Balaji Srinivasan Part 1 - Virtual Worlds, AI and Politics

Welcome to the what Bitcoin did podcast.

Hello there, how are you all? How was your weekend? You all doing good? I am about to head out to Taipei. I'm off to record four interviews for my new upcoming podcast, Defiance. And then I've got to catch three flights to get from Taipei to Riga for the Baltic Honey Badger Conference. So it's going to be a pretty intense week. Anyway, welcome to the what Bitcoin did podcast which is brought to you by the Mighty Kraken, the most trusted place to buy and sell bitcoin. I'm your host Peter McCormack and today I've got an interview with Balaji Srinivasan, an interview that has taken about 14 months to land. So pretty excited about this one. Anyway, before that, I do have a message from my show sponsors and firstly, today's show is brought to you by my good friends over at BlockFi and they've just announced a cool update for their interest accounts. They announced BlockFi Flex whereby you can choose to receive your interest payments in the currency of your choice. So if you want to lock up some GUSD and get your interest paid out in bitcoin, you can do that. Another cool way to stack sats. With BlockFi interest account you can earn interest every month on Bitcoin ETH and GUSD. And also with BlockFi you have access to crypto backed loans where you can take out a loan against your Bitcoin ether or Litecoin. If you're interested in trying any of these out then then do your own research and head over to blockfi.com, which is B L-O-C-K-F I.com also today's show is brought to you by Kraken, the Mighty Kraken, the most trusted place to buy and sell Bitcoin. And I'm going to do my best to get Jesse back on the show soon. I met up with him recently, caught up with him, talked about what's coming up for Kraken. So I want to get him back on the show and talk about Bitcoin. And we already know that Kraken has the best security practices of any exchange. But for you traders out there, they've got so much more. They've got kraken.com, the best place to buy, sell and trade digital currencies. They've got margin trading with up to 5x leverage. For you hardcore crazy traders out there, they've got futures, they've got indices, they've got the Kraken OTC desk for large trades and personalized services. They've also got Crypto Watch, where you can trade on multiple crypto exchanges from a single platform. And for you advanced traders out there, if you want some badass account management, if you want a really cool personalized service, well, they've got you covered. There really is no better place for Bitcoin traders. So join me in supporting Kraken. Head over to Kraken.com which is K-R-A K-E-N.com okay, so onto the show and yes, this is one I'm very excited about. I've been chasing Balaji, trying to get him on the show for a good 14 months now, and when I finally got him to commit, I was straight on a flight out to San Francisco. And yes, I also need to say a big thanks to Bart, Brady, Brad and Spencer at Blockchain Capital for allowing me to record this at their office. Okay, so as I said, I was pretty excited about this one. And while I don't agree with Balaji's worldview on tokers and altcoins, I have found some of his previous interviews really fascinating. And you know what, as somebody who's worked at a 16z also worked at Coinbase, there's so much I wanted to get into with him. And I'll tell you something funny as well. So this is one of these interviews where I planned in detail. I did spend like a good day and a half going through previous interviews like his work history and just planning the things I wanted to talk about. And on the morning of the interview I watched another interview with him where he was talking about virtual worlds. So I kind of dropped that in as my first question and that ended up sending us down this 90 minute rabbit hole that I wasn't prepared for and meant I didn't touch hardly any of my other questions during the first part of the interview. And this has ended up being probably, I think it is the longest interview I've ever recorded. And to be honest, if I didn't have a plane to catch in the afternoon back to la, we probably could.

Have gone on for like five hours.

I have though decided to split this interview into two parts as it does feel like two distinct you but connected parts. But it was such a long interview I just wanted to break it up. So in this first part we get deep into some really interesting areas, from virtual reality to AI and autonomous working to the future of immigration based on a belief system. We talk about politics, we talk about state surveillance. So all super interesting stuff. I'M not even sure.

I can't even remember if we talked.

About bitcoin in the first part, but that is safer. Part two, which will be out later in the week. I think you're going to really enjoy this episode. I definitely loved making it. If you've got any questions about it, you know you can reach out to me. My email address is hellohatbitcoindid.com Also, just a few notes. I'm flying out to Taiwan today. I'm off to record four interviews for Defiance, which launches at the start of October. I've got a North Korean defector, a Hong Kong pro democracy activist, a Pulitzer Prize winner journalist from Burma, and a writer specializing in information warfare. So all totally on the money for Defiance and then going to be catching three flights to get over to Riga for the Baltic Honey Badger conference. And that's September 14th and 15th. I'm coming back to UK for a couple of days and then I'm going to be heading out to Wyoming for Caitlin Longswire hackathon. That's September 19th to the 22nd. And then going to be heading out to Crypto Springs in palm springs. That's September 23rd to the 25th. And then I'm going to be heading out to Ohio in October for an event with the drop bit guys and then to LA for cis. So busy, busy, busy. Lots happening. Anyway, if you've got any questions about this show, feel free to hit me up.

I've been coming to San Francisco now, I think, for 11 years, and it's changing a lot and not always for the better. There was a syringe outside as I came in. I went for a jog the last.

Time I was here.

Ended up in the Tenderloin. I didn't know the area. I was like, what the. You've obviously witnessed it.

Yeah, no, I've tweeted about it a little bit. I think that the, the center here is starting to realize that, you know, things are kind of getting out of control.

When doing my research, I saw that Mark has said you've got the highest output of ideas. You're like a machine for ideas. Do you have ideas to solve this, to solve these problems in San Francisco? Because I know people are moving out and leaving because of this.

Yeah. So I, I do. But I think it's gotta be at least multiple options. Right. So, you know, I gave a talk a while back, six years ago on like Voice versus Exit. Right. Conceptualizes, you know, Voice is, is choosing to try to change the current system, like to, to try to reform it. Whereas Exit is to leave. For example, Voice is voting, Exit is immigration, Voice is submitting a bug report, Exit is forking. You know, Voice is trying to do a turnaround of a company and Exit is leaving to start your own, and so on and so forth. And I really believe in that. I think it's a very powerful meta framework to look at a lot of things. And so I think it's actually good that folks are able to leave, that they, you know, leave for, you know, LA or Austin or Singapore or Switzerland or what have you. And I think that frankly, should be the default option because that is sort of guaranteed, that's under individual control, whereas Voice is very much not guaranteed. And in fact, sometimes cities do, you know, just die and fall off the map. You know, Florence used to be this huge center of the world and kind of isn't anymore. Portugal used to be, you know, a big player in the age of exploration and really isn't right. So. So you can't really bet on something actually getting fixed. So. So a. I'd say exit is your first option. But for those folks who are trying to fix it, for example, Stephen Buss, I retweeted him, he's actually a former, former employee of Mine Council, now at, now at Google, very smart guy and has been working with Sonia Trous and other folks on the Yimby squad and they've actually, you know, it's not my sty things, but their persistence, three yards in a cloud of dust, in an American football sense, has really, to keep the metaphor going, move the ball forward over the last few years, where the whole Yimby movement is now at argue kind of where the center is and that's a big change. And these things have inertia, but it feels like things are shifting. And this attack on this lady Paniz, completely unprovoked attack outside her apartment, it was on video, totally ludicrous that the person was on the street a few days later, you know, violent criminal with no punishment. Right. And that was also kind of a turning point because everybody could see that happening to them. And I think you're going to start seeing change in the city. I'm not exactly sure when, but anyway, that's a high level.

I would have thought if there was a mass exit of employees or you couldn't recruit the people and you were the type of company who wasn't too into remote working, it might, it might put a bit of pressure on the companies out here to want to make a difference.

Absolutely. I think there are a lot of CEOs of. And not just CEOs, founders, executives, engineers, you know, anybody who works in tech over here who recognizes this is a recruiting problem. And, you know, there's. There's a number of strategies. These are some of the ideas I can't talk about. Yeah, but there's a number of strategies out there for trying to push things in a positive direction. And it's sort of like, you know, for example, after Obama won in 2012, then he's able to give away the campaign playbook. Right. You know, and there are articles on it, like postmortems or what have you. I think after tech wins, they'll give away the campaign playbook. But there's a lot of folks thinking about this now.

All right, wow.

Okay.

Well, listen, look, thanks for coming on. I've been pestering you for a while. Do you know how long?

Like a year and a half so.

It's 14 months, something like that.

Very persistent.

Well, do you know what? You have to hustle and you have to ask for favors. And there's a list of five I've got on my list that I've always struggled to guess. I'm not going to name the others and show them up, but you're one of them. So I really appreciate you coming on. You've obviously got a lot of experience in this space. You've done a lot of things. You've got strong views on crypto, you've worked for some of the biggest companies. You're vc. Like, there's a lot here. I'm going to want to unwrap as much of as I can, but I think a good starting point would be I actually want to just go forward a bit. I saw a really interesting interview with you where you talked about, like, these future worlds, these future VR worlds. And what really struck me then is you said that VR isn't there yet, but in some ways it is, because I look at what's happening at home with my children. My daughter is only on Roblox. My son is on Minecraft and Fortnite. These are virtual worlds.

Yep.

They're just living it without a headset. But my daughter is fully in Roblox. She's building her house. She's coming to me and saying, dad, I need a unicorn, and I'm having to give ten bucks or five or whatever. So that world you're seeing is happening. It's just not with the headset.

Right?

Yep.

Can we kind of unpack that? Talk about that future world you see and also why? You think the VR bit hasn't actually happened yet?

Sure.

Because there is an intersection here with crypto.

Absolutely. And my one liner is, I think VR will be to crypto what the iPhone was to the Internet. You know, the Internet was obviously going, you know, before the iPhone. But then post 2008, when you had iPhone apps and people could program for it, just started going vertical. Everything became more useful when you could do it in a mobile form factor. Google Maps became more useful, email became more useful. Right. Twitter became more useful because you had this device with you and it's ubiquitous. You don't have to just sit down in front of the desktop to do it. You can watch movies on the go, all this type of stuff. Mobile was useful because humans are mobile. And, you know, you might say, well, what is VR? VR is sessile. It's a complement to mobile. Right. And the big thing about VR is virtual reality and virtual currency go hand in and glove. And just like, you know, with the iPhone, we had precedence. You know, the Palm pilot was out 10 years ago or 10 years before the iPhone. In fact, it was something that, you know, Peter Thiel, Max Lovechin, they actually wanted to base PayPal on the Palm Pilot because they were so ahead of the curve. They were thinking about mobile payments 10, 20 years before it became ubiquitous. Right. And I think virtual reality plus virtual currency is one of those very obvious marriages where we already have proof points. You have, you know, you've had World of Warcraft and people buying and selling Warcraft gold in China and Blizzard trying to stamp it out. That's been going on since early 2000s. You have free to play games, you have Zynga, you have the use of credits in many different kinds of online systems like iStockphoto or what have you. Obviously, you've got frequent flyer miles. You start to get a little further from games there. But the point being that kids are playing games a lot, so are adults. Right? And what hasn't hit yet, but I think it's there now, Oculus Quest is actually quite good. What hasn't hit yet is a VR platform with, you know, the canonical killer app that gets, you know, a million or 10 million folks to put on a headset. And once that happens, you can now not just have, you know, virtual reality and virtual currency. What you get is a virtual economy. Right? And one way of thinking about it is another big trend is remote work, information work. Essentially, what many people do, they don't necessarily think of it this way, is they hit keys and fashion pleasing Configurations of electrons and then they send them over an Internet connection, right? You're making like little sculptures, right? And you can hit enter and you can copy that sculpture, that electron sculpture to another computer or a million other computers. And it's exactly, you know, like this high fidelity replica of exactly the electrons you configure locally. And what does that mean? So that's obviously engineering, you know, can be thought of like that, but design as well. Law, increasingly a lot of medicine, a lot of diagnosis is like that journalism, you know, like video production, audio production. And what's interesting is it's going to start getting into physical tasks as well, because lots of these robots will not be fully autonomous at the beginning. They're going to have telepresence to control them, right? So if you've seen these beam robots, for example, right, you can kind of, you know, move them around remotely, Edward Snowden, use them to kind of get into a conference or what have you. It's like a, like, like a TV on wheels, basically. But you hook something like that up to a Boston Dynamics humanoid form factor. You put those two things together, right? So Boston Dynamics thing can walk around, it's got like human like or animal like agility and, and the beam robot has telepresence. You put those together, you've got a telepresent humanoid, right? And now you can now have somebody be a quote, migrant worker without actually having to leave their family, right? So you can have them go and they can just ssh in, they telepresence in. They can do whatever tasks they need to do. They get paid a salary and they come back and now they're with their family, they don't have to uproot even if they can't get a visa. Doesn't matter, because they can connect. These are things which, you know, our current political system's not even designed for, right? Because what it means is your immigration policy is now your firewall, right? Can you prevent a connection, you know, like coming over the Internet, right? An encrypted connection. And if you can't, then somebody can animate a humanoid robot and walk around and do things, right? That's not far off, right? Like what I'm talking about are you've seen Boston Dynamics, you've seen the telepresence stuff. We're just talking about system integration. I mean, when you say just. That's always tricky to do. The latency will be the trickiest thing. But when you put that together now, you start thinking about lots and lots of different professions being Amenable to remote work, to digital work. Right. Even five or six years ago. Rio Tinto, it's a mining company. Yeah, yeah. You might be familiar with them. Yep. So they were running fully autonomous mines out of Perth. Right. And this is actually where autonomy will and has come first. Everybody talks about, you know, autonomous driving trucks on the highway, but when you're on private property, Right. Where you've got a controlled environment. Right. When it's fenced in, we've had autonomous trucks for a while.

Right.

Because you can, you can set up the entire thing. There's no, there's no unexpected turns, there's no traffic on the road that you don't control. You have. It's like a so called turnpike in the original sense of a turnpike, a private road. Right. You can instrument it with sensors, you can set it up for autonomy, just like you can set up an assembly line to operate autonomously. Right. It's just like a little larger than assembly line. It's like a private mine or a private farm. Right. This is also happening in agriculture. People are, you know, autonomous farming is way advanced beyond where people think it is. So you add all this stuff up and so that's all the information professions, that's lots of physical labor, that's actually mining and farming. Huge chunks of the economy are now amenable to like digital work. Right. So that's the kind of stuff that you can pull into like a VR environment and earn virtual currency for.

Hey, it's gonna save me a bunch of flights a year.

Yeah, potentially. Exactly.

Because you know what, the reason I do my interviews in person is however well you think you can do them online, it's a 2D environment, whereas when I'm sat with you, it's a 3D environment. I see your gestures, I can see slight movements in your mouth where I know, okay, you're. You want to talk?

Absolutely.

Speak. I can't do that remotely. And the in person interviews are much higher quality. But I guess in a VR environment, put on my headset and we could sit opposite each other and it would be a very similar experience.

Yeah. So the key is actually what you need is a camera that is high fidelity enough to record every micro twitch like that and fashion an avatar in VR that has that degree of body language or what have you. Right. That's getting close. Facebook has a project Facebook avatar that starts to get hyper realistic avatars in VR and you know, again, you're talking system integration. Right. You've seen deepfakes, you've seen, you know, the extent to which you can animate all the muscles in a face on a computer, it's getting good.

Have you seen that new Chinese app that just came out this week? Within 7 seconds you can imprint a face on a video clip. And it's you that blew my mind.

Absolutely, Absolutely right. So, you know, I think the next generation of VR cameras or VR headsets may have some kind of two way setup. The tricky part is going to be like recording the configuration of the eyes and so on, but that's all potentially feasible. You just need like a camera for the rest of your face and then something to record the position of the eyes and whatnot. I mean, eye tracking software that already exists. Right. So you kind of integrate these things to get a hyper realistic VR avatar and now you just hyper deflate the cost of travel. Right. And so it doesn't matter what, you know, immigration restrictions people put up or, you know, tariffs or things like that. If you can connect over the Internet, boom, you can like materialize and you can meet up. Right now, of course there's still going to be in person. And actually one of the things I'm sort of long term bull on is like perfumes and food. Because VR can digitize sight and sound and to some extent touch via haptics. Right. So those experiences will hyper deflate. Like you' be able to walk around the Louvre and so on. Right. Anything that's like a visual thing, you can be put into that. But perfumes and foods, often the thing that, you know, like we don't yet have electronic scent. Maybe you could stimulate nerves or something with neural link. That's a little farther off. I don't feel the proof points are there yet. So that stuff actually I think will become the compliment. And then of course there are things, you know, humans can't yet reproduce over the Internet. Right. So there's always going to be a reason to meet in person. I'm not saying it goes away. I am however saying that what we can do over the Internet, we aren't even fully there yet in terms of what we can do.

So it's really that transition from VR being a toy and fun to being a tool. And in that world where people are able to complete work tasks and be paid naturally, they're going to be people who are going to be creating the bots that can automate those tasks. So we will live in a very kind of strange world where it doesn't feel too far from the matrix, where a lot of it is automated and a lot of it could, could get a bit weird.

Yep.

Do you think about that? Do you worry there's risks of this?

Well, it's interesting, you know, there's this term NPC that is, you know, non player character that's common in video games. And one thing that's sort of funny is, you know, you go like you play a video game and you walk around and the way you interact with a shopkeeper in a video game, they're an npc, they're kind of on a script, right. And you know, for the most part like some video games will let you like draw your sword and like, you know, like get in a fight with the shopkeeper. But for the most part, you know, there's the player character and other player characters and there's NPCs and a funny thing, you know, somebody like, you know, discussing this with them the other day. Most people who you interact with on a daily basis, you know, or like obviously there's your co workers, there's your friends and family or what have you, but lots of people walking down the street might, in a simulation, you wouldn't really be able to tell the difference, right? You're not probing their internal mind state, you're not really having a conversation with them. The folks who you're walking down the street within a crowd might as well be NPCs and in VR they maybe could be right. Like, you know, when you go and buy something at Starbucks, you're not engaging the cashier in a deep conversation. That would be inappropriate, right? So it's as if that person could be an npc. Now by the way, this is no diss on cashiers or anything like that.

But it can happen. You know, you can go into Starbucks and you can have a conversation. You can strike up a conversation, it's.

True, but most people do not. Right. And even so. So, you know, the point is that you could probably get pretty far in terms of an environment where there's only maybe 20 like humans playing, but 10,000 NPCs and make it feel a lot like, like a normal environment. So long as you didn't push in the so called NPCs too far outside their script.

Do you see it though, getting to the point whereby this is a world that people plug into because they prefer it from a real world.

Yes.

Ready player one stuff.

Yes.

Do you think therefore it important to know who is a real human and who isn't? Do you think it would almost like you could be cheated? I mean if you go as far as thinking, I try to remember the Joaquin Phoenix film where he builds the relationship. But.

Right, but what if you.

Yeah, what if you build a relationship and it's not with a human and you've realized it? It's like there's certain.

Yeah.

Areas.

Right. I mean, you know, the thing is this sort of already happens. Like, you know, I'm too old for Tinder, you know, like, but, you know, married, whatever. But. But catfishing does happen, right? Folks build relationships with essentially artificial constructs that are not the human being who they thought was on the other end. That's actually pretty common. So what do I think? I think, you know, certainly there's deep human relationships where you're fully Turing testing the other person. But I think an interesting insight is most human interactions are not like that. That's really the core of what I'm trying to get at. Most human interactions are not deep Turing Tests where you're getting into spirituality and religion and deep beliefs and so on forth. Most of them, you know, frankly, you know, from the Starbucks cashier's perspective, you're an npc, right? You're just another person queuing up, you know, latte or whatever. Truly. They could be in a Starbucks simulator and like, you know, once in a while a customer acts out or does something weird, but basically you're just queuing up, you know, could they possibly remember one of the thousand interchangeable people who comes every day? I don't know if they've got a really good memory, maybe. So. So I think there's. There's something to that, because why is that? You know, so you might say that sounds dystopian or bad. As an observation, there is a good aspect of it, which is for some people, you know what, they enjoy something like mathematics, right? That's, you know, like, frankly, if I. If I have only one thing that I can do, and you say, I can only do one thing for my life, and you say, okay, I've got the Princeton Companion of Mathematics, okay, I'll at least be reasonably happy, right? Give me a pen, pencil and that, and I can work on that pretty much for the rest of my life. For a lot of other people, though, they really want some kind of social connection, social approval, affirmation, etc. So in this kind of VR environment, if people don't really know who's real and who's fake, you could have, you know, every woman a queen, every man a king, right? Everyone's a winner because everyone's super popular. Everyone has thousands of people telling them how great they are. And so on and so forth. And most people can't be celebrities outside. Right. What VR and AI and this NPC thing could do is it could hyper deflate the experience of being a celebrity. Right. Because all these people are watching this stuff on televisions, are like, oh, I wish I could be LeBron. Oh, you know, I wish I could be, I don't know, Ariana Grande or something like that. Right. It's a very common aspiration for people. And for people who are like that, the VR environment would probably be better, you know, to them than their offline environment. We already see this with lots of young men who just basically play video games all day because it's frankly better than their offline environment. One of the most interesting things was the study. People, you know, say, oh, this is a bad thing. And I can understand how it's bad. There's an interesting study that shows such men are actually happy, Happier. Right? Yeah. Like, you know, there's no way that they can achieve maybe that level of success or they think they can't in, in, you know, the offline world. VR. Every man a king, every woman a queen.

Yeah, I do. It's this funny thing because, you know, if I could put on a VR headset and end up scoring the winning goal in a World cup final, that would be great. But I don't ever think it would feel authentic enough. It still feel like a game.

Yeah. Well, so here, let me give a potential counterexample to that. If you think about what's happened to Twitter over the last 10 years. Right.

I'm on the naughty step today.

Yeah. Yes.

I've got a 12 hour ban.

Oh, really?

My first ever.

Oh, I'm on the naughty step.

I'm. I'm sorry to hear that. Well, the, you know, Twitter in 2007 or 2000, you know, like, I think roughly 2007, before the Arab Spring aspect, it was people tweeting their breakfast. Right. It was considered ludicrous. And the idea that it would be an international incident that could start a nuclear war 12 years later, that every politician would be on it in every country, in every language, that a significant fraction of newspaper articles would essentially be wrappers around tweets, that people would routinely, on a daily basis get fired for this, that people would care so much about this, that the venue of politics would shift from offline to this public war zone that, that we've developed and can't seem to escape from. That would seem like impossible. Right. But that's what it is, right?

Yeah, but I'm not sure if it's made things better or worse.

I think it's so.

And I don't think there's a. It's not a binary answer. It's made certain aspects better and certain aspects worse. I think things have become more divisive and argumentative. But it's also a free knowledge up. It's open knowledge out to people and it's allowed people to engage directly with people they can't normally reach, which is good.

That's so, so you know, what you say there, I think is a very important special case of a general observation. One of my sort of general rules, which is the Internet increases variance, right. In anything. You'll get more upside and more downside. For example, Uber rides you have, if you compare them to taxi rides, they have both extremely long rides. The taxi rides don't. And extremely short pickups. Right. If you take the 30 minute sitcom, we now have, you know, like 10 second gifts and you have 10 hour Netflix binges, right? You, you go from oh, you know, this person, you know, like, like is working in a gig economy job from a normal job to oh, this person has made a killing in crypto, right. And so variance just increases. Where you started out with the 30 minute sitcom and the 9 to 5 job and you know, stuff that was sort of bucketed in this slot and then you've got things that are much smaller than that and much larger than that on both end. Like it just come unmoored in that way. And what do I think is good about Twitter? What I love about Twitter, the reason I'm on it still is at its best. You can find people of like mind. You can learn, you can learn about all these different professions. Like, you know, I actually spend most of my time on Twitter in read only mode, right. I learn about geophysics, I learn about the politics of some country that I've never visited and I just use Google Translate and I read like a thousand tweets. I'm like, oh, okay, so this, this, this you can learn about history and you know, all types of stuff you can learn about. It's like this library, right? But it's a library combined with a civil war, right?

Yeah.

So, so you know, you're here studying, right? And there's people who are just shooting at each other.

Yeah.

And sometimes you'll put out something which is meant for your audience of folks who want to study and think and then, you know, like one of the war zone participants will catch wind of it and come over and start shooting at you. You, Right. And try to pull you into the ongoing worldwide social war that we have. So what I actually think, you know, ultimately happens not just with Twitter, but with. With Facebook and all these other things, is we are unbundling and will eventually rebundle the nation state.

Interesting.

All right, so I think that is. That is the macro, the most important consequence of the smartphone, the Internet, crypto, all of, you know, VR, all of these things together lead to something called T bow sorting. T I E B O U T. Right. So like everything. So, you know, I remember writing up some equations on this a while back, and then I went and did some research and like, everything. Somebody invented the concept 50 years ago, 70 years ago, right. So T bao came out with this in, I think, like 1950 something. And it's incredibly prescient model where essentially he says, and he's got like seven assumptions. He's like, okay, if people have perfect information and they can move anywhere, like migration costs are very low and there isn't spillover effects between communities and so on and so forth. He has a model for essentially how you can solve the free rider problem in politics where folks can essentially move between jurisdictions to the one that suits their preferences. Right? So basically, you treat your ballot not as something to be aggregated alone, but as a search query. Okay, so, for example, you check off, here's my preferred tax rate, here's my preferred, you know, like, like abortion policy, gun policy, gay marriage policy, whatever. You have your vector of preferences. And rather than simply aggregating that with other people in your current geography, you treat it as a search query and you rank order all the jurisdictions of the world. Here's Singapore, here's Switzerland, here's this, here's that, and here's their match to my set of beliefs, right? And you migrate there now before that happens offline. That's already happening online. That's your Twitter followers, that's the Facebook groups you're joining. This is happening organically now, where you're searching for certain things. That's a bitcoin and crypto community, right?

No, I'm laughing because I'm being drawn personally into America.

Ah, interesting.

So I've built my podcast, right? And I've come, I've traveled a lot here for my guests. My plus 50% listeners are American. I'm getting sucked now into American politics and discussions. I did a show about gun rights and I'm trying to understand that. And now I'm looking at how do I move here, how do I emigrate here? Ah, this so I'm living what you're saying.

Exactly. Right. So. So basically I think that aspect of folks finding their ideological compatriots in the cloud and then migrating physically is the story of the century. Right. That is the big thing that the Internet is going to catalyze a gigantic wave of mass migrations where folks meet their, like, like their, their, their co. Religionists or their co ideologists of the cloud and, and form communities offline. You know, I had an article this in 2013, six years ago actually, called Software is Reorganizing the World. Wired has messed up the formatting. I should probably repost it on my, on my blog or something. I gotta get my blog up. By the way, I've got like so many blog posts I've just been holding back from.

Well, I did notice I clicked on the link and took me to medium and there hasn't been anything since I think 2017.

Oh, yeah, yeah. But what I do is actually, you know, I literally have on the order of a hundred blog posts written. I just haven't published any of them.

Yeah.

And part of the reason for that is. And I've got them all on my phone or, you know, my local thing or whatever. Part of that is just because whenever you are a founder or an executive or CEO or something like that, you really want to minimize unnecessary drama. Right. And this is something to understand as to why, because, you know, you asked about VC and what have you. Why do we try to maintain like, message discipline? It's not always successful. Right. But the reason is because it's selfish for you to cause unnecessary drama when your employees and your investors and your customers and so on are depending on the continued health of your organization. Right. As an executive, you typically only want to, you want to take the minimum necessary number of polarizing positions. Right? Because every polarizing position you take can cut your, you know, support base in half or at least, you know, Even if it's 70% support for the issue, you've just lost like 30% of the audience. Right.

But that's the complete opposite of what I have to do. I take polarizing positions.

Right.

I'll sit in one camp and then I'll sit in the other camp to try and see what the different arguments and points of view on bring and kind of then open up and understand the debate.

Absolutely. And so as a commentator, right, where you don't have a social network supply chain, right. This is actually, I think, a critical concept. You know, people talk about a supply chain. You know, for example, you're building the iPhone and you've got, you know, you've got a supply of aluminum and a supply of rare earth elements and glass and all this stuff, and there's multiple vendors for that thing and so on. If there's a supply chain disruption, like an earthquake and suddenly you can't get your rare earth elements, well, you better have a backup plan or else the price is going to spike. Ok? Supply chain. A social network supply chain is something where you visualize yourself and then you visualize all the nodes around you. Right? Here is your manager. Here are your co workers. Here is this key vendor. Here are these investors. Here's this customer. Okay. And you actually want to look at these folks and say, all right, which of them would go south in the event of a negative news article coming from this or that political direction? Right.

Okay, okay.

Because that's what a social network supply chain disruption looks like. You know, your manager's like, oh, I can't believe you said that. Boom, you're fired. Right? Your investors, oh, my God, you did this. Right. Pulls the funding or doesn't re up. Right. Your customers, you know, may be like, I can't believe you're associated with this. And then they'll pull it. Right? And that's becoming a bigger and bigger thing everywhere. Right. And, you know, like, the most common, of course, is like, American politics. That's what people think of. But it's certainly true within crypto there are projects where, you know, they're. I would argue they're technically meritorious, but because they're on the other side of a crypto tribal divide. Oh, my God. You know, like, I can't believe you. You tweeted positively about that or liked it or whatever. Right now I think crypto is actually the best place for this relative to normal politics. And the reason is crypto does give people an incentive to admit they were wrong.

But they don't. Enough. I want to come to that.

Sure. But we.

We went on a tangent.

Yeah, we went on a tangent and.

You know, what was in my mind is like, when you were talking about geography, the thing that was going through my mind, it was almost like you were talking about a free market for geography where. Where the currency is your belief system.

Yes, that's exactly right. And I think the T BOW model basically says if you can find your compatriots like this and move to them and like your movement cost is zero and you can work from the new place without disrupting your income and so on, then no matter how, like, mixed up the initial world is you will get this rapid sorting of people into, you know, the, the republic of X and, and the, the town of Y and the city of Z that reflect the respective beliefs. And it's actually a different model for diversity. You have a thousand different like micro cities, microstates, et cetera that are pure examples of a particular way of living. You know, in my, in my 2013 article, I made a table of what I called cloud formations taking physical shape. And what's a cloud formation? Define it as a group of people who meets online and then meets up in person, right? Say for strangers who met online for the first time and then they met up in person. So for example, a two person Cloudformation meeting up for a day, that's like two people meet on LinkedIn and they, they, you know, come together for coffee or whatever, right? What's two people for a year? That would be like eHarmony, right? Two people meet up on eharmony and, or you know, a year or even 10 years, right? They're married, they're together, right? What's you know, a hundred thousand people for a day? Well that's like some of these protests, right? You know, folks meet up online and they come together, right? And you know, what's like 70,000, 100,000 people for a week? That's burning man, right? And you start to see this table of scale and duration. There's no upper limit to the scale and duration of these cloud formations. In theory, you could take a hundred thousand people from the cloud and have them live together for a year or 10 years, right? That's what I call like cloud cities. And eventually cloud countries will sort of distill out of the cloud into physical formation, right. And we're still at the early stage of that with, you know, startups are recruiting from the Internet, right. And you know, Y Combinator is recruiting for them to every conference. You, you know, like a Rails conference, Django conference. There's, there's no offline thing, there's no store that sells you Django. You go and learn about online, you come to the conference, right? So we're already seeing this thing happening and it's happening in many different ways. What hasn't yet happened is for it to turn into new political units. But I think that's where it's ultimately going.

Next up, I talked to Balaji more about these crazy virtual worlds. But before that, I do have a message from my amazing sponsors. So firstly, let's talk about Drop it. The best bitcoin wallet out there. I've been talking about these guys for ages now. Have you downloaded it? Have you got it? You should. They've got so many cool things they're doing and things coming up. Actually, they've got this one thing they're working on. I really want to tell you about it. I really want to sneak out there, but if I do, I know they're going to kick my ass. So I can't ruin the surprise. I can tell you it's cool and I can tell you it's coming soon. I'm also going to be heading out to Ohio in October to hang out with them. They've got this cool event coming up that they're running, so I'm going to help them with that. If any of you out there, any Buckeyes want to come and hang out and grab a beer, keep an eye out for that. But Drop it is definitely my favorite bitcoin wallet. I love everything they're doing. I love the innovation. I love the fact that you can.

Tweet bitcoin to people.

That's so cool. I love the fact you can text bitcoin to people. I love everything they're working on. Have you got it, though? Have you downloaded it? Come on, time to go and check it out. It is available for the iPhone and Android. Just head over to drop bit app, which is D R O P B I T app. Also. Today's show is brought to you by my new sponsor, my bookie. And Sunday Night Football is back. I was there watching it. The jets still suck. Sorry, Bobby. They do still suck. Throwing away a good lead. The Patriots are still boring. Lamar Jackson smashed it for the Ravens and my team, the Rams, got a tasty win under their belt. I think we all know the Rams are going to probably win the super bowl this year. And with my bookie, you can bet on the NFL every week. And they have live in game betting on every NFL game. And guess what? They accept bitcoin. Of course they do. What bookie would I work with other than one that accepts bitcoin? And they also have a promotion for the listeners of my show. You can get up to a thousand dollars first deposit bonus. Yes, you can double your first deposit. Just use the promotion w bitcoin to activate the offer. You can check out my bookie online today which is my B O O K I E AG and do not forget to use the code WBITCOIN when you're creating your account to claim your bonus.

Do you see this part as part of something that will ultimately lead to less government and potentially the demonetization of the state, because cryptocurrencies are a natural fit within the environments. You know, the. The idea of Bitcoin is that it separates money and state. Hopefully it leads to less wars, less violence, I think. I think I heard you say. But you might have quoted it from the sovereign individual where they said, violence can't solve math.

Right.

So do you see this as all part of that?

Yeah. So that quote, by the way, is I think from Julian Assange. Yeah. No amount of violence can solve certain math problems. Right. Meaning, you know, strong encryption. It doesn't matter if you have an army. You just need compute to crack it. And frankly, if you know the password, you can crack it or the private key rather much faster. Rehearse back up to your other point.

So one of the things about Bitcoin, which draws a lot of people in, is the separation of money and state.

Yes.

Can this take power away from the government? And whether or not it can happen, a lot of bitcoin maximalists look to a future of hyperbitcoinization. You know, there would privacy that hopefully the state can't tax or take your money from you, and therefore you demonetize the state and you make the fiat currency of little value. So they can't buy weapons and they can't weaponize and attack other countries. That's like a future desired outcome. What I'm hearing you talk about here in terms of, you know, these virtual worlds that you get to live in part of your time and potentially consider new places you'd like to live, how do you regulate that?

Right.

Becomes very difficult to regulate that. And is that. Do these online environments with the cross section of cryptocurrency potentially accelerate that demonetization of the state? Because this whole online virtual world happening, which they can't potentially control or stop.

So, yeah, great question. So there's a quote from, I think, Jim Barksdale in the late 90s or mid-90s. It was kind of an offhand comment he made. This guy who worked with Mark Anderson on Netscape, he said, the only two ways I know how to make money in business are unbundling and bundling. Right? And it's meant to be like, you know, kind of a, you know, throw you for a loop kind of comment. You're like, what is he saying? Right. But it's. And then I'll come back to your point. It's extremely true. Right. So I'll give some examples. You know, the MP3 unbundled albums and Spotify Rebundles them in playlists. Right. What the Internet did, is it unbundled news and then Twitter sort of rebundles them into feeds or hashtags or what have you. Right. Like they're grouped again by something and you can see the same thing over and over again. You first fracture, fragment the existing thing and you break that business model. And then new business models form because people sort of want some form of discovery, some form of curation, etc. Right. And at first you might think, well, oh, I've just come back to the same place. But I think of it more like a corkscrew. Right. Where lots and lots of things are cyclic. For example, you start a company, you gain employees, you eventually create a bureaucracy, and then someone leaves to go and start a company. But there's actually progress along the Z axis. As cyclical as these things are. There's kind of like a corkscrew, you know, kind of phenomenon up. Right. And so too for the unbundling and bundling. So the way I think about how hyper bitcoinization and so on maps to this, and I'm very sympathetic to a lot of that stuff actually. And frankly, I think I was one of the earliest proponents of this stuff. I was kind of, should I say I was a maximalist before bitcoin maximalism occurred, kind of. I definitely got a lot of people into bitcoin very early in Silicon Valley.

So have you unbundled your maximalism?

I call myself a bitcoin nationalist. Right. And I can tell you why.

Nationalist. That's interesting. So someone you know very well I have on the show was Lily. She's a bitcoin rationalist.

Right, right.

I've not heard her. So I've heard recently that I quite like was a bitcoin centrist.

Yeah, yeah, yeah. So, you know, we can get to all that. But basically, let me talk about the hyperbitcoinization part first. So hyperbitcoinization, do I think it happens? Yes, in the sense of. I do believe that the short term incentives for lots of states that can print, they will print. And because it keeps them in office, you know, it's like a way to kick the can out X number of years. And so those short term incentives will lead to, you know, BTC kind of rising. And, you know, it's amazing to see, you know, the President of the United States or the head of the Fed or, you know, the, the chair of the IMF or the head of the Biscuit. Everybody knows about crypto. Every head of every major bank it is like, it's one of those things where you're accelerating and you kind of each headline. None of those things I've said is surprising from the 2019 context, from 2013 or 2011 or 2010, that'd be mind blowing for people to actually be taking it seriously. Right. It's very clear to me that that's where we're headed. Right. However, I think that. So that's the unbundling. Governments that are not internationally competitive when it comes to their various policies or that, you know, are unwise when it comes to their monetary policy will print and they'll go away. Okay? But not all governments are dumb because I think a very important concept is to go from the state or the government to a government. There's 193 nation states worldwide, roughly, give or take. And some of these states, like Estonia, Israel, Switzerland, Singapore, and actually China are, you know, run by engineers. Right. Like, you know, Estonia. Tomas Elves was a Princeton computer scientist. Benjamin Nanyang, who has a degree from mit. Lee Shen Loong, who's the son of Lee Kuan Yew, runs Singapore, he was a wrangler at Cambridge. So super smart guy. He actually posted like a Sudoku solver in C on Facebook, which was actually like. I was like, that's pretty legit. Right? So these are folks who think like engineers, who have the training of engineers, and frankly, actually China does as well. Right. Like, all the folks who have run the Chinese Communist Party are, you know, like Xi Jinping, I believe, is a civil engineer. Hu Jintao is an electrical engineer and so on. Right. They really select for engineers there. And that's why, you know, like the great firewall, they implemented in the early 2000s as an instrument of policy, seeing pretty far ahead. And you might ask, okay, well, how many people in the US Government even know what a firewall is? Could they define it for you?

Right.

Probably not.

Not too many. Right. And you know, I think the prescience of that, you know, again, like, without endorsing it, just saying the prescience of the. The other day, Twitter stopped the Chinese government from running ads on Twitter about the Hong Kong, you know, protests, giving the Chinese government's point of view you. So he said, oh, it's state sponsored media. We're not going to take ads from them. But NPR is okay, right? NPR is okay. BBC is okay. They're state sponsored. But they're like the Western kind of state sponsor, which is okay, right? Okay, fine. So, and I made this sort of, you know, kind of rye comment, which is well, pretty smart for China to have de platform Twitter. Before Twitter deplatformed China, right? They saw ahead, recognizing that letting in Twitter, Facebook, etc. Would potentially let them to get cut off by these, you know, foreign interests in the future. And so they just put up the firewall, close their ears to all the entreaties. You know, Zuck, really smart guy, offered to name his child after, you know, like, rather have Xi Jinping name his child, right? So all these entreaties, they just close their ears and they're like, nope. And, you know, they stimulated the birth of their own industry there with sort of farsighted nationalism, frankly. And so now they've got WeChat and they've got this other stuff, right? And they can't be. The state can't be de platformed. So my point is not all governments are actually dumb, right? Some of them are smart, some of them are run by engineers, some of them have some degree of foresight or what have you. And those governments, I think, will embrace crypto in different ways. Like the Chinese government is probably going to roll out their own crypto right now. Will it be a stable coin? Probably. I don't think they want something that oscillates up and down. You know, they've been working on it for many years. I've heard about it and stuff that, you know, who knows when they'll actually do it, but at some point they will do it. And other, other smaller countries probably have established positions in BTC or something like that. I would not be surprised if sovereign funds have done so, just haven't made a huge stink about it. And so the idea that every government is going to fail simultaneously. And so I don't think that's the case. Right. I think especially some of the smaller polities and the big exception of China, which is the largest polity, but run by engineers, you know, the same way that in the 20th century, the US was both really large and really rich and democratic and capitalist, was an outlier in main dimensions. China's like the outlier, but for the most part. Lots of small governments in this century which are run by engineers, I think will embrace crypto and won't die from it. So that's kind of one aspect of it. The second aspect is I think lots of software CEOs will eventually start becoming effectively de facto heads of state, right? And so that's interesting, right? Because, you know, I'll give you an example of this. A few years ago, there was a person running a small 60 million person social network called the United Kingdom that was really happy to do like a video chat with Zuckerberg, who was running a billion person social network called Facebook, right? And I forget the exact context of it. You can Google Cameron Zucker, something like that. But just the very tone of it, I was like, wow, you know, like Cameron understood that Zuck controls distribution, that controls his reelection, right? I tweeted about this, but somebody like Zuck has really not brought the other hand out from behind his back. He has just taken incredible amounts of abuse for the past two and a half years. But just to give you a sense of like the latent power he has, should he decide to use it, he can put a push notification at the top of 2 billion people's Facebook feeds, right? He can make every single person there read his point of view. He could start a newspaper at Facebook. That's like Twitter moments, you know, where basically everybody looks at it and that no one would be able to stop him from doing that. And that, frankly, people would look at it, click at it, etc. He'd employ a ton of journalists, journalists would cheer it. He could, you know, have stickies. There's like a thousand things he could do. He has more distribution than any newspaper or any nation state because they actually look at it, right? And he hasn't done any of that. You know, the only thing he's ever done to put it post the top of the feed is he tested out something about like Oprah's Book Club, like, stuff he gave some book recommendations. So that guy went to the top of the Amazon bestsellers list, of course. But that's like the only thing he's done. Other future software CEOs will probably more consciously think of themselves as building countries, right? And what you can do is build a country in the cloud and then materialize it in physical space, right? And I think that's actually where the future is. Go ahead.

Well, the reason I'm smirking is I wrote down quite early on when you started talking about this. Does technology have a political bias?

You know, I would say your best software CEO is like Lee Kuan Yew, right? Lee Kuan Yew was ultimately a pragmatist, right? And his metric for success was, is what I'm doing good for Singapore, like, is this good for my people? Also, of course, subject to ethics, right? He wasn't like killing people outside or whatever, you know, like, but basically was what he's doing good for Singapore. So because of that, you know, he took policies that would be considered left, right? Center off the map or whatever, right? For example, Singapore's hsa, the way their health system works, it's both far to the left and far to the right of the American system. So it's far to the left of the system in that it's a compulsory savings account, right? Like some percentage of your check is debited to fill up this Singapore hsa, right? And the whole compulsory aspect of it was the big thing that, you know, people fought against with Obamacare, the mandate, et cetera, etc, so that's considered like far left, oh my God, compulsory deduction of X percent. But it was also to the right because once that money is there in your hsa, it's like total free market capitalism. There isn't insurance and reimbursement and so on. It's just like, you know, pay cash. It's essentially for the service. And so that combination is sort of outside of the political cone of the US and has resulted in some of the best health outcomes in the world, right? So that's kind of one example of, of sort of pragmatism. And I'd say that your, your best software CEOs do stuff that's like that. Where is it left wing, is it right wing? Who cares? It works, right? Black cat, white cat, doesn't matter if it catches mice. Another example of this actually is, you know, the whole free lunch thing at software companies, right? Larry Page and Google, they were really the big pioneers of this in the late 90s, early 2000s. And many people looked at that and they're like these, these dumb SF hippies wasting money, you know, don't they understand how expensive that is? Just like incinerating it. And from your kind of rigid libertarian point of view, you'd say, well, of course, if you give everybody individual amounts of money, they would go and optimize because they purchase their own food and it'll satisfy their preferences more and what have you, right? You know, somebody else buying on their behalf. It's public choice area, you'd roll all that stuff out. Okay, what actually happens though, is that central gathering place that people come each day. A, it builds a community so people are hanging out each day. B, it saves them time so they don't have to go and shop for food or lunch. C, you get economies of scale, you can get sometimes better food there. And D, it actually makes money for the business because people are working more hours, right? Since they don't have to leave and come back, etc. So it's one of those things we're Actually sort of coercing people into this. Actually debiting money from their paycheck to, you know, de facto right to. To pay for these lunches and dinners. Opting them into something, I shouldn't say against their will because they've still chosen the job, they still quit. Right. They have the macro exit, but they don't have the micro choice as to whether to opt into this lunch or dinner. They can't get another 50 bucks a day if they say, I'll never come to dinner. Right. That actually produces better outcomes than letting everybody have a free choice. And that's interesting because that's against, you know, kind of what I call dogmatic libertarian thought. Now, I think a lot of libertarian thought is very insightful. But ultimately, if there's a choice between that versus better consequences for the people as a whole, you take the better consequences. Consequences, Right. Another example of this, by the way, in early American history is Shay's Rebellion. Are you guys familiar?

No.

So in the American. Is kind of relatively obscure part of American history, but, you know, the. The American Revolution had just happened. There had been all this propaganda about the right of a free people to dissolve their bonds from, you know, this remote entity that's taxing us and whatever. Right. And so these farmers in, I believe, western Pennsylvania, they're kind of invoking the same rhetoric, and they're like, f. The new American central government. We're, you know, like. And so we're independent and they use the same rhetoric. Right. And George Washington just put down the rebellion. And so you never heard of Shays, Right. And so it was. It was. Was it hypocritical? Sure. Did it, like, net work in some sense? Yeah, because the US Became like a powerful country. Right. You know, that's, that's why there's this saying, like, revolutions are judged by their fruit. Right. Any revolution will take extra legal mechanisms, you know, mechanisms that are. Cannot be justified by the law. And one of the most remarkable things about history is sometimes you have order come from men with bloody swords, right? Like, you take England, right? You have these people with the powdered wigs, the judges, right? And it's all ceremonial, like this whole court, but that maps all the way back to like, battle of Hastings, 1066, and. And people just killing each other with swords. And from that chaos comes order. It's always been something very remarkable to me that that happens in history, right. Because sometimes chaos just leads to more chaos and you descend stuff. Sometimes it leads to order. And so that's, I think, what the Right. Software CEO should do, obviously not kill someone with a bloody sword, but rather do things that are right for the people, regardless of where it fits ideologically.

But what is right for the people is like their decision. So I want to say, if Twitter was run by a staunch Republican, would I be on the naughty steps day? Would I be have my 12 hour suspension for saying mean words were actually we're in response to somebody who's been bullying people online, right. Called him a name. So I've had my account suspended for that. Would that have happened if it was a Republican running Twitter? And also a lot of Silicon Valley companies, a lot of the large companies, the CEOs tend to be liberals and we have witnessed a significant amount of deplatforming and censorship for more conservative views. I mean, I certainly recognize that, you know, and that's what I was getting at is, you know, each technology, does it have a political bias? Because it has, does it tend to reflect the political bias of the CEO?

So this is a very important area and I want to choose my words carefully on this. Right. So are most tech CEOs Democrats? I think that's probably true. True. Right. What does, what does that actually mean in practice? I think that even if they were staunch Republicans, the incentive structure in the short term is set up in such a way that they don't really have a choice. Right. Because let's suppose that there are some, you know, series of editorials that is, you know, calling for so and so to be deplatformed or whatever. Right. And let's suppose they resist. Right. Okay. Then it'll escalate to, for example, trying to go after their investors or trying to go after their advertisers and get them to pull because they've got this awful person on their platform and so on. And in the short term, essentially the incentives are to comply with the mob. Right, because you can comply with the mob. In the long term, however, the most important swing vote in the world I would argue is the anti Trump pro crypto tech Democrat. Okay, that's. That seems like a very arcane creature, right? Like does that exist in the wild? It's like this unicorn or Pegasus or whatever. But it's actually very, very important because these are the folks who typically run these, these platforms, Right. I'll give it one or two concrete examples without naming all of them, but like Dorsey, right? So on the one hand, Dorsey is deplatforming people today. On the other hand, he's a born again bitcoin maximalist. Right?

Okay.

And you know, he's put bitcoin into square cash and all this type of stuff. He understands it. He's put, you know, like this into square crypto. He's hired people, he's smart enough to get that right. In a different way. Zuck also recognizes how important crypto is. Right. And while I would argue with many specifics of how they rolled out Libra, I actually think his overall heart is in the right place in the sense of, for example, his big push on privacy. I think that's actually real. I mean, I know a lot of the people involved. But faced with the Hobsons or there were two contrary, like, arguments being lodged against Facebook. The first was, oh, you aren't censoring enough, essentially, like you need to filter your platform, the hate speech, the this or that. And the second was, you're not private enough, right? Oh, everybody's getting their privacy invaded, etc. Now these are actually mutually incompatible arguments because in order to censor, you need to invade privacy because you need to track messages and so on and so forth. But it was kind of an any port in the storm, any, any weapon to hand, people just lobbing rocks at Facebook. Right. So Zuck intelligently understood that these were incompatible things and you could kind of go down one road and sacrifice the other. And what he did was he said, let's go hard on privacy. And he actually lost people internally doing that. There were folks who wanted to actually go harder on censorship. He actually took the, what I'd call the centrist kind of view, almost like the dead center view of, you know, we're going to go hard on privacy because we can't do both. Right. And this is actually the long term trend of technology. It's where our incentives are as well. So it's good for the company because you could see the traction of WhatsApp and Signal and crypto and all this other stuff and Snapchat, obviously. And so those are two examples of anti Trump, pro crypto tech Democrats.

Right.

And the reason I think this is ridiculously important is in the long term, the blockchain ification of these platforms, both directly and those that are funded by them and that are complements to them will put them in a zone where A, they make more money, which they have to do for their shareholders and their employees and so on, and B, they can't deplatform. When you are in that zone, you actually have, in a sense, both more money and more power. Right. Why do you have more power? Because anybody who gets to the top of one of these companies, regardless of their political views. You don't become the CEO of a 10 billion or $100 billion company by bending to. You don't like bending to the mob. You don't like doing that. Right. Even if in theory you agreed with them politically, you're like a Nietzschean will to power kind of person. And so why do you want like some crazy person Internet dictating to you what your, your schedule is? Even if you in theory agree with them ideologically, it'll get your backup. Right.

Why can't you deplatform them?

Why can't you?

Yeah.

Oh, because I think. All right, so this gets to another thing. I actually think today the deep platforming thing is something which is arguably like a right of center kind of issue. I think it's very quickly, if not already coming towards the center and a bipartisan issue. Do you know why? The reason is the YouTube demonetization stuff and so on has hit lots of people, lots of false positives all over the political spectrum. And eventually what's going to happen is folks are going to turn, they're going to realize that their passwords, their private keys in the sense of like your SSH private keys, you know, computer scientists use this for logging into writing code. And your crypto private keys are all kind of like the same thing. And that ideally what happens is if you have a crypto like security model for Twitter or Facebook, you just dock your ship with them. Right.

You're thinking more like the Microsoft decentralized IDs. That's going to be potential future. Or the Apple Urban.

Yeah. Have you not heard of that?

Okay, I know the name.

Yeah. So that's worth checking out, right. Urbit.org, it actually predates Bitcoin. Pretty interesting project where let's say that URBIT is almost as optimized for cryptocurrency development and blockchain development as Linux was for the Internet. Right. I think it still needs some like, you know, like folks building on it and whatnot. But it's essentially set up to store your keys locally and to be a personal server, not a personal client. Right. Like your laptop over here can serve up files. It's not really built to do that. Your Urbit ship is built to be a server. Right. And it's also built to host lots of private keys and keep them in an encrypted like, like a secure enclave like thing. And now you can imagine something where you've got a social network and you dock with it, right? In the same way that you, like, put your Bitcoin into Coinbase and you can pull it out and no one can stop you.

Right.

Or shouldn't be able to stop you. Right, I know, I know. Yes, yes. Coinbase can freeze your account. Right, of course.

But.

But in the sense of if you are an account in good standing, right, you can remove your stuff. Right. And.

But even that, Even that can be debated.

What is it? Account.

An account in good standing. So I interviewed a sex worker, okay. Legal sex worker, adult actress. She makes her money in a legal way.

She's a.

She's an actress. She was deplatformed by Coinbase for being a sex worker.

Right.

Which is a legal job.

Yeah. Right. So. So, okay, well, we can talk further about Coinbase. One of the things is Coinbase is ultimately subject to banking regulators. Right? And so there are things that you have to do to stay in good graces with them, to keep the fiat rails open for 30 million users that, you know, they'll basically be like, this account is suspicious. And they won't necessarily tell you. Throw them off. Sometimes they will. Right, but they'll basically say, you're spending reputation points with us to do this. And if you do so, then, well, we may keep your limits low or we may, like, drop support for you because then our license is in danger from the government. Right. Or from the press.

But what a strange gray area where it's not based on fact. It's almost like rumor.

Exactly. So actually, what you get to is something like, Walter Olson has written about this. It's sort of what I'd call decentralized censorship. Right. Because the First Amendment prohibits the government from just outright censoring people. Right. In China, they make no bones of it. They're very open about it. The great fire will exist. Don't criticize the government. It's very open in the US it's actually like. It's more artful and deniable. What happens is a regulator will come and basically be like, oh, did you know that so. And so is on your platform? Right. And they'll just ask that question. Right. They're very careful about what they put in email. They won't say, throw them off the platform. And then the bank will see that, and they'll be like, oh, shit. And then they will have an internal meeting and, you know, their general counsel say, well, if we don't deplatform this person, then, you know, we might have, like, a legal problem in the government and the person's de platform now, now Think about what happened there. The responsibility falls in the gap because a bank can claim quite legitimately that you know, they were taking a risk of having all their other customers shut down by the state. And the state can deny that they ever asked for a shutdown because they're just asking questions. How do you know this guy has an account with you? Right. So in this fashion it's all set up to be deniable. Right. In a sense this is sort of like the art of where Western civilization is right now. You've had this decentralized censorship, you know, kind of regime. Now against that stands crypto, which is decentralized censorship, resistance. And that is the real, you know, game on civilizational battle that we're going to be waging.

What a strange place that somewhere coinbase is then because they are fighting, it's almost like they're fighting the battle with the government, but they're also defending the rights. With bitcoin being part of the bitcoin ecosystem. Ecosystem. The other one I always think of those is gab.com and I have this very strange view of gab.com I like Andrew Torber. I find his views on censorship very interesting. I took a look@gab.com and it was just hate filled. Yeah, Racist, sexist, homophobic. And I get in this very strange world of censorship whereby I don't think we should have censorship but all the places where I kind of see the like the resistance like gab is just disgusting. Yeah, it's a really strange like world.

Well, let me give you actually, so I've thought about this a lot and I think there's a historical example that I think a great deal about that that brings us into I think clarity which is so in the Soviet Union, right? In the, the pre Ding xiaoping China, so 1949 to 1978, like Mao's, Mao's China, capitalism was illegal. Right. And profit was stigmatized. And because that was stigmatized, prices were broken and supply chains were broken and entrepreneurship was punishable by death. And markets as we know them didn't exist. And you know, you couldn't just like switch a job or get a raise or make money in any normal sense. Like the idea of who's like, you know, a rich person in the Soviet Union that didn't like compute in any normal way. You could have high status people like a pianist or a mathematician or an admiral or something like that, but high money people kind of didn't really exist in the same way. So this one thing, this denial of capitalism pathologized and broke many different aspects of society and turned into this bizarre dysfunctional state because they were in denial about this sort of necessary evil or even arguably a good of profit. And one of the consequences of this is there are only kind of two types of people who would be what we'd call capitalists in the Soviet Union. They were first a very small minority of highly rational dissidents, right, that, you know, could, could be in a society and could think these thoughts that were so taboo and pathologized by the ussr. I mean, from birth you're, you're given all of this crap, right? And you know that these thoughts like, oh, maybe profit's a good thing, huh? Are you, are you an American supporter? Are you? Or in China, are you a capitalist rotor? Like, what about our Great October Revolution and how many died in the Great Patriotic War? You hate our troops, you hate our country. Like everything we sacrifice for, you know, like the entire society had been based on this lie, right? And so people got really head up about it. It wasn't a rational argument to them, it was an emotional argument. And so you have to be like a very hyper rational, logical person and with a ton of like taste and sensitivity to consider capitalism. That's a dispute. And then there was the other group and you know who the other group was. Black market guys, okay? The true Grand Theft Auto kind of people. And, you know, so like sometimes you had to interact with them to like buy a tomato or something like that. And yeah, in theory you might think, yeah, I support capitalism in the abstract and you interact with them. And every bad stereotype of capitalism was actually present. They could cut you, they could rob you. They were like criminals, right? So operating outside the law. And yeah, they would buy and sell, but it was like every stereotype that the regime talked about came to life. These utterly ruthless things. And you're like, they're not going to promote me. I guess actually the regime is right about how evil capitalism is because all the capitalists I'm encountering are evil, right? It's actually sort of similar to the whole NRA thing. You know, if you, if capitalism is outlawed, only outlaws will become capitalists, right? And the reason I think that's a, that extended historical example is didactic, is that when there's behavior that's not sanctioned, it's pushed to these extremes. A tiny group of hyper rationalists and a much larger group of basically criminals and folks who can't keep it in their pants, basically. Right? And so I think that's sort of what happened with Gab, right, is you just sort of filtered for the kind of people who are censored on Twitter, and a lot of them are, like, basically batshit, right? Like the guy who went and shot up the synagogue or whatever. I mean, these guys are actual lunatics. They're not like, like, oh, I just made a comment. I have a political point of view. They're actually lunatics. Right. So that's unfortunately sort of like what happens when you, like, censor capitalism. You know, that you get lunatics being capitalists or criminals. Here, you, You. You censor ideas and you have only lunatics espousing them. But it's not a reflection of the merits of capitalism and not even necessarily a reflection of the merits of. I shouldn't say all, but some of those ideas are being censored. Right. So that's kind of how I think about it.

Do you worry that with the growth of cryptocurrencies and I'll stick with Bitcoin, that if we have this separation of money and state, that will obviously change the structure of a country and how, you know, the governance of a country. But if that doesn't happen in someone like China, because it's communist, they do have the great firewall. They have their restrictions in place. This could actually lead to the expansion of communism around the world.

Oh, but China is not communist in any typical sense.

I mean. And you know what I mean, though?

Well, actually, let's start.

I think it's communist in terms of its control of the people.

Yeah. But it lets people leave the country. That, I think is actually like the core kind of, you know, thing. Now, to be clear, it doesn't let them leave the country with all their money very easily and so on. It's not as perfect as, let's say, a Switzerland or a Singapore. And I shouldn't even say perfect really, but it's like. Like if you know what life was like in China in the 40s, the 50s, the 60s, the early 70s. There's a couple of references that you might post in your Twitter feed or whatever afterwards. There's a great article, short one on npr called the Secret Contract that Transformed China. I've tweeted it out a few times, and that gives a quick capsule summary. Most Westerners don't know how China became rich, like, mechanistically. Right. Do you know?

Nope. Okay, you tell me.

So. So roughly speaking, what happened was under Mao first, there was. So Mao's claim to legitimacy and fame was driving out the Japanese and winning the civil war against Chiang Kai Shek, who got driven to Taiwan. And then he drove the people of China through the Great Leap Forward, which tens of millions of people died, and various propaganda campaigns. And by the mid-60s, he felt his power slipping. And so he pushed this thing called the Cultural Revolution, which essentially got student activists all head up. They turned into Red Guards, and they were told to denounce their parents. Smash idols. You know, anybody who was smart was, like, sent to the fields because if you're a professor, you're clearly a criminal. And this madness went on for, like, 10 years. People's lives, careers were destroyed. You know, like, at least like a million people died. And finally, by, like, 1976, Deng Xiaoping, who had been a communist revolutionary, but he had been purged three times. And, you know, if you read about the USSR or, you know, China, you'll hear the term purged a lot. You know what a good synonym for that is for a modern American? Canceled. Okay, okay. So, like, you know, when you're canceled right on Twitter, boom, you lose, you know, your. You don't lose your life, liberty, or property. And that's a big step up, actually from where the USSR and Maoist China were. But you do lose your future income and your current job and a lot of your status and friends. Right? So it's pretty bad.

Hey, I've lost a marketing channel today.

Great. Yep, exactly.

I released a show today, and I can't advertise that to my 77,000 followers or whatever it is.

Exactly. So being canceled is basically like what being purged was like. And Deng Xiaoping had actually been purged not once, not twice, but three times, literally sent to the fields. But he was so wily and so smart and so cunning and so. So competent that he managed to work his way back. And by the mid-70s, after Mao died, his wife and three others, so called Gang of Four, were maneuvering for control of China. But Deng Xiaoping outmaneuvered them and eventually basically got control of, like, the army and whatnot. And then they were actually under arrest. And then Deng put all of his guys into, you know, like, positions of power. Suddenly, China went, you know, very quietly to the right. And Deng knew that he couldn't just make the entire country capitalist at once. Because the nature of, like, a communist revolution, like a. Like a left of center revolution is change the flag, change the anthem, change everything. It's year zero. Start over. Boom. Right? The. The rightist revolution that. That Deng did was actually much more gradual. And so, for example, he, you know, across the causeway from, from Hong Kong. He knew Hong Kong was successful, he knew Singapore was successful, he knew Taiwan was successful. These were Chinese ancestry people. Clearly there was nothing like you know, holding like the Chinese back from building great societies. So he's like, okay, I'm going to set up a special economic zone across the causeway from Hong Kong, let's call it Shenzhen. We fence it off and it's just an experiment, right? So he wasn't trying to turn the entire country capitalist. In fact, most people weren't even affected by this. He spent his political capital on this and of course that was like, you know, boom. Just went vertical, like, you know, allowed them to practice capitalism. He took this dead weight off their backs and, and it started going vertical with that. He used that political capital, then set up three more special economic zones across the east, east coast seaboard and then there are 15. And by the mid-80s, China started to hum, right? And there's tons of other things he did, but that was like the core of it. And there's a good book on this by Ezra Vogel, you know, on if you want the book length version. One of the things about this whole thing is insofar as, you know, for example, a huge amount of American popular culture is the Holocaust was bad. Avoid that, you know, Nazis are bad. Etc, like clearly something to avoid. A huge part of Chinese culture is the Cultural Revolution was really bad. We want to avoid that, right? That level of instability like, you know, like crazy. You know, Red Guards going and smashing everything must stop that. Anything that looks like that, stop that. Nip it in the bud. Right Order rather than chaos. So like Tiananmen look like that. Look like the Cultural Revolution student revolt, Right, right. This Hong Kong thing looks like a Cultural Revolution, right? So, so like, you know, I'm not, I'm not saying this is good or bad. I'm just saying where the, where the mindset is, is they react to the stuff like Americans wreck Charlottesville. Right? You've got guys like literally like in Nazi uniform parading around, okay? You're just going to hit them with everything you got, right? And so in the same way, folks who seem to be trying to destabilize China or other things that the, the Hong Kong guys are doing, they're putting up like the American flag, they're putting up the Hong Kong flag. Flag. The other big thing in China, the legitimacy of the regime in addition to economic growth, that's one big pillar. The other big legitimacy rests on throwing out the colonialists. Right. After a century of humiliations. And you Know, the Opium wars and the British, you know, occupation of Hong Kong. For all these years, China has stood up, right? And for these folks to go and rouse like American flags, British flags, etc, is basically like saying, let's colonize, you know, the country again. Right? And some of them, by the way, like, have actually come and said that, you know, some of these, these soon leaders are like, yeah, we need America to come in and like physically intervene or whatever. So those are things which, you know, for many mainland Chinese are like, yeah, these guys are bad.

I should have said, sorry, authoritarian regimes, do you think? Because if, you know, for all that I might hate about my government, other people might hate about the US government, that their money goes towards wars and drones and killing people and all the bullshit that happens. Is there a risk if you separate money and state from these Western capitalist democracies that you empower authoritarian regimes such as Russia and China? And we've seen, you know, we're seeing right now the spread of Chinese surveillance equipment around the world, right?

So let's talk about that. Well, first, I mean, yes, spread of Chinese surveillance equipment, but we also have the nsa, which is American surveillance equipment around the world. Like, you know, all the Snowden revelations, you know, the US is basically wiretapping everybody at all times, right? With, with, you know, the taps into Google breaking HTTPs taps into Facebook, et cetera. And so it's not something that's like, I would actually think if I'd have to bet on who was surveilling more people and against their will, it's almost certainly the American state. That's kind of number one on that. Number two is, I'd say up until roughly 1991, net, where America intervened, it was better than the alternative. For example, South Korea is a better place to live than North Korea, right. Chile a better place to live than Cuba. Iran, pre revolution, a better place to live than post, right. Like, you know, West Germany a better place to live than East Germany, Hong Kong and Taiwan and Singapore a better place to live than mainland China and on and on, right? Like, you know, so, so on net, America, you know, even though it definitely did a lot of extra legal things during that time, all the CIA stuff or wherever, I'd say you could justify it by comparing it to the alternivo of, of communism, right. I'd say since that point, and this has happened gradually over the 90s and the 2000s and so on, American intervention leaves countries worse off than they were before. Right. You may have seen Syria, the photos before and after it was A completely functional country, right? Like it had nice pools and resorts and so on. It really was not that bad. And you know, like American intervention turned it into like a free fire zone with ISIS and people killing each other left and right.

Yeah. I mean, is Iraq better off?

Exactly. Iraq led to, I mean like some was saying, yeah, I mean he's not like the greatest guy, terrible guy, but.

He kept the population in order.

The lid was on. Right. It wasn't ISIS with like, you know, literally like women dragged around as slaves and people beheaded in the street. Like Iraq was not a great country, but it had like, you know, functional airport and like it wasn't just mass murder and people killing each other left and right. It can be worse, right? So Iraq, Syria, Libya, Tunisia, basically. And you can also argue Crimea, Georgia, lots of places that the US has fomented these so called color revolutions are worse off than they were. And certainly the US no longer has its own house in order. Right. The US itself is just a freaking war zone every single day. You know, the, the obviously the Twitter conflict, the shootings, you know, the financial crisis, which is still ongoing, like all types of stuff like this. Right. And so therefore I kind of think there was a period over which you could argue from roughly like 45 to 91, that American intervention was for the better on net. Right. And then since then it has been, I would argue, for the worse. Right. On net. And of course you can point to exceptions. I'm not saying it's universal, but so from just a pure result standpoint, right, you have to question whether or not the US is leaving these countries better off. Right. By contrast, Chinese intervention in Africa with the belt and road and so on, you look at the before and after, things are getting built. It looks like the opposite of what happened in Syria, right? In Syria, things are getting destroyed. Yes.

But I do worry with the social scoring aspect of the Chinese surveillance, is that a worse Orwellian future than the nsa?

So I think the biggest difference is the Chinese system is explicit in the American system is implicit. Right? Like if you're canceled in the American system, you still can't get a job, right? Like it, it, it basically works like the social credit system, right? You're attacked and then someone Googles your name and they see all the Google links and they can't hire you. I, I'll give like one example of this, right? You know, there's this guy, like in 2013, he got attacked on, on Twitter, Greg Gon, he made some dumb comment about homeless people on Facebook, okay? Dumb comment. So he lost his. He was like, a founder of a startup, so he lost his thing there. All right? Now, like, a few years later, he got a job at Twitter as, like, a VR guy. Article in TechCrunch comes out and talks about controversial Greg Gottman hired Twitter. Same day Twitter fires him.

Right?

So, like, for one comment on Facebook, which was stupid, I grant, right? Literally, this guy is being fired over and over again. He's, like, living, you know, in the shadows, like, you know, being purged and canceled over and over again. You know, he worked at home with shelters, did all this stuff, tried to make amends. There's just simply no path back to him in society. Right? So. So the idea that, like, this is something that's unique to China, it's not that the US System is just deniable and implicit as opposed to explicit. That, I think, is the single biggest difference.

It doesn't feel the same, though.

This.

It's like, say, with my children, I don't want their behavior to be of the threat of getting a smack.

Okay?

So the Chinese system is like, you're aware now you have a social score. You're aware. Certain behaviors are required, and if you don't follow these certain behaviors, then you won't be able to access certain facilities, you won't be able to get flights. I feel that's a very. I don't know, It's a very dangerous. So I'll give you version of an Orwellian state. And, you know, most countries have some version, but at least in the U.S. look, it's just your own stupidity, and that's like the free market of content.

I want to be clear about this. I'm not saying that's good. I think that's bad. Right? Like, I do not want to have a system where someone can flip a switch and deplatform you from everything. My. My line of argument is really that we're vectoring in that direction in the US and the US Is not better than where the Chinese are. And it falls to us as crypto people to build a better system where you can't be deplatformed from. Right? So that's kind of. That's my thing. Now. You might. What you might contest is one of the premises that I put out, which is the US Is not better, and in fact, it's becoming worse. Let me. Let me explain why. We have the no Fly list, right? Which you can basically be put onto without any kind of thing. We have civil forfeiture, right, where the police can basically Seize your assets without any kind of due process. And in fact, the amount of money, Washington Post published this a little while ago. The amount of money seized by police via civil forfeiture is now greater than the amount robbed. Right. So the state has actually robbed more people than that. We have actually. I think you're going to see an increasing number of folks being financially deplatformed. Again, this is like the tip of the edge or whatever, but I saw a while back that a African American member of the Proud Boys who I don't endorse, but this guy like lost his Chase bank account. Right. That's happening. That's coming to the U.S. right. So now you're no longer just banned from social media, you're starting to get, your life is starting to get banned. Right. And you know, you have folks who are being gone after for their political donations and so on and so forth. So it's more chaotic and disorganized and decentralized. But I do think a lot of those same negative things are coming to the U.S. right. For example, you know, a year or two ago there was an article in the New York Times there was almost regretting not having the Chinese firewall in place. Right. I think it was by like Farhad Manjir. I can find the article. Right. But it's basically saying, well, if we had had something like that, then, you know, there wouldn't be all these Internet trolls and Trump wouldn't be elected and so on. Right. And so they were sort of pining for that. Right?

Yeah, but that's like this. This is where people in power are under threat and they take those steps towards authoritarianism.

Absolutely.

But the difference with China is, you know, the arguable levels of democracy that country has. You have, you know, we've got re education camps, you've got children being taken away from their parents for being of a minority groups. You know that it's those types of people who have control of systems to social school, un how far do they push things?

Right.

And what people will retort is they'll say, well, the US has Guantanamo Bay and it has Abu Ghraib. Right. It has the children in camps near the border and so on and so forth. And to be clear, I'm basically arguing that I think many states are actually going to vector in this direction of speech suppression and so on. I think China's done it in an explicit way and the US does it in implicit and deniable way and it's going to vector far worse. I think over the 2000 and 20s and that if we want a better system, we can't just assume, oh, the US is better. I think it's going to get far worse. It's already vectoring bad. We have to build a better system with crypto. That's what I'm trying to get at.

Okay, well, you gave us a good segue to crypto.

Okay, how was that? Pretty far out there, right? So it took a long time to get Balaji on the show, but it was well worth the wait. This is definitely one of my favorite, probably even my favorite show that I've recorded. It was absolutely fascinating. Loved all the stuff we got into and there's so much to take away from this interview. You know, Balaji is one of those people who's just on a different wavelength and when he starts talking, it's just hard not to pay attention. Especially when he starts getting into these weird worlds of like virtual reality, AI, what that might mean for the future of immigration. He also has got so much knowledge. I mean, it's another interview where I was recommending so many different books or different parts of history which I need to go and research. I have no idea how someone like him consumes and retains so much knowledge. And you know what? In prep, I was reading about Marc Henderson where he described him as the person with more ideas than anyone else or produces more ideas per minute than anyone else.

And I agree, there was so much.

We covered in this. Coming into the interview, I did have a bunch of questions about Bitcoin and Coinbase and I didn't really even get to ask those in the start of the interview in the first part. So part two is coming out later in the week. Make sure you keep an eye out for that. That we do in that interview. Get into Earn.com being acquired by Coinbase, Maximalism and Smart Contracts and Balaji's well VU on Altcoins. Okay, any feedback in this show, do reach out to me. My email address is hellohatbitcoindid.com Also, a big thank you to everyone who supports the show. For those who leave reviews, to the sponsors, to those who subscribe via Lightning Network, to an ad free version. Whatever you do, thank you, thank you, thank you. If you do want to help support the show, it's all listed up on my website. Just head over to whatbitcoindid.com click on the support section, it will explain everything to you there. As I mentioned, I'm flying out to Taiwan today. While saying that by the time you read this, I'm going to be there, but I'm recording a bunch of interviews for Defiance, which is coming out, which is super exciting, start of October, so you've got to keep an eye out for that. But listen, if you've got any questions, do reach out to me. My email address is hello or what bitcoindid.com.