure. Think about that framing. Sure. So basically, I mean, like, I never give financial advice. Right. I was just going to say, right. What is this? Is it? Is it a disclaimer? Yes. What would you do? This is not financial advice. We're not registered investment advisors. caveat, amped, or this is for informational purposes only. No miners or minotaurs allowed, et cetera, et cetera. Please continue. Sure. So the question is, if I was given a hundred thousand or a hundred million dollars, what do I do with that? Like, how do I maximize returns? So the dumbest thing, but that I think is the most obvious thing to do, is put half into Bitcoin, half into Ethereum. The dumbest meaning, the simplest or the most ill-advised? No, no, the simplest. Like, the simplest thing that I think is, you know, guaranteed to produce really exceptional returns, I think you could probably do, I mean, in retrospect, from, I don't know, 2030 looking back, there'd probably be something you could do that would be bet, not probably there will be almost certainly something you do that would be better than that. But that's going to do extremely well. I think it's a global strategy also. Go ahead. Is that what you would do? Now understanding you've sold multiple companies, you've had multiple exits, you are post-economic in, I assume, in that respect. But you said to maximize returns, and I'm not sure if that is how you would think of the objective at this point. So is it objected to make the maximum difference to humanity, or is it to maximize returns? Or what was your... It's whatever you would do with it. Oh, okay. Well, what I would do is something very different. So I thought you meant invest on behalf of somebody else. Okay. Well, in a sense, you answered that. So I'd love to hear your personal take. Sure. Okay. So I'll tell you what, at least I'm planning on doing, which is pouring money, some of my own, and maybe some from investors, if I set your raise money, into bootstrapping talent around the world through 7029. So just return to that, because we were talking about that at the beginning. This is going to be the first newsletter that pays you. And so that's to say, daily, at least $1,000 in Bitcoin prizes for doing tasks. Okay. So for example, here's an essay. The best 10 responses to it get $100 in Bitcoin. Here is a scientific article. The best 142nd video on this gets $1,000. That explains it to the masses. Here is a textbook or a chapter of a textbook. Please generate 10 exercises for this chapter that are fully open source that anybody can do. And I'll give you $100 in Bitcoin each. So that's cumulative, like an open source, Coursera, open source Wikipedia in a sense.

What participating in 1729 — “the first newsletter that pays you” — would ideally look like. (01:10:55)

And the goal here in doing this is several fold. First is I want to actually build up those citizen journalists that we talked about, those content creators. Second, I want to invest in like a cumulative form of open source education, where these folks are doing tutorials. So for example, those 10 questions I just mentioned, they could be on science, but they could be on video editing or other kinds of things. And it's all just open source so that people get paid for creating the educational tasks that others can do. How are those two things related? By the way, I know it seems a little vague, but let me explain. So you have these tasks that people are completing, and you have educational content that people are creating. The reason they're related is there's global tasks that anybody can do, but you might be able to get paid more if you know Figma, or if you know Python, or if you know Chemistry. And so the educational tasks that I also pay people to do are like a curriculum that if you solve these tasks, you can level up and get higher value, remunerative tasks. The basic idea is go ahead. May I pause you for a second? So if you have a task, like create 10 exercises based on this textbook or this material, can multiple people perform that or complete that task? If so, do you pay all of them? How do you decide who to pay? That's a great question. So the review process, actually, we allocate as much of a budget or a good chunk of the budget, just a review, because review is its own thing. And there's various ways of doing review. And we're going to experiment with a crowd sourced aspect, like a Reddit style leaderboard of up and down voting, and then a manual review on top of that. And then there's like 50 different things that you can do to kind of make this more sophisticated. In a sense, this is like 3.0. There is, there's coinbase urn, which is actually doing extremely well before we sell to coinbase, is essentially pay people to reply to emails and complete tasks. And then coinbase urn was asset issuers, like creators of new cryptocurrencies and digital assets would pay users to do tutorials on their assets to learn about how it worked, like Filecoin or Orchard, how to use decentralized storage or decentralized VPN. And this is like a third iteration, which also combines a bunch of ideas that I've had for online education. So just to summarize it again, a newsletter that pays you with at least $1,000 a day in Bitcoin prizes for completing tasks and tutorials. And then b, what this does is hopefully it bootstraps talent all over the world. Anywhere there's a phone, there's a job, right? We can give this guy hook to people and you can just start with nothing, absolutely nothing other than this phone, which people have made really cheap. And you can do the tutorials, you learn some skills, you level up, you get more tasks, you start leveling up more, you get digital currency. So anywhere there's a phone, there's a job and there's an education. And this is what I plan to do with what I've been fortunate enough to make. And that's my contribution to humanity, I think, or hope it to be. And hopefully this helps find also the next for the next one, there's this kid in Brazil or the Middle East, somebody in some more torn area, like Syria, it's all bombed out. But hopefully that kid has a smartphone and we can airlift them out, give them a shot if they're willing to put in the work and be all free.

How Balaji envisions 1729 as a skyhook to rescue the world’s brightest minds from places that usually get overlooked — like developing countries and war zones — or allow them to operate on home ground pseudonymously. (01:14:01)

So let me pause there. That's at least what I'm thinking about doing. And I know it's idiosyncratic use of capital, but I'm not the tech to spend on drearies or whatever. Yeah, I would expect no less. So let's just say that there is a bright kid in Syria, who I'm struggling so much because I'm accustomed to saying Ramanujan, but I'm getting that in correctly. So Ramanajan, and he's performing, or she is performing various tasks at a high level. What do you then do with that talent? So presumably they develop some type of reputational score or they accrue some type of reputation. How do you airlift that kid out or encourage them to airlift themselves out? Is it the capital? Is it that they now have the resources to in greater optionality to perhaps improve their situation? Or is there another approach because they could be brilliant and continue to complete these micro tasks? Right. So three thoughts there, right? So first is, of course, you know, Syria is an unusual case because it's actually a war zone. We could use another example if it's easier. So let's say, you know, it's Nigeria or it's India or it's a place where maybe the kid doesn't actually want to leave. They don't want to leave. Now they have their cake in the air too. They can have home cooked food, they can have their local culture and local language, but they can also get into the internet fast. And they can contribute, suit on nicely, ideally, to a community that will neither discriminate against them nor cancel them because the accent doesn't matter, their age doesn't matter, skin color doesn't matter, gender doesn't matter, none of those things matter can't matter. That's at least my idea, the true global meritocracy. And that's international, of course. And so the concept here is, yes, they would start earning. And the thing is a thousand bucks, even once in a year is actually a lot of money for people in a lot of places. So that's like quite a lot of people that we can airlift out that way. I want to say airlift, as I said, I don't initially mean remove them from that location unless they want to leave. They might be able to stay there. I mean more like airlift them from whatever situation they're in, at least give them the opportunity. And what does that mean in practice? Well, one of the most important things it does, I think is this is the, again, if this works, Sam Bishis and it's crazy and so on, but let me try and explain it anyway. This is actually the digital need of solution to education. Here's what I mean by that. So you can think of a piece of paper and then you can think of a scanner and then you can think of a text file. So you go from physical to this hybrid physical to digital scanner and then digital native. Another example would be you've got a face-to-face meeting, you've got zoom and then you've got virtual reality. The zoom is also like a scanner. It's taking the offline and putting it online, but then VR is like digital native. Third example, physical cache, then something like PayPal or FinTech, which is just basically the scanner taking that and putting it online. And then you have crypto, which swaps out the back end is just now natively digital. It doesn't have a physical form. And with education, you have at least higher education offline, you've got the physical college, then you've got the scanner, which is like Audacity and Coursera and so on, which are fine companies, good companies, billion-dollar companies, you know, but they're basically taking the college experience and putting it online. And then there's this really interesting terra incognita of what is digital native education look like.

A digital native solution to education that qualifies students to work as they go instead of waiting years until a full degree is earned. (01:17:37)

So let me kind of motivate how that works. And then you can see how maybe that links in with the tasking piece. And I say this is something that's taught a lot of courses, whatever. And you know, so this at least it may be a mistake, but it comes from my experience of mistakes for it. So let's say you take a Stanford degree in computer science. There are on the order of 25 courses you need to complete the degree, give or take, and that's in addition to so-called graduate education requirements. And each one is roughly, each course roughly 10 weeks and say on the order of 10 problems per week, sometimes more, sometimes less. So that means about 2,500 problems, 25, 10, 10, 10, 10. You need to solve 2,500 problems before you get your one degree. So it's like, you have zero degrees at problem 2300, and then you have one degree after problem 2,500. I can't catch your it, but not by much. And after you have your one degree, you go and now you can actually get paid and you can work and so on and so forth. That's a historical thing, get your degree in that work. Now, of course, this is only an idealization. People will do paid internships and so on during college. So after, you know, 500 problems, they have enough qualification to go and get some, you know, job or internship, that's true. But to first order, this is how the system is still meant to work, right? Get your diploma before you get a job. Now, one of the things people used to say, sort of a caricature or attack or whatever of a audacity of these nanodegree is they say, oh, you gain a nan degree? Well, you better expect a nanosality. You know, oh, ha, ha, ha, right? It's crap, whatever. So the thing about that is, what if you take that seriously? What if you say, all right, rather than this step function, this discontinuous degree, I have to solve 2,500 problems before you get a job that's paying 100k. What if you solve five problems and I give you a job that pays you 10 bucks? A microtask. And we see how you do on that. That radically reduces a risk for both sides, your risk in terms of, you know, spending all this time learning something and the employer's risk. And frankly, you know, the difference between a person who solved five problems or one problem in JavaScript versus zero is actually a big difference. It's a, you know, that's actually a big difference. So the idea here is that if you could show proof of skill somehow, right? If I could demonstrate that I have some skill in JavaScript or I have some skill in chemistry or skill in Illustrator, whatever, then I could qualify for more skilled microtasks, right? As opposed to the mechanical Turk style, low-scom denominator, which is fine, but that's just like labeling something as a cat or a dog. All you need is a pulse. It's the the recapture style thing that you see, you know, labeled the cars. That type of stuff is fine, but that's like just all you need is a pulse. You don't need any skill. The question then becomes how do you actually do proof of skill? And I think the answer is something, and I've got a post coming on this, which I call the crypto credential. And the idea is every time you solve one of these problems, we don't give you karma, like on hack or news. We give you a little badge that says you solve that problem. And that's held in your digital wallet, just like your cryptocurrency. Think of it as an NFT if you know what NFTs are. So it is an NFT, basically, right? Except it's non-transurable. And just, just to side note, for people who are interested in learning more about NFTs or non-fungible tokens from remembering correctly, Katie Hahn and I discussed this at length in that podcast episode, which you can find elsewhere. So just Google her name, H-A-U-N, and my name and no pop right up. So please continue. Awesome. Okay. Yes. No, Katie's awesome. So the idea is this would be, this is not something you can resell. So it's not an NFT, it's not like a piece of art in that sense. It's a third application or anth application of crypto. It's not cryptocurrency. It's not art. It is a crypto credential. It's awarded to you. And the first version of those are just you solve problems on a website and you earn these crypto credentials. Just like you earn badges that stack overflow, just like you earn badges in a video game, you earn these crypto credentials. The difference being they're on chain. And because they're on chain, you can log into any site with them.

How do you pseudonymously show proof of skill? Enter the crypto credential. (01:21:33)

And now you can qualify for instant jobs, micro tasks. Now, here's what's cool about this. There's a lot of details in how we implement this, which I can get into. But what's cool about this is it levels it all out. Yes, absolutely. There's smart people at Harvard, MIT or Stanford. But there's smart people in the middle of Brazil and in Hungary and India and Nigeria and the Philippines. And I know there's smart people there because I could see them in my class. And I could see that many of them were the equal or the better of some of the more pampered kids at these expensive schools, especially nowadays, where there's less stress on just getting the right answer and more on canceling people or whatever, right? Like undergrad is much more screwed than what, especially in the US than it was even 20 years ago, 10 years ago. Plus, because the pandemic, lots of colleges are shut down and they're having economic problems, there's a huge desire to do something better. And the concept is, if we do this right, it's like Wikipedia for education, because every course is open source. The problems are out there. It's like an open source curriculum. We're going to build it on the exorcism framework, at least that's my thinking right now, I might change my mind, but This is an awesome site, by the way, got a funny name to like exorcism, but with an E. And exorcism basically has something where you can learn Python by doing like 50 Python problems, or you can learn that's very cool by doing like 70 JavaScript problems. And it's recorded on the site. It's like you see this counter go up and just think about how much better that is than typical social media, where all you're doing is fighting for clicks or whatever, you know, fighting for hearts on Twitter or likes on Facebook, whatever it is. And that's something where you're just incrementing numbers on somebody else's server. I'm not saying it has zero value, there is some value to it, but it's not value that you can easily quantify or extract from the system. You know, you've built up your followers there, you can't import them or export them. It's not really building up yourself. So that you're behind would be, you would constantly be pursuing your improving your knowledge and your bank account, you constantly be learning and earning, you'd be learning and getting these crypto credentials and then that would allow you to earn cryptocurrency. Now, the third thing actually, and this is something I've been also thinking about starting with that year of and maybe we'll do this is you may think this is crazy, but you're also the four hour body guy. So I'm already crazy. I think I've crossed that Rubicon a long time ago. All right. So the third thing I was also thinking about is actually putting up a third kind of daily post, which is burning. That is to say, just post something of you working out and we give the hundred best each day like $10 in BTC. And it's a varied health task and not just working out, maybe it's show your fitness tracker or what vitamins are you using or something like that with a goal being that people who are at Sibtitrana and are focused on truth, health, wealth, learning true things and leveling themselves up that way, like gaining knowledge, health, like improving their body, their physique, but also, you know, like saving off aging, you know, thinking about transhumanism, measuring themselves, and then wealth as important, but third, truth, health and wealth in that order, because, you know, determine what's true, make sure to maximize your health, and then accumulate wealth, but don't do it at the expense of what is true or what is good for your health. Go ahead with your smiling. I love that. I love it because, I mean, not to bring this to the fore our body seems like a down grade, but the, the, I mean, like I'm very proud of that book and happy. Great book. And a lot of what was in there that seemed highly speculative at the time has only gained more traction and support and literature and so on. So I'm very pleased with that. A large component of that and especially the four-hour chef, which can very confusingly is about accelerated learning and behavioral change. The disproportionate impact of small incentives and stakes is, I just think, so under-discussed.

Don’t underestimate the power of microincentives. (01:25:27)

And one of the stories that I tell in the fore our body, I believe, was of a Google engineer who hoped to get in shape and he created a pact with a fellow engineer, which was we're going to work out together, whatever it was, three days a week. And if either of us misses a workout, we're going to pay the other person a dollar. Now these are Google engineers. They make more than a few dollars a year and it was incredibly effective. And the fact that it's a micro incentive leading to a micro behavior should not be minimized because ultimately our life is largely comprised of longitudinal accrual of these micro behaviors. It's a big fucking deal. So I love that idea. I love that idea. Let me backstep if I could. I knew this was going to happen. So no surprise here. But I realized that I did not deliver on the promise of one of my questions and that question was related to, so we're going to focus on the earning component here for a moment just because I want to ensure that I provide what I promise to the listeners. I asked the, what would you personally do in this case to maximize return with 100k or 100 million? And then we didn't dig into the predictions or assumptions underlying your answer. So the answer was half in BTC, Bitcoin, half in Ethereum. And I'd love to hear you comment on number one, the assumptions of what's going to happen or not happen that makes that a rational investment. And number two, and maybe you can answer this first, if you could paint a picture of what you consider the risk profile to be in doing something like that. And again, this isn't an investment advice. It's part of the calculus, an assumption that this is a 10 or 100 extra, it's a zero or something else. If you could just speak to that. Sure, sure. So, I mean, look, it's crypto. So crypto is crazy. And it's very difficult to predict exactly what's going to happen with anything. But the two things I said that I would do with the money are there's return on investment, there's like return to society. And what's interesting is actually when you talk about the, you know, so return on investment is 50% BTC, 50% ETH return to society is the sort of open source education, tasking, truth, health, wealth thing. And you know, by the truth, health and wealth, I think of as the next liberté, egalitarian return to today, it's the slogan of the next state, which I'll come to.

How does Balaji rationalize a “half in Bitcoin, half in Ethereum” investment, and how does it tie into shifting establishment dynamics? (01:27:51)

Okay, or one of the next states. But coming back at the stack, so both of those things actually have common premises underneath them, which is that I am simultaneously very bearish on the US specifically and the West generally, but very bullish on the internet, technology, crypto, Asia, and, you know, future progress. And those are not normally often somebody is very positive on one and positive on the other, or vice versa. Now they're actually separated out. They're separated out. Thanks, because for a long time, people associate technological progress to the USA. And now, technological progress is something that doesn't benefit the US establishment. They don't win a game. The East Coast establishment does not win a game of free speech and free markets. And so that's why they're clamping down on free speech and free markets, because if everybody has a voice, especially around the world, go ahead. Why do they not? Could you just say a few more lines on why that's the case? Sure. So why they don't win that game? Why those things are bad for the East Coast establishment? Well, so, you know, a small example of not winning a game of free markets, whether it's the bailouts, whether it is all the regulations that protect them, or the whole GameStop thing, you know, where it definitely looked like some strings were pulled somewhere. I'm not saying the Robinhood thing, you know, because I think Vlad gave a pretty good, you know, explanation of that, you know, for people who follow that whole scenario. But certainly discord going and just shutting down GameStop discussion out of nowhere based on, I think, a pretext seemed like someone pulled some string somewhere to make that happen. And that's something where truly free markets maybe Wall Street doesn't win, right? There's a rigging that's going on. I see. So by East Coast establishment, just to be clear, you mean specifically in the financial sector, do you also mean DC? Media, DC, Harvard, like basically, the legacy kind of entities in the US, right, like the pre-internet establishment. And then like free speech, that's even more obvious. Every single day, you have some new editorial saying something like free speech is killing us or critical thinking is bad or, or whatnot. And, you know, oh, I can't believe people are having unfettered conversations, right? That was like the latest meme. And for many people, this is like this weird thing where how is it that the US that they grew up in has suddenly just done a 180 on this. And the answer is that those folks have legacy distribution, but they have a terrible product. They can't win the argument. And because they can't win the argument, they're trying to use their distribution to shut off other people's distribution because they know they'd lose the argument if distribution is open to all. So they're against free speech, against free markets. And crypto is actually truly free speech and free markets. So that's actually the true inheritor of the Western tradition. It's sort of like the internet is to the USA what the Americas were to the UK. It's like this new world that will eventually give birth to the successor. And crypto is like a huge, huge part of all of that because it captures, you know, the part of the West is actually globally admirable, you know, unambiguous rule of law, except in smart contracts, protection from search and seizure through encryption, you know, all the types of stuff coming back up. You asked the why, why are you not winning this game, right? Because first of all, empirical observation, what's the underlaught pinning thing? Well, they basically become these inbred folks. They are not selecting on talent anymore. They are selecting on connections, just like on whether you were the son of the son of the son or the daughter of the daughter of the daughter. It is not something where they are actually taking the best folks. They are taking the folks who can just repeat a party line. I think that's one huge component of it. Just for sake of clarity, do you mean within corporate entities therefore contrasting sort of? He's got media, for example, take a look at how many of those folks went to private school? How many of those folks have a trust fund? How many of those folks inherited a fortune? Just for me, how does that tie to the BTC ETH? How does that tie? Those folks, they lack the skills to win an affair competition. There's various rigging that was done, most obviously with the bailout since 2008, but there's so many other items of this. That's just a very high profile one. In response to that, technologists developed Bitcoin and Ethereum and these free systems. If you look at the Genesis block, it says it references the bailout in the Genesis block of Bitcoin, where it's essentially the counter to this sort of nepotistic East Coast establishment. To me, that's super obvious, but you're right that it's actually useful to lay out the full logic of it. One of the consequences here, or one of the medium-term things is you can only use force to clamp down on global free speech and free markets for so long. It's like a jack-in-the-box that will just pop out somehow. One way I think about that is after the financial crisis, basically the way that they decided to stop the next crisis is, they made it almost impossible to get a banking charter. You punished the banks by limiting all of your competition. Somehow, Fintech and Crypto found a way. Different threads coming to the same thing where basically working above, doing partnerships, working below, despite the front door being closed, technology came in through the windows in the chimney or what happened and it's actually sort of reforming the system against their will. Like Dodd-Frank did not reform the banks, it just sort of enshrined them. It was a coronation in the name of a regulation. It did reduce some of their profit levels in some ways, but it made them more invulnerable. Go ahead, you're going to say. No, I'm smiling. I'm enjoying it. For those who can't see us because we're probably not being publishing video, we are currently on video so we can watch each other's facial expressions, please continue. Sure, sure. I like the coronation disguised as regulation. Right, right, exactly. It is literally picking winners because you're writing the regulation that assumes a certain structure and capital requirements. The concept of a smart contract was not contemplated in Dodd-Frank, like a contract that could be executed independently of a judge or a person. Okay, what's my point? Point is, as faith in the pre... I mean, I don't think many institutions that predated the internet will survive the internet. It is this universal asset and the reason is because it connects people peer to peer. And so what that does is it... One of my laws of internet physics is the internet increases variance. Okay, why? First let me give the observation, right? The observation is you go from 30-minute sitcoms to 30-episode Netflix binges or 30-second YouTube clips. You go from a stable nine to five job to a 20-something billionaire or a 40-year-old fail son who's made nothing of themselves. You go from a taxi ride, it's a standard taxi ride, to Uber, which actually has very long trips and also very short ones. The whole thing is spread out relative to the ride time of the normal taxi. And the reason for this, like this is a very common thing in every area. Like in every... I've seen hundreds, probably thousands of companies at this point. I've seen all these graphs, right? So you'll have to believe me that this is a synthesis of a lot of different graphs that I've seen. When the internet disruptor comes in, variance increases. There's more downside and more upside, more amazing outcomes and more really bad outcomes in all kinds of ways. Why does that happen? Because it connects people peer to peer, entities peer to peer, it removes the middleman, it removes the mediator, it removes the moderator, it removes the mediocrity. Now, each of those words has a different connotation. Getting rid of the middleman, everyone shares, yay. Getting rid of the moderator, people are like, oh, I'm not so sure. Getting rid of the mediocrity, again, everybody shares. So those are all kind of similar words, but they mean somewhat different implications.

Crypto Regulation, Risks And The Future Of Internet Surviving Institutions

Why does Balaji believe that “not many institutions that predated the internet will survive the internet” — including nation states and fiat currencies? (01:35:44)

But they're all true at the same time. So what happens is you have these communities that then arise where nodes that can never connect to each other, boom, they form some bizarre subreddit or some amazing thing like ETH research, which is put, or Y-combinator. So it's like a... And if you're centrifuge, anything, have you ever centrifuge anything? I can finally say yes to something. Yes. Okay. All right. Great. So you centrifuge and you get these different layers out, right? This... You mostly samples of some tissue or fluid from my own body. There you go. There you go, right? So if you centrifuge something, you see all the layers just... You can often see them just in the test tube itself. And you're like, whoa, that was like a slurry before, but now it's like very defined. There's a supernatant in those layers. And in the same way, that's what the internet is doing. It's just like basically taking all of these previously mediating, mediocre, moderating middleman institutions and just nuking them all. And they're like trying to fight back, but they won't make it. The centrifugal force is too much. I think the one exception might be the Chinese Communist Party. That might be the exception of the Prusal rule. Just because they were like super early on a lot of this, they built the firewall. They may be the exception of Prusal rule. And the future may be a centralized east versus a decentralized west, where what I think happens in the west, you see this greater Idaho thing, for example? Have I seen which? Greater Idaho. So a bunch of counties in Oregon want to break away from Oregon and merge with Idaho. Catalonia wants to break away from Spain. There's all of these breakaway movement type things that are ever happening. It's like a rumbling that's happening. Quebec, there are quite a few examples of... I mean, I have a Texas t-shirt that says most likely to succeed with a picture of the state. Not that that is, but actually you could look into the formation document, so to speak, of text. It's kind of fun. But yes, I'm not familiar with greater Idaho, but I'm familiar with the breakaway movement. And the thing about that is, I think some of that is bad, some of that is good, but the centrifugal force, the whole thing is juddering. The system is juddering because folks are unhappy with it. And I think one of the reasons for that is, going back to Westfali, one of the Westfali in assumptions is that people who are geographically proximal are ideologically proximal. They say, you live next door to this guy, therefore you share his language, you share his culture, you share the norms for the most part, you know them, you say hi to them, all the tips. In the modern era, people live in these apartment buildings where they couldn't recognize somebody who lives 10 feet away from them, but they're sharing the most intimate moments with people 3000 miles away via Snapchat or Twitter or whatever. So this variance, just again, to try to tie some of these threads together, the variance increased by the internet and what you're describing, these are to the benefit of, in this case, Bitcoin and Ethereum. Yes, yes. And now the reason is, there are examples of the extreme upside. There are examples of like several things at the same time, right? First, those middlemen are going away, you know, the whether it's the old nation states, I mean, they'll fight, they'll get me wrong, you know, it's not going to be a trivial thing. Some of them will reform, I'll come to that point, I don't think every state just goes away. I'm not like a total techie-topianist in that sense. But first, there's a loss of faith in the past, and that makes people open to turning the constant into a variable. A dollar sign, this fixed dollar that everybody knew into well, I can have fiat or crypto. Something that was a constant is now a variable, fiat or crypto. Before I was just fiat, it wasn't even thought of as fiat was even, was fiat even a word 10 years ago? I mean, like people, people never heard it. You never heard it, right? But I thought it was, it was a car, I think it was a car when I was a kid, and now it's crypto. Exactly. That's right. That's right. So, so, or rather, it's opposite of crypto. Okay, I see. I'm sorry. You're right. You're right. It was, it was a car. Jesus, well, I'm tying myself up in knots here. Yeah, it was a shitty car, and now it's a shitty, debased currency. Yeah, exactly. That's right. Right. So, so essentially, many things we have taken to be constants have been turned into variables, because there were constants due to that mediating influence. And once people could connect peer on the internet, you could see there are actually more permutations and more levels, and those people started getting more of a voice. And that's true in so many different areas. I just point out, you know, this one, you know, for example, just the digital versus physical versions of everything. You have to specify whether it's a snail mail or an email 20 years ago. Now it's almost all email. So, or the meeting is an in-person meeting or an online meeting. The reason that BTC and ETH are important is first, they represent the sort of unbundling from the old system, where it's no longer able to corral all the nodes, the nodes don't all trust it. It isn't performing the functions that they all wanted. And the top ones can now escape to build something better, which they did on the internet. And that I think becomes the new center that people align around, like the digital native kind of thing. Because I don't believe that you just have all these particles flying around forever. I think we're in the age of unbundling, and then eventually rebundling. I mean, you know, like there's that thing by Jim Barksdale, right? The only way he knew how to make money on the internet was unbundling and bundling. It was a very funny kind of thing. It's also true. You know, you think about, you unbundle all the songs from all the albums, then you rebundle them in Spotify playlist. You unbundle every single article and website in "You're All in the World" and you've rebundled them into a Twitter feed. You unbundle all of these different, actually, there's a lot of things I could talk about with unbundling here. But you unbundle all these different products, and you have them on Amazon, you rebundle them into like shopping lists or whatever there. So you can click and just buy like 50 things at once that are, they're served by, it's as if you have your own store shelves. This is your prep or shopping list. And there's a thousand things like this if you think about the unbundling and rebundling. But I think the next step is because states of mind and nation states no longer map to each other, because people are friends with millions of people around the world who share their values, but they're not physically concentrated, the physical areas have less volition by their subjects. So they have to enact more coercion. And more coercion, in turn, leads to less volition and leads to less legitimacy. And that's a negative feedback loop where at the same time people are building bonds with other folks of like mind that are geographically disparate. And that is something that's exerting like a strain on the whole system, which I think eventually results in mass migrations and people assembling into communities of like mind to sort of rebuild civil society with folks who they agree with ideologically. And that's already kind of happening with hacker houses. And so I wrote an article on this, by the way, eight years ago in 2013. I think it's really started to happen. I think it's certainly happening in a small scale. I mean, I'm very, I'm aware of a number of concrete examples in places like Utah, upstate New York, and so on, where this has been, I think, dramatically accelerated by COVID. Yep. And a mass exodus, at least for the time being, I don't think this is permanent, but out of city centers to question not to belabor this point, but I think it's a useful tool to use in the conversation. In the case of BTC and ETH, how would you think about downside risk? And what would need to happen or what might happen or not happen that would make them bad investments? Great question. So I think that for BTC, because it's like a 10 year old protocol, if the attack on BTC that I think would be the most likely is that the Chinese put up the great firewall against it. So it's a network level attack as opposed to a mining attack. Because the thing is that Bitcoin assumes that every node can reach every other node. So or every mining node can reach every other mining node. So it assumes a global internet. If you put up the firewall, you can work out the kind of predator prey on this, but they block port 8333 and the Bitcoin devs do port randomization and then they do, de-pack an inspection. These guys do tunneling to try to put it over SCH, HTTPS. There's a back and forth that can happen there. I think at the end of the day, the firewall is pretty sophisticated and that plus domestic penalties may make it challenging for people to maintain a blockchain indefinitely in China. Or what would happen is they mine the China chain and the rest of the world chain is also being mined. And there's like a peekaboo problem where they sync up every once in a while. And because the China chain would have more mining, the rest of the world chain would have less mining. All the blocks mined the rest of the world would get thrown away with a chain reorganization. And the China chain would basically periodically throw away every transaction that was happening for us world. That'd be like the worst case scenario where remember two things would have to happen there. First, they'd have to put up the firewall and second, they'd have to allow Chinese mining to continue. At some point as you're describing this, I'd love to hear you assign a probability if you had to, like 0 to 100% over a time frame, right? Like in the next five or 10 years.

Addressing downside risk, what circumstances might make Bitcoin or Ethereum bad investments? (01:45:06)

I'd say 30% chance of a firewall attack. It's not 100%. The reason is because it's just something, I mean, Bitcoin is like a guy who's like extremely strong and muscular on many dimensions, but can be hit from a direction over here, which is just an assumption of the protocol is that every node can reach every other node. And depending on the location of where mining is happening. And so now, to be clear, I don't think this is a fatal blow. I think what would happen is in the event that China allowed mining to continue, but put up the firewall, which is like the most Machiavellian thing they could do. They're pretty smart. Right. And the 30% that you assign was only for the first part of that, correct? Not the allowing mining to continue. Well, if they do both. So, so being I think it's very likely they're going to do a firewall attack at some point. If they do that and shut down mining, no problem. And the reason is because there's enough rest of the world or whatever, you know, mining to continue just means that Chinese can only transact in the rest of the world. They have to like either go overseas or pick up the phone and speak the words to somebody to execute a transaction. China will never be able to actually eliminate Bitcoin because of the way it's constructed. But they could try it seriously. If they've really went after it as super aggressively, they're the only state in the world that I think has a combination of total disregard for individual privacy or human rights, totally organized, top down surveillance regime, which gets a workout every single day with a firewall, you know, like that combination. The US government can't mail checks to people on time. So a lot of people think the US government could do some technical, the US government is incapable of a technical attack. The US government can't set up a website. It is not the entity that we know from the movies, which may be never existed. But, you know, the US government from 1933 to 1968 could do like Hoover Dam and, you know, like Manhattan Project in Apollo. That was like a generation that is long since gone. You can't think of the last impressive thing that happened. Go ahead. Well, I'm just smiling. I'm just enjoying this conversation tremendously. It's not because I have something to say. Although now that you give me the mic, I'll ask a question that perhaps is just on the mind of people listening. And that is that 30% that you gave, does that mean that biology is saying there's a 30% chance of Bitcoin being a bad investment? No. What I'm saying is something different, which is in the event of such an attack, like a firewall, attack, what would happen probably is a few things. First, depending on how it manifests, people might actually move over to a quasi-trusted chain for a time. That's to say you'd put some form of signature or hash into miners when they put it out there to prove that they were a non-China miner. And you'd actually temporarily move away from the Satoshi algorithm of heaviest proof of work chain to heaviest trusted proof of work chain. You actually have to introduce some trust potentially to get around it. That's one option. The other option is that it's like a fork of the chains. And this is an event that they do the firewall, but they also love mining to continue, which is like the most Machibillion thing that's possible. However, if there's some other issue with the Bitcoin protocol, the thing that I'm pretty sure will never disappear is the Bitcoin ledger. That is replicated in some of the places that's so valuable that in the event of some issue with the Bitcoin protocol, the ledger could be imported into a hundred other chains and would be. It's already done with all these forks or whatever. But for example, Zcash could just double their supply from $2.1 million to $42 million and just give refuge to all Bitcoiners. Snapshots in a particular timestamp. Everybody who has private keys before then, you've got a spot on the Zcash ledger. The same thing could happen on Ethereum. The same thing could happen on all these other chains. It's as if your stock would get split into a hundred different or a thousand different instances. Your private keys would still find your future. That, now, the sum total of all those values, that might be a price hit. There's no question that there might be a price hit there. Maybe it's even more. Who the heck knows? It's just crypto so unpredictable. I can't even say what would happen because some of the forks have done extremely well, way better than I would have expected. That would be a tower of Babel moment, where you'd still want to hold onto your private keys, but it'd be all these other chains that would back you up. It would be messy, but I don't think the idea of cryptocurrency can be defeated at this point. I think any individual chain remains to be seen how robust they are. I don't think that cryptocurrency has a concept goes away. It's similar, by the way, to file sharing, where Napster got sued and Kazaw got sued. The BitTorrent and Magnet links in the Pirate Bay are still around. BitTorrent streaming is quite good. What was that? Popcorn time. Popcorn time is actually quite a good app. That's basically streaming with a quality of an iTunes or whatever. BitTorrent streaming. That doesn't mean I'm not saying it would be a bad investment. I think that's the most likely attack I can see from the Chinese side. That's specific to BTC. For BTC. On the US side, not like other algorithms, other consensus algorithms have a greater degree of partition tolerance built in, for example. The fundamental thing you'd have to work out is tolerance for extended partitions, where a big chunk of the network can't see another big chunk of the network. Then you'd have to detect that. You'd have to maintain a log of which nodes you were able to reach. There's ways of doing this. It's non-trivial, especially non-trivial in production, but it's possible. A lot of smart computer scientists work. You'd have to have partition tolerant chains, which could exist. Number one. Number two, with respect to what the US would do, the US would probably do a regulatory attack, because that's a one part of the state that's still functional. They can pass regulations and yell at people and job with them and so on. What happened in New York with a bit license, I think, is a harbinger of what is to come. New York overestimated their clout. They're like, "We're in New York." Of course, we're going to regulate all crypto stuff. What are you going to do? You're going to go somewhere else. It's New York. It's the best. That's not what happened. Instead, what happened was every crypto company was like, "Actually, the world is very big now. New York is the last place that we're going to operate, like literally last. We'll operate in 40-0, and there are states in New York last." That just meant that actually New Yorkers got financial innovation last rather than first. That one regulation, the bit license, was something where these folks who were, at some point, the big apple, quote-unquote, was number one. They just overplayed their hand in an arrogant way because they didn't understand the guys who got them there were an arrogant like that. They were always hungry coming up. They were folks who understood, "Okay, New York has to do this. Has to do that." These folks had been born with. They inherited the system. They just thought they always had that leverage. I think that's a microcosm of what the US might do, where it becomes super unfriendly for crypto or it's possible. I think it's also possible the resistance comes from the US. This is something that I have very low probability on. I think it can go many different ways. The future is uncertain. So the regulatory, federal level regulatory attack in the US, you view as a low probability event? Or just a low consequence event because those companies domiciled in the US who are focused on crypto just redomacile? It's not that easy to just do that for lots of reasons.

How can we expect crypto regulation to play out in the United States? How are cities, states, and countries with an eye on the future currently signaling their friendliness toward innovation? (01:51:57)

It is not easy. It's not that easy to see that. I think US incorporation in the sense of being incorporated in the US is going to be considered a major vulnerability in the future, I think, after the 2020s. People ideally will want to incorporate on-chain and then have jurisdictions that respect that because that's global rule of law. You can put your shareholder vote in there, you can put your board of directors vote in there. Everything can be done on-chain in a better way. Just like you can print out a document locally or exchange Bitcoin locally or have email work everywhere, you'd basically have local governments or Twitter works everywhere. Local governments would actually adapt to the on-chain realities rather than vice versa. That's starting to happen. Now to the federal point, go ahead. I was just going to say that sounds like a company or organizational response to federal regulatory attack. I'm wondering what, if anything, individual retail investors who hold Bitcoin could or would do? Sure. I'd say go to Miami, go to Wyoming, go to places like that, maybe Colorado, which will be sanctuary cities and states for crypto. Why is that? Is it just because you have the first two at least or new state income tax? I don't know because Wyoming and Miami have a lot of taxes. There's places that are low taxes. That's actually the thing. The mayor of Miami, Francis Suarez is awesome guy. You should follow his Twitter, basically, may single-handedly change governance in the US because he just got out there and he innovated in a way. He's got the personality of a startup CEO. Have you followed this at all? The whole Miami thing? I haven't. I should. Okay. Who's the name one more time, please? His name is Francis Suarez, his mayor of Miami. Last fall, one of my friends actually after observing the latest catastrophe in San Francisco was like, "Why don't we just all move Silicon Valley to Miami?" And Francis Suarez retweeted with him with, "How can I help?" which is the VC, kind of a cash phrase or whatever. By the way, I'm not cynical about that phrase at all. There's people who try to make it into something to be mocked or attacked and making everybody cynical. It's actually a good phrase. Even if it's not lived up to 100%, it's way better that that said than not said. Anyway, so you put up, "How can I help?" And then the contrast with California, basically a legislator there told Elon Musk, F.U., literally on Twitter, and Elon replied, "Message received," versus, "How can I help?" enormous gap between the two. So Miami suddenly, basically, began, go ahead. You're laughing. No, I'm just shaking my head. So it's like, "Who? How is that a good move?" And just just like it boggles the mind to me how that type of response is productive. They are getting local positive feedback for that. They're people who are cheering them on Twitter, F.U. Elon, ha, ha, ha, etc. Right? Like the stupid peanut gallery type stuff. Yeah, and then Elon moves to Austin, and there you go. Exactly. He said, "Master received, got that out." And this is the thing. So Suarez essentially has recruited all of these tech and finance people to Miami by literally just being friendly on Twitter and doing coffees with them while coming to the city. Billions of dollars in capital, all these companies have now moved to Miami because- Smart. Yeah. That's smart. That's right. And so essentially you have, he spent, I mean, the ROI of every tweet has to be like a million dollars. If you did a thousand tweets to recruit like one billion dollar company to the city, right? You can score it however you want. Maybe it's not a billion dollars for the city, but the market cap is going to get distributed somehow. It's going to be spent some fraction of that. It is ROI is phenomenal. And the thing about it is you don't actually need 10% of the world's governors or mayors to be like Francis Suarez. You just need 10 because those folks will be these technologically progressive leaders that will recruit tech and finance to their cities. And Dubai is doing this, Sony is doing this, Switzerland is doing it. Chile for a while had a start, Chile program. All of these places now see their opportunity if they're smart. And many of the legacy mayors don't understand what's just happened. Basically, COVID has put us into the remote world. And now you're more like CEO of the city than a typical mayor. That's so true. Totally true. See the city you're always selling. You are selling your city. And crucially, there's a new path to power. You don't need to go mayor to governor to president, right? You don't need to get on national TV. You don't need to politic an angle for a spot at the national convention or go to national media. Instead, by just doing sales every day, by essentially getting on, whether it's Twitter or some social media platform and just getting out there and talking to folks, recruiting folks and pitching your city and improving the product of your city, he passed, he got a bill through, which was like, oh, Miami is now like a pro-Bitcoin city. And he's like, actually, it's the first city to buy Bitcoin. How like the thing about it is, oh, he also put the Bitcoin white paper on Here's the thing. There are a bunch of governments into this, right? Estonia, Columbia, Miami, et cetera, all in a little boom lit a few weeks ago, put the Bitcoin white paper on their site. That thing is on the one hand, of course, that's just a symbol. On their hand, it's actually a great signal that that's actually a crypto-friendly place. It doesn't cost them anything. You know, it doesn't commit them to anything. What it does do is it puts out a flag. And if you can't get the white paper on a government website, maybe that place isn't actually that friendly to crypto. And if you can, there's at least somebody there who's pretty friendly to crypto. It's actually a really great filtering mechanism in that sense. It's much more than symbolic because of the bureaucracy involved, right? It has to actually get the nod from quite a few stakeholders in order for that to happen, right? So it would seem entirely or could be entirely symbolic if it were just an individual blogger for it, but for it to be put on a website like that is signifies much more. Quick question for you, again, just to, I mean, it's just much for me is for people listening. What are the implications of federal regulatory attack for those who are not able or not willing to move to Miami or Wyoming or the handful of places? Yeah. So Wyoming also, by the way, has amazing crypto laws. And basically, my thesis on those, just to hover on that for a second is those places will probably litigate and fight some federal kind of thing if it happens, just because they have a strong incentive to all their citizens are there and so on and so forth. So that's actually good because it drags it out for a long time. We see what happens. To be honest, I don't know. I don't know what the answer is. I think that things are going to get really crazy because here's the other side of it, that crypto ban, if it's contemplated, will happen at the time that cryptos created thousands of millionaires and billionaires, not thousands of billionaires, but like a lot of very wealthy people who are ideological. These are the kind of folks. The more crypto you have, typically, it's more correlated with buying into crypto in 2011 or 2012 or 2013 when it was an out-of-the-money thing to do because you were basically ideologically, you made a bet against the monetary policy of the US. You said, "Bailots are bad." And you said, "This is actually despite what everybody's saying on TV. I don't believe that. I actually want to make a contrarian." And as it turns out, right bet, not quote, "QAnon" or something, but contrarian, correct. You know what I mean? And that's actually like the whole teal thing. You're actually making something that is in that quadrant. And so those folks are not folks who are likely to just go down without a fight. The whole thing, these are activists. And also highly anti-authoritarian, generally speaking. Yes, but capable of organizing. So it's an important combination, right? The way I described the community actually, I mean, this is the best part of the community. There's all kinds of crazy actors in crypto who I wouldn't endorse. But maybe this is an idealization. Maybe this is the community I want to build. But I think it is fair to say that the best tech folks and the best crypto folks are Win and Help Win, which is actually neither... I agree with that. Yeah, so here's the thing about that, right? That Win and Help Win is neither progressive nor conservative nor libertarian. And let me explain why. Okay. So first, conservative. You know, your typical conservative actually just, you know, made this a caricature. Maybe some of your listeners won't like this or there. But like, they just kind of want to stay at home. You know, they want to do their 95. They want to just have things done. They're not as ambitious. They don't want to leave their small town. They don't want to go bright lights, big city. That's not dispositionally small, seek conservative at least. Your progressive often has a very zero-sum mentality. They may be ambitious, but they often believe at a very fundamental level that the rich are rich because of poor poor. That one person's gain is another person's loss necessarily. And they feel it's a zero-sum conflict in the state, you know, is their weapon and so on. And the libertarian will say, "Live and let live," which is a vision of little house in the prairie, all being by themselves, etc. And Win and Help Win is none of those three. It's ambitious in a way that the small city conservative is not. It is positive sum in a way that the progressive is not, and it is collective in a way that libertarian is done. And I think that's actually like the most powerful kind of philosophy where you are, and notice also the ordering, the sequencing, Win and Help Win. That is to say, "Absolutely, take care of number one." That's important, because if you don't do that, you can't help others win. But do that as well. Two questions for you, and I'm sure many more, but it strikes me that what Francis Suarez is doing, what Wyoming is doing is very valuable as an experiment and also possibly as different prototypes, and that there are governors and mayors who would be very interested in learning more about this, but they don't know how to approach it. Is there a list of what these different places are doing, Estonia, Dubai, etc., Miami, or anything, a resource that one could point mayors and governors to, who want to possibly look at testing different aspects of embracing Bitcoin or cryptocurrency? Actually, this is one of the first sent to try and tasks that I wanted to commission, because I've got a bunch of these.

Why Balaji believes “win and help win” is neither progressive, nor conservative, nor libertarian, but a concept that beats them all. (02:02:22)

I want to see whether folks can crowdsource the rest, and then we just put that into the lecture. Amazing. So let's do this experiment. I've got like 10 or 15 of them, but I'm sure I don't have the global list, and maybe we can just get that in the day. Second, because I asked about the probability you would assign to the Chinese side of things, when we were discussing that earlier, what probability would you assign to the federal attack, regulatory attack, or shut down in the United States? A regulatory attack of some kind is basically like 100%, in the sense of, like Mnuchin already tried something. The question is, what level the attack will be? How should that factor into how somebody thinks about, or how you might, I'll make it personally in? How would that the regulatory attack potential factor into how you think about investing, or not investing, or bet sizing with BTC and Ethereum? So the thing about this is, an attack is not necessarily successful. That's why it's in regulatory attack. And the reason is that there are lots and lots of people across the political spectrum who are very pro-crypto. Pro-crypto people tend to be more pro-crypto than anti-crypto people are anti-crypto. With some notable exceptions, I think that's true. They just feel more passionately about it for all kinds of reasons, ideological, financial, technical, whatever. And they're extremely online. And many of them are crypto-rich, say, all the time in the world to be extremely online. And they're extremely into establishment and so on. Say, punch massively above their weight. This is a non-answer, but let me give you something that I think is interesting. Back in 2011, all the early Bitcoin people thought that, or not all, a good chunk, let's say on Bitcoin talk or whatever, I shouldn't say all, but a good chunk of people thought that once more people knew about Bitcoin, crypto itself wasn't a thing, it's just Bitcoin then. Once more people knew about Bitcoin, well, then China and Russia and every country that wasn't the US would adopt it, and the US would fight it really hard. And actually, that's not what happened. What happened was, once there was money to be made, a whole bunch of people who weren't just interested in a purely ideological project, but were maybe ideologically sympathetic and could invest came off the sidelines. That's what happened in 2013. And that was this enormous strengthening of the ranks that was able to make the argument that this was financial innovation, because there was technical and monetary upside, not just an ideological project. And that actually meant that the greatest support in some ways came from within the US, and in fact, places like China and Russia were actually more bearish on crypto and still are, then the US is in many ways.

So it was like the regime and the opposition are like both the strongest within. It's this hard thing for me to fully articulate it, but if that makes any sense, it's sort of like, both the problem of the bailouts and this giant monetary system that's failing the world and the solution are both coming from within the US or the West, which is this kind of crazy thing. But it's actually similar in something like the three-body problem where the Chinese invite the aliens to the world, and then they have to solve it. It's like Homer Simpson, like beer, the cause of and solution to all man's problems, right? I was just going to say, it also strikes me that your vulnerability to regulatory shutdown also probably depends on the form in which you hold Bitcoin. Oh, yeah. You definitely want to hold your keys locally. I'm an investor in a company called Casa Hodl, which is actually like a rel. It's a keys.cosa, a ZRL. It sounds oxymoronic, but it's cold storage as a service. So they go through with you how to set up your cold storage in such a way that the whole signing ceremony and so on, it's basically home storage of your crypto in such a way that it's hard to mess it up and it's more error-proof and whatnot. I think that one of the most hardening things I've seen since January of last year is all this crypto-leading exchanges all around the world. Get your keys off exchanges. Do it now. Do it yesterday. Get your coins off exchanges. And don't worry, they'll be fine. But not your keys, not your coins. Absolutely 100% true. The thing is with DeFi, you can't even mess around with DeFi really unless you have your keys locally. So there's an incentive as well as a disincentive. So definitely keep your keys locally because that at least means that you can't just have your account frozen with a tap. So we've spoken, or I should say you've spoken at length, about a number of risk factors, a number of potentials related to Bitcoin, just to make sure that we touch this base. Is the risk profile of Ethereum different? Is it more resilient and less susceptible to certain risks? Is it more susceptible? How would you think about Ethereum as compared to Bitcoin from that perspective? Yeah, so it has a different pattern of risks. Some of them are shared, like regulatory attacks on crypto. Others are distinct. For example, if Ethereum completes the migration to a proof of stake system successfully, then it doesn't have stationary Ethereum miners that can be sort of rounded up in the same way that Bitcoin mining farms can be. So that's one major difference where you've got a bunch of mobile individuals. It's got downsides in other ways. I won't get to extreme technical detail, but proof of stake, because it's not doing computation in the same way the proof of work is, doesn't have some of the same guarantees that proof of work does in terms of being totally, totally trustless. You start to need someone to point you to which chain is real. There's a bunch of chains like Medusa Lite that are all competing. So it has a different and overlapping set, different and orthogonal set of risk modes or risk factors. I think Ethereum is certainly more complicated than Bitcoin in many ways. The most important of which being that there's tons of programs running on top of the Ethereum itself, at all these more contracts. And it does have actually a negative network effect right now where the more things that run it, the higher the fees are, which crowd out other things. So there's both positive network effects from composability and negative network effects that come from just incredibly high fees for all kinds of stuff. Now everybody's working on scalability of blockchain. It's a good problem to have. It's kind of like scaling the early internet. There's going to be paradigmatic new things. An investor in something called "Starware" which has something called "Cairo" that is very promising. In general, so-called zero knowledge rollups are very promising. In May turn out, for example, with Ethereum that many, only the price used to application, say on Ethereum, and many other applications go to other L1 chains that then all just specialize by application. I think that's probably the most likely outcome or rather, I think Ethereum will scale, but I think that for example, derivatives might go to a chain that specialized for that. NFTs might go to a chain that specialized for that and so on and so forth. Chain interoperability, so-called "interchain" will be a big thing, where assets can be indexed in references even if they're remote to a particular chain.

How do Ethereum risks differ from those faced by Bitcoin? (02:09:44)

Bitcoin had no knowledge of other chains, but nowadays, chains do have knowledge of other chains through things like crypto oracle, things outside of themselves. So the risk factors of Ethereum are distinct, different from those of Bitcoin, not some overlapping, some not. Let's segue to Lee Kuan Yu, and we'll get into who this is. Before we get there, maybe this will be a shorter question and a shorter answer, but there are in some ways tied together, in my mind at least. There are those out there who are terrified of your predictions because they feel rightly or wrongly, and I want to hear your perspective on this, that there is a high likelihood baked into those predictions of apocalyptic outcomes, and that one needs to become a tech enabled Jason Borne to survive, let alone thrive, in the future. We do, we do, too, Ted, but go ahead. So how would you respond to that assessment? Do you view yourself as leaning towards viewing the future through the lens of entropy and dystopian possibilities, or is that just a misread of what you're saying? Is that just a misread of you in general? I think the future will be more different from the present than is commonly understood. And that's actually so more different than ours. Like, was a year 2000 that different from 1970? Not really. I mean, certainly there were political changes. Obviously, China had reformed and the USSR had fallen and so and so forth, but the rhythms of daily life were actually quite similar. People got up, they went to work, there was a relative constancy there. Yeah, there were phones, but they weren't smartphones. They were still basically landlines, headsets or handsets, cordless perhaps. Over the last 20 years, there's been an enormous change in terms of the rhythms of daily life. One way of thinking about that is, what was your daily life when you woke up in 1980? Okay, so you would, you know, there'd be an alarm clock, beep, beep, beep, you'd wake up, you'd go downstairs, maybe flip on the TV to look at the morning news, make some eggs, drink some orange juice, maybe read the morning newspaper, go and drive to work where your job involved, if you're white collar, like some papers, and if you're a blue collar, you're going in hammering something or whatever, you come back, maybe go to the bar on the way back or you just come straight home and, you know, play with your kids or something like that. And almost every aspect of that is now changed. How do you wake up? You wake up to your phone. What's the first thing you do? You look at all of your email because you're getting, just all of these messages, right? Messages are coming into you, right?

Transformation Predictions And Analysis Of Future Prospects

Want to get an understanding of how unrecognizable the near future will be? Consider how much the world has changed between the year 2000 and now — and how little it changed, comparatively, between then and 1970. (02:12:36)

You have this personal communication to us. So first thing you do is different. This is for people who are dating to their phone, but a lot of people are. You come downstairs or you get up and maybe you've got some fitness thing that has read off your sleep, so you look at that because your sleep was also instrumented. You know, you go to the kitchen and, yeah, there's food there, but maybe you just go straight to work and you Uber eats, you know, food to work or maybe you don't go to work at all and you just work remote from your pajamas in, you know, the living room, which is totally feasible today. Your job isn't evolving papers, you're hammering things, but it's hitting keys. Everything is with 50 people who you might have never met in person that they're remote all around the world. Through the day you're like reading newspapers, you're reading code. Your job is just much more variable than the hammering job. Rather than pushing the same button for 20 years, you're pushing a different key every second. Basically every single second of life from your sleep to your sleep tracker to your food, through your ordering apps or what have you, to obviously your work, to your finances, to your communications, to where you decide to go after you finish working like, okay, let's do Google Maps. Now the whole map is opened up. One thing we take for granted in the 80s and 90s, when you really had to get an Atlas or you don't get a map out, you go somewhere new and you have to study because you could get lost, get lost was the thing. You never get lost anymore, none the same way. So for the most part, thoroughfarers were really important. People didn't really go off to be in the path that much, unless you had a house over there. It was like the fewest number of turns. You really didn't drive around randomly. You didn't go to this random coffee shop over here, the map was mostly like cored over it. It wasn't opened up. So that's all opened up now. Your recreational life, you can meet with a different person rather than the same group of friends. So in so many ways, the rhythms of life, we've turned into these sort of nomadic creatures from 20 years ago. And our political structures and our homes and a lot of those are things haven't flexed to accommodate that. And one way to think about that is there's two major ways that humans operate. There's like the hunter-gatherer where Rome around the world, many religions, many cultures have something similar to a garden of Eden type thing, which is whether it's in our genes from some primitive hominid ancestor that we've got all the way down because vision is baked into the genes, of course. The reason you can recognize something is human. That's genetic. So maybe there's something coded into us from many, many millennia ago that recognizes garden of Eden-like thing when we're hunter-gatherers who knows how it's represented. And then of course, there's a farmer in the warrior where you have a piece of land rather than roaming all around. You're settled in one spot and your food is worse, it's grains, it messes up your teeth and so on. It has you grow less, but it's more reliable, it's more consistent rather than the variable ups and downs of the hunter-gatherer. And in many ways what I think, and this is not original, you know, to me by any means, fusion synthesis, a lot of different ideas, but perhaps at least this take on it is, you know, we're going back to the hunter-gatherer way of doing things, but with technology. The best quality of life will actually be available to the digital nomad, who has a minimum number of possessions, has the ability to pick up and move stakes at any point, has, because mobility is leveraged against the state. A state is a sessile actor. Mobility is something that you can do as an individual if the state cannot do, not as easily. You know, you can't just stretch a tendril somewhere else. So new kinds of polities will form. New ways of self-governing humans that are fundamentally network-based rather than state-based, fundamentally optimized for mobile social networks, as opposed to stationary houses, because the assumptions are fundamentally different. And, you know, basically, for example, you know, I define a network state as a social network with an integrated cryptocurrency and a sense of national consciousness that eventually crowd funds territory. Okay, and I think that's a new kind of thing. That's at least one definition of network state. That territory doesn't have to be all in one place. It can be a cul-de-sac here, a range here, an apartment building here, and so you have, you know, a group of 100,000 people, let's say, that owns a piece of territory all around the world, and that is constantly in communication with each other through a social network and considers themselves to be a people. It's like nation, national formation, distillation, that centrifugation that we talked about out of the internet, boom, it's a network state, and it is like a cloud formation taking physical shape. You know, clouds are actually distilling down. And so, you know, when I think about the future, I think about this type of stuff where I'm just thinking from, you know, I'm thinking about 50 different graphs. This is going down. This is going up. This is going down. This is going up. Actually Jordan Peterson had a good remark on this similar kind of train of thought where he's like, the number of different revolutions that's happening at the same time is too hard to track. Tinder alone is a complete change in how mating happens. Swipe right, swipe left, swipe right, swipe left. That itself is like this huge thing that would dominate the textbooks of another age, you know, because it's a massive change now, like the daily rhythms of life operate. You went from having like, have you seen the graph of how people meet their partners? I have not. Okay. This is an amazing graph of like how people meet their significant numbers. 2020 update. Basically, each little curve here tells the story, but it's like, did you meet a church? Did you meet through your parents? Do you meet a college? Do you meet at work? And you can see like, meet at work is like this boomlet that kind of drops off. It's peak in the 80s and it drops off in the 90s with various kinds of pathologization of something like that, right? So what dominates everything today is internet, internet, internet, and in particular, basically, what norms have shifted now is that it's actually more legitimate. I mean, like I've aged out of this fortunately, right? Before my younger, you know, friends, would have you, it is impolite to hit on often considered, depending on the situation. It's often considered impolite to hit on somebody in real life, but it's totally okay to do so on Tinder. So of course, humans are contextual, and of course, the same behavior that's okay in a bar is not okay in a workplace or what have you. But now that's actually extended to digital venues as well. So Tinder alone is just a massive revolution. And then you have like 20 of them happening at the same time. And so all of those are these things where the institutions that we have are simply not built for this at all. And that's what we're straining and stressing against and they're going to give, and we have to have vision for what's on their side. So you're more a student of destabilization or stabilization, but it just so happens that right now these multiple revolutions combine to present destabilizing forces, not so much that you view humans or the future of humans through a dystopian or pessimistic lens. Is that fair to say? Yeah, this fair to say. I think there's actually a lot of good stuff that's going to come out of this. I think we are going to get to. So what is a positive vision? What do I think about? You know, I do think that we can shape the future. Individuals can shape the future. You can shape the future. A founder can shape the future. I've seen it happen with my own eyes. What I think a lot about is a positive international vision. And I think that's going to be based around essentially transgiumism. And why do I say that? So, you know, I've got various one-liners on this, but I've got this book coming up, by the way. That'll actually also be serialized in 1729. So like there's daily tasks and book chapters. The book's title is the network. So you've got about 10 chapters that should be dropping. And then more to come. But one of the concepts in it is infinite frontier, immutable money, eternal life, like as something to strive for. You know, because you need these sort of slogans or things, which, you know, bumper sticker that expands into a PhD thesis, right? So what does that say? That says space is good. That says, you know, Bitcoin is good, crypto is good. That says life extension is good. And you know, that pulls so much with it. Life extension basically says, look, universal healthcare is not enough. We need eternal life. Okay, our ambitions have actually been lower than they need to be. Universal healthcare is just moving greatly around on the plate. It's a fundamentally zero-seventality that really presumes going away. No, no, no, that's a great turn of phrase. Yeah, yeah. The moving gravy around on the plate. Well, like the goal is for you to not need healthcare in any normal sense. The goal is for you to be this self-repairing, rejuvenating. There's technologies out there, which sound crazy, but I've got a post called purpose of technology. You know, we can, scientists can, engineers can restore site, cure deafness, like good research on liberal generation. There's good research on genetic modifications that'll make you completely ripped without ever having to do anything like the folio sad and stuff and my assholes and stuff. Can I pause for one second? Go ahead. Just for people who don't have this bit of context, because I don't want folks to think these are the ravings of a madman. You are very cross-disciplinary. You've spent a lot of time in the biological sciences, genomics, computational biology, of course. Tell me if this is a fair statement. I mean, you almost became the head of the FDA under the last administration as well. Is that a fair statement?

Does Balaji believe the changes we’re about to experience en masse will be mostly positive or mostly negative? (02:22:16)

I was considered for a very senior role there, yes. Okay. That's just wanted to add that for people who may not have any of that context. Please continue. Yes. Healthcare, universal healthcare, or basic health care, moving gravy around on a plate, unnecessarily or unhelpfully low expectation. Right. Exactly. I'm really not somebody to stand on qualifications or credentials or whatever, but in this area, people want to check them. Yes. I've taught computational genomics, I've founded a clinical genomics company, all that stuff. And of course, no one can be an expert in every area of biology. It's too big. There's guys who are experts in radiology, which I don't know as much about. But I do think that one of the few good things that will come out of this pandemic is a Y-shaped recovery, where we're taking a different fork. We've deprecated the 20th century leisure economy. The 20th century leisure economy of bars and restaurants and clubs and all that type of stuff is something which just had this enormous economic hit to it. The levels of bankruptcy are just off the charts. It's a terrible thing. I think if we're lucky, we get not in its place because it's not zero sum, but there's a greater focus on health, on life extension. And we're using to say life extension, by the way. We're really reversing aging, which is even better, is it just captures everything. It's like a universal ruler, where if we get reversing aging, we can fix so many other things. We can probably just say, "Cure cancer." There's many kinds of issues, musculoskeletal things, osteoporosis, macular degeneration, all those kinds of things that happen often. They're correlated with increasing age. And people have this mental model that, "Oh, we're just breaking down a car. It just accumulates hits and it breaks down." That actually cannot be the model of how aging happens. Do you know why? Why is that? If that was the case, if we were breaking down a mechanical thing, then there's a known Schol distribution. It's like a hazard rate. You have an exponential distribution of lifetimes. And some fraction of cars, for example, just managed to make it through without any hits whatsoever. And so you'd have some people, if that was a case, would live like 1,000 years, because they're just lucky and not taking any hits at all. That's not what we see. What we see is actually a sharp cutoff at like 120 in a row. Right. If you keep the human in the garage in perfect condition, they don't last forever. Yeah, exactly. That's right. So there's something interesting about it, where also there's this very predictable. There's an aging and then there's menopause, for example, women. One car rules long and it busts a tire. The other one smashed the windshield. There's a greater variability when it's just random things happening. If you see 500 older men, there are some version of grayer or more wrinkles or whatever. There's a predictability to it of how actually everything's happening. So because this, people have found that aging is actually a coordinated thing. And people understand that going from a child to an adolescent is a coordinated process. People get that that's programmed into your genes. What just hasn't really sunk in for many people is that the aging part is as well. And we might be able to unprogram that or reverse that. And in fact, there's actually a lot of results in this area way more than people think. Okay, there are studies I can show you that are what we technically call the holy shit phenotype, where there's a guy who's graying hair has just been reverse, right? Repigmentation of hair just by taking a cancer drug as a side effect. There are studies of rats. You can see the foliosan injections. You get like this Hulk-relike rat. I posted one of these. And so there's actually amazing things that are happening in biomedicine that have simply not achieved distribution in part because of regulation, in part because that's simply not the stories that people are interested in telling, in part because not exactly lack of funding, but it is lack of funding and energy sufficient to overcome the regulatory and negative press obstacles. And this is something I think is related to kind of doing decentralized media, getting folks around transhumism. Either people are going to kind of vector on this sort of anarcho-primitism axis. Do you know what that is? No. It's a word. It's afraid. I think it's going to become much more well-known. anarcho-primitivism. It's basically like the unibomber ideology, right? It is the essential ideology that humans are bad. We're all destroying the planet. Therefore, we need to kill as many humans as possible. Or it's like, you know, a vignment, voluntary human extinction movement. I do not. I do not. I do not. Okay. This is like a quasi-joke, but there's actually a lot of folks who do on some level believe that humans are bad, humans impact when the world is bad. You shouldn't have children because everyone's cousin climate change and we're ruining the earth. And we need to have a smaller footprint and we need to shrink onto ourselves and we can't expand and what we're doing is terrible. And we should just go back to nature somehow. And technology is bad. The future sucks, right? This is a real attitude and it's partly connected to folks, I think, idealizing nature. And these are folks who love nature. But often, I don't think they realize they love tamed nature. They like nature without wild lions and they like nature while they still have eyeglasses and they like nature while they can decide to kind of lose nature and go back to a warm bed. They're not really going to live like, I mean, unibomber at least had skin in the game. You know, he's out there actually living in the wilderness like a, you know, like a true gay man. But many of these folks are, they're just inconsistent, but nevertheless, they call themselves an archa-primitivist and that's what we like ideology. And it's a burn it all down ideology, right? And unfortunately, it's very popular, much more so than you might think because it's easy to burn bald in. It's exciting to do. The aftermath sucks. But it is like you get the sense of transgression, you get the sense of maybe doing it all collectively together, you get the sense of we're making history and destroying it, sticking with demand, etc. And against that, I think it is transhumism, right? Where you're going to the stars, right? You're transcending this human body, right? We are doing brain machine interface. We're doing liver generation. We're doing CRISPR, right? We're doing all the things, you know, and we're taking the way off limits that thus infinite frontier immune money, eternal life. Let me hop in for just a second. Are there any particular thinkers, scientists, or resources you would recommend just a handful for people who want to explore this further? I don't know if it would be the Davidson clear and Aubrey Gray. Who would make your shortlist or what resources? It's funny because the serious book, so Zoltan is fun is pretty good, I think. Say that one more time, please. Zoltan is fun. He's prof. Right, right. Yeah, exactly. Yeah. There's a debate that he did with a neurocomprimitist a while back called Zemus Zirzon, and they built it as Zoltan versus Zirzon, which I thought was hilarious. It's like something from one of those early Superman movies. Yeah, that's right. Superman too. Zoltan versus Zirzon 2014, right? So, and you know, this is one of those things, which I don't think people would realize is like this obscure thing happening in academia that is going to dominate our future. Because there are going to be, essentially, these, for lack of a term, ledite forces who don't like tech, don't like the disruption springing, think, we need to go back, right? We need to go back to when it was a simpler time. And I understand that, right? Like, I actually really do. The easiest way to give them that pass is actually VR goggles, so we'll give them 80s. I'm like half-kid, but I don't fully kid. Ready player one, here you go. Ready player one, to eight, exactly, right? Because that's actually, that's in this way to give them the idealized version that they think they want. This is a rabbit hole that could go very, very deep. So, I want to respect the value in that while also recognizing that we may want to leave people hungry for more of that and continue exploring. When we think of these sort of, I think I'm getting this right, sort of, Malthusian dilemmas and growth of population and inextricable devastation and ecological collapse and so on. I mean, I do think there are some arguments to be made that uncontrolled population growth is a terrible thing for an invasive species, so successful, like human beings. But that's why this thing is just sort of starts. Right, right. So, we have the extra planetary and then we also have a few corrective forces. If anyone has read Lessons of History by Will and Ariel Durant, War Famine and Pestolence, example given COVID-19, also do a pretty good job of correcting for a lot of that. So, we were discussing nation building. We've talked about nation states, the weaknesses thereof of certain types of nation states and different types of leadership. And that is a segue to Lee Kuan Yew. Could you please explain for people who Lee Kuan Yew was and why he is interesting?

Thinkers, scientists, or resources Balaji would recommend for people who want to further explore life-extension and transhumanism. (02:32:16)

Lee Kuan Yew was probably the greatest leader of the 20th century. He was the man who took Singapore from literally a third world book called From The Rural to First. And he took Singapore from this third world swamp, which had all of these historical battles with drug addiction, this post-colonial kind of dump into this shining metropolis. He had no natural resources to work with. It was a tiny place that was surrounded by hostile actors. He was in a region where there was a ton of basically communist revolutionaries that were trying to operate, because he's in Indochina where you had obviously Vietnam and you had Cambodia, you had China, pushing everybody into communism. And despite all of that, he managed to pilot it through, not simply to survive as a polity, but to build a country that was so impressive that when Deng Xiaoping took over China, he actually went to talk to Lee Kuan Yew as one of the people to help him reform China, because you could see what an ethnically Chinese population had done there. You could also see it in Taiwan and Hong Kong, but for various reasons, those were certainly influential in Deng Xiaoping, but they were also counter-revolutionary. And so he had to give him a little bit more of a distance, whereas Singapore and LKY were kind of the Switzerland of Southeast Asia. And what Lee Kuan Yew did, really, the reason I think he's so important, is I think he's a piece of the 21st century that fell into the 20th, to paraphrase. Basically, he was the first startup CEO of a country of a city state, and I think we'll see a thousand more like him. And so he's a very important person to study his life and history, because here's the thing. He did what he did with minimal coercion. He's not famous for winning some giant violent conflict. He's not famous for some activist kind of movement. He's saying, "I'm still delivering results." That's actually really, really interesting. He's famous for boosting prosperity and zero to wanting a society. And it was really a lion and a really a great guy. Now, of course, there's a lot of people who, I should say, a lot of people don't like it. There's a lot of people who will try to knock down Singapore in various ways. There's a famous article from Long Town, like Disney Land with the Death penalty, where here's the thing, part of the reason it is Disneyland is it does have the death penalty for drug smokers. The thing is Singapore and China had a huge problem with the opium wars or during that period.

Who was Lee Kuan Yew, and why he is interesting? (02:35:04)

The British basically had addicted huge percentage of the population to opium. And that part is often not talked about in like that Disneyland with the Death Land thing. There's a whole colonial overlay on what Western powers have done in that region. And you basically, I just cleaned up that whole thing. Now, I can understand people don't want to live there. I think also like the Netherlands is a totally different solution, for example, on drugs, total legalization, fine. Different strokes for different folks. I think there's multiple solutions there. But as just a ridiculously impressive country, in many, many different ways, from a financial center, it's a public tech capital, I've got unicorns there, just a very, very awesome country. It's warm. I love it. Great place. Hugely impressive. LKY and Lee Kuan Yu spelled L-E-E-K-U-A-N-Y-E-W for people who want to learn more about him. And it is true. I mean, the systematic approach with which that country has been transformed into what it is today is mind-boggling. And it makes me also all the more appreciate when I went to Princeton as an undergrad. And there were many Singaporean students, all of which were going to go back to Singapore at the end because their educations were being paid for by the government to work for the government. And so their inclusion and retention of talent inside the government is also remarkable. And the way that they prioritize financially incentivizing also top talent to participate in government, I think, is really worth studying. Are there any other countries that are on your shortlist to watch if there were places that maybe the 20 seconds century dropping into the 21st? I'm pushing the comparison a bit. Yeah, so Estonia. Estonia. Yeah, so Estonia. So basically countries I'm going to name are those that have leaders with some of the skills of software CEOs. It's just a different approach to the network state, where SD takes on qualities of like a tech company. It's masters technology to drive things forward. So Estonia basically had this guy around the time of independence when Estonia got independence from the Soviet Union. There's got two myselfs who is a Princeton train computer scientist. And he was the one who said, "Look, we need to use this internet thing," which at the time was like, you know, a country gains independence and me being there and saying, "We need to do the script with it." It was definitely some of the people that were talking, but that's roughly analogous. You know what I mean? It was a thing certainly people were talking about, but you were talking like the mid 90s, but it was a relatively early thing to do. You know, it was not like uncontroversial, but essentially, Estonia became a software country. And so they punched way above their weight with Skype and transfer wise and other kinds of companies that have come out. They're a really, really impressive place to buy actually, you know, has done quite well. They've got large fun with their investing in things, very livable place, and very tech savvy. I think Switzerland has... The commonality of the places that I'm naming is that they are relatively small countries which have had to do more convincing than coercive. You know, when you're a gigantic country, your goal to is a course, right, "Oh, I can pass a law, compel all these people," and so on. When you're a small country, you have to work for your supper every day, and it's actually a better habit in the time of the internet. You know, when crucially, all these people are now mobile. You know, in the remote economy, the remote economy, what COVID has done, what we've done to understand is doing this, and then the remote economy just jacked it up. Just like Google News in 2002, put every single newspaper in competition with every other one, and then all of these local newspapers shuttered and only the really big national newspapers became international centers, right, the ones that could respond to it, right? And then the smart ones actually saw that, and then you had new things come up like, you know, pure digital outlets, right? In the same way, the remote economy has put every city in competition with every other city. Miami is in competition with San Francisco is in competition with this in competition with that. And the smart cities recognize that. Actually, Miami is on my watch list now. You know, it depends on how much strength Francis Suarez has, because, you know, he's so-called weak mayor, and this weak mayor versus strong mayor, like his formal powers may not be that much, but his political capital is much higher now, right, but I don't know how that actually nets out, okay? But there's so many, there's Switzerland, there is Dubai, there's Singapore.

What countries are on Balaji’s shortlist to watch as examples of what the future holds? (02:39:56)

Actually Israel, also, they've got Unity 6 hundred, they've got very up on cyber war, you know, they reinvent themselves constantly. Taiwan with Audrey Tang there, who has done a phenomenal job in terms of leading their COVID response, I think let me see what else. Those are some big ones of Monaco. The Prince of Monaco is actually very smart about crypto. I think, you know, now in terms of larger countries, I'm actually, so let's do China, India, the US, right, we showed the big 30. India is in the news right now, quite a bit. And I mean, you've commented on this, but- Yes, that's right. Not to skip to India. I'll give you the last. It's a one which I think is going to be the dark horse of this decade. Like it's a one that's not priced in, like people just don't understand how big a deal it's going to be, but I'll come back to it. So China is kind of priced in. I mean, like everybody knows it's a big deal. It's going to continue to be a big deal. Go ahead. No, I'm just smiling. I'm just smiling. Yes, China, China, everybody knows China is a big deal. So I think the part that is what is not priced in about China, I think that most people don't realize that a lot of, I mean, it is definitely becoming more totalitarian, right? The Xi Jinping thought app and so and so with thought control is actually, you know, Jack Ma having what happened to him. And by the Jack Ma thing made the headlines because he's like so big that he's known in the US. For people who don't know, Jack Ma founder or maybe co-founder of Alibaba, like Jeff Bezos of China, I think it'd be fair to say. That's right. That's right. So the super rich, super successful tech entrepreneur gave a speech that was critical of regulation in a fairly measured way. And they just, like when after him, they stopped the IPO of Alibaba IPO, keys under quasi-house arrest, all the regulars so mad and they showed who was boss, right? And that is a real change, right? Like, to be a Chinese entrepreneur in China, the Xi is really asserting itself saying, you know, there shall be no gods before me. You know, as an entrepreneur, you better bow and kiss the ring. And they're also pushing much harder on this Xi Jinping thought app where you have to like repeat Xi Jinping thought all the time and so on. Right now, is that that far from where America is nowadays? Not that far anymore, actually. Like that's the thing I don't think people get. I think the world is splitting into three groups, which I think of as woke capital, communist capital and crypto capital. And America is both capital and America and its subsidiaries, tributaries, allies, whatever you want to call them. Communist capital is China and crypto capital is the free world, you know, and the distinction is the first two are very good at pointing out each other's flaws and faults, but not in, you know, the internet censorship, all this stuff is going to is ramping up going to ramp up aggressively in the US. I think that by 2024, you're going to have to use VPNs. There's going to be all kinds of filtering at the ISP level. It's going to get very, very aggressive. I mean, that all that's already exists. You know, there's safe search, there's block sites and so on, but it's going to get to a level way beyond where people think. Because East Coast institutions can go on winning game of free speech and free markets, so they're going to restrict and constrict. And obviously, the same thing is happening in China. The difference is China is more like, it more explicit about it, which is both good and bad. It is good in the sense that everyone can identify it. It's happening. Right? It's obviously bad, because when it's explicit, they're just in your face about it. The site is up and then it's down, and there's no apology that is given. It's just government says so, right? In the US, it's this weird moonwalk where it's more like a Soviet Union, where the Soviet Union would say that you have this great constitution. And hey, everyone can have an election and so on and so forth. But then actually, I don't know if you know how elections work in the Soviet Union. You could just put in a blank ballot to vote for the communists, but if you want to vote for someone else, you could do it. You'd write something out and they kind of know who you were and so on. And so you didn't have all these rights guaranteed on paper, but the actuality of it was a completely different thing, the gap between the actual thing and what was written down. And that's where the US is becoming, where it is just this joke in the 1980s, it all kind of illustrated. The guy Jakob Smernoff, I don't know if you remember him, he said something like, he's a joker, a camera from Russia. He's like, "Oh, people say that in Russia, we don't have freedom of speech. Of course, we have freedom of speech. But in America, you also have freedom of speech." Is that true anymore? Not really. At least not outside of Sydenum. I think China is actually underestimated in some ways. It's not fully priced. I think a lot of Americans underestimate China for a few reasons. First is, they think everybody within the country is like this oppressed, that they don't like the regime, that they're against for you. I think if you're a Uighur or you're Jack Ma, or you're an entrepreneur is on the Bronx at the Communist Party, yeah, you're probably not a fan. But I think that on net, the Chinese government has delivered goods for many people from their perception, with the COVID response and like 40 years of growth. And they're the relative winners of COVID, like the West just totally wrecked themselves.

Woke capital vs. communist capital vs. crypto capital, the Maginot Line revisited, and why China is so underestimated while the US is overestimated when it comes to facing the challenges of present and future. (02:45:28)

And technologically, they're way beyond. People don't understand how far beyond they are. They did drones for taking people temperatures. I tweeted about this in the early days of COVID. They really did like five years in a few months of technological improvements to COVID from robots delivering stuff. They had hospitals that were fully telemedical hospitals, but the doctors didn't have to go in and they could remotely operate them. All kinds of crazy things they managed to pull off. So, it's fairly jump-cope. Cope is in COPE. Yeah. Well, so like it's- I know the word. You know the word, right? But online, it's used as a young man that's cope, right? You're just saying that to try to handle this difficult situation, right? And there's a lot of folks who are over the course of COVID, I saw something very new and interesting. I mean, bad, but interesting happened, which was as US sort of flailed in its response, you know, as the federal government failed and state governments failed and local governments failed, as public health failed and public schools failed and police failed and fire failed, you know, as a power went out, as the health went out, you know, as like riots happened, all this stuff happened, right? People would basically say things like, "Oh, yeah. You know, I know you're saying Taiwan's got under control, but they're island." And, you know, like New Zealand, "Oh, yeah. Well, Janet, they're just a totalitarian." And everyone would give like this litany of excuses, which was why that, of course, you're so stupid that that wouldn't possibly apply to the US. And fundamentally, it was basically a bunch of excuses where, yeah, America isn't the worst in the world. What are you saying? We're just as bad as Europe. You know, they kind of make these kinds of comparisons, you know? And, you know, you have to talk here and be like, "We're number one, USA, USA, USA. It's just extremely different from, yeah, we're not the worst." Just completely different, right? And while there's this cope within the US on this, outside it's very perceptible that the US was basically like, we're just handed like a military defeat by COVID. People don't actually fully proceed in this, but like, you know, I mentioned this, you know, a few times of Twitter, it says in Sunkin or, you know, whatever, maybe it will get mad at me. But 2018, there was a DOD thing that was something like national biodefense policy, a night defense strategy, protects against man-made and natural threats. And all of these, you know, four-star, this and that, Fufraus, oh, we're so protected and they've got like this plan and they've had billions of dollars that was allocated for biodefense since the Antsrax attacks in 2001, 2002, right? I think it was 2001. I forget, it was late 2001 or early 2002, but I think it was late 2002, right? Since the Antsrax, there's been all this money that went to biodefense, I know because when I was in grad school, a lot of the money was flying around for like microbial research and what have you. That was like 50 years ago. And there were sars and there was the Ebola scare. There's plenty of warnings for all of this, right? And it was a military priority. There was like, DARPA stuff that was supposed to crank out fast vaccines and none of it actually seemed to work, right? Like basically, to the best of my knowledge, and correct me if I'm wrong, that might be wrong, the military's most public thing was setting up the folding chairs in the Jeff Center. And that sounds really harsh. You know what I'm talking about, right? The palliative care, they're early on the pandemic, right? They do, they do. Yeah, and they put like a flower in there so people could like die next to a flower, okay? That sucks. And the reason I kind of make that harsh comparison is you know, the Maginot line in World War I. I do not. I do not. And also, I know we have the lens on the US right now within the context of China, but I would love to make sure we don't forget to have you comment on the other things that are not fully appreciated about China. But just continue. And I don't know the line. I don't know the line that you're referring to in World War I. Okay, so after World War I, the French built something called the Maginot line, which was like, oh yeah, Germans, you're going to try trench warfare on us. We're building the system of fortifications where we'll just gun you the F down and you'll never win trench warfare against us again, right? Of course, Germans, the events in Blitzkrieg, you can just win around it, right? So the huge system of fortifications, so it's a great metaphor for fighting the last war, right? And so, you know, there's like there's a guy who I don't personally be for the right thing, I've never met him or anything. This guy who a lot of folks quote, like, Zihan, and I should probably go and write a blog post on all the things I disagree with, right? It's about 20% I agree with. Like, it's true that shale oil is an important resource for the US. But, you know, he thinks for example, American or demographics are a big win for the US over China, but robotics over demographics, you need a small number of people programming the robots, that's the future. You can already see that in warehouses. Another thing is he's like really bullish on like the US military. And the US military, like F-35 was a failure, right? The US military just failed on the pandemic. This military in many ways, I would argue, is actually a management online where it's set up to fight the last war. And, you know, one way of thinking about that, this is, it's hard to test this, okay? Because, you know, it's just a prediction, it's a forecast. But China is able to build a hospital in like 10 days and their infrastructure in general, you know, they can snap together a subway in like nine hours. You know, I've been posting these videos on Twitter. It's like crazy, but they do, they prefab everything, they snap together on site, okay? And that's something which is a whole of society thing. It has to be legal to do that. The engineers have to be willing to work 24 hours, you know, they have to have like that. The early American 1900s work ethic, not the late American current work ethic, you know, they have to be interested in building things as a society, you know, where it's not like everybody fighting each other, where you build something and they'll make my property less expensive, there'll be shadows or something, you know, like, which is the San Francisco style. All these things have to come together. It's not just one thing. But they snap together a association in nine hours. So you can snap together a skyscraper in 30 days. And people will say, oh yeah, well, they're building qualities terrible. It's all going to fall over and over. Right? Like, have you seen the Millennium Tower in San Francisco? It's actually creaking to one side, you know, the whole Salesforce complex that they built near Salesforce, like this new transition that was also cranking us built like a billion dollars or something like that. It was like creaking after the first few weeks and they had to like not allow anybody in there. Right? So it's not like the American building quality. I mean, this, you know, it's you have to do a fiscal analysis, of course, to actually put them side by side. But in general, if you go to China, most of the buildings are standing up and most of them are new and they've been built over the last, you know, 23rd years. What's my point? The point is the Chinese have shown the ability under duress to be able to execute in the physical world. As a subroutine, you can think, okay, we're going to build a hospital. That's just not something we can contemplate in the US. That seems like a 30 year process, not a 10 day process. Right? What do you have to do in a war? You have to build like a field hospital. Right? You might have to build a bridge. You might have to take down a bridge. There's all those kinds of things that have to happen. And if in like perhaps the most desperate crisis the US is faced in a long time, you know, people have this idea that it's like cramming for a test. Like, we'll pull it out. You know, the US will do the right thing after exhausting everything else. It'll quote this like churchalism from like 70 years ago. And the thing is that cramming for the test only works if you've like studied someone. Not if you're if you haven't done anything for years. Right? And that's actually, I think it's flipped over a card where in an actual like serious like military conflict between the US and China, a non nuclear conflict, I think China would probably win. That's like a Taiwan conflict. Because we've got all the observables, right? The observables are even underdressed, the US military can't execute in the physical world. It's got these plans for a pandemic that didn't work. The Chinese can actually execute in the physical world and build these things. And that's not just a one-off. It's like a cross-rope society. And it's also not a one-off for the Americans across powerful society, where the power is going out and other kinds of infrastructure things are happening. And it's not like just one localized place. It's like the water and flinch. It's a power in California. It's a power in Texas. It seems to be spread. I was just going to ask, so if there were a military conflict or a nation state versus nation state conflict between the US and China, it seems unlikely that it would be like red dawn on US soil seems unlikely, not impossible. I mean, there might be a cyber attack that has impact on any number of things in the United States and the domestic US continental US. But if we take as an example, Taiwan, if there were a conflict over Taiwan and the US lost, what are the consequences of that in your mind? I think it's huge because I think it basically, it'd be comparable to the Russo-Japanese war. In 1905, the Russo-Japanese war actually led to all of these former colonial colonized people being like, "Wait a second. The non-whites can win against the whites. Holy cow." And it was this huge mental unblock where that led to anti-colonial sentiment, and so on, just ended one century and began another. And I think it would, that would be the true end of the American Empire. I think it would be something that someone could write off like, "Oh, Vietnam, we didn't really try." Or, "Oh, Afghanistan or Rockwell, no one else is visibly one." It would feel different, I think. It would be like the Mike Tyson getting knocked out by Buster Douglas moment for the United States, where people were like, "Oh, this is a defeatable enemy." That's right. Now, the thing about it is, we should hope it doesn't come to that. What I fear is that often there's a delayed reaction or a fuse on this stuff. Like, I keep my Wall Street only happening about like three years after the financial crisis. So the fear is that, if vaccines are eventually rolled out and if enough Americans take them, then by 2023 or 2024, people will be spoiling for a fight to go and beat up China as the one legitimated enemy. In the same way as in the mid-2000s, it was like, "Okay, to hate people in the Middle East." That was like a loosen kind of valve or whatever. You could be more angry towards that. It was more socially legitimate. I don't think it was good. I think that that was just true. That was more legitimate than, or at least people greenlit it more. In the same way, I think anti-Chinese sentiment will be more greenlit. People won't jump on you for saying things that are negative about China. It'll filter into, unfortunately, many Chinese Americans because anybody who's working at a university lab or something like that, they'll come up with some rationale for why it's not racist or whatever because it's nationalist. "Oh my God, I can't believe you're saying that the agents of the child during dictatorship are blah, blah, blah that you have to be concerned about." But the point is that they will, I don't think it'd be great to be a Chinese American in like four years or five years as the new Cold War really heats up. Now, we should hope that it doesn't actually come to, I mean, call it a bad prediction.

Approach Towards Us-China Conflict, Democracy, And India'S Crypto Decision

If there were a conflict with China over Taiwan and the US lost, what would be the consequences? (02:56:44)

It'd be an unfortunate thing. Many Chinese Americans have been here for generations. They have no ancestral connection. The answer to Chinese is very distant. I shouldn't say it doesn't matter. It does matter. I don't think they're going to be strictest citizenship or anything like the Japanese internment. But I do think that it'll sort of be like being a Muslim American in the 2000s. Basically, there was actually, as well as things where there was a lot of surveillance and mosques, folks within the community felt it a lot. You might say it's legitimate. You might say, "I'm not trying to get into whether it's good or bad. I'm just saying that that's likely to happen." Okay. So, what's my point? Point is that I think that Cold War between the US and China, we should hope it doesn't kick off into a hot one. If it does kick off into a hot one, then the wounded American pride might, like, retaliate with nukes, it's crazy things that can happen. It gets really bad very quickly if you think about the scenarios. With that said, I think that most of the world will actually not want to be, they want to try to keep us far away from this fight as possible. I don't think many Americans realize that. Many Americans think, "Okay, Europe is going to settle with us against China." Europeans don't think that. Europeans think America has gone crazy. Europe is actually in many ways, now in some ways actually to the right of the US. You can actually put it on a spectrum where the US is on, basically, the most left-wing, large country in the world. Then you've got crypto in the center. Then you've got India and Israel, like, center of right. Then you've got China as the farthest rate. That's a new political spectrum of roughly, on one side, ethno-nationalist, on the other side, ethno-massages in the center of sea dogs. If that makes any sense. It does. Let me jump in for a second here. Then I want to move to the dark horse, because I know it'll probably not be a short conversation. On the Chinese front, considering China, if there were just a few actions or a few investments or changes that the US military could make or the US government, what would they be to try to mitigate against some of these risks? The US has within it the capability, like we were talking about earlier with crypto, beer, the cause of the solution to all man's problems and so on. The US has within it that capability for a rebirth. Just like, frankly, China had a rebirth under Deng Xiaoping, and India had a rebirth under one monsoon after decades of just being in the toilet. The US would have to experience a national rebirth, and that's a serious thing. That's a big deal. They have to be at the level of Deng or monsoon or Liquan Yu or something at that level. You'd know it when you saw it. What kinds of things could lead to that? Let me give you some out-of-left field thoughts. To answer your question, do you think it's like a tweak or another tweak? No, I don't think there's another tweak, because I think the US is on a civilizational downtrend. For example, Intel failed their chip tape out, and Lockheed Martin, as is mentioned, at 35 and Boeing failed their thing. All physical businesses have been shut down. The only thing that basically is functional, if you think about it, are the internet businesses that were founded 20-something years ago. There's only things that essentially function through the pandemic. The political institutions didn't work. The reason is those new businesses were new enough that it gets to a fundamental distinction I have, which is between founding and personality. If the founders are still around, the founders can edit things in change things, whereas so many of these East Coast institutions were inherited, sometimes the literal sense of inherited fortunes or inherited newspapers or inherited money. Also, in the sense of inherited something that they couldn't have built in the first place. The 57th mayor or 72nd governor of some state could never have organized the National Guard and the Public Health Department from scratch. They were selected solely for legitimacy and not for competence as well. If you're elected, you're selected only for legitimacy. You're not actually selected for being able to organize the NYPD from scratch. By contrast, if you're a founder, you're selected for both legitimacy. Why is the guy to see it? Because he founded it. You're selected for legitimacy, but you're also selected for competence because all the backlinks, the support that come into you, don't just get them, but they're snapped overnight like you do when you win an election. They come to you gradually over time with a thousand proof points. Zuckberg didn't just get three billion people in this gigantic organization. There were a thousand proof points that he did over 10 years where the support came in gradually. It wasn't just, "Okay, I don't have the nuclear codes. Boom, I have the nuclear codes." It wasn't like this overnight thing. It was gradual. Crucially, one of the things about that is the folks who were selected on the basis of founding rather than parroting selected for both legitimacy and competence rather than just legitimacy, those folks actually are folks like Bezos who actually could organize the NYPD or the US military because it's an expert in logistics and saying amateur stock strategy, professional stock logistics.

Does Balaji see any obvious fixes the US could implement to mitigate against the risks of a cold war with China turning hot? Is there any way we can select our leaders for legitimacy and competence over popularity and inheritance? (03:01:38)

I think I have no question that Bezos would at least be an extremely important contributor to the organization of a military from scratch. The Bezos had to do the US military from scratch like a drone army. He could probably do it. The question is, how do you have selection for legitimacy and competence? How do you get more founding DNA versus narrative data? Let me just throw a few interesting concepts out there. One thing I think about a lot, this is a chapter in my upcoming book, is 100% democracy versus 51% democracy. What's 51% democracy? Do you want to Fosbury Floppis? I do. I do. This one I actually do. Okay. You want to explain it for folks? Sure. Yeah. Dick Fosbury. Great story. That's right. Basically, if you ever see a pole vault in the Olympics, you know what a Fosbury Floppis? It's essentially someone they vault in such a way that they just barely clear the bar. They manipulate their body in such a way. And they do it backwards. Yeah, they do it backwards. They do it backwards. So it's just like barely clearing the bar. That is the way a 51% democracy works, where if you think about the root of democracy, it's not actually voting per se. The root of democracy is the consent of the government. That's what makes a democracy legitimate. Can I add a note on the Fosbury Floppis? Sure. So quick note on the Fosbury Flopp and Dick Fosbury is that for the vast majority of the time that the Olympics have existed, the techniques used for clearing that pole vault bar were almost like a not a scissor kick necessarily, but very similar to the way you might clear the high hurdles in a sprint race. And then Dick Fosbury comes along. And I think I want to say it was in Mexico City, but I might be just remembering that. And the equipment had changed. So it became possible for the first time to land in the way that he landed, which was on his back. And he was ridiculed at the time, ended up winning gold medal. And now that is the default technique. Right. So Fosbury's method was actually a smart pack of the system. But one of the things about it is basically, or the part that I'm evoking is the feeling of just barely clearing the bar. Very little margin of safety. Very little margin of safety. And so in so far as the legitimacy of democracy comes from the consent of the government, we kind of into it that there's more legitimacy if there's a landslide. There's more of a mandate if it's a bigger margin. Right. Because you have more consent. Because there's more consent. You need to use less coercion. Right. You have more of a mandate with which to govern. Right. 60/40 is way better than 51/49. Here's the issue. The issue is when it's 51/49, which is being for a long time now, basically that's just the minimum necessary. That's a Fosbury flop of consent. It's a minimum consent to say, okay, we've got the consent of the government. We get the minimum necessary consent. You have to use a ton of coercion when you're in power. And then what that does is it pushes that 2% over to the other side of whatever. And then the next group is in power. And then that guy has to use a lot of coercion when they're in power. So this is a very bad negative feedback cycle where you're using, yes, you can use coercion if you're a government. But in general, think about being CEO. If any of your followers here are CEO. Like a lot of people have this kind of fantasy model of a CEO where the guy goes and barks or is like, I'm just a CEO, just go do it like that.

Balaji explains how a 51 percent democracy is like a Fosbury Flop, and the types of votes that really make a difference in such a system. (03:05:18)

And if you ever are CEO, you'll find that that really doesn't work. You have to persuade and you have to convince and you need to motivate. And you really can't just order flunkies around in quite that way because everybody's got their possible job they can get. It's more like a bunch of subatomic particles you're holding in your hand to just not have them all go to escape. So it's a very different kind of thing where you have to convince you can't really course. I'm not saying that you sometimes can't like have to give it like an order or something like, yes, we're going to do it this way. I'm not saying that doesn't happen. But ultimately, you know, it is much, much more way towards convincing that coercion. Right? Okay. So this is also true for a good leader. A good leader is doing more convincing than course. Here's the point. We see this 51 49 thing. The ideal would be 100 zero. The ideal would be 100% of our equity consents. And to do that in such a way that's not like some Stalinist joke where Erwin's voting their great consent for the great leader and they don't actually have a saying, right? You need to have them not manufactured consent, but demonstrated consent, right? To paraphrase Chomsky saying manufacturing, you want demonstrate consent. So where I go with that is I think, okay, there's actually three kinds of votes. We think of two kinds voted with ballot and voting with wallet, which are democracy, capitalism, respect. There's a third crime, which is voting with feet and migration. Actually, all three are components of the US political system. So for example, if you put them on an axis, or with the x axis being the cost of that particular kind of vote and the y axis being the probability of changing the outcome, but what your ballot is a tiny, tiny, small cost, it's like a few hours and a tiny probability of changing the outcome, like one over an event people, right? Roughly. If you vote with your wallet like a political donation, you know, it's not considered kosher to really calculate this out. People do, Washington Post often publishes like the price of a vote or whatever. They calculate, okay, here's a spending of political ads, who has extra votes. There's ways that people try to pull this out of regressions. The main thing is with some money, you can effectively get more votes than just your one, right? Vote with your wallet. It does, through ads or we have you campaign stuff, it gets you, you know, you put in your 2300 max if you're an individual, it might get you 10 votes or 100. I don't know the number, but basically it'll get you more than one, okay? Towards that hand. So that is a higher cost than if you are, but it's somewhat higher probably still small of changing the law under which you live. And then we get to migration. Now, migration is the highest cost of all, usually, because it's like $10,000 or more to pick up stakes and move city to city or country to country. But it has by far the highest probability of changing the outcome. It's 100%. You just pick the laws, right? You just looked at the dashboard of all the laws and you picked the one you want and you moved there. The vote how you want, the move where you'd like. So once you start thinking about like this third fundamental force, you know, there's nothing more American. I mean, every America is a nation of immigrants. That means, tautologically, it's also a nation of immigrants. And the camera is not as frequently put on what causes people to leave. Causes people to leave was declining economic circumstances or communism or civil war. Resources are more just a bad economic lack of opportunity than they came over to the US. If our ancestors weren't evil, then immigration can't be evil. In fact, immigration is the most American thing ever. And so now when you think about that as a third fundamental force, you start thinking, okay, 100% democracy means that people are re-signing a social smart contract every few years. They're part of a polity. And they are, if they don't like it, they've got nine or nine other jurisdictions to go to. They can vote with their feet to go over there. The critical thing this does is this model of lots of jurisdictions run by the CEOs of city states maximizes consent. I've got a mathematical model of this, but a maximizes consent because, like a company, nobody is there if they don't want to be. So let's take this opportunity to transition unless there are just any closing comments on that chapter that you'd like to make. But I would love to as our last topic. I want to close and comment. Yes, far away. So once you start thinking in this way about maximizing consent and so on or using the network versus state, something that is possible, for example, in Austin, it's a city of like eight or 50,000-ish 1.2 million, somewhere in that range of people, right? It's not inconceivable to just, if you start thinking of, okay, convincing rather than coercing, you just start by declaring yourself shadow, not you, but someone, maybe you, okay, someone with some distribution or even someone wants to build it, declares themselves either shadow mayor of Austin or community organizer or something like that. Very different proclamations. Very different. Yes. Yes. Yes. The shadow mayor is like this concept like from the UK, like the shadow government, right? And you just start organizing people, whether it's Austin or some other city. You start organizing people. It's just like, you know, when you start a company, you declare yourself CEO, you and who, right? Like you're, you know, you're the CEO, right? You just named yourself CEO, right? Okay. So you just, you know, whatever title you've said to give it, maybe you say, lead community organizer, I don't know. And people just start folding into you. If you start delivering the goods, what are the goods? I think you would conceive of this thing as like a network union that say not like a normal social network, but a social truth, right? Not everybody connects to Hegel de Piggly, but a graph where folks are folding up into like a union leader, effectively a network union leader, except the network union. So it's not just focused on labor rights, but it could collectively bargain on behalf of the people as consumers, as producers, as investors, as voters, whatever. It's just like a group of folks that are organized for collective action. It could organize, for example, a shoveling of snow or, you know, empowers out, it's a genuine community organization. And you have this head and these folks folding into them. What's my point? Just like a startup, you can grow that and you might go back in time, because this is so new. It's actually old, what I'm talking about is old, but it's new to us today because it hasn't been done a while. It doesn't seem like something you would do. People know how to start a company and a multi-building business. They don't have to start a community organization. But your ancestors of it, and you know, like an else club or whatever type thing. So you build that up and you, you know, you may name it something and you start accumulating users, 10, 100, 1000, 10,000, because your organization is competent and able to deliver the goods locally. It doesn't have a guns, it can't course, it doesn't have, you know, guys have badges, it can't tax, it has to do everything with contributions. Maybe it's selling a product, maybe it's organized like a company. There's many different ways of doing it. But fundamentally, it's delivering the social goods that the current elected inherited government can't, because that inherited government is set up for a different time under a different set of circumstances, right? As you start just delivering more goods, you gain more political capital, and ultimately that entire social structure is just software in people's heads. The mayor, the supervisors, city hall, all of that is just stuff people have agreed to do.

What a convince-oriented “crypto” government versus a coercion-focused fiat government might look like. (03:12:41)

And just like fiat to cryptocurrency called it fiat government, this crypto government or something like that, you know, might do it all suit anonymously or whatever first in time. There's lots of different ways in parameters you can fix. At a certain point, when you've got 100,000 people in this hierarchical organization, then yeah, when there's an election called, you'll probably just instantly win and become mayor, right? And this is a way that you can affect, quote, political change outside of politics, because you start actually focusing on delivering the societal goods by convincing people, and you set coercion to zero. And frankly, you can get really far with that, because CEOs get really far with it, right? You might think of this as a text startup, you know, that's a fine way of thinking about it, and you modify it to make it like a community or into text startup. There might be dues, you could do subscriptions. There's lots of different ways you could make this work, right? It's a community organization where you pay in to get something out. That might just right there, that might work, right? It's got local news, it's got childcare, you know, it's like round rob and childcare, you keep track and you give to get a lot of things you can do here once you start thinking about this, right? You could use Facebook group sort and I said you're going to code things at the beginning. A lot of it is just, you might feel too with no code if you know that, right? This is, I think, the recipe for how you start rebuilding functional organizations in the US. Not trying to jam a square peg into a round hole and be like, "Hey, let me capture the cores of state and get the guns and then I'll be able to finally do something you're bossing around the other 49 percent." Instead, you build these convinced-oriented organizations as post-course art. Well, I might just call this, maybe this episode should be titled the episode that's, that shall spawn a thousand shadow mayors. I think this is a valuable discussion. I think this is a very valuable discussion. I'm glad that you got to explain this and I would love to get to India. Yes, sure. Let's add any sort of concluding statements just to that piece and then segue, if you're open to it, to maybe starting with India, the dark horse, as you mentioned, and what is currently at stake. And there may be many things at stake, but certainly the one that is pinned at the top of your Twitter profile is of interest to me. So I'll let you take it from there. All right, so we talked about China, talked about the US. And so you have this thing where you have this ascending China and you have this declining US and they're just on a collision course or a spark shall already fly. This is the decidities trap of the rising power and the declining one and big fine, right? And there is an interesting possible way out of this, or at least, I'm not sure there's a way out for the US and China, but there might be a way after the rest of the world, especially some places like India, which is India is number three. So it's not the US or China. It's actually its own way in the position of a Singapore, for example, where it is not realistic. You might think it's realistic to course the world to use the dollar. You might also think it's realistic to course the big chunk of the world to use the digital yuan. Both of those are like our contenders for a global reserve currency. The digital rupee is not for because it's number three, you'd have to beat up the number one. So you could do something different. You could say actually the other possibility here, if you're neither Windows nor OS X, you go all in on Linux. So you're neither the dollar or the reminbee, you go all in on BTC and crypto. Because that is as a nation, of course, your first thing is you want to be able to control your currency. But internationally, you want no one to be able to control your currency. And you'd rather have no one control it than a foreign power control. Because the currency is not just currency, it's a technology platform, right? Swift. The international versus that's a technology platform. The US can hit a button and just deploy from you from Swift, just like Twitter can deploy from you from Twitter. The dollar is not just currency, it's a technology platform. And it's a declining technology platform because it's basically based on this 20th century technology. If you look at the, I've retreated this other day, but in China, it's been gradually over the last 10 years, replacing the dollar in cross-border trade. It was basically 80 something percent in 2011. And now it's, I think it's now less than, or close to less than 50%. So it's about to flip. The flipping is happening, right? And then it'll just replace it completely and it'll be dollar independent. And that means just like the bit licensing that we mentioned earlier, they'll come a day just like New York tried to throw its weight around the bit license and actually found that it just sanctioned itself. And rather than forcing what your company should jump through to those companies, just put it last and a list that America will try to wield the dollar as a weapon one more time and just find that it's actually just own itself. It just walled itself off from enough of the world economies outside the dollar economy. Is India at risk of doing that right now? So India is had postulated a crypto ban. Okay. I think that if you look at the very latest reports, that is now being re-thought.

India: the dark horse, what is currently at stake as it considers banning crypto, and what Balaji sees as its way forward — by embracing crypto, learning from China’s ascendancy in the global value chain, and claiming its rightful place in the media hierarchy. (03:17:42)

And the reason for that is a lot of tech people, a lot of financiers, a lot of people in the government have communicated that actually the two biggest stories in India over the last 30 years are a economic liberalization and being the internet. And crypto combines both. It is the financial internet. It's literally at that level, you know, because what do the internet do? Digitize books, movies, songs, all forms of media, right? Crypto goes and digitizes everything scarce stocks, bonds, commodities, and of course gold and other things. Basically, because what a blockchain is, the attention of is a way to copy things from point A to point B, a blockchain is a way to transfer things, scarce things in a proven way. So every financial asset becomes natively digital, just like every media thing became natively digital. So economic liberalization, internet massively benefit India and crypto is a combination of them. And so banning is a huge own goal. So I wrote a couple of long articles on this, A, why India should buy Bitcoin and B, how India legalizes crypto. And those have gotten a fair amount of traction, I think, within the Indian discussion. And there's some really good follow-up articles and videos that I've been retweeting. And it's definitely something now where I think folks are realizing that a ban would be precipitate. You know, it'd be too hasty. We'll see what happens. But I think that it's going to be more likely that it's legalized with some form of regulation than it is to be banned. Knock on wood, that's how it looks as of right now. What would be the global consequences of India banning cryptocurrency? Some global consequences wouldn't actually be more would be felt would be, it's like boss yet seen and unseen. The thing is that if India bans crypto, people don't understand how big a deal is it in the above crypto, because crypto hasn't had time to compound within India. It got banned in 2018 and then unbanked. And so because of that, like the crypto industry is in a much more nascent state than it is in other places and so on, meaning like only like 10 million people have it or something like that, which is small for a relatively large country. Well, let me describe what would happen in the alternative and then it'll be more obvious as to why it's a big deal. Basically, over the last four years, while everybody in the west was obsessed with American politics or whatever, India has brought about 400 million people online, this is something called Reliance Geo, which basically 4G LTE there is about 100x cheaper than in the US. So it has like the cheapest mobile LTE service in the world, which is insane. Right? Because that's a huge physical infrastructure project in India. You know, that's hard to do with the reliable power, all kinds of things have to work for something like that to work. And at the same time, two other things happened. COVID happened, so all the world's jobs went remote and crypto happened, which meant that you have this peer-to-peer international payment role. So India has opportunity to have 400 million people suddenly start doing all these remote work jobs that are newly qualified for with their funds, okay? Like because every remote work job cannot be done there, which is at least 10 million, 20 million, 30 million new sources of remittances and remote work, maybe it's like 10x that, who knows? So that would completely change the world. It would basically mean that every Indian who could do white collar work could do it for one tenth the price on an Android phone, you know, being paid in crypto or something like that. And when I say crypto, I don't necessarily need Bitcoin or Ethereum, but that's also possible if you look at stablecoin, when they stablecoins, which you can now zip transmiting where, you know, that has an interaction just over with all the needs of Ethereum address, you can send it to them, right? With some of these. So the magnitude of that disruption is hard to actually, I mean, you know, when you have like a few hundred million people coming online, that's a very big deal. It's part of the global labor market. I mean, it's not like they wouldn't be connected if they didn't have crypto, but they'd be a lot less connected because crypto means anyone on the internet can pay anyone to first order, right? It's like email, you know? So if you have to go through the repeat, it's fine for some purposes, but it's certainly not fine for just paying somebody 20 bucks to do something right now. You know, that's like a multi-day wait for an international wire transfer. You spend more than that on the wire fees. It just won't work. So being in crypto would be one of those things where it's more obvious as to would be lost when we unbanned crypto. So by 2030, you'll be like, yeah, okay, that whole thing wouldn't have happened without it. It's hard for me to show you that yet because compounding hasn't happened. Right. But with distribution, with wider distribution, and use of say, micro payments via cryptocurrency, much of the friction for this type of gigantic possible workforce to engage globally is removed. Right. A lot of the friction. It put another way. Exactly. If the Indian government wants to facilitate the global participation and effective competition of its citizens, we're going to come online on mass with profound implications. Then cryptocurrency facilitates that substantially. That's right. I mean, India basically is internationally competitive in computer science. And it's also pretty good at all of these. I mean, like the Indian Diaspora has been pretty good at things like finance, media, journalism, as mentioned, engineering, but also medicine, you know, and so on and so forth. Right. It's notable in those areas. These are all like white collar jobs that you could do over an internet connection for crypto. And then you wouldn't even have to leave India and remittances remote workers, huge source of revenue. So basically, India could be this. The only thing about it, by the way, by supporting crypto. Right now, you know, America's blowing up the Middle East and China is building colonies in Africa. And, you know, like, like actually, you know, on net, yes, build those colonies for anybody calling colonies, you call them cities. The Africans actually are benefiting from the Chinese presence in that sense. They're actually getting infrastructure and so on out of it. If you actually talk to Africans there, they're not that negative on them. It's definitely not like, oh, we hate the Chinese or something. It's not like that, right? But people can say like, Oh, you know, well, the Chinese are actually hooking them today. And then they're going to put them in debt, you know, like they're trying to do with the Belt and Road projects, are your readers familiar with that? No, I mean, they're okay. I'm sure some of them. China has this thing called a Belt and Road, which was a bigger deal before the pandemic, but they may be rebooting it. Essentially, it's the site here of building global trade routes with overland and overseas, where China builds across Eurasia, these huge railway lines that can ship their finished goods everywhere to hit all these markets. One of the concepts behind the Belt and Road is China builds infrastructure in all these countries, ports and railway stations and fueling stations and all this stuff, schools, whatever, and return that government just takes out a loan in Red Mindy. But maybe it can't pay back, in which case, China kind of repos everything and has a military base there or whatever, right? So that's kind of this heads I win, tells the don't lose deal, but that China is doing. It's actually quite smart. It's kind of like the Marshall plan in a different way, you know, with the US got all these military bases, you know, right? That's a cynical way of looking at it, of course, but you know, that's certainly part of the game is for the US to have a military presence in Western Europe. What's the point? Point is, while America's blowing things up and while China's building these colonies, what India could do is build software for the world because getting behind crypto, and this is a good case, right? If India gets behind crypto, crypto is a globally neutral platform because everybody can trust it since they don't need to trust it, they can audit, right? They can look at it themselves. I already see this today, by the way, you know, Chinese people no longer trust the or trains investors don't trust the US legal system and certainly not vice versa, but both of them will definitely invest in a smart contract on Ethereum. That's actually where international capitalism still lives and will continue to thrive, even in the age of tariffs and trade war and so on and so on. People can actually work across borders regardless of the silly fights. This is actually my spare and this is something which I think India can be kind of a peacemaker, similar to actually in some ways, it tried to stay out of the Cold War with the so-called non-aligned movement. You know, there was NATO and the Warsaw Pact and the non-aligned movement, the non-aligned movement was, it was sympathetic to the Soviet Union, but it wasn't setting troops around the world to wage communist revolution. That was actually the origin of the term third world. You know, first world was the West, second world where the communist countries and the third world where all these countries are behind the non-aligned movement. Now, of course, non-aligned movement came in third, it was poor. It didn't have part of the reason it didn't join any military, it didn't have the money to even pay for the guns or anything like that, right? But now back to the future, I think if the US and the West is, you know, there's a declining West and its world capital and you have on the other side, you know, the Chinese are commonly capital, I think India could be crypto capital and it could be the center of the decentralization movement, which is maybe the most powerful of the three, because there's sympathizers of crypto in both the US and China, millions of people. And it sounds weird to put it that way today in 2020, but it won't sound that weird in 2025 or 2030, because crypto is an ideological movement and it's a transnational movement, it's international capitalist and it's not nationalist capitalist like Reagan, it's a not nationalist socialist or international socialist like Hiller Stalom's National Socialist or Leno's International Socialist. It's internationalist and capitalist, right? And around Trotsky was internationalist and socialist. So international capitalist is like tech, that's crypto, that is to a deal across borders, that is, I don't care what you look like, you know, we're equal partners in the deal. And of course, there's bad aspects of it too, I'm sure people can rattle them off, but ultimately there's an ideology embedded in there, it's not simply a currency. And that is, I think, over time going to be what blue jeans were in the Soviet Union, that is to say the orange coin is like the global symbol of freedom and prosperity, like the blue jeans were in the Soviet Union. It's really a deep point, you know, blue jeans in the Soviet Union, right? We're a symbol of what was there beyond the iron curtain. You know, the orange coin is both freedom, you know, to say being able to transact with whoever you want, you know, to say what you want, freedom from surveillance, you know, speaking your mind, not being deployed for him, not being censored, and of course prosperity, because going up into the right. I was just thinking to myself, we're going to have to call this episode the four-hour podcast. That's funny, that's true, we've got all that. So I think that, you know, there's an outside chance that India could become a backer of crypto for national security reasons, because it's not going to be the US or China. So it could play a different game. If it embraces crypto, then India gets all this from its volume, it gets all this remote work volume, and all of its financiers are actually quite good, and all its engineers are also quite good. The other aspect of crypto is it would allow Indian media, so this is actually, if you want a dark horse, you want a dark horse prediction for the 2020s, I actually think India has the potential to become a media superpower. Why do I say that? So China, in the late 90s, early 2000s, it was making plastic stuff for Walmart. A lot of people were very skeptical of China's ability to ascend the value chain. Oh, it's going to make fancy machine tools like the Germans, you know, and of course it did. It went all the way up from iPhones and stuff, now it makes strong on the TGI, and it makes basically everything other than the very top-end semiconductors, and they're working on China's workshop in the world. People no longer say that it makes only crap, right? It makes a lot of quality stuff there now. Just giving them their due, you know, they do make quality stuff. And they ascended that value chain very intentionally, very methylic, with espionage, with all that kind of stuff, with big barmen steel, and everything they could, right? You have a company there, they force an acquisition of it, but all that stuff. They play fair and foul, okay? So China became a tech and manufacturing super power, because they've got meatchat, they've got the software, and they've also got the physical stuff. But I think India can take a different path and become a tech and media superpower. And the reason I say that is, first let me talk about the raw material, right? So of course India has Bollywood, you know, it has less well-known, it has a back-end for a lot of animation for all of them. Like if you go and you look at the end of Tenet, you see all these Indians there. They did a lot of the special effects, a lot of the computer graphics, because a lot of Indian engineers. And India has Saja, or at least a diaspora, in the US-South Asian Journalist Association with like thousands of journalists. And it has basically like this multi-thousand-year culture of arts letters, and it's exported both of them, and into is it, okay, fine, it's got all that stuff. Finally, it's got engineers that are competitive worldwide, right? Because now actually number three in tech, unicorns, app, and US and China, most people don't know it. Okay. So how has India potentially become a media superpower? Well, the difference is it's not just Bollywood going global, that's often the mistake people make. Why? Because when you go and you have a chair from China, can you tell us a Chinese chair? Not really. It's just it's a global chair, you know. You have to look at the bottom to say, "Manchai." Everything's manchai. So there's a company, for example, called Arsal Matal in, you know, Sanindian company. It makes steel, but it makes a global bar of steel. You don't look at it and be like, "Oh, that's Indian steel." That's just like a globally competitive product. That's like the best product. It may be, I don't know, a minesteal expert, but it's like one of the best products for a surprise, right? It's a globally competitive. Whereas Bollywood has a specifically Indian flavor to it. And this is the mind shift that I think India is going to make in the 2020s. It's going to take a lot of people by surprise. It's going to start building products for the world. Not just software products, just can do that, but media products. And I think the direction is bright sun to the west black mirror. Let me explain what I mean by this. As I was saying earlier, because the East Coast of the US has experienced a decline in relative status as the internet has risen. They have the sort of black mirror worldview. The future sucks. We need to crack down our free speech in free markets. I hate these tech bros. You know, you invent a bus maneuver. You know, like they basically are doubling and tripling down on the old stuff. It's sort of similar to a country where technology passes by the double downer of religious fundamentalism. Well, they might be richer than us, but we're better. We're holier. We've got a better democracy or whatever. That kind of is more cop, right? So the buses in this sort of black mirror thing are the only thing they can see in the future. Not all of us, but certainly a lot of the intelligency along the media folks and so on. One thing that can see the future is this black mirror, right? Where there are futures declining. And the future is just hoping to give a completely different worldview. Have you ever seen the movie or even the trailer to Super 30? I have not. Okay, you should definitely watch this. All your viewers should watch this. You couldn't have a more different spirit and attitude towards technology than this. Okay? Like imagine sort of like, brocky, but for engineers. Got it. Kind of like that. Okay, that's like, it's not exactly right, but it's like, it's got the same spirit. And it is essentially something that just glorifies computer science, engineering, leveling up, you know, the future because here's the thing for the global south for India, you know, for all these countries that have just gotten smartphones, they've risen with technology. This is something which is correlated with the greatest improvement of living standards they've ever experienced. And that is just a completely different. You can't, you can't teach that, right? You can't inculcate. That's just a different cultural base. The future is looking bright, we're all the way up. We're coming back to our rightful place in the world as kind of a mentality. And that is the basis for a completely different kind of culture. And so I think that you can start the export of films, movies, culture that's based on technology, global technology, you know, so all the stuff that I talked about and how would you do it? You were like, well, how do you make it not boring? Because movies will all require conflict, right? There's going to be some Pollyanna thing, right? And so there's actually an interesting flip you can do with the dystopian movie. The key trick is it's like being a Terminator. The present is all idyllic. Everyone's gambling through the fields and so on, right? And then this crazy scientist invents some horrible, you know, new Terminator and it messes it all up and now the future is worse. And so the premise is that the present was fine. And this tech guy, tech bro made the future worse, right? Miles Dyson and Terminator. But it's easy to actually invert that. And the inversion is, present as dystopian. It's a present where we're all wearing masks and it's a present where the power is going out. It's a present where random fires rage and cold snaps hit the middle of nowhere and politics is dysfunctional. Oh, this is a really fictional story I'm telling, right? So it's a present that's dystopian and there's a small group that might be able to carve out a better future. Right? They've just invented, for example, a better form of nuclear power. But they're getting hemmed in by, you know, these power hungry regulators and these NGOs that just hate nuclear power and press that's just trying to press them for clicks. And these guys need to figure it out and actually build something better. And so you just invert a lot of the tropes. You're still fighting the power, but you're actually fighting the power that is technologically conservative. And you have a group of technological progressives. Now that's what I just described actually has a lot of move to it because that's actually a reality. That is every single star I found or has to go through what I just described. Once in a while, you see a Hollywood depiction of this house of cards and Netflix and its first season actually depicted an evil NGO. Like a water thing, you know, it was like some water charity that was just like a, you know, a scam for the, it was a future president's life, you know, running this thing. It depicted an evil journalist. The original Ghostbusters depicted an evil regulator. So did Dallas Fire School depicted evil regulators. So there are snatches where evil journalists, evil regulators, evil NGOs are depicted, but it's like 1 to 10,000 or 100,000 or normally it's like the evil corporation with evil military. That's a victim. But those are the mental models that people slot things into. If you have media that inverts that, if you have media that allows people to pattern recognize that and it doesn't have to be feature films, it can be short video games, it can be clips and so on, that's actually upstream of driving technological progress. Because A, it shows the technology is good. B, it still has conflict as much conflict as a dystopian. And C, you can just take all these plots, adapt them straight from the history of a thousand different tech companies, startups, and then going backwards further in time. You know, Robert Goddard had to fight NYTCO, you know, on rockets. Do you know that story? Like basically they said that it was a total joke that what he was doing was a joke. There basically being technologically conservative for every innovators had to fight this. And those stories are on the shelf that we can just take off and make into things. Right? Let me pause there. I'm just going to say, dark horses and cryptocurrencies and biology. Oh my, this episode is going to take my team 100 years. Maybe I'll need a thousand Indians to help us with this to do the show notes. I'm just imagining linking to everything that we that we I'm using the royal we hear that you have discussed so far. So I think this makes a lot of sense in part because my headset is running out of battery and my bloodstream is running out of glucose. I think this is probably a good chapter one for folks. But is there is there anything that you would like to say if you're open to closing now or close to it? Are there any closing comments or questions or requests of my audience that you would like to make? Sure. Go sign up at It's free and you'll get a chapters of my book and you'll also be able to get some crypto tasks. If you like this, there's a lot more of it and it's all better organized and writing. Tim has been a very gracious house. It's been a lot of fun. And I think all these ideas are laid out at greater length in the book and on the tasks on what's it's all free. Wonderful. And people can find you on Twitter at biologys website for everybody listening. My team will make a best effort to link to everything that we have discussed. It is going to be an incredibly voluminous version of show notes. And, biology, thank you so much for taking the time. This is going to have to be the episode of everything. There are many titles that are vying for the final version of what we will call this episode. It'll be very, very challenging when I'm looking forward to it as a challenge. But thank you for making the time. This has been great. We've covered a lot of ground. Awesome. Thank you. Hey guys, this is Tim again. Just a few more things before you take off. Number one, this is five bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little more soul of fun for the weekend? And five bullet Fridays, a very short email where I share the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the world of the esoteric. This is my guest episode of Rocking My Food. It's a favorite article that I've read and read. That I share with you my close friends with friends with you. It's very strong. It's just a little good, highly good performance. Good. Everything seemed to stay head off from good sleep. So if you want to receive that, check it out to opt to watch. Just go to four hour week. We kill some potions. That's four hours. We're all sorts of different mattresses. You name out and just drop in less than you. You just have to sleep in the very next one. You look mid-day sign-ups. I also have one in the guest bedroom and feedback from friends has always been fantastic. It's something that they comment on. Helix Sleep has a quiz. It takes about two minutes to complete that matches your body type and sleep preferences to the perfect mattress for you.


Parting thoughts. (03:40:00)

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