May 26, 2023

CD102: Bitcoin is the Best Money with Adam Back and Jack Mallers

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Citadel Dispatch

support dispatch: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠
BLOCK: 791518
PRICE: 3734 sats per dollar
TOPICS: Good Money vs Bad Money, Early Bitcoin History, Onboarding the Next Billion People, Silk Road, Anti Fragility, Energy

This chat was a continuation of our conversation on stage at Bitcoin 2023 to end the conference:

Adam on Twitter:
Jack on Twitter:

nostr live chat: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠
nostr account: ⁠⁠
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podcast: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠
stream sats to the show: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

(00:00:37) Introduction and bitcoin events

(00:02:11) Thanks to supporters and donation options

(00:04:20) Introduction of guests

(00:05:47) Discussion on the value of bitcoin

(00:19:30) Bitcoin as a savings technology

(00:27:17) Volatility and challenges in emerging markets

(00:38:14) Why bitcoin has been successful compared to previous attempts

(01:08:12) Volatility of bitcoin and its potential stability in the long term

(01:22:53) Onboarding the next billion users to bitcoin

(01:27:14) Different trade-offs in using exchanges and custodial lightning

(01:28:10) Liquid as a trade-off between centralized exchanges and noncustodial options

(01:29:44) Advantages and risks of using Liquid for trading and rebalancing Lightning channels

(02:09:29) Bitcoin's future and scalability

(02:10:26) The value of free markets and the maturity of bitcoin

(02:11:24) Disappointment in backtracking on bold predictions


00:37 - Introduction and bitcoin events

02:11 - Thanks to supporters and donation options

04:20 - Introduction of guests

05:47 - Discussion on the value of bitcoin

19:30 - Bitcoin as a savings technology

27:17 - Volatility and challenges in emerging markets

38:14 - Why bitcoin has been successful compared to previous attempts

01:08:12 - Volatility of bitcoin and its potential stability in the long term

01:22:53 - Onboarding the next billion users to bitcoin

01:27:14 - Different trade-offs in using exchanges and custodial lightning

01:28:10 - Liquid as a trade-off between centralized exchanges and noncustodial options

01:29:44 - Advantages and risks of using Liquid for trading and rebalancing Lightning channels

02:09:29 - Bitcoin's future and scalability

02:10:26 - The value of free markets and the maturity of bitcoin

02:11:24 - Disappointment in backtracking on bold predictions


Happy Bitcoin Friday, freaks. It's your host, Odell, here for another Citadel dispatch.

The interactive live show focused on actionable Freedom Tech and Bitcoin


It's good to be back on the airwaves. I know there's been a bit of a break

since May 13th. I guess it's actually not that big of a break. 13 days.

We had Miami in between then. We had Bitcoin 23 2023 between then.

Over 10,000 people in


congregating to talk Bitcoin.

It was a pleasure meeting all the freaks out there and and shaking so many hands

to all the people that came out

and listened to our live rabbit hole recap or listened

to my panel on the open on, main stage with Adam and Jack.

It was a pleasure meeting you all, and thanks for coming out.

This conversation will be an extension

of the conversation

that me, Adam Back, and Jack Mahler's had on the main stage at Bitcoin 2023

to end that conference.

It was absolutely an honor and a privilege to have them on stage with me to talk Bitcoin,

but our time was very short.

So we decided we'd extend it on dispatch with with all you guys, and dispatch is very unique in that we have this

interactive live chat where you guys can participate and and put your questions.

So we thought it would just be a great avenue to continue this discussion.

But before I introduce them further

and get started here, I just wanna thank all the freaks who continue to support the show.

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Yeah. I mean, with all that said,

I have Jack Mahlers from Strike here. How's it going, Jack?

Jack Mallers:

What up? It's going good, man. How are you?


Very good. Very good. It's an honor to have you on the show again. Glad to be. I'm glad to be here.

And we have Adam back,

from Blockstream.

An absolute legend. How's it going, Adam?

Adam Back:

Pretty good. Pretty good.


Awesome. So as I said earlier

in the intro, my long winded intro,

we had a great conversation on stage at Bitcoin 2023.

If you haven't listened to that conversation, do not leave

this stream right now and go listen to it, but consider listening to it after.

You can just search Bitcoin Magazine on YouTube, and you can find

our conversation there.

But that was a very, you know it was a it was a very short conversation. It was we had about 25 minutes. It was actually kinda funny because

Jack was going on about how time is the most scarce thing we have in our lives, and, the screens were flashing wrap up. You're out of time,

while while he was talking about it.

So, I I mean,

I don't know exactly where we should start.

I guess I guess a good place to start would be,

a good place to to start, I think,

would be,


we'll start with you. I mean, you were talking about

how if you don't have Bitcoin, you're essentially short Bitcoin.

I think resonated with a lot of the audience

on stage. I think it's an interesting

Adam Back:

it's an interesting perspective. Do you wanna go into that a little bit? Yeah. I mean, it's like some people were thinking now it's just just a kind of cone or something, you know, like, something to say. But but, actually, it was a kind of realization from trading that, you know, if you're,

you know, after after you get in Bitcoin for a while, at some point, you start thinking in Bitcoin. Right? So you don't think about dollars. You're like,

I have this many Bitcoin, this many sets, and your objective is to get more. So you're like, reduce spending,

try to get extra income streams,

keep stacking, holding. And if you ever sell some for some reason, they get super nervous. Right? And so,

you know, if you're trading and you're

like, out your you know, you've got some dollars,

now you're short stats or you're short Bitcoin, like, literally. Right? You know, If Bitcoin price goes

up, you'll have less Bitcoin tomorrow if there's another, you know,

$1,000 green candle or something. So

you are you know, once you redenominate

in Bitcoin, you're literally

short Bitcoin. And so that it took you know, that realization came, like, you know, after some years. Right? And I was like, wow.

That's that's why I feel nervous about,

you know,

getting back into the market as soon as I can if there's some dollars kicking around

Jack Mallers:


reason. Yeah. I mean


I mean, for anyone listening to the stream, most of us are probably,

you know, pretty deep into Bitcoin. I mean, I I don't,

I guess there's there might be a few new coiners listening to this episode,

but the crazy realization to me was that the whole rest of the world is short Bitcoin. And I I kind of realized this while I was running in all caps

on Twitter, 2 years ago.

And I would, you know, wake up in the morning and tweet something like all caps, like, every blue check is short Bitcoin or something to that effect.

And that's that's really like, it hits you in the scarcity

hole in your head. Right? Whereas it's there are 9,000,000,000 people or 8,000,000,000 people in the world,


you know, 7,900,000,000

of them are extremely short Bitcoin, and they don't even they don't even realize it.

Adam Back:

Yeah. I mean, another

interesting thing is,

you know,

it's you know, because it's confusing to us that other people don't get it. Right? But

the the fact they don't get it

is is what creates the opportunity. Like, you know, people say we're still early. We're still really early.

And and it's the opportunity because if everybody did get it, you wouldn't, you know, you wouldn't be able to buy

very much Bitcoin for your for dollars anymore. Right? The price the price would already be there. Somebody's,

chatting in the scroll there that

Eric Weiss, who is who is the guy that Orange called Michael Sailor

and actually actually, I met him at the,

around the conference, you know, during during the Miami week. And he he told me this story in person that's fascinating, right, which is, you know, he bought Bitcoin. It was super volatile. He decided to sell.

Then later started buying back, and he's since, like, tweeted this story or, you know, did a video with this with this history.

And he said that, you know, he never got back to that original holding because it just it just gets much harder in time. In 2014, it's a long time ago. Right?



yeah. Many such cases.


There's a reason I say stay humble, Stack Sats every morning.

And it's not because I'm humble.

It's because it's because I've I've learned that,

we all could use a reminder, myself included.

Jack, do you I mean, do you think I think a lot of times we get shit for

or we get shit. I don't know. I don't,

I didn't really say we are so early anymore

even though I think we are still early. I think every good meme is based in reality.

Do you think we're still early? I mean, I

Jack Mallers:

Yeah. I got some

some thought. I think, you know, Adam's obviously right.

When you own anything, you're inherently short everything else that you don't own. It's actually a super simple

concept, but it's not inherent

and natural to us because,

the understanding of money,

as a technology and why it exists in the first place has been so convoluted and fucked up.

I think Bitcoin

has brought us back to first principles is what, like, what money

solves for as a technology for our species, you know,


you you know, like, money is required as a technology within society for it to scale. You know, going back to first principles

of the history of money, it was I'm being overgeneralistic here, but it was created because

it solved the coincidence of wants problem. As if I spend all my energy and my time growing apples, Matt, and you spend all of your energy and your time growing bananas, we'll have to coincidentally

want to exchange

apples and bananas. But what if I want a cheeseburger and I don't want your fucking bananas? Then society breaks down, And we don't have functional exchange, and we don't have a functional way to value each other's energy and output that we're contributing to the world and to society. And so money was created to capture


value and energy that we're creating,

and then a free market was deemed to value that energy. So then you have things like you put your time and energy, and you exchange the bananas I grow for gold or for shark teeth or for soybeans, and we have many variations of money, but money fundamentally.

And that's why we can have a society of 8,000,000,000 people, and humanity scales with money. And when money breaks, then society breaks. And it's so so

money is, like, one of the most valuable technologies we've ever been able to build. We wouldn't be 8,000,000,000 deep in humanity and been able to flourish function if we didn't invent money and continue to harden our understanding of it and continue to improve it. And so, functionally,

it's really important to know that, And once you know that, you know, money is is designed

to be able to capture your energy output in society across space and time so that I can exchange it physically and I can store it through time forever.

And when what you under yeah. So it's just like how do you wanna how do you wanna store your energy that you create in the world? And Adam's right. If you store it in, you know, chairs or if you store it in dollars or if you store it in bag of chips,

you know, it's probably not the right and correct instrument to store and capture

your energy. So I don't know. I've I've I find it through my journey in Bitcoin. I found it super simple to think about these things,

and which money I elect to actually store my energy. And certain certain monies do a really bad job at capturing and storing my energy and performing the functions that money was, created to solve.

Adam Back:

Yeah. I think there's something

sort of counterintuitive.

I mean, of course, as Jack said, most people

they they don't think about what money is. They just grow up, and there's dollars or euros or something. And it's just an

abstract concept like a meter or something, and they just assume it's a thing. When they realize if they realize

how it works, they're kind of a guest

at the, kind of naked money printing aspect of it. Right?




super interesting to think in a context about,

you know, how and why

gold was a good money, you know, that it that it's a hard money.


it's a proof of work because

it's scarce and you have to dig it up, and that cost effort and energy.

And you might naively think, well, that's you know, you can't eat it.

Most of it sits in vaults or in, you know, safe places.

So if you look at it, even though it's shiny

so what's the point of that? Right? Let's just, you know, replace it with a paper ledger or something. But and and the effort that's put into digging it up could be used to, you know, build something, a house or what have you. But,

ultimately, it proves it I think history has proven that,

you know, having hard money is so fundamental that it's that it's worth it because having soft money or political money just ends up costing indirectly more.

And so it's it's interesting to see,

you know, how Bitcoin connects to that because, you know, some people who don't like Bitcoin

argue that the work that goes into mining Bitcoin

is not productive.


it's I thought it was curious that well and I I think, you know, it took me a while to to to find a way to

articulate it, but

I think that it's probable

that any,

like, hard money

has to have an unavoidable production cost.

And if you think about it, it's just like, if

if you could produce it cheaply,

it wouldn't be scarce. I mean, it's a super simple concept. Right? And, you know, people will argue about proof of stake and all this stuff, but, ultimately, it doesn't make any sense. You know? If it if it doesn't have an unavoidable production cost that other people couldn't verify, you know, you you can sort of verify gold because you can essay

it, and

you know the rough everybody knows the scarcity of it. So they know that if you have it, you spend effort, like, digging it up or what have you.

And it's interesting to see people who join Bitcoin

at different periods,

you know,

adding, expressing things in new ways or or re expressing them in similar ways. And it's interesting to see Bill Miller who,

famous investor,

very recently, like, last week said, well, I guess, on TV, that gold is just an inferior version of Bitcoin, which is to say that they're they're very related concepts. Right? It's it's Bitcoin is a digitally

redesigned or remastered

gold, and now we have it. It's better than gold. And so presumably, over time, it will, you know, supplement or maybe gradually displace it because it's just,

better technology.


Was that his son on stage? Was was it with Sailor?

Adam Back:

I'm not sure.

Jack Mallers:

I think they're both yeah. His son was on stage with Sailor, but he was there too.


Pop Papaville was too?

Yeah. My I saw him backstage, at least. I think they're both called Bill they're both Bill Miller. Right?

Jack Mallers:

Is that true? I don't know. I know I know the legendary Bill Miller. I know papa. I'm is the son also Bill Miller?


I don't know. There was a young guy on stage that I think was called Bill Miller and was not

the Bill Miller. Son.

Adam Back:

Yeah. No. But I think dude as his son. Sorry. That quote is the is the older Bill Miller. Yeah.

Jack Mallers:



Papa Bill.

Jack Mallers:

I love it. My dad's name is Bill Papa Bill.


yeah, I think,


how do I say? So let's go back to, like close your eyes for the audience and picture, like, cavemen and in the invention of money as a technology. And I work all day in the heat, in my cave when society is, like, a 100 people, and I work on building,

let's say,

houses for everybody else, and I work all day for it. And in exchange, I need to get something to capture that value and buy food with it and pay my family and pay for travel. What do I what do I get in exchange for it? Do I want to store that in

wheat? No. Because the wheat will rot, and then all that work that I put in all day and night is now worth nothing, because the wheat is now evaporated, and it's rotten, and it has mold. Okay?

Then what else should I put it in? Should I put it in


No. Because there's lots of water and people can go find more water and someone will drink my water. That's probably not the most safe. So how do I all money is is functionally.

It it allows society to capture the value that we put in and in exchange, and that's it. And so when people say, I don't like Bitcoin, it's kinda like, okay, what do you like storing your energy in instead? Like, so you work all day and night and the collective output of your life has to be stored in something. If you wanna store it in dollars,

I would question that because they're just going to print more dependent on fuck knows all. And it's not fair to me that I bust my ass and I work super hard only for someone else

to devalue

my energy output and what I do with my life. That's bullshit.


what is better than Bitcoin

and designed better and operative and better protecting

my ability to capture my energy in my life? I I I just don't understand. And so, like, Adam's

Adams, right, Gold was

on awesome money because no one else could just randomly print more of it. No one else would go behind my back and drink it. No one else could, like, it's it's very right? It's like a perfect way

to in the caveman days.

But obviously has its deficiencies and and we engineered Bitcoin to be better. But I think the concept of money is just so widely misunderstood. It's actually really fucking simple. It's like I wake up and I spend my life and I want my life to be valued. And I have to exchange the output of my life into something. And I'm not gonna put it in a bag of chips, because those are gonna rot and get old. I don't and so it's, like, kinda obvious. It's, like, what I don't wanna put it in Apple stock. Then I'm trusting Apple to perform. What if they launch a shitty phone? Does that make my life worthless?

No. I don't think that's how it should work.

So I think, yeah, like, money is designed and it it has an intemple purpose. It's super simple of what it it needs to solve for humanity. And

and I don't know how you could not like Bitcoin. It it was engineered

to literally be the best at what money was created to do.

Adam Back:

Yeah. Straightforward.

I mean, like, certainly, it's the case that


major fear currencies,

you know, the some of them are better than others. Like, the Swiss franc is actually pretty good compared to others.

But not coincidentally, it was the last major currency to come fully off the gold standard, like, really recently, like, mid nineties or something, which most people don't know. But in any case, you know, they have all lost, like,

high 90 percentage points within a 100 years. But

in practice, what people do

is they

and if they try to hold on to you know, if they try to save and accumulate, which which I was doing when I was,

you know, at university and right after university,


and you approach it a bit scientifically. You find out about,

you know, the real rate of interest versus

inflation. Right? So, you know, you get

a long term

savings accounts, difficult deposit,

long run share returns, things like that. And, like, okay, but what is how does that compare with the

consumer price index or the retail price index? And you read about that and you find out, you know, the politicians are massaging it and it it's fake. Like, you can just tell that if you look at the basket of things that you spend your money on weekly and work out your personal,

you know, retail price index,

it's much higher than they're saying because they're trying to, like, pretend the economy is better. Right. And then you realize if you're not really careful and you don't re really,

you know, well organized investment decisions,

your attempts to save were actually gonna lose your spending power, and that's kind of depressing. Right? So then you're like, well,

maybe I need to buy,

you know,

some real estate

and at least the

you know, you get the rent,


the the property itself might go over inflation. Right? So that's a sort of extra hedge. But, you know, it it basically turns everybody into investors.

And all of that choice. Yeah. I mean, otherwise, you just lose your money. Just slip through your fingers. I mean, sailors

are melting ice cubes. True. But, you know, most people are actually literally storing it cash in, you know, in a safe. But

it's still true even if you do your best to save it because,

you know, all the all the metrics are fake. Right? You know, the consumer price index, which they like to use I was in the UK when I was doing this trading on the,

like, early nineties on e trade

try and, like, savings accounts and trying to trying to hold on to the money I was saving,

which I was determined to do. Right? My thought was,

you know, save, invest, compound, reduce expenses.

When you're older, that would stand you in good stead. But it's actually really hard to even

get ahead in real spending terms because,

yeah, you know, it's quite there are periods you you never know it when you're in it, but there are periods of time when the prevailing interest rates

are lower than,

you know Right now. The experience price index. For now, for sure. Right? I mean, for sure, like, the


you know, price index is


double digits for sure. It's, like, 12% or something like that is probably, like, real inflation. 13, 12? Yeah. And, like, what interest rates are, like, 6%.

Adam Back:

Right. So so everybody's going backwards. Right? If you put it in stocks, I mean, I don't know. That's that's a crap shoot. Right? Because

everybody's just looking at fed pivots and interest rates, and the stock market is basically

correlated with the money printer.


it's it's not even about how the companies are doing. It's just money washing around trying

to avoid getting deflated away. So it's buying bidding up price of stocks. And it's it's


I mean,

I'm not I think you agree with me, Adam. It's more than just the fact that,

like, maybe, like, if you if you know what you're doing and you get a little bit lucky, like, maybe you can outperform inflation in the stock market or buying investment real estate or

buying gold or whatever you want to try and outperform,

inflation with and and not lose your purchasing power, actually save money for future generations.

But, like, it is absolutely tragic that people are required to do that. Like, to me, like, the the promise of Bitcoin is that I can just focus on my life.

Obviously, we're all obsessed with Bitcoin, and our life is intimately connected to Bitcoin. But the average person can just focus on their life, and they can just save in good money. Right? Like, they don't have to actually

have a finance degree or pay some

financial planner to to handle this stuff for them. They can just stay humble and stack stats every morning and just focus on what's important.

Adam Back:


Jack Mallers:


Money, like, all the stuff Adam's talking about, like, stock market and and, like, all the shit's all fucking it's a lower load of horseshit.

It's all, like

like, yes, Adam's right. They manipulate it. Of course, they do. Again, like, think of first principles, like,

it's just so obvious. It's, like, money is a reflection of your contribution to society. It should be. I wake up, I spend all day mowing lawns, building homes, growing bananas, whatever I do, I need to exchange that for some

monetary instruments that I can collectively interface with society and with the rest of my species.

And so

if the money I use is every I I wake up, I work all day mowing lawns, and then I go to a certain individual that then issues me money in return. Well, what if that guy likes

my neighbor more than me, and he he gives my neighbor more money? What if that guy misconstrues the numbers? What if that guy tries to trick me into how much the money is worth that he's handing me? Of course, he's gonna manipulate it. Of course, he's gonna try and trick me into making what a powerful luxurious position that guy is in. He gets to hand the neighborhood money

and gets to decide who gets what and how much everything is worth.

Of course, it's not gonna be fair. Also, by the way, how fucked up is that? That's bullshit. Is that the value of my life and how I spend my time is up to some dude? That's not how it should work. It should be up to whether I'm mowing lawns well and whether society appreciates the fact that I'm mowing lawns.

It should be up to this fucking guy and this guy I'm alluding to the Federal Reserve. That's bullshit.

This guy's gonna cheat. This guy's gonna scam. This guy's gonna and and by the way, it's human nature. People are going to have natural tendencies

of politically leaning biases

or particular interests. And so, of course, if humans are going to manage the money for the neighborhood, then certain people are gonna get advantages. It's not gonna be fair. They're gonna manipulate it. They're gonna lie, and it's bullshit. And so the best money is one that cannot be co opted, is one that's naturally fair and distributed

in a way that we don't have to trust someone to devalue my life.

Money money is a reflection of my collective con my money is is a is a reflection of my collective contribution to society. How my time is spent improving society and society is then allowed to value that. And I store that contribution and the energy that I put into this world in money, and I'm not fucking giving it to the Federal Reserve because they just devalue my life. And that's bullshit. I love my life, and I have a great life. And it's bullshit. So it's all scam. It's all fucking scam.

And I think it's just super super first principles. You can't not like Bitcoin. I don't understand that. It's just the best way to to achieve what money was intended and designed for.


Adam Back:

lying. Yeah. Somebody's talking about

circular economy,

Bitcoin circular economy and scroll back.

So I guess the question is kind of Bitcoin is a saving technology versus Bitcoin as

a payment and, you know, circular economy

kind of question.


Do you have an answer? I mean, I think both,

Adam Back:

you know, but yeah.


I think that's where a lot of people miss it. Right? It's like,

maybe maybe,

social media isn't great in terms of incentives,

but, at least in my Bitcoin journey,

there tends to be, for the most part, 2 extremes, right, camps. It's like Bitcoin is censorship resistant,

p to p e cash, and then,

that Bitcoin is a store of value. But, really, you need both for good money. Like, you need to be able save it without permission. You need to be able to spend it without permission.

And Bitcoin is both, but that just doesn't get doesn't hit the same way on Twitter.

Adam Back:

Yeah. I think Nick Szabo said something at some point,

not so active on Twitter these days, but

something like,

you know, for a savings technology,

you need to be able to spend it

when when you need to. Right? You need to, like, buy a house or or do some some big transaction.

And so

that that is a form of payment, if you like. Right? The the liquidity, the ability to sell it. And,

of course, if you've got nothing but bitcoin, you've gotta transact bitcoin anyway. Right? Just to Yep. Get by.

And, you know, it's probable that people in different countries,

have a different weighting of of uses.

So, you know, in emerging markets,

many people are underbanked

or they don't trust their banks with good reason

or they don't have, you know,

any k y c any KYC to even get a bank account. And so, like, they can't it's very hard for them to track and transact internationally to get access to international markets, you know, as a small business,

or as an individual.

And so Bitcoin really

because it's a open Internet protocol, it really tears a lot of that stuff down, right, in the same way that

access to the Internet open people up to, like, educational information and language program and being able to participate in the online economy. And Bitcoin gives them a way to get paid for that directly,

you know, without the frictions that come from

uneven access to international finance and cut out middlemen.


it has that's like circular economy thing. And

because it opens up

new commercial activity,

it it should,

you know, create value. Right? You know, for free trade benefits or parties, basically. So

that is a

a good thing.

Jack Mallers:

Yeah. And I mean, liquidity

is what's needed for money to be good.

Again, if I spend all my day mowing lawns and I get it money in exchange for it and I can't use that money to exchange it for anything else, then the money is pointless, it's useless, and it does a bad job of collectively representing my contribution to society. So I think people kinda get

caught in a loop there is since I've been in Bitcoin,

if I've ever needed to sell it, there's always been a buyer

for the last decade of my life. And as long as there's a buyer and there's enough liquidity for me to exchange that, then, yeah, I can find my way to buying stuff.

But, yeah, I just think people overcomplicate

money, man. It's, like, I spend my life working super hard and then I go to buy a house and I can't, and I have to live perpetually in debt. Car notes, mortgages. It's basically society's way of saying we don't value your contribution

enough to actually own anything. College debt, mortgage debt, car loan debt, and the way you'd have to think about that is, wow, society doesn't value me at all in my life and my output. Why is that possible? Like, almost everyone in the world can't actually own shit.

You're, like, why? Is it because I'm mowing lawns bad, or is it because my business is bad, or is it because my collective output to society is bad? And it's, like, no. Actually, the money you're getting in exchange for your contribution to society is just being inflated to debt. So your life is worthless because of the Federal Reserve is printing more of the things that they gave you for your work. And that's just, like, the Federal Reserve is devaluing all of our lives.

It's bullshit. That's just not fair, man. Like, that's just I and I don't think it's more complicated than that. So people should not store their

collective, like, representation of their life

in dollars because the Fed will devalue your life. They'll make you worthless. Seriously, you can work all your life and get really good at something, and you'll never own a fucking house. You'll never own your car. You'll never own your college degree. So you have to represent your life's output in something else. And what do you wanna put it in? You wanna put it in Apple stock? What if they release a bad phone? You wanna put it in an index fund? Who's managing that? That sounds far too complicated. I don't give a shit. I just wanna put it in something that no one can co opt and control

and that I know the monetary policy. I know it's fair.

That's it. And as long as it has liquidity and I can exchange it for shit that I, like,


That's it. And the Bitcoin, we, like, what whoever Satoshi is, who she or they, like, fucking like, the best thing ever. They took a look at money, how humanity's understood it, and then tried to engineer the best version of it, and it fucking worked. And it's really just, like, not more complicated than that.

Oh, fires me up, man. Like, it's ridiculous. Like, you could work your whole life, and your life is gonna be deemed worthless because the people that

are handing you the money in return for your life's output are manipulating it. It's bullshit. It's not fair, and it's ruining society. Broken money, society can't can't operate at the scale of billions of people and on the Internet with money that's broken. It's why everyone's sick and mentally ill, and the world's falling apart. That's the

Adam Back:

reasons. So are people talking about,


like, short term volatility

for emerging market users

as a potential problem. Like, because there's a there's a difference between,

you know, long term saving

where where which

is, you know, that's true for stock market. Right?

Generally, a financial adviser would say, well,

you know, don't don't put money into the

into the stock market that you need to spend within 3 years or something like that. Right? And so,

you know, a lot of

people have a modest amount of savings or, you know, they spend most of the money they get every month. Like


I guess what people are saying is that is is that gonna be challenging

to is Bitcoin Vault also gonna be challenging, and what could they do about it?


I just wanna say I love that you're following along in the live chat and answering everyone's questions. Jack, you're gonna answer that?

Jack Mallers:

How to stomach, Bitcoin's volatility?


Is it a problem?

Adam Back:

Well, they're they're talking about sort of emerging markets where people might not have a lot of savings. You know?

Let's say, they're spending 90% of the money they get each month. They get it in. They don't want it to, you know,

jump around plus 10%

a week, which they cannot do at times.

Jack Mallers:

Yeah. I think I don't think it's a problem. I think it's a reality though.

You know, the prop like, the general problem or, like,

part of the imperfection that we're living through is that Bitcoin isn't accurately priced yet,

which we talked about on stage very briefly. It's like, I don't think the world totally understands how to price a money that's definitively scarce

and accessible to everybody. It's a very difficult thing for humanity to understand in price, and so it's going through its journey. It's worth 60,000. It's worth 3,000. It's worth and eventually,

it will be worth probably,

you know,

all the collective

monetary value. Hopefully, I'll be alive for that. Maybe not. But along that journey implies volatility. It's just humanity's natural mapping to try and understand

its worth to us functioning as a species. So

I think it's just a reality, and I think the free market will figure it out. Like, someone will

want to save their,

like, collective output and their their savings, their money, and their life in Bitcoin, and then it'll go down and they'll be like, shit, I can't get a double cheeseburger. I have to get a single cheeseburger, and then they'll learn they'll learn to

manage their, you know, risk tolerance appropriately. And It really depends it's natural.


It depends how much in savings you have. Right?

Jack Mallers:

Yeah. I mean, it's a concept of, like, working capital. So if I make $10 a week,


I run my life on $5 a week, $5 is working capital that I need to sustain my lifestyle, and $5 I could if I want, I can save it. And so what Adam is saying, and he's right, is that there's a lot of people in the world that don't have non working capital. Capital that they're bringing in that they can save. All the capital, like, very close to all the capital that they're making needs to be put in to operate their life, so very low income.

And so the problem is if I make $10, and then I need that $10 to live every single week, and all of a sudden the $10 is worth $2,

then the quality of my life is is diminished, and it's fucked, and I can't eat, or my son can't take the bus or whatever the problem is. And solving that is difficult. Right? Like, I mean,

there there's instruments like Tether or like I mean, we're all trying to collectively build shit to help this transition of humanity, understanding Bitcoin and valuing Bitcoin

and serving

and improving people's qualities of life with these tools. But these are just, you know, natural problems and we try and solve them. So


Well, there's a couple of things to unpack. I I kinda wanna go deep on this one, because I think it's important.

You know,

like, obviously, we we see anyone who's done any kind of work in the emerging emerging markets you know, I've been working with HRF for 5 years now, I think, training activists.

And there there is a heavy demand for dollars.


Their shitcoin, their national fiat is is significantly

worse than dollars,

even though dollars are designed to lose value over time.

You know, they they want access to dollars, and they want to to to hold those dollars, at least in the short term, to

to try and escape that that volatility of their own fiat and also the volatility of Bitcoin.

But the main issue is

that it's impossible to hold dollars without trust.

Dollars are inherently a centralized system.

Whether you go to all the way to the creation of dollars or if you go to however you're holding and using dollars, they require centralized platforms.

Even something like Tether, which is essentially,

you know, this, like, shadow bank,

US dollar shadow bank, like, you are trusting the Tether corporation or whoever's running the Tether corporation,

that they will not rug you. Now Bitcoin is extremely unique in that lack of counterparty risk.

Most of the world has not really realized that yet. I think they don't really realize it until they get rugged over and over again,

kind of in that situation.

But it's it's important to to isolate that that key difference.

And on, like, on that topic, what I would really like to go down a little bit of a hole with Adam since we're so privileged to have him here. I mean, Adam,

you know, you're one of the original cypherpunks.

Your your whole group of of friends

and contributors over there tried to create digital, like,

trust minimized money for a while, and a lot of people think Bitcoin was the first a lot of people think Bitcoin was the first one. And

I I'm curious in your opinion,

you know, what and it wasn't the first one.

There were many failed projects before Bitcoin, and I'm curious in your opinion,

you know, why is Bitcoin

why has Bitcoin been successful so far in this adoption,

where the others failed?

Adam Back:

Yeah. I mean,

there was the DigiCash one,

I think,

you know,

it failed because it was centralized.

So and it and it and it was a it was a stable coin,

technology they were playing with, this is Chorm's e cash protocol,

it requires a central database. You have to trust it not to print more money than it says it does. We have extremely good privacy, and it's highly scalable. And and actually something like Casu, which is a Fedimint push in, is actually approximately the same tech, right, but Bitcoin denominated.

So they they build this tech. People were very excited about it, very optimistic about it, and privacy for money on the Internet. A lot lot of enthusiasm.

Right? So kinda like Bitcoin, but, you know, it didn't grow big enough because it it failed in its early stages because that that company went bankrupt.


then the doubles database,

double spend database, which was centralized,

was lost. So you couldn't tell if the coin you had

was spent or not. So it's game over. Right? So, you know, people people saw that. And and and the other their other problem was

they needed,

you know, permission from a bank because their idea was, well, you know, you you you wire transfer some money and you convert it into coins.

You transact it backwards and forwards, and you wire it out. You know, you you burn it and you wire it out. So it's exactly like Tether or something. Right? But but with pop with a partnership with a bank, which is hard to get. So it had the, you know, seek permission problem.


Right. So

Adam Back:

when people saw that go down in flames oh, and and the other curious

thing there is is they ran a demo server

that they promised they'd only issue

a 1000000 units of, that would the name was, like, something books.

And so a bunch of us, like, messing around

on the slap punks list figured,

well, we can

we can bootstrap it to have a value. We can just start selling stuff for it, like giving it away to them a value. But if we treat it as a dollar,

there's only a million of them. It will start having a floating value. It will be worth a dollar. And and we started. Like, you know, I sold some some of those RSA

encryption t shirts and other people sold, like, I don't know,

PDFs or just just stuff. Right?

And we got a few weeks into that, and the company went bankrupt, so I was slightly into that. But, you know, it it was

it's interesting because

you're talking to some


you know, monetary economics

theory people,

you know, in a in a, like, 2013 era on Bitcoin. They have they have some

kind of mantra, which they take as an axiom,

I think, of one of the branches of economics that,

you know, a money can't be a money unless it first starts as a

scarce commodity, and Bitcoin didn't. And I'm like, but why? You know?

Like, that that's just an observation about history that doesn't seem like an axiom to me. And,

you know, effectively,

people try to bootstrap something that didn't have a commodity value

with this Digicash demo service. There was no connection to a bank. Right? So anyway, like, after all that failed,

people were, like, super sad that it failed

and trying to figure out what to do

to build an electronic cash system. And so they the lessons they drew from it and this this would be, like, you know, mix arvo, weidai,

a bunch bunch of, like, applied crypto people and

privacy tech people sitting around talking on online.

Was well, it's got it's got to be decentralized because, look, the centralized thing just failed. Right? So it has to be survivable. It has to be decentralized.



not so long after that, I

proposed HashCash initially as a kind of postage stamp to stop

to make to create a cost for spam.

And so I think that's that seem to grab lots of people at the same time that, oh, this is like digital gold. How could you control inflation? And,

you know, oh, you could you could mine coins with this, then you don't need to, you know, you don't need a partnership with a bank. That that'll be good for decentralization.

I think basically,

you know, and that's what b money and bit gold, which were like a year later. So HashCash was 97.

Bit money so Bit Gold and b money were 98,

were basically designs of how to

sort of create scarcity, you know, sort of control the inflation rate. Because if you think about it, you you've got you know, you can use your computer

to print some money,

and you say, like, well, a stamp is worth a cent or it's worth whatever the market says. And then people just go nuts, and they print trillions of them. Right? And computers get faster. So people were kind of, you know, well, this thing's gonna hyperinflate.

It's it's cool that there's digital gold, but how do we how do I how do how do you engineer it to be stable? And that and that, you know,

brick hold of b money

were kind of sketches and not not you know, they involve too much human judgment, like, you know, groups groups of humans like a super node or humans would decide a policy or people would have to operate some specialized market.

And so,

you know, basically, that's what's actually cracked, and and nobody else figured it out. Right? Which is, well, just forget about that. Just just have the

the protocol, the computer system

control the rate of supply and let go of this concept that you want, you know, stable

value and let the market figure out what it's worth. And,

you know, it looks it looks super simple and elegant. Now we see it, but nobody and people tried. Right? But nobody managed to figure that out before. So I think things always look clearer

afterwards, so I see.


I mean, so to distill it, it's this idea of a native a native digital bearer token, so not like pegged to a dollar.

Yeah. This idea of proof of work, which was originally shown in HashCash, and then this idea of a difficulty adjustment,

which regulates

the new supply of Bitcoin

depending on how much,

work is going into the system. Right?

Adam Back:

Yeah. I mean, I was thinking about it recently

in a slightly different way, which is the

HashCash stamps

are you know, if if that was the building block, let's say it's physical, and you found these little things lying around on the ground, you're like, it's scarce. And we say, like, well, yeah, there's not an infinite number of them, but there's sure lots of them, and people are creating them faster and faster. Right? That's the technology you're playing with.

And then somehow you have to make it say


you know, it's a lot more scarce. And that's what Station came up with, which is,

you know, I guess to define that in each period,

you know, it takes a million I guess Bitcoin's


difficulty is,

what, like,



to make a coin. That's a starting point. Right? So you're saying that in each period,

the system is gonna automatically

require more stamps

worth of work

to create some coins, and that's it. Right? So

you couldn't I don't think you can really do that with a physical system. But because Bitcoin is digital,

you can program things that


you know, I mean, to to build that physically would be some kind of,

you know,

physical, like, computer or something. Right? It's, like, extremely,

I guess people had the idea of baggage engines, like, you know, computers with gears, and they'd have a physical artifact that

has to communicate globally. It's it's just like, you know, kind of steampunk tech, which we can't build yet because you can't make computers in a scale. So so, basically, it takes digital computers to

turn this

somewhat scarce thing into a really hard scarce thing.

And that's effectively that kind of,

the advantage of software

as a control system


you know, humans to discover

digital gold, like Bitcoin. Now I I like to consider it a discovery even though, you know, it's actually

invented the key parts of it. But I think it's

one of the reasons I think it's interesting to think about is a discovery because

in the years since

Satoshi released it, nobody really found a way to materially improve it. Right? You know, they they optimized bits of it,

but nothing major you change about it improves it. It just makes it worse or more complicated or more fragile, and people tried. And that that is actually really surprising. Right? So it's kinda like DNA. You know, you can swap out some protein and it

it falls apart. It doesn't bond properly. And there's, you know, it's it's basically completely stable, and you can't really improve it. And everything you do makes it worse. That's that's not what you expect for technology, but that's that's the kind of artifact of a discovery. Right? You find some mathematical thing,

and that is kind of

dependable and axiomatic


a unique thing that stands alone. So

I find it really interesting.


I mean,

Jack, I know if you have any questions for Adam, you're welcome to ask him questions directly too.

Adam, I mean, I I,

correct me if I'm wrong, but

so, I mean, you were on the cyberpunk mailing list.

You saw all this development happening,

but you weren't really sold on Bitcoin in the beginning.

Adam Back:

Right? Am I, like Yeah. Yeah. So well,

I mean,

I had some initial reactions. Like, one is

it's not very private because Chorm's system was, like, super private. Right? It's complete



guaranteed unlinkability.

So that's one thing. And then,

know, the other thing I was saying, well, you know,

at least it's decentralized,

and it's it's


So, you know, that that was what caused DigiCash to to fail. Right? So

it's got a shock. But then the next question is, well,

okay. Like, he seems to have solved the problem that nobody solved before.

So that's

cool. And maybe, you know, maybe people can prove it, you know, improve your privacy or something over time.

And and that's what I ended up trying to do later, right,

with confidential transactions and stuff like that. But

the open question in, like, late 2008 and then when you released the source code in 2009 is,


you know, will it will it bootstrap a price? Like, will it get enough users

to sustain a price and to have a market? Because it you know, I I mean, I wasn't even I heard about it in 2008, I wasn't kinda one of the tinkerers who wants to understand by doing. I'll just read it or or read somebody else's description. I get I get it, like, more like that. But, you know, for the people that did tinker with it,

a good a good thing to sort of get an idea of how that would have felt is to read

Dustin Trammell's

well, listen to some podcasts he's done, and he was describing what it was he was mining, like, in super early in 2009.

And it's, like, super desolate. Right? There's sort of hobbyist

mining. After a while, I got bored. I went off to do something else. You know, a few people, you know, like debugging things or,

you know, just just standing them around for fun. Right? There's literally no price. There's nothing you can buy with them.

And, you know, then then after a while, you have this,

you know, probably half $1,000,000,000

pizza by now or something. Right? As a kind of first commercial transaction, which is a bit like the


let's sell t shirts to see if we can give it a value. So I think probably just did it for, you know, an amusement. Right?

For a giggle. You know? I'll I'll I'll buy pizza. Send me so many you know, I'll pay you so many thousands of Bitcoin or something.

So, yeah, it was a kind of an open question. So I was like, well,

let's let's wait and see. Right? And so, you know, I was like, keeping an eyes, reading bits, talking to friends about it, saying, like, this is really cool, trying to persuade,

you know, some applied crypto people I knew who worked on electronic cash, you know, to, like, look at it, start start researching, and see if they could improve it. And they're none of them seem very enthusiastic, actually.


you know, I I wasn't very organized, so I didn't buy as early as I I could have, obviously.

But I was just kinda looking in the background.

You know,

and, you you get the old bit of news bubble up about, oh, it reached a dollar or it reached a $100. And I was like, yeah, actually, a $100, that's

that's actually quite a lot of money. I guess I guess you gotta count that as a bootstrap event. Right? You know, there's there's a a market or 2 by then.

So then I

because I was like, well, if it it's it's just a hobby thing unless it bootstrap. So I wanna see if it would bootstrap. Right?

And so then I got more involved. You know? Start started reading more

I don't think the white paper describes the smart contracts. I found out about them,

Found found out where the developers were hanging out to ask

all kinds of details about how it works. Yeah. Because when you start, you end up you have some, like, misconceptions, and there wasn't a lot of documentation.

So I read everything I could find, and I still had all kinds of questions about

just basics, how it works. Right?


yeah. So then I did what everybody does. Right? Went went nuts right down the rabbit hole. This is amazing.


you know, started Blockstream, like, pretty much,

you know, within

less than a year after that, like, 6 months or something. What year was that?





Really fascinating journey.

Adam Back:

Thank you for walking us through that. Yeah. Well, you know, people say, you know, about that early, but I felt, like, embarrassingly late when I finally,

like, jumped into it. Right?


Well, there is is there something there? And I wonder if Jack,

would cosign this. I mean, when I first got into Bitcoin,

it was around that same time, like, the 2013


and I thought I was incredibly late. Right? Like, there was I was way late. And then, like, you stay in it for

a certain amount of time, and then at at some point later in the journey, ironically enough, you end up realizing we're incredibly early. So it was, like, 5 years. It's like I'm, like, sitting there in 2018.

Like, everyone just lost their cool on ICOs and just got completely wrecked.

And I'm, like, in 2018, I'm, like, holy shit. We're just still incredibly early. Like, it's not it's not even it's not even close.

Jack Mallers:

Yeah. Adam, I'm curious. I got into Bitcoin

2013. I have a funny story,

about my dad that's resonating here in Utah years, but I'm curious, Adam. How important was Silk Road do you think?

I I have I have an opinion on this. Oh, I'm gonna have a look. Don't appreciate that.

Adam Back:

Yeah. Probably pretty important. I mean, actually, I was

you know, I guess,

WikiLeaks was another thing. Right? So Yep. WikiLeaks was getting on the news,

and I saw the name Julian Assange, and I was like, wait a minute. I know that name. Because he he was a, like, moderately active poster on the Cypherpunks and then implement I mean, the siphonets like to implement, like, privacy and,

you know, encryption, and he implemented this kinda

encrypted file system, which is like TrueCrypt, where you had hidden partitions that you couldn't tell if they were there. You know? So there's always another potential of another password and another

partition. So


you know, they they they were getting debanked, and so they kinda involuntarily went all in Bitcoin. And, of course, that, you know, that made WikiLeaks fantastically funded after some years, which is kind of a nice irony.

But, yeah, I think Silk Road

you know, it's often the case that

the gray market,

adopts technology earlier. You know?



pornography was yeah. Pornography was a early, you know, thing on the Internet. Right? People would say, oh, the Internet's in used for watching porn or something. But it's because they're innovators. Right? They grab a tech. You know, maybe they're frowned on industries. They have trouble.

You know, they get interfered with by the establishment,

and so they adopt. Right? And,

you know, of course,

drugs and gray market gets the various descriptions.

So it's a risky area to conduct commerce in. Right? So they can actually innovate.


I I think another another example of people that

ended up on Bitcoin early for,

due due to having a bad experience with banking


people that play online poker, which is, like, kind of another gray market thing. Like, maybe you're not allowed to do it technically, but, you know, if they want to, it's got all these kind of poker players that ended up with Bitcoin

and became Bitcoiners.


That was a big one for me. I got rugged in the Black Tuesday or whatever when they cut off all the financial access to the online poker sites.

Jack Mallers:

Yeah. Yeah. There's a lot of, like, Cyprus crisis.

Back in the day was a huge

Bitcoin validation point. There I I think the Silk Road


at least for me and my dad, and, like, was so important

to Bitcoin being successful,

you have to solve this liquidity problem. You know? Like, Adam is calling him bootstrapping.

It's yeah. That's right. Is that

I I keep

it it has to be a market. It has to be liquid, or else it doesn't solve

what money is intended to solve as we've been talking about. And so it found liquidity

in really interesting niche ways out of people needing it for necessity, like you. Right? And so

I'm I'm a, you know, free raw sky for a lot of reasons, but, I do not think it's greatly

understood and appreciated how important Silk Road was to Bitcoin's inevitable success, I think. It's, like, a really misunderstood part of the story, in my opinion. We were talking about circular economy earlier.



And by the way, I'm wearing my BTC pay tag, which I think is crucial to,

having a robust Oh, yeah. Censorship resistant circular economy where you don't have to rely on centralized

third parties in order to accept Bitcoin for goods and services.

But Silk Road was, like, the key ex example of of what makes that kind of system.

Like, Silk Road was obviously centralized,

but I would say, like, Silk Road got shut down, and then, you know, a million flowers bloomed after that. Right? There's tons of other dark markets that emerged after that fact. But,

in the early days of RHR, me and Marty had,

a Silk Road vendor on,

and he told us his story. So he actually he Great episode. You remember that one? He got Yeah. The forced huddle. Yeah. He got thrown in jail.

He got thrown in jail, did his time in jail,

and then came out and was listening to rabbit hole recap and was like, I would love to come on the show. So we talked to him. And I remember one key tenant that I'll always remember was,

he would buy drugs on Silk Road with Bitcoin.



and he would sell drugs on Silk Road with Bitcoin. But to get out of the Bitcoin, to to get the Bitcoin into something that he could actually purchase goods and services in person. His best way of of essentially converting that Bitcoin into something he can purchase with was to then buy drugs on Silk Road and then sell it in person so he would get dollars and then use those dollars to buy something. So, like, he was actually

there was actually a full circular economy there where the in and out of getting in and out of Bitcoin was

buying goods and services and selling goods and services.

Jack Mallers:

Yeah. You tell I think, yeah, he was taking his Bitcoin profit and buying a bunch of weed and then selling weed locally. Right? For dollars. I think. Yeah.

Yeah. Yeah. No. I think but

more particular, like, at least the Chicago trading industry,

like, I think people are generally pretty familiar with my background and, like, my dad's a trader.

Silk Road was important though to solidify

that Bitcoin was legit to those guys. So, like, let me tell you what I mean.


traders and, like, people, like, you know, everyone here in Chicago, they built the agriculture

commodity risk transfer market. Is hugely important to society functioning. So that was a bunch of word salad. That just means, like, corn futures. Right? It's, like, the futures industry is here, and the commodities that get produced and that we consume,

like, are priced and traded largely here.

And so these guys have a deep understanding of money, and when they heard, like, when my dad heard that there is a money that's definitively scarce,

it's digital,

so that it's programmable,

so you could engineer it to be the best,

and it's digital, and and that it's can be accessible by everybody in planet Earth. It's native to the Internet.

That's just such a natural winner when you hear that, but how like, it sounds too good to be true. And when they couldn't shut down Silk Road,

they they shut down Silk Road not because they could stop Bitcoin, was when everyone here in Chicago was, like, oh,

this thing's gonna be worth a 1,000,000,000,000,000,

quadrillion dollars just because if they couldn't stop this college kid

flinging drugs,

they're not gonna be able to inflate it either. And that is when

the CME and my dad and all all Donnie Wilson, all of these guys started to, like, start building their Bitcoin position of, like, this thing's just going up. Like, there's, like because they're not technical. They're not Adam Back. And so I'll never forget I think, like, my dad logged on to the dark web. My fucking father is, like, middle aged man with 4 kids.

And and he's he goes on and he's, like, I'm gonna try and buy drugs with this thing

because if this is real and they can't shut this thing down. And back in the day, it was like wanting

in the face of authority

is Ross was like really in everyone face about it. He was doing, like, interviews with media, like, fuck you guys,

and they couldn't figure out how to shut it down. And all the traders were, like, if they can't shut it down now, they're never gonna be able to. This thing is gonna be definitively scarce. This thing

is gonna and that so it was just such a critical moment

for Bitcoin and it validated,

like, people don't I don't think people necessarily appreciate what that did for the confidence in the early liquidity of the thing. Because then everyone realized, like, oh, there's not gonna be more than 21,000,000.


and and and it does as as it's marketed. Which So it's a crucial part, at least my Bitcoin journey. So that's an interesting perspective. So you're saying



the a lesson that a lot of people took from that was that you could shut down Silk Road, but you couldn't shut down Bitcoin. If they could shut down Bitcoin, they would have shut down Bitcoin, and they couldn't at that point.

Jack Mallers:

Correct. So you like, so my dad spent his life

in building markets,

building futures markets, understanding money deeply. And so when hearing Adam talk about Satoshi, I think the most impressive thing about Satoshi

is their understanding of money. They had such a sophisticated Adam's right, it's a such a sophisticated understanding that this needed to be a commodity. It had to have a commodity premium to produce and that it should be priced naturally as a commodity.

And so it was really Satoshi's, like, depth of understanding of money that was, for me, the most impressive. And so my dad heard about it from a guy named Mike Krieger. It was a a Duke University blog

and Liberty Blitz. Mike Krieger's awesome. Liberty Blitz. Yeah. So everyone should go read Mike Schitt. So I think Mike wrote something in 2012, and my dad was just a reader of his blog, And my dad was, like, well, holy shit. There's supposedly a new money that's definitively scarce, native to the Internet,

and it's digital and bare, so you can engineer it to be the best fucking thing ever. He's been around money his whole life. He was like, wow. That sounds


but too good to be true. And then when he watched in Silk Road flaunting everyone's face that you could go online

and buy any drug you want like it was Amazon and there's nothing the authorities could do about it because this Bitcoin thing.

And they got to Silk Road, but not through Bitcoin. He was like, oh,

it's worked as it's works as advertised.

That means if they can't shut it down and construe it there, then they're not gonna be able to inflate the the asset. They're not going to be able to over govern it. They're not no one no one can turn this thing off, and there's only gonna be 21,000,000 of them. And then

I dropped out of college, and he was like,

you and me, buddy, we gotta get as many of these fucking things as we can. And that's what we did. But it was the it was that moment where and then right after that was Cyprus crisis, and it was those type of moments where traders here in Chicago were, like, oh,

that like, because we don't under like, back in the day, now I do, but we didn't understand cryptography and shit. I I mean, my dad would, like, walk me to school, and he was, like, the coach of my baseball team. He didn't he didn't understand what Adam Back was writing on Bitcoin talk, but once he saw that they couldn't shut this thing off even if people were slinging heroin with it, he was, like, oh, they're, like, this thing's gonna be a huge winner. And, yeah. That's I think it is critical part to Bitcoin's story.

Adam Back:

Yeah. Curious about marketing. You're talking about the

the scarcity,


it's it's one of the things that you know, because it's interesting to look at smart newcomers when they they get involved in Bitcoin, you know, whenever it is, you know, 2014

or 2022, 2023.

They will add a little bit, And and I think understanding

new technologies is a kind of

group thing, like a societal thing. So as you get more people understanding

and commenting on it, it affects people who thought they knew it for years, but, you know, it's sort of tweaking their adjusting their understanding a little bit. So I think it's kinda group exercise. You you can think about it like,

you know,

early grappling with electricity or new concepts. Right? It it was just mind bending people until they got used to it, and then it became like a simple fact that everybody takes for granted. So I think we're still in that kind of stage. Right? Because it's really something fundamental and

different and unusual that didn't really exist before.

And so one of the things that,

you know, people even

even programmers or, like, you know,

people understand Internet architecture really well.

Like, well, how can it be scarce? You know, that's just mind boggling that, right, something that's digital could be scarce.

And so

I think Michael Saylor added something

novel to that story. You know, he says things in a kinda

poetic way, but

he's like, Bitcoin is a

portal, like, from, you know, cyberspace to the physical world or something.


you know, that sort of says it all, right, which is

the only reason that that Bitcoin is scarce

is it

there's a sort of hard requirement that something very physical industrial happens in a physical world. So it's literally the the it's got a connection to the physical scarcity, and somehow

the protocol, which doesn't understand or know anything,

is, like, mathematically

tied into that. And that that trick or, like, that that kind of combined effect


is what makes it possible,

and what makes it unique.

So I think, you know, it's very curious

phenomena that's unique amongst anything else digital, really. So that's that's why you, man.

Jack Mallers:

I I mean, you're describing proof of works necessity to Bitcoin working. That's you. That's your work. Well, yeah. But I'm I'm excited for it. Yeah. But I think kind of the That's why you're the fucking man.

Adam Back:

Thanks. But, I mean, I think, like, even though, like, we understand that and we've been, you know, playing in it for, you know, for a decade. Right?

Sailor comes along, like, couple years ago

and expresses it in that way.

And, you know, it's was thinking about in a simpler way or in a different way or in a way that that can make sense to people who are not, you know, into their bits and bytes

and programming and, you know, she encode and stuff like that. So Totally.

It's it's very interesting because people are

it's a sort of fundamental new building block. Right? Additionally scarce thing, and it's scarce because it's connected to the physical world. And I like the fact that it

like, the Bitcoin drives

it's also driven by

economic incentive.

It's kind of marshaling millions of humans around the world to adapt their ingenuity to, like,

improve it and strengthen it and react to its economic forces.

So even though it's like a very simple inanimate thing,

it has some kinda combined,

you know, magical


on, you know, everybody gets drawn into it. So it's really a kind of funny phenomena. Right? Like, that I think that that's why,

you know, we can understand that at some levels, but, you know, the combined human and psychological level still

sort of evolving how people think about it.

Jack Mallers:

Yeah. Totally. Is there something wrong with my Internet?

Adam Back:

What is wrong? Am I coming through? What Do I see the comments? We can see your your audio is fine. I think your your resolution is fluctuating a little. That's all.


Yeah. You were in a you were in a rant earlier, and I laughed. And I think you thought I was laughing at your rant, but I was laughing at, someone called your camera a potato, and then someone made a Greg Zaj reference.

Oh, shit. I don't know. That your camera's Greg you look fine. You're fine. Don't worry about it. This is a great conversation.

Jack Mallers:

Yeah. No. I think

I think we should talk about proof of work and its necessity because I don't think it's well understood.

Maybe it is to the listeners, but more broadly in the world, why proof of sake doesn't make any sense and literally uninvents the invention.


I think you're right too, Adam, in that,

another, like, really

amazing insight that seems simple in hindsight, but was so genius from Satoshi

is the monetary policy that they ended up going with. It


it it it drives a natural network effect is that you issue a lot initially.

It's kind of the idea that, you know, if the if the issuance was was fair and flat across the board, and I can just kind of wait. I like, I don't get rewarded for being early. So I can just kinda wait to see if it works.

You know what I mean? And and what Satoshi was able to do

is kind of say, you know, if you come early and you contribute to this thing working,

then you're gonna get paid big time compared to the guy that comes 10 years later. And that was it was designed that way. And so he does create this natural network effect and you're still seeing it today. Like, Michael Sailor thinks

that he can build

a bigger position than Apple,


he's earlier and he's gonna contribute to his position and make Bitcoin better and go around the media. And so that network effect in Apple is probably gonna come 5 to 10 years later than Sailor, and you're seeing it. So that was in the design. Satoshi Satoshi solved that very elegantly, and the monetary policy he chose.

Adam Back:

Pretty cool. I mean, it's it's,

I think it's interesting. Like, if there's a number of things people say which are kind of observations about how things have gone for different people. But,

you know,

I think Lena,


the lady that makes the, cartoons with the Bitcoin Huddlers,

she she has one about, you know,

you were so lucky. You know? You you bought Bitcoin early, and you're lucky. But, you know, as as Eric Weiss observed, you know, and lots of people had a similar experience,

they they, like, you know, got scared by the volatility

or they weren't sure if it was gonna make it or, you know, they sold or they lost or they mismanaged the coins or failed it back up. There's there's so many ways people can go wrong. And so, actually,


know, Matt's,

stay humble, slack, sats is good advice because people get, like, too too emotional, and then they they shake themselves out. You go you gotta, like, find out a way emotionally to deal with the volatility


not get shaken out. Otherwise, you you know, you have your,

you know, the gadget or the t shirt you bought that you regret,

because you, you know, it it was expensive and you didn't replace the Bitcoin or,

you know, you tried your hand at trading, and that always goes wrong too. Right? So

I think, yeah,

it's there is there is an element of luck,

but there's also,

you know, the determination or or whatever it is to get in a mode of thinking where you're just gonna keep buying and holding and averaging.

Because, you know,

people who trade tend to lose over time. It's it's a very dangerous thing to trade. Right? And


you know, thought about this,

you know, probably in 2013

sometime that, you know, this this thing is going up on an exponential rate.

And this is before I'd read this stat that Bitcoin,

if you take out the 12 biggest gains in a year, it goes down every year. So before that but, you know, it's it's going up


with high volatility.

So do you really wanna sell it and try and tell them the market? Because you can just see this the the odds are against you. Right? It's like it's like playing

you know, there's a house betting against you or something. It is going up exponentially,

and you want a time to market, you're gonna lose. Statistically, if you do it enough times, you're just gonna lose time after time after time. So you you get it. Okay.

So So it's not a good idea. Let's not do that,

or, you know, get smarter about it or something.

But the,

you know, the 12 12 days a year is,

that's that's something else. Right? So

that is a

another reason why trading is a bad idea.


I agree.

I agree. Do you guys think

my my thesis is that,

Bitcoin is volatile because it's going through this adoption phase,

But long term, that volatility edges out.

Are do you guys operate on the same thought process there? I mean, yeah. So so,

Adam Back:

you know, I guess, like, Amazon stock, like, went up and down a lot and had some dismal periods. Right? And that that happens with early

technology things.


you know, I'm not sure it's necessarily gonna get, like, super stable because,

you know, I used to earn gold as part of my stock trading

and efforts to

save in a in a world with fake inflation numbers. Right?


yeah, I think


that gold still has volatility,

right, in a in a short term. And so, you know, maybe Bitcoin would too. But the other the other thing is I think part of the volatility

is kind of our own fault. You know, like, the collective

group behavior of Bitcoin is

is partly what causes the the volatility if you think about it. Because,

you know, if nobody's got any fiat left

and, you know, something crazy is going on in the market, some DeFi is failing,

somebody some company was leveraged or they get liquidated on a big land, and somebody's out in the market trying to protect their assets because they were a lender, you know, market selling 1,000 of Bitcoin. And we've got no money left, so we can't buy it. Right? So they push the price down.

Eventually, somebody finds some money or wants some money or get some resolve together, and they buy it up and price comes back. But if you look at that compared to

what happens with value stocks,

there are all these funds, you know, like pension funds and their analysts, and they're looking at the quarterly reports.

And they've got, you know, below this price, this is a buy. Above this price, it's a sell. It's overweight, underweight, this kind of thing. Right? And they've got, you know, 100 of 1,000,000,000 of dollars sitting around

reallocating shares, and they've got a value


And so if something goes down, they'll bite up. So so they'll sort of smooth the volatility. Right?

And we've got the value thesis. You know, we want more Bitcoin,

but we we don't have,

the other assets to

to reallocate, and I guess they've away because we're all in. And so if you're all in,

it's very hard to help


So I used I used to do a bit of I still do a bit of, you know, buying a dip

and then selling it back, you know, once prices recovered. Now you, you know, you've gotta be prepared to hold it for long term if you're doing that because it can just keep going down for, you know, a year or so.

But I think that that does help a bit. It's just kind of decentralized market making or something.


Yeah. But beyond beyond that.

Right? Like, when when Bitcoin is the absolute standard, when SATs are the standard, when

when you're the majority of your savings are in Bitcoin,

when you work in Bitcoin, you earn you earn sats,

when, you know, houses are priced in sats, when water is priced in sats, when everything is

is is Bitcoinized,

like, wouldn't

the volatile wouldn't it be, like, the most stable money that's ever existed in humankind?

Adam Back:

Yeah. I mean, because there were there was a long period in history, right, where gold was the

international unit of account, right,

for civilization for 1000 of

years. So

and, apparently,

you know, looked at on the long term,


is, like, remarkably price stable. You know, like, you can,

you know, buy a,

you know, a loaf of bread or, you know, just just

random things

for about the same price, you know, from the Roman times or something, which is insane. Right? So that that shows it can be burned.

So maybe we're just looking at the wrong comparables, and it's the,

it's the fiat currencies that are moving around a longer time anyway. Yeah.

Jack Mallers:

Yeah. I I mean,


like, drive price discovery. That's why they exist for, you know, the market to deem

what something is worth.

And so

volatility in Bitcoin

is just

people trying to figure out how valuable it is. And so it's kind of like a proxy to people's

cons like,

us as humanity it our collective understanding

of what it is, why it's valuable, and then how valuable it is relative

to society.

And I think as that becomes more and more understood, volatility goes down, and volatility has gone down. And I think it's just a function of the world

understanding it and accurately pricing it. So, yeah, I think you're right. When Bitcoin is the only money


we live our entire lives on on Bitcoin and it's well understood that it's the most performant,

for what we want money to be, then, yeah, it'll be extremely well understood and really efficiently and effectively priced. And it's probably mostly until then.

Adam Back:

Yeah. No. You're right. Yeah. Probably mostly the adoption

that is driving the volatility right now. Right? Once once you reach saturation, I think you're both right, and it would get

stable Yeah.

Jack Mallers:

Totally. Yeah. I think the volatility

today, in my opinion, is driven by what's happening at the Fed, the mismanagement.

I mean, because it's not just Bitcoin that's volatile. It's, I mean, everything.

No. Like, the world

doesn't understand, basically, the way money works today, unfortunately.

Because we should talk about, like, gold was allowing society to be so efficient. Adams, like, for 1000 of years, it, like, wasn't volatile at all. People were able to focus on living their lives and exchanging,

you know, money with each other via gold, and then it broke. And we have Fiat, and the way Fiat works is

the Fed

deems how valuable the dollar is.

And so everyone's just right now confused at how the Fed is going to be valuing the dollar and how much the dollar is actually worth. And that's the world just collectively trying to figure that out. You know, if the Fed puts interest rates back at 0,

then the dollar's,

like, worthless and it's gonna hike forever. If the Fed keeps hiking rates, then the dollar is going to artificially get stronger, and

they're caught in an awful situation

because they're stupid and they fucked up,

and it's broken.

And, I think the the volatility in the world right now is just, like, trying to price

the potential outcomes, and Bitcoin's just

a victim of that just like everything is. Like, there's volatility in my in the eggs I get from Whole Foods, like, and no one knows how to price anything because the Fed just mismanaged everything. That's just an unfortunate reality. It's a it's a combination. Right? Like,


there is. It's a it's a function of the liquidity of Bitcoin and how much Bitcoin has been adopted.

But then as that adoption curve goes up, like, as more people adopt Bitcoin, as Bitcoin becomes even more liquid,

then the only volatility left remaining

would be the world is is inherently volatile place. So if it's the world's money, there's gonna be some volatility

based on what's happening

at any given time. But it should be significantly reduced, I think,

significantly reduced from where it is today.

Jack Mallers:

But yeah. But I think, you know, there needs to be a like, you need to divide Bitcoin is not

a company. It's not an equity. It's not a stock.

And so bit Bitcoin understanding Bitcoin's price is not based on cash earnings, you know, like, Apple could be volatile, so comparing

Bitcoin to Amazon isn't actually perfect comparison

because Amazon's volatility

could could have to do with the macroeconomic

environment, could have to do with adoption curves, it could have to do with their quarterly earnings because, like, Amazon is a business and they deliver shit

that you order online. And if they don't do a good job at that, it could be volatile.

But Bitcoin as a commodity,

there's no earnings or any it's it's, you know, speculating

on on that. It's not in its nature. It's just

the world understanding

what it is, why it's valuable, and then collectively

agreeing how to value it, which may take a 100 years.

But, yeah, I just think Bitcoin's miss not not

it's the maturity in which it's understood

is not great, which is is shown in the market. Is that, like, some people think it's worth 60 k, some people think it's worth 3 k, and that's just there are inefficiencies there,

and, it'll get more to the top. Worth a million.

Exactly. Right? And and the market the free market will figure that out.

But yeah. And I and, you know, I think too, like, I actually am really excited for Bitcoin's price performance over the next few years because

of, like, this is the first time I think

Bitcoin in Bitcoin's life that we'll see how it performs on the back half of,

yeah, like central bank mismanagement. And I know I am over indexing on the Fed. I I saw that comment. Someone said I'm over indexing on the Fed. It's congress too. It's true. It's just the general mismanagement of monetary policy throughout the world.

Bitcoin was born after o eight,

and so this is the first time it'll be alive, I think.

I don't know what to expect. I don't know how to price it, but I think it's gonna this is gonna be wild.

Adam Back:


so how are we gonna onboard the next 1,000,000,000 users? How do we get them uncensorable,


Bitcoin ownership?

Jack Mallers:

I don't know. I mean, you and I are trying to fucking figure that out. Right? We run these companies Lay outrunes. Figured that out.

Yeah. Yeah.

I don't know. What do you think?

Adam Back:

Well, I mean, I think some people get stuck in a kinda central planning mindset, but, you know, Bitcoin is a market. And so,

you know, all you can do is

and and there are there are competing technologies always. Right? So people have an idea. They build they build the idea. The market adopts it or it doesn't adopt it.

Sometimes the market adopts things

only when there's pain experienced.

And so you saw

some kind of rapid spontaneous adoption of

I mean, actually, the fee market spiked as you all know, like, I don't know, like, a week or so ago. Right? And it seems to be coming down again now. But

it was causing problems for,

this company called Boltz Exchange,

and they have an atomic

submarine swap between Bitcoin

to rebalance like, to draw funds out of or add funds to a lightning channel as an alternative to


or creating a new channel.

I guess it's slightly more efficient in, like, fees or something. But, like, the fees were were breaking it. Right? They're doing this in bulk, and they were not having a good time. So

within the space of a week,

they made a liquid version of it. So

the channels are on the channels are the same. Right? They're they're on chain

Bitcoin mining channels,

but they have an atomic swap from liquid Bitcoin.

So you can

you know, if you run out of capacity, you can sort of push it back towards you by paying somebody else to send it to you. So it's just,

you know, you you if you're in person, you can give them a $100 note and say, like, send me send me a $100 off my capacity back. Right? So it's kinda like that. Right? So, you know, you can just you can sort of and it's still atomic because it's using the same mechanism.

And it was funny because, you know, you saw the evolution. Right? They were tweeting

other services down, the fees of, you know, broken it, and, like, a short blog while they work on it. And then they were on a

Telegram channel

with a beta, but they're saying don't you know, I was like, you're gonna tweet about that. And they're like, no. No. We we still like working on bugs. We you you guys can test it in a channel, and we'll we'll we'll fix the bugs. And then, I think, like, a day or 2 ago, they tweeted it. And now they're, like,

translations in multiple languages of how to do it and stuff. So it just shows you that, you know, people have a sort of central planning view that, you know, you gotta you gotta, like, have massive blocks or you gotta do this or you you must do that. But, you know, the fact is

they made that happen in a week because they had a problem. Right? So,

you know, I think

it's just the way the market works. Right? The,

you know, people would develop subjective views about, you know, is that a good use of block space, you know, like GIFs or something, right, or ordinals or inscriptors.

But, you know, the person that pays the highest fees will take the space, and there's nothing you can do about it. And

so, you know, you can you can get depressed about it and say, well, each time, you know, these rich guys are collecting GIFs and paying $200 to post a GIF,

they're, you know, pushing a 100 UTXOs

out of out of the box chain. Right? Now, you know, there's a 100 people in emerging markets that can't earn a UTXO in a sense just money. But you can't you can't you won't you won't achieve anything by complaining about it because, you know, personally, they're monetizing you complaining.

Right? So you just wait until they get bored.

And you can't build a layer 2 for them to store the GIFs on because they wanna store them on chain for some reason, you know, like, because it's scarce or something.


you know, at the same time, the fact that they pushed the fees up made something happen. Right? It motivated Bolt's exchange

to get very busy and presumably

a few sleepless nights there coding away and fixing bugs

to have a workaround, which is now they can rebalance a channel

with an on chain footprint. And, yeah, it's a different it's a different slightly different trust model. Right? Like, Liquid is a little federated.



you know This is a little federated.

Adam Back:

Yeah. Well, I mean, it's all a trade off. Right? So Right. Right. Multisig custodian, basically. Right. I mean, so it's,

you know, there's there's there are different trade offs. So you could say, you know, people were using exchanges.

That's like a single custodian risk. Right? And you saw with FTX most recently that that can be extremely bad when it goes wrong.


you know, then then I mean, there there were and still are some custodial lightning,

things. Right? Because and I think sometimes people think that's fine because,

you know, it's it's maybe a media medium to low value transaction. Like, if they lost the phone and they didn't back it up properly,

they'd be more upset about losing the phone than about the SATs on it because the phone is more expensive than the sats on it. So, you know, different,

kind of risks

are appropriate for different use cases. So I wouldn't I wouldn't, you know

some people get kind of dogmatic that,

you know, you gotta you gotta be noncustodial. And, of course, it's important that people should should be able to be noncustodial. But yeah. So liquid is just a trade off in the middle. Right? So it's somewhere between

it's it's a lot less centralized than a single exchange. So, you know, if people doing

noncustodial trades with it,

that's a far safer place than they put limit orders in exchange. They can put limit orders on siteswap, for example, which is

a noncustodial

it's a central order book. You can place limit orders and walk away and be offline.

You should be able to do that from a hardware wallet. They're working on that now. So that's cool. They can leave stink bids and not be exposed to exchange risk.

But, you know, I mean, they are exposed to the federation. Right? Right. And I I think the point is


rebalancing Lightning channels, it's actually quite interesting because,

you know, they can rebalance cheaper and faster,

and so they have a kind of competitive edge

compared to people who are opening new channels

or rebalancing on chain.


so even if you don't use it, you benefit from the improved liquidity in the network. Right? You know, those channels are there's some subset of the network, which is now

more frequently very rebalanced.

And for the people running those channels,

you know, they have high velocity,

and they can, you know, route the same amount of sats with with less Bitcoin in the channel because they can just keep knocking it back to the center whenever it gets off.

Right? So,

you know, it's not as cheap as lightning. You know, like, the fees on liquid with confidential transactions

work out to, I don't know, about 10¢ a transaction.

But, you know,


that's a lot less than the chain at times. Right? On the main chain at times. Right? Significantly less. Yeah. I mean, I think the the the key kernel of of that thought process,

which is

one of the reasons I'm so optimistic about Bitcoin, why I'm so where a lot of my,

conviction on Bitcoin comes from

is this idea of,

you know, antifragility,

this idea of iron sharpens iron. Right? So, like, we can talk about all these things

for hours on end. We can do it in IRC. We can do it, you know, on forums. We can do it on Twitter. We can do it on Noster. We can do it on podcasts.

But the things

actually get built and improved on

when they're actually feeling pressure

and the market demands it. And as soon as fees started to creep up and increase,

you started to see the pain points become very obvious.

You started to see people complaining

about having issues and user concerns and whatnot, and then you started almost immediately seeing improvements getting rolled out across the ecosystem

to to handle those pain points and take advantage of of that new opportunity that existed because of that pressure in the first place. Right? Yeah.

Adam Back:


Jack Mallers:

So Yeah. It's free You know? Free market.

Yeah. Like, super important property. Bitcoin's not centrally planned, so the innovation

will be driven out of necessity. And if someone's building something that isn't actually valuable, they won't be able to work on it for much longer because no one will fucking use it and pay them to work on it. So it's, like, really the most efficient

Free markets are the most efficient way to make progress.

Adam Back:

And it's it's also kind of a little bit

viral because, you know,

once somebody has a market edge,


they drive others to copy them or

or somebody, you know, somebody outperforms them in the market. Right? You know, they can operate channels more efficient. They can make more money per,

you know,

per Bitcoin tied up in channels because

they can make it work harder.

And I presume that must work by,

you know, drawing capacity out of other channels because you're you're basically paying someone to send you your own stats back. Right? Right.

And so, you know, that's those stats gotta come from somewhere. They just you you're just you're just getting, like, all the stats pushed towards you, so you're having a good time. But that that means somebody else who isn't doing that is probably having a a worst time. Because usually the problem with

on chain rebalancing is a bit like a Sudoku puzzle. Right? You you pay yourself to rebalance your channel. They just unbalance something else. So I think another

sort of advantage of this is you're not unbalancing you know, you're not

you know, there there's there's new money coming into it. Because I think the network can't distinguish between a payment

and a rebalancing if the if the if the rebalancing payment is out of band.


it helps a bit solve the Sudoku puzzle, I think.

And, ultimately,

I I think the fact that it's unilaterally you can adopt it unilaterally, and it helps the network as a whole is is a is a is a good characteristics too for something to get

incrementally adopted. Right? Because there there are lots of technologies where everybody's got a top tier. It doesn't do anything.

You know? Like, HashCash was kinda like that. People were saying, well,

you know, you need everybody to to recognize a postage stamp before it will help you much to put a postage stamp on it. And, you know, there are lots of things like that. Right? So Mhmm.


Yeah. No. That makes sense to me. I,

I just saw the 4th question in the chat about,



new l two arc. I just wanted to say, I I think it's a little bit early to discuss.

He will be coming to the lightning summit,

in Nashville that we're hosting at Bitcoin Park,

in July. So I'm gonna do an in person conversation with him on that. I'll probably bring in a panel.

Maybe Jack will join us. He'll be in town for it as well.

But we'll make, like, a little party rip discussion on arc and and dedicate a full discussion to that. But he announced that on the open source stage at Bitcoin 2023.

Adam, there was another question in the comments from, ride or die free, Carlos,

who I disagree with on the timing of my episodes. He likes when my shows are in the morning. I prefer my early afternoon episodes.

But he asked,

if you are offended

by my blunt commentary

on the lack of liquid adoption.

Adam Back:

No. Because I have a market outlook, which is

people will use something

if they want to or if it solves a problem for them. Right? And so,

you know, that liquid bolts exchange,

use of liquid didn't exist a week ago, and now it does.

And that's because,

you know, something broke. Right? And somebody found a a simple solution.

I think, you know and

and you see a similar thing with exchange risk too. Right? You know, I personally got Mt. Gox to little do an arbitrage on there. And so you learn, like,

I mean, every trader has been a while has lost something on some exchange rate. It's been a big year for that.

Yeah. Well yeah. So it's a refresher course. Right? Yeah.


you know, I think it just shows the,

you know, people forget risk.

You know, they see people getting


and then they, you know, it fades, and they do it again.

And, you know, the point of liquids


to be a

a lower risk way to

place limit orders and trades and simple smart contracts like this.

A trustless covered call option. I mean, trustless. Right? You're you're trusting the stable coin. You know, you're trusting the federation. Trust Minimize.

But it's definitely lower risk than,

you know,

the other,

Bitcoin options. Right? It's it's kinda depressing in a way. Right? We have this, you know, trustless bearer

technology with Bitcoin,

and yet all of the trading is old school. It's like, yeah, you send all your assets over here,

you know. And, yeah, the regulators are annoying, but they're pointing out that these these exchanges

don't necessarily

have, like, clear custody. Look at look at the Celsius

bankruptcy decisions. Right? They're like, yeah, those assets are not the users. They belong to a bankruptcy.

What what the heck is that? Right? So, evidently,

the the configuration of the contracts to start with was ridiculous.


the point is if you can

avoid that

and, you know, have a decentralized enough

tech to move it forward, I mean, that could become more decentralized over time.

That's a step forwards.

And, you know, the problem is you can't it doesn't make sense to do everything on Bitcoin on a main chain. Right? I I think,

you know, if

sort of line Lightning does things that Bitcoin doesn't

and Liquid does things that Bitcoin doesn't, but you they're not things that you initially would want to put into the main chain.

So I think it's and and, of course,

you know, any layer 2

is typically worse than Bitcoin in

one or more ways. Right? Or Bitcoin would already do that as my thinking. Right? So Different trade off balance. Yes. I mean, basically, it has to make a trade off because otherwise, Bitcoin would already do it. Right? So so, yeah, there's a trade off, but, you know, you can't write, like,


call options and trade them from a hardware wallet

on on the main chain nor should you want to. Right? Because the main chain can provide a much better story, much better assurances for censorship resistance than a federated chain can.

And it's much better for long term assurance. Right? That you can,

you know,

put a cold seed back up somewhere and get it back in 10 years. Right? On a on a federated chain,

that might have such a good idea. But, you know, for the time frame that you have a trade on, you know, like some of these instruments,

people are trading on a daily basis or, you know, an op a 12 month option or something,

then it's then it's

a step forwards. Right? I I think that

my view of technology is it's

incremental and we're learning, and it doesn't necessarily matter


approach wins because the market's gonna find it out for us. Right? We're gonna do,

you know, different companies, different individuals, the developers are gonna develop lots of different things, and we're gonna find out

what works and move the thing forwards. But it is a little frustrating when

people keep doing the risky things, and then they lose money, and then they do it again.

And, like, it's I think that's the one thing that's surprising me about Bitcoin is how bad things have to get before people actually pay attention,

feel the risk, stop doing the thing,

or how expensive it has to get or how broken someone has to get before they adopt it. There's there's it's really reactive. Right? There's not a lot of forward planning. Like, well, if the fees get to this level,

then, you know and historically, I think most of the fees were actually driven by traders. And I think something must have shifted. You know? I mean, traders still don't care about fees, but

I think probably the cross exchange stuff is happening with,

you know, some of these

paid to trust a third party, you know, sort of service providers that provide custody to exchanges. I think they can move funds between exchanges. So it's probably an even bigger single point of failure. But I think it took some of the trading fees off the network. So now we have something else driving the piece. But, you know, it's it is it is a

it's just a natural market,

side effect that the people that are least fee and sensitive

are gonna get the best experience, and that was always the case with the traders.

You know, Bitcoin price would go up. The market would heat up. Volume would exchange volume would be up 10 times,

and people would wanna trade in a hurry.

Look at the fee market, and they just pay 3 times as much because they wanna be in the next block.

And you got lots of fee bots looking at that, and they just go crazy. Right? So,

I mean, what can you do about that? I don't know. Like, encourage them. I don't I don't so that that's part of the theory of liquid. It's like, well, does it even

does it does the chain even care about,

you know,

a user moving Bitcoin from custodian 1 to custodian 2? That seems like a completely useless

I mean, a waste of chain space actually because,

you know so liquid can do that. And I don't think either of the traders are

it doesn't make any difference to them. Right? So but, you know, get persuaded people to actually use it or to take their assets off the exchange

or do trustless trade it, like, less less centralized trading, like, you know, more smart contracts, offline limit orders, things like that.


it takes time or it takes, you know, a few events so people get sick of losing money, basically.


Do you think

I wonder about that. Like, do you think, like, there's been too much focus

in the liquid ecosystem

on trading

rather than other use cases for it? I mean I mean, possibly. You know, people people will,

Adam Back:

you know, you you can have in mind


something this could be useful for, but the market will find its use. Right? And it may have been what you think. Well, like, the bulks thing the bulks thing would point to the opposite. Right? Because, like, There's been all this focus on traders using it, but traders are kind of price

insensitive. Right? Yeah. They'll they'll pay a higher fee. They're used to doing some kind of risk management,

and it's just the cost of doing business. And like you said, there are centralized providers that are doing this. And on top of that, now there's private lightning channels presumably between a lot of these exchanges.

But then, like, something like the Bolt

swap thing appears

because end users need it in,

like, node operators needed in a high fee environment.

Adam Back:

Yeah. I mean,

I think

we saw some other organic users, like people,


stacking sats



like, daily.

And then once a month, they sweep it to the main chain or something like that. So it's it's a way to kinda

amortize fees, I guess.

And, you know, it's it's clever Reduce custodial risk in the meantime. It's clever because they're like, well, I'll tolerate it for a month, but I want real cold storage after a longer period. So that's quite clever, and we did see that coming.

The other kinda curious thing is

there is lightning I mean, apart from the Boltz Exchange, which is still a main chain lightning channel,

there is lightning that works on liquid bitling.

It's kind of a separate network. I mean, possibly those networks could be bridged,

But that's, you know, that's another kind of

escape valve

if the main chain gets really a lot of fee pressure,

which is,

you know,

it's less

kinda sense resistant or bearer


lightning backed in on chain things where you can, you know, you can get satisfaction from the main chain.

The other thing that's kinda interesting

in terms of,

you know,

an escape of is

drive chains. You know? So Bitcoin doesn't have the opcode to support them, but as a company that's gonna happen?

I don't know. We'll see. Right? I mean,

I think the tricky thing and that that's where Liquid evolved from. Right? Because it was what you could do as a step towards that without any opcodes for it. Right. Without any soft forks. Yeah. And that that's that was our, like, well, let's do that until such time as, you know,

there's a convincing mechanism. I think the challenge is the

Bitcoin is good at adopting soft forks


are, like, self contained, clearly secure,

win win,


But things which are, like, a little bit complicated and a fuzzy trade off,

then people argue about them, and they're not sure. You know?

So I think another way

you might get something like that is,


which is, you know,

a low level sort of self extensibility mechanism like a script 2.0 for Bitcoin. But it it it predates Blockstream as a concept, but, Russell O'Connor was talking about this in, I don't know, 2012 or something on IRC.

So we recruited him and some more people to to build it out.


I think the interesting thing about that is, you know, something like the Schnorr signature could have been from scratch. So you can think of it a bit like microcode for Bitcoin scripts. So you can make UOP codes from scratch

in a in a fairly compact way. You can prove they're correct, and you can prove

you know, c implementation is the same

as the simplicity implementation. So, you know, vaguely, something like a lot it it could sort of complete the circle of what there's a there's a old

Bitcoin talk post by Satoshi saying that he rushed the script


for a release so that it could be frozen. He'd never change it again. And it's, like, part of the ossification story. Right? So maybe simplicity could finally make that reality,

which is,

you know,

original Bitcoin scripts. There are a bunch of bugs in it, and people rapidly disabled some opcodes, and it seems to be not not flexible enough to, you know, to build Schnorr signature with, for example. Right? So simplicity is lower level, and it could actually do that and do it efficiently

and with formal security proofs.

So it might be and I've seen this in other kind of programming language,

you know, first debates about programming language evolution, like c language had one of these, the c preprocessor,

where people actually are more relaxed about


You know, like, who doesn't want extensibility? Sounds good. You sure it's secure. Right? Like, yeah, it's a complicated thing, but it's opt in. You're fairly sure it's secure, and who doesn't like extensibility? Whereas if you have,

you know, a specific feature, then people can debate the feature. Right? You know, so there's a big debate about covenants, and there's, like, I don't know, 4 or 5 different designs.

And so the time seems to be

not so much about whether covenants

are useful,

but by which design. And, like, the assumption is, well, we're gonna have 1 opcode. So it's kinda like you've got a CPU,

and it's a risk CPU, and it's got so many instructions, and you want to add another instruction. There's an intense debate about, you know, what is the optimal instruction, and how's it fit with other stuff. Whereas if you've got, like, bam, you know, here's a low level,

script 2.0,

we can just build stuff. It's kinda permissionless again. Right? And so if you have that,

you know, because you you could build,

you know, pit to pit side chains and drive chains with it,

because you just implement

whatever functionality you want. You need, you make an opcode or some microcode,

and you do it. And you're sort of you know, and you're and you're quite convinced it's safe.

And I think ultimately,

you know, you don't you don't opt into smart contracts by accident. Right? You know, if you're gonna receive

you know, if you're like, oh, I don't know if multisiglass security is an example, or I don't know if covenants is secure. But you're you're not gonna receive a covenant transaction by accident. Right? You have to, like, have a wallet that understands that and have opted into it. Right. So I think, effectively, you you you end up with, like,

little extension places of people who've opted in

to some feature.

And as long as that is a convincing argument that those are

you know, you can't get hurt if you don't opt into it and the security of the chain is protected.

And so maybe that's another way we get there. But, I mean, that's why I asked the provocative questions. So what how do we get the next 1,000,000,000 users

so they can have sense to just

Bitcoin because

it's pretty difficult to do today. Right? You know? I mean, there there are other ideas, like, you know, Burex talking about ARC. Other people are talking about shared UTXOs.

So it's all kind of trying to push the envelope. And

because we don't know. Right? There's still the new things being invested invented,

and we don't have to get there in one go. And some of these kind of

half steps help too. Right? You know, if you can rebalance channels without more UTXOs

with a 1.5

point liquid,

It helps a

bit. You can have lightning or liquid that helps a bit. There's channel factories. There's all these organic things. Right? But people don't necessarily

adopt them

until the next wave of fees or issues are seen. So

I think it's just the way it works, like, historically in Bitcoin. You know, people are building things,

kinda curious, you know, waiting for people to adopt it, and they will adopt anything until they have a pain point, and then they do it in a rush.

So it is what it is.

I mean, like, Binance was talking about lightning finally. Right? They've been talking about that for a couple of years. Right. And suddenly they're like, oh,

I guess we need lightning.



Yep. No. I mean, I'd I I agree with you. I think

I think we won't figure out we won't figure out how to onboard the next billion until

till there's actually pressure to do so.

Right? Until we actually start to see real

on chain pressure.

At at the at the crux of it all is is that on chain fee pressure. I mean, you look back 3 months ago,

and I was saying mempools will never clear again.

And, obviously, that was an intentionally provocative statement, and I will continue to say it because I think it's effective and helpful.

But but really what I'm trying to get across is we need to be prepared for a sustained high fee environment at at some point. Some point that's gonna fucking happen.

But the reality of the situation is we'll never be fully prepared for it.


when it happens is when we're gonna figure everything out on the fly, and that's when shit really gets done. Right?

Adam Back:

Yeah. I mean, the the the blog size debate was interesting because if in a way,

you know, I it's it's very interesting to see newcomers point to that as the moment of confidence for them, like Jack was describing with his dad, but, you know, from a point of view of the immutability.

Right? Because if you like, you know, the fact the first wave of fee spikes back in, I don't know, 2014, 2015,

and, you know, a bunch of companies banded together, and we're like, we need a quick fix. We need you to, like, you know, try and pressure

anybody who could they thought they could influence till they, you know, push the block size up a 100 times.

And if you if you think about it, it's a kind of quantitative easing type of activity. Right? It's like, well,

we create a problem.

We didn't do anything about it. It was obviously coming,

but now now there's a moral hazard. Yeah. You go weaken the system. We'll take some shortcuts, put some duct tape on it so that we can keep doing the,

you know, the inefficient

thing that doesn't reinvest in its own technology base or something.

And so

it's interesting that Bitcoin

didn't go for that. Right? You know? So

I guess I mean, the way I look at it is is it was

a kind of market

victory. Like, it's it's like, everything in Bitcoin seems to come down to the market deciding. Right? And the market

the investors obviously valued

the censorship resistance. And unlike,

you know, the eternal September on the Internet,

the investors are weighted by their conviction. Like, are they gonna trade it? And then the coins they had, and investors have more coins than the people

doing retail payments, and so they won. You know? So, like, no. We want I mean, the market basically said, we value,

you know, verifiable, censorship resistant, bearer Bitcoin

more than, you know,

on chain brute force,

you know, retail payments or something. Right?

At a loss of some of that. So

super interesting.


Do you think

so, I mean, you mentioned the block size war.

I'm kinda curious on both of your opinions here, but,

do you think

so the block size war increased my conviction,

in in Bitcoin, but I think I got a different takeaway than most people did.

And my takeaway was

my takeaway was that,

Bitcoin is extremely hard to change by default. That's the key that's what underlines the key value prop is because if it was easy to change at a whim,

then it could be easy to change by an attacker. Right? And it could be made a weaker money.

So it's extremely hard to change by default,

but, also,

we witnessed an attempt to change it, a very brute forced attempt to change it via hard fork,


funds weren't at risk. Like, I was a holder of Bitcoin

entering the 2017,

block size war.

And now I was an active holder of Bitcoin. So so I was watching and I was aware,

and I could choose who I thought was gonna which side I thought was gonna win. But if I wasn't an active,


as a result, I essentially had

equivalent Bitcoin on on both chains. Right? So, like, if you held Bitcoin and this might be new for a lot of people that are listening to it, which is why I'm trying to unpack it a little bit. If you held Bitcoin pre 2017,

and then you go into the block size wars, you had an equivalent amount of Bitcoin Cash,

held by the same exact private key. So if you went into a coma, you just turned off the Internet, you did whatever, you just lived your life, you had equivalent on both sides.


what I took away from it was, first of all,

that wasn't

it wasn't the end of the world. Bitcoin has been extremely successful since then.

If people wanted to opt out of that situation, they could have just turned off their computer, and they're they're still holding their private keys, and they have equivalent Bitcoin on both chains.

But I kinda took away from it that if for some reason, you know, we're just

small people, we're just individuals here on this planet, I have no idea what's gonna fucking happen in the future. I have no idea what kind of demand is gonna happen in the future. I don't understand what kind of stress Bitcoin might be put under

in the future. If there was some kind of situation where

Bitcoin needed to hard fork and, like, once again, very hard to measure, like, objective momentum or


desire or need for a change to Bitcoin,

there is a path for that to happen. So

and there's a path that's not a nondestructive

path. And and and so my question is basically this is a long winded question.

But my question is basically,

is there a potential for Bitcoin to hard fork in the future? Or is I feel like a lot of people took out of the 2017 block size war that the hard forks will never happen. And I kinda took it the opposite way that, like, hard forks might happen, but, like, if they were to happen, there needs to be an overwhelming


desire and need for that change for it to happen.

Adam Back:


Tend to agree.

Jack Mallers:


I I also agree. I mean, the box size wars,

it was it was very, like, pivotal chapter,

but it was it was pretty simple in summary is that

the market, like, the collective free market was asked, is

Bitcoin more like a tech startup

or more like a digital

com scarce commodity?

Like, what what

what does the world value Bitcoin as?

Because we could have, yeah, taken shortcuts,

built a road


elected certain developers to lead

engineering efforts, and it would have acted more like a start up, like Ethereum.

And the world collectively

decided that, no, that's not why this thing is important to the free market.


that was really cool because

the world is so accustomed to central planning

in in all of our lives,


not just within money. And so it was really cool to see a distributed network

come to consensus on


a, like,

large question of its purpose. And so, yeah, it gives everyone confidence that I think if there is

needing to be a resolution,

the free market would figure it out

for sure. It was the first time it happened at that scale. And so, yeah, I think, I don't know. If the free market

agrees that it needs to happen, it'll happen.


Yeah. I think I think people just don't realize that

you don't need permission to fork Bitcoin. Like, anyone can fork Bitcoin. No. The crazy thing I mean, I was gonna Yeah. Oh, go ahead. Go ahead. No. I was just gonna say the crazy thing is you don't really know you don't really know whether or not there's real support for it till after the fact.

Adam Back:


I mean,

I think,

you know, because the the not your keys, not your coins

mantra was there before. But

after the fork, I think people

got a similar realization

that, well, you really need to

verify your coins with your own node as well. And so the kind of importance and popularity of running your own node became part of it because

if you weren't running your own nodes, you could end up on the wrong chain. And you got your keys, but you're getting tricked by, like,

big bitcoins or, you know, some service provider or wallet provider that's got an extra grind has decided for you, and that's not what you want. Right? So

I think it increased awareness that,

yeah, have your own keys when you're on node or, like, at least, you know, be aware of it and,

you know,

ask other people who are more technical if if something's going on. But,


if if you have your own keys and you're running your own nodes,

there's nothing anybody any external actor can do to affect your Bitcoin. You know, they can go off and create their, you know,

what do they call it? Bizcoin, you know, like a a big k y c chain over there,

and you're not really affected. Right?


Jack Mallers:

yeah. Yeah. I mean, it was, like, a cool you know, back in the day, people forget

there was confusion in the public of whether miners,

like, controlled Bitcoin's outcome.

Yeah. Like, it was it's actually this is, like, fun to talk to you guys because it's crazy to think back over the last, like, 10 years on a lot of this stuff. But, yeah, at the time, there was, like, general genuine confusion on whether Bitcoin miners could drive

Bitcoin's outcome,

and it was the best education ever for the public to realize that

nodes govern and enforce the rules. And then people were like, oh, really? Wow. Who runs those? And then the answer is whoever the fuck wants to run one can run one. Really? Why? Because we keep the block size small, and we care about accessibility,

and really shitty hardware and the ability to actually run 1. You're like, wow. That's amazing. And people started to run 1 and voted with their feet on, like, what they wanted the rules to be. And it was, like, the coolest moment ever because you go on to see on TV and the TV analysts are interviewing Roger Baird, like, well, these miners decided this, and the whole world was, like, actually, it's not how it works, and all of us can run a node. And it it was, like, a beautiful moment. It was hilarious.

And I was gonna make a joke, Matt, because

the funniest part that people don't appreciate about forking Bitcoin is you're right. So for those that don't know, when you fork Bitcoin,

they take a copy of the Blockchain and they duplicate it. So if you own 10 Bitcoin

on the Bitcoin Blockchain, and they make

Bitcoin fast fork or Bitcoin green fork or Bitcoin wood coin fork, then you own 10 on there too. And so I don't know. This is, like,

a comedy skit level hilarious.

Roger Ver, this guy, you guys should all Google him if you weren't around. He forked Bitcoin, and so whatever I owned

on Bitcoin, I now owned his version of Bitcoin.

And it's like creating money out of thin air. And so you get really excited, and you're like, shit, like, my net worth, like, doubled. This is amazing. I used to own 10 Bitcoin and now I own 20 because I own 10 real Bitcoins and 10 of these guys' Bitcoins. And then you have this, like, really sad moment where you're like, oh, shit. But his Bitcoins aren't actually worth anything because they're not real Bitcoins. They're his version of Bitcoins.

And that's when the funniest thing that I've ever been through happened is he just bought them all from us.

They're worth nothing. They're pieces of shit. Mhmm. But he was so driven by his ego that he was, like, I'm gonna create funny money out of thin air that's worthless, and then I'm gonna give you real money.

The best thing ever is I just do anything.

And I got gifted these pieces of shit that were pieces of shit and that are worthless, and some guy then just bought them all for me and gave me real Bitcoins for his fake Bitcoins.

And it was, like, it was just a joyous time to be around as everyone learned how to run a note and why it was important. And we all got free money for doing

for I mean, I don't wanna say doing nothing, but it was like the I'd it's gonna be a story I don't know how to tell my kids. It's like, yeah. One time this guy was, like, so mad at everyone and so ego driven. That he created a bunch of fake Bitcoins and gave us all his real Bitcoins for them. It's, like, the craziest thing. Well, I will say fortunately,


have our kids read,

because it is important that the history was written down. But I I mean, that that crazy. That lesson's still not learned, and I I actually expect it to be,

as the freaks know, I like to make predictions. I expect it to be learned again because of this whole, like, green piece change the code thing,

changing Bitcoin to proof of stake, and they don't realize yet that they can just fork it.

Oh, why would need our permission.

It exists. So No, Adam. You're wrong. You're a legend, but you're wrong. That is not a fork. That is just a shit coin. Oh, okay. Yeah. There there is a coin. Bitcoin

Adam Back:



Yeah. Bitcoin proof of stake. There's a That's it. And its price is, like,

Adam Back:

like, 000


But it's not a fork. Oh, it's airdrop or something. We didn't get we didn't no. It's not even an airdrop. They just put the name Bitcoin. They just created a shitcoin that's proof of stake, and they put the name Bitcoin in front of it. Oh, that's sad. Because I had a I had a good time talking about proper Bitcoin proof of stake fork where, like Yeah. Yeah. All the UTX like, the UTXO set is the same exact UTXO set that we have equivalent amount Bitcoin proof of stake tokens that we can dump on Greenpeace and BlackRock.

Yeah. Like, it's coming.

Jack Mallers:

Yeah. They should, let's let's run it back. They should fork it. That's the only thing. Let's run it back. They should fork it. Give me a bunch of free worthless pieces of shit, and they can buy it from me. They don't need our permission. Let's run it back. So so Yeah. Change the code. Go for it. Yeah. Yeah. That is oh, yeah. Somebody's bringing up the skull meme. I mean, that was a gift, actually, the, the nuclear powered skull. We're like,

Adam Back:

yes. This is it.

But I I think it comes back to what we're saying about,

you know, any hard money has it seems inherently has to have


production costs.

And so I I I don't know what they're really arguing that, you know,

you you want, like, fiat money? Like, go use it. It's called the euro or the dollar. Right? If you don't want hard money, don't use it. Like, what's what's the problem? Right? And I I mean, gold mining

uses power and chemicals and

digging big holes in the ground and grinding up rocks and stuff. Right? So

it's it's a cost of

having to depend on money, and so it's a net win for society. The other thing people

don't like, you know, economics is hard because it's all full of second order effects. Right? That

they will think that

the cost of mining


a a sort of new spend.

But every every it's there's like a conservation of of momentum or conservation of energy here thing, right, which is

if I

buy some Bitcoin

or I spend some money buying electricity to mine,

that money came from somewhere.

And, you know, I stopped buying something else to do it or I sold something else to do it. And, like, if you look at what the


you know, developed country

person was spending money on before they go into Bitcoin,

it's all like disposable stuff and, you know, plastic things that end up in landfills. Right? So, you know, even on that basis, like, doing less of that and developing a longer time horizon,

trying to buy fewer

consumerist things and things that last longer because you wanna, you know, save your money so you can buy Bitcoin.

That that's the thing you gotta compare it to. Right? Is is a, you know,

a longer time frame outlook

market and the value of that.

Jack Mallers:


Well, you know,

my takes are always more aggressive, typically. Like, I just think that these people shouldn't we shouldn't even waste time on these people that are, like, who who are they to tell us

us? I'm not even gonna say us as in, like, the corners. Like, who who is one person to tell another how they should be using energy?

Like, the fuck do you think you are? Like,

when the when the light bulb was invented, it's, like, hey, you know, you're not allowed to turn that light on. Why? Who the fuck do you think you are? I could do what I want. Like Right. I wanna take my girlfriend to Paris this fall. I'm gonna take I'm gonna fly in an airplane instead of a kayak because I would prefer to use energy. It's my decision.

So it's like, an energy like, harvesting energy is, like, correlated to human flourishing. Every time we find a way to use energy productively and innovate with energy,

we advance.

The light bulb, the automobile,

flying Right. Like, Bitcoin.

And so, like, it's it's not my fault that the United States is ill positioned

in an in a geopolitical sense around energy. Like, you know, a politician's opinion is a politician's position. You know, they don't like energy because they don't con they don't have, like, the net

benefit, like, you know, they are short energy effectively to people that now all of a sudden don't really Yeah. Like them. Right. I'm speaking about American politicians, but yeah. What you're saying is is true going back for, like, 100 of years. If you look at history that there is a

Adam Back:


clear correlation between

human advancement,


and the wealth of nations

correlated with, you know, their their energy or power capacity that they can build. So now what we should be doing

is building more

energy generation

to build the future. Right? And so, you know, this this kind of concept

of cutting off power sources,


it's it's like trying to drive drive the economy into the previous century or something. It's just backwards. Yeah.

Jack Mallers:

But it's just so dis it's so

disrespectful. It's, like, energy to your point. There's just data that enter like, being able to have access to energy and harness energy has a direct implication on the quality of one's life.

And so for you to tell me that I'm not allowed to use energy means that I'm not allowed to have a high quality life. So you can go fuck yourself. I'm not going to listen to that. I wanna use energy because I I wanna live a high quality life. I wanna fly on airplanes. I wanna drive fast cars. I wanna own Bitcoin.

And, like, I don't I don't if you don't wanna use energy, you can take kayaks

and you could walk everywhere

and you cannot watch the NBA playoffs on television and you can store your wealth in fiat. I don't give a shit, but don't tell me that my quality of life needs to be diminished because you don't you don't wanna use energy. It's just so stupid. Like, we just waste so much time on these stupid people. I never understood that of, like, why using energy is bad.

Like, since when? And who do you think you are to to to to try and it's really, like, you know, people don't understand America is in a bad place. I mean, that's like authoritarian type shit. Like, you're not gonna get let us you're not gonna promote us harnessing and using energy to improve the quality of our lives, you're gonna dictate that. That's not, like, that was a lot of my message when I was in DC a month ago. Was, like, you guys gotta fix this. I would highly suggest that you start harnessing

American ingenuity and innovation and entrepreneurs and to start using energy and get and and building a moat and value within this open public good. Because if you guys keep bitching about energy use, in 10 years, you're gonna be in a lot of trouble. Energy is a core function of, like,

our species existing

and flourishing.

Adam Back:



I cosigned that statement.

Damn right. Guys, guys,

this has been an absolute pleasure.

I know time is scarce. We've been going for a little bit over 2 hours.

I hope to have you both on on again. So,

we shouldn't have to cover everything.

I will say, specifically,

there's a I saw a bunch of questions about KYC.

I think there's a lot of demand for, like, a proper sit down and heart to heart,

on, like, the path forward for strike and how and your vision for strike, Jack. So, like, when you're in town in Nashville,

when you're at when you're at the park in July, we should we should do, like, a proper

you know, just me and you just go on about strike and and how you're looking at everything.

Jack Mallers:

Yeah. I mean, I try and go on Twitter and answer

people's questions so it doesn't have to wait till July. But yeah. Totally. Fair enough. Yeah.


But, I mean, I would love to have you both on again. But, I mean, before we wrap, I'd like to end it with final thoughts.

So with that said, Adam, you wanna hit us with some final thoughts?

Adam Back:

Yeah. I mean, I

think that

Bitcoin will be fine.

And as somebody said in the scroll back,

necessity is the mother of invention.

High fees are the driver of adoption.


you know, the technology to scale and support, you know, a billion

users, it it will come. You know? Maybe not exactly the way we think it will come, but, you know, all the pieces are around and new things are getting developed all the time. And things get developed and used

faster as as, you know, as people have their use for it. So

it's all good.


Cheers to that. Thank you, Adam. Jack, final thoughts.

Jack Mallers:

My favorite part about this conversation is,

the value of free markets. I think Bitcoin works,

and, we're just lucky enough to be alive


watch it be assessed and valued,

in a free market. It's really cool. Things are gonna be built, and, the maturity of its understanding is gonna evolve and cool time to be alive. So

I don't know. I'm excited. I think the coin's gonna moon, in the back half of this. I'm just excited to be alive and be a part of it. You you think $1,000,000 in in 90 days? Or

I'm not that dumb. No.

I, actually, I respect Balaji. I don't think he was being super legitimate. I think he was being super helpful actually, on trying to get his message across. He did a really good job at that, but I don't know how practical he thought that was. I think if you're gonna go down that route, you should


you should not backtrack until day 90. You have to go No. You have to go full hog. I think it's gonna I think it'll be higher

in years to come than it is today about that. I'm not disappointed in him for making the bold prediction. I'm disappointed in backtracking on day 32 or whatever day it was.

Just a guerilla marketing. Yeah. Yeah. Well, it could have been. Yeah. Okay. Well,

this was a fucking awesome conversation, gents. I really enjoyed it. I had a lot of fun. I hope the audience enjoyed it as well. I hope they found it helpful.

On the dispatch front, we have some I have some amazing shows,

set up for us on Tuesday

at, 3:30 EST,

19:30 UTC. I have Phoenix Ammunition,

which is a American

small business ammo manufacturer that accepts Bitcoin. I think he's gonna have a very interesting different perspective than a lot of people that we have on the show.

And then the next day on Wednesday, May 31st,

at 3 PM EST

19 100 UTC, I have,

CK Christian Karolz,

from Bitcoin Magazine. We're gonna do a proper debrief of Bitcoin 2023,

go through all your questions, comments, concerns, feedback,

have a nice hard heart to heart discussion there, so that'll be good. There's a lot more discussions that I plan to have on dispatch. I hope you all join us for those.

Like I said,

sale dispatch is available on all your favorite platforms.

Just search it. Press that subscribe button.

Share it. Enjoy it.

And to all the freaks who continue to support the show with Bitcoin, I really do appreciate it. I wanna give so much love

to Adam and Jack. Thank you guys for all you do, and thank you for joining me. I know time is scarce, and I really do appreciate it. We appreciate you, man. You're the GOAT. Thanks.

Thank you both. Much love, freaks. Stay humble and stack sets.

Adam Back: