'Resistance Money’: Decoding Bitcoin’s True Value Proposition

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In a world of creeping financial surveillance and control, could Bitcoin be a key to preserving our freedoms? Hi everyone, I'm business coach Steve Sandusky for Barron's Advisor, The Way Forward Podcast. Today I'm exploring this provocative question with three philosophers who have written a fascinating new book on this subject. Andrew Bailey, Bradley Rettler, and Craig Wormke are the authors of Resistance Money: A Philosophical Case for Bitcoin. In our wide-ranging discussion, they argue that Bitcoin represents a revolutionary form of resistance money that can provide individuals with greater privacy and autonomy in their financial lives. But as you might expect from a group of philosophers, they don't just accept the popular hype around Bitcoin.. They scrutinize it from every angle and challenge us to ponder the very nature of money itself. We cover a lot of ground in this episode, from the unique attributes that make Bitcoin different from any other form of money in history to how it might help citizens of authoritarian regimes or those suffering under hyperinflation. We also tackle some of the most common criticisms of Bitcoin, including its its energy usage, and its association with the dark web and other illicit activities. So regardless of your current views on Bitcoin, I think you're going to come away from this conversation with a deeper understanding of its philosophical underpinnings and a more nuanced view of its potential. You may even find yourself questioning some of your long-held beliefs about the role of money in a free society. Now, If you're ready to have your assumptions challenged and your mind expanded, then you won't want to miss this fascinating discussion. With that, please enjoy my conversation with the philosophical trio of Andrew Bailey, Bradley Rettler, and Craig Wormke. So why in the world did Satoshi Nakamoto try to invent something new when it comes to money, this thing that we now call Bitcoin? So Andrew, I'm going to toss this over to you. So if you could give us just a little bit of the genesis story of Bitcoin. And of course, we don't know who Satoshi Nakamoto is. All we have are some writings that remain from this person or these people that created Bitcoin. So we have to somewhat interpret what we think Nakamoto was saying or intending when it comes to Bitcoin. So tell us a little bit about the genesis story and why there was even a potential need for something like Bitcoin to come into existence.

Digital monies are not new and didn't originate with Bitcoin. Much of the money that we know now is digital, and this has been true for my entire lifetime. I was born in 1984. So many of the transactions we make, much of the money that moves around the world is just digital items in ledgers. It's deposits in a bank. And deposits in another bank going up or down, credits and debits marked on these digital letters. So digital money isn't new, but one thing that was holy grail and sought after was a special kind of digital money, digital cash. And maybe a way to see the difference there is just to think about the difference between a bank deposit and physical cash in the case of the US dollar. In a bank deposit case, you can't hold that yourself. Instead, a custodian holds it for you, the bank, nor can you move it without the cooperation of the bank. You ask them permission to wire the money to another bank. And finally, you don't make it yourself, nor can anyone make it except without the permission of deputized banks in cooperation with the central bank. So it's the making, the managing, and the mediating of the money all happens through these trusted parties. A network of central banks and their deputized commercial bank partners. So that's digital money. That's how it's often worked. Contrast that to cash, physical cash. Let's think about first, you can hold physical cash yourself without the cooperation of a bank, and you can give it to someone else without any third party being involved. You just hand the coin over and they put it in their fanny pack and you're done. And in terms of making cash, there are trusted makers. That's the US Mint that makes physical cash in that case. So 2 out of those 3 roles are actually disintermediated in the case of cash. So here's a question that can get us to think about the design space that Bitcoin occupies. Could we make digital money that's like cash in some of those respects, that doesn't require managers or mediators or makers? Could we have a digital money that's actually digital cash, where you can hold it yourself without a bank holding it for you, or you could transfer it to someone else without the cooperation or permission of a central or commercial bank, or where, and this is a really tricky one, where there's no central party managing the creation of that money. And Bitcoin has a strange set of designs basically to try to occupy that intersection to create digital money that's more like digital cash and that doesn't have any of those three trusted roles. So why would you want that? Well, great question. As it turns out, people occupying those trusted roles of manager, mediator, and maker sometimes mess up. Sometimes they make too little money or too much. Sometimes they confiscate the money when they shouldn't have, or sometimes they decline to mediate the right transaction as you instructed them to. They block the transaction or direct it somewhere else, or perhaps reverse it. So there are all kinds of failure modes that might pop up for these trusted parties. And if we could eliminate them, of course, that creates other kinds of failure modes, but it at least eliminates those key trusted roles and the risks that they impose to their users. So think about the failure modes of cash and the failure modes that are eliminated. A bank can't lose your cash for you, but of course you can lose your cash for yourself. If you're in a place where you can't trust the banks, you might very well prefer to hold the money yourself under your mattress. If you're in a place where you can't trust commercial or central banks to not produce too much money, to not produce too little, you might prefer a system that doesn't involve their cooperation or permission at all for the making of money, and so on. So this really is what differentiates Bitcoin from monies that came before. It's not that it's digital, it's that it's more cash-like. One other factor that might be worth mentioning is the Great Financial Crisis, which was bubbling up right around the time that Satoshi was working on Bitcoin. So he claimed to have started work on it in 2007 prior to the great financial crisis, but he releases the white paper on Halloween of 2008 and things are just, they're not going to a good place at that time. And it gets even worse right around the time that Bitcoin is released in the first quarter of 2009. So one suspects that some of that may have been a motivating factor for Satoshi and even more so motivating factor for early adopters who saw banks and their trusted networks failing in some pretty wild ways and looking for an alternative that bypasses them, that doesn't have these middlemen in the money system.

Now, certainly one of the features of Bitcoin is that there's a hard cap on the amount of Bitcoin that will ever be mined, and it's 21 million Bitcoin. So in your take, or from a philosophical standpoint, how do you think about this idea of the hard cap being, and obviously it's a feature of the Bitcoin system that is very different from our pretty much open-ended monetary system that we use today. So is that a good thing? Is that a bad thing? Is that indifferent? Or is it just something that needed to be in place because it solved one of the problems of our current system, which is that there is no cap on how much of the dollars, for example, that we create, which some people say can lead to inflation and other issues as well. Craig, what are your thoughts on that one?

I think if Satoshi could have created Bitcoin anew and he could have figured out a way to make Bitcoin's price stable, I think he would've seriously thought about doing that. And the reason is that you do want price stability in a medium of exchange. You want, say, a dollar to be able to buy the same kind of loaf of bread from one week to the next. And insofar as you're trading goods for dollars, you don't want to be on the short end of the stick, especially over the short term. With Bitcoin's cap and fixed issuance schedule, you lack this price stability, and that makes Bitcoin, at least for the foreseeable future, a worse kind of money. On this one vector of having a stable price. Now, why did Satoshi then put a cap on it? And so this reason why Satoshi, I think, likely wanted Bitcoin to have a fixed issuance schedule is to help the price go up in responses to demand. And how this would work is that a small number of people buy at the beginning, And because there's no release valve with the supply, the pressure can only push the price up or down depending on how many people are buying or selling. But if more people are buying it than selling, then the price will go up. And if the price goes up, then presumably this will capture headlines, word will spread. And Satoshi had to solve this problem. Think of it like a bootstrapping problem. You need to be able to bring people into the network. And one way to do this is to advertise and to market. And Satoshi did do some of this by making a forum, a website, a logo, and so on. But another way to do it is to attract new participants to the network through price increases. And this would be a way to exploit and use as leverage the phenomenon of human greed. Although Bitcoin's price instability, I put it on the, the minus side of Bitcoin's ledger, I think that there is a, a major plus side in the way that Bitcoin's price instability on the way up helped grow the Bitcoin network overall into what we know it as today, which is something like a $1 trillion asset.

I also want to talk about, you guys have this new book out and it's called Resistance Money, and you obviously specifically chose the word resistance in there. And I would love for you to talk about why you use the word resistance and how that applies to Bitcoin.

Brad, why don't we start with you? Bitcoin enables people to fight against the creeping authoritarianism that we see in governments and corporations. On the government side, there's increasing interest in being the central hub for all financial transactions and learning about every single one of them. There's an increasing pressure to report ever lower levels of transactional amount, what people are buying and selling. There's efforts to force banks to unbank people that are considered either undesirable or untrustworthy by the governments. And there's an effort among corporations to monetize our data, especially our financial data. If you know what people are buying, then you know what they'll likely buy more of, and you know what other things they might be interested in buying. And so you can use that data. To try to sell them things. And if you can't use that data to try to sell them things, then you can find someone who will and you can sell them the data. So all of the digital money that is being transferred around has a number of different sets of eyes on it, and those eyes are vying for power and vying for money, and they would like to know as much as they can about what you are doing with your money. And we don't think that's so good. And we think Satoshi didn't think that was so good either. So one side of Bitcoin is this 21 million supply cap and sound money, and that is less the focus of our book than this other aspect of Bitcoin, which has to do with privacy and censorship resistance and financial inclusion. While some people are using Bitcoin to store value who already have a lot of money, other people are using it to buy basic necessities because they've been cut off from their country's monetary system. And some people are using it to buy protest items that they don't want their countries to know about. Some people are using it to buy things that they fear someday might be used against them in a court or something like that. Bitcoin is private, relatively. It has only on the blockchain addresses and amounts. It doesn't have names. It doesn't have names of companies and it doesn't have names of people unless you deliberately put them on there in some sort of note. It's resistant to censorship. If some miner chooses not to include your transaction in a block, some other miner will, and it's inclusive. There's no way to keep anyone out of the system. There's no way to keep them from acquiring Bitcoin. And so for these reasons, people can acquire Bitcoin and they can spend it on whatever they want, and people don't have to know about it. Now, there are limit cases where transactions of significantly large amounts or of significantly interesting people, if enough resources are marshaled against it, can be sussed out to some degree. But by and large, the vast majority of people who are using Bitcoin for its privacy and censorship-resistant and inclusion features succeed in doing so. And we think therefore succeed in resisting the authoritarianism that they're trying to either directly fight against or at the very least circumvent. And those are the people that we mostly care about having access to Bitcoin. We're fine with people who are relatively wealthy who live in the United States having Bitcoin as some allocation in their investment portfolio. But we think the best part about that is that it's helping the people who are using it for these other reasons. And They're the ones who really need Bitcoin.

With Bitcoin having this level of privacy and the ability to transact peer-to-peer that might be outside of the government's ability to reach in and say, hey, you owe me some tax on that transaction. If we reached a point where Bitcoin became such a huge way to transact and not using currency that was part of a system where the government could get its hand in there, What would that suggest for the state of the economy, the state of community, the state of our ability to organize things that would benefit societies at large? Is that an issue? What are your thoughts on that, Andrew?

I think it's helpful first to think about the case of physical cash. Physical cash is private. You can make a transaction and no one else can see it as long as you close the door and pull the drapes closed. Just two people need to know. It's also censorship resistant. As long as no one else is in that room standing between you and your counterparty, you can hand over the cash. So physical cash is also resistance money in our view. Now, did the wide availability of cash or gold— another bearer instrument that has historically been used as money— did these things prevent states from operating, from collecting taxes, from having armies and police forces and firefighters and roads? No, not really. So historically, the existence of resistance money, as we've known it before in physical form, hasn't undermined the ability of states to operate and to even have some real capacity to do good. And yet there's another factor we should consider here, which is that some states are quite bad, and circumventing them is therefore Good. Now, how do you tell the difference? And how do we evaluate Bitcoin's net effect on the world, whether for good or for bad? We have a suggestion. This is to adopt a thought experiment that gives us a neutral perspective on the world. And here's how it goes. Imagine that you were to fall asleep and that you're going to wake up and you will be somebody, but you don't know who. You could be a farmer in Venezuela, you could be CEO of MicroStrategy living in Washington, D.C., or Florida, as the case may be. You could be a financial advisor. You could be a philosophy professor in Singapore. You could be a banker in Nigeria, and so on. One of 8 billion people that you could be, but you don't know who. And then stepping behind— so we call that the veil of ignorance— stepping behind that veil of ignorance, being ignorant of who you might be, ask this question: would I want Bitcoin to be in the world or not. And we think that behind the veil, that is not knowing who you'd be, you're going to have a fairly risk-averse stance. You're going to say, just how bad could things be? How bad could central banks be? How repressive and authoritarian might states and their corporate lackeys be? And in fact, because billions across the world suffer from crippling inflation, irresponsible central banks, or from authoritarian or undemocratic rule, or from corporate repression and cooperation with repressive states and so on. You're going to want this alternative to be available to you should you happen to be one of those 2 to 4 out of the 8 billion people who really drew the short stick in life. They're just bad luck. And so from a neutral perspective like this, you're going to want Bitcoin to be in the world as an opt-in alternative, just in case you're one of the people Who's the least well off in these respects? So of course Bitcoin's effects aren't all positive or all negative, but we think when you adopt this neutral standpoint, you can see how the positive effects that it has for the least well off among us carry significant moral weight. And that's a reason to want Bitcoin to be in the world. I have a thought to connect the ethical discussion to the investment discussion. I, I think wise investors care about the consequences of their investments. You don't want to allocate something that's going to screw over your children or grandchildren, as in the case of something that might make climate change worse, nor do you want to do something that makes things worse for your compatriots or for other people alive today. So I think wise investors should care deeply about the ethics of Bitcoin and its consequences for the world. So this should be on the checklist of, do I allocate to Bitcoin? One of the items on there should be, is this net good for the world, net neutral, or net bad? And we're not here to give investment advice, but we can give advice about how to think about what Bitcoin's effects are on the world. And we think that it's net good. So it can at least check off one of those items in the list.

So since we're talking about some of the, the criticisms of Bitcoin, let's address some of those head on. And one of 'em, I think you've already touched on a little bit, which is this idea that it's super volatile. So how can we think of it as a currency? But another one is, and I don't know if you guys touch on this from a philosophical standpoint, but this idea that there's no intrinsic value to Bitcoin, so it really can't be worth anything. So Brad, what are your thoughts on that?

I think that intrinsic value is said in a number of ways, and when we talk about intrinsic value in philosophy, we mean the value that something has in itself. And it's pretty well agreed that the only thing that has value in itself that you don't seek for the sake of something else is happiness. And nothing else has intrinsic value. It only has value to the extent that it can bring about happiness. Now, I know intrinsic value is used in a different way in investing, and it has something to do with making a positive rate of return, producing something else. In that respect, no commodities have intrinsic value. They have instrumental value to the extent that you can make things with them, maybe jewelry or something like that, but I don't think anyone would suggest that The reason that gold is worth what it is because of its use in instrument cables and jewelry. Rather, it's used in jewelry because it already has this value for other reasons. And those reasons have to do with things like scarcity, recognizability, divisibility, durability, fungibility, et cetera. There's lots of features of gold that make it, when you take those features together, interesting. Specifically interesting as a way of storing your wealth because gold can be counted on to have these features in 50 years, in 100 years, in 1,000 years. Gold is not going to change. We're not going to suddenly discover a large amount of it and inflate the supply massively. It's not going to suddenly be possible to turn other things into it very easily. It's not going to suddenly cease to be shiny and recognizable and such. So when we look at the features that make gold interesting as an investment, I think we find analogs to a lot of those features with Bitcoin. Bitcoin is fungible, it is highly divisible, it's recognizable, the supply is auditable, it's predictable. And along each of these dimensions, it's even more so than gold. Bitcoin is more divisible than gold. It is easier to know the Bitcoin supply, not only right now, but in the future than it is to know the gold supply. And so Bitcoin excels even more than gold at these. And it also has some other features that make it maybe even more valuable, like the fact that it's digital, so you don't have to carry it around. It's easier to cross borders with, it's easier to hide. So when we look at whether something is valuable, call it intrinsic or, or whatever, when we look at whether something is worth having, we should look at what features it has that make it something to be desired by people. And there are lots of reasons to find Bitcoin desirable.

And to that point, a lot of people will say the only reason why Bitcoin has any value is because other people will pay something for it. And it's just simply a greater fool theory. Where if we get enough people that want to buy this thing, the number's going to go up. But at some point it's just a Ponzi scheme and it's going to be exposed, and then the thing is just going to totally deflate and go to zero. So it's just this idea that it's almost like hysteria where they see the number go up, everybody jumps in and it goes up, but there's nothing. It's just hot air. There's nothing behind it. And I know you've addressed this here with this idea of intrinsic value. But does it differ from, say, a painting, a Picasso or a Van Gogh, where they're not making any more of them because they're dead, yet people will pay millions, tens of millions, hundreds of millions of dollars for these paintings, yet there's no, quote, intrinsic value other than, say, the happiness that I get by owning this. So is there any correlation there, or how do you think about it when someone says it's just a bunch of hype, and at some point people are going to see behind the veil, so to speak, and dump this thing?

I think Bitcoin is unlike a Ponzi scheme in that it's incredibly useful. So it's a monetary unit that you can send around the world within a second, and it has no non-monetary uses. That's true. So it's not something you can put around your neck on a chain, or you can paint a dome with. That's all true. And that's something that I think gives people the impression that it's created out of thin air. There's nothing to it. And the price just fully depends on how much people are willing to pay. That's true. And that's true for all kinds of assets. But it was meant to be used as a kind of monetary asset. The network functions so that it's censorship resistant and more private money. And you can use it like that if you want to. And I think that's what a lot of people are doing. So in Nigeria, something like 10% of all transaction volume consists in just flinging Bitcoin around. So Bitcoin is not just like gold in that it's a scarce asset. It's also as if it has wings on top of it. So Bitcoin is like gold with wings. You can transact with this kind of digital asset very quickly, more privately, and it's very hard for people to stop you. Now, another way that Bitcoin improves on gold, there's a UCLA economist back in the late 20th century named Armen Alchian, a great economist. And he thought that in order to solve this bootstrapping problem, and not so much in solving it, but the way that assets overcome it, how does something become money? He thought that an asset becomes money because of its low recognition costs. And what he means is low verification costs. So think about what it means to test that you have a genuine Picasso or a genuine Frank Lloyd Wright house or whatever it is, these things that are much less fungible than Bitcoin. And you have to go through these series of tests, a battery of tests. And even with gold, I tried to buy gold maybe a few years ago. I didn't have a mentor to help me to try to buy it. I didn't know what website to buy it from. I didn't know if I could trust them. And if you find gold on the street, you have to find the right kind of equipment to test whether or not it's the genuine article. With Bitcoin, this is tremendously easy. You can verify Bitcoin for less than a cent. All it takes is a query to see whether or not the Bitcoin you are about to receive or that you have received is genuine Bitcoin. So the verification costs are very low. So if Armin Alkian is right that one major factor in how assets become monetary assets is having low recognition costs or low verification costs. This is the reason to think that Bitcoin is primed to be something like money and not just a Ponzi scheme, because not only can you fling it around everywhere, but every person who gets it flung to them can test instantaneously whether it's the real thing.

Andrew, I'd love to get your thoughts here on how should we think about the fact that Bitcoin the mining of Bitcoin uses a tremendous amount of energy, but also to some extent, it's the energy that's being used that makes Bitcoin perhaps have some value because you can't just, someone else can't just, oh, I'm going to create my version of Bitcoin and it's going to be just as valuable. No, because the cost to create it isn't there. So how do you think about the cost to the environment, the cost of energy, that is behind actually creating Bitcoin.

One of the things that sets Bitcoin apart is, as you say, it has a positive marginal cost of production. So positive, it's not zero marginal. Each new unit costs something. And in this way, Bitcoin is unlike many other cryptocurrencies, which were printed for free and then sold for what the creators really wanted, which is US dollars or Bitcoin, as the case may be. So Bitcoin stands apart in that way. It costs something on the margin to produce. Now, as far as that cost being expressed in the world, this is through energy use. Miners mint new Bitcoin when they add new blocks to the blockchain, and they use a lot of energy and chips to do that. Perhaps before answering the questions about the externalities and the cost to the world of using that much energy, it's worthwhile to say why miners do this. We want to be expensive to create new blocks, new collections of transactions, because we want to make it expensive for someone to cheat the network. You can cheat the network by spending the same Bitcoin twice. It's called double spending. When you spend the Bitcoin and then create a new block of transactions replacing the old one that spends the same Bitcoin again, but to a different address. That would be a way to cheat the network. It's as if you had the same dollar bill, spent it, got it back, and spent it again. We do not want money to be able to do this. What mining and the high expense of mining does is it makes it expensive and difficult to reorganize the network and replace a block or a collection of transactions with a new collection of transactions that double spends. So that's the intent behind the design and why we want it to be expensive. It adds security to the network of certain kinds, security against this kind of attack. So that's why mining exists. Mining does use a tremendous amount of energy. First thing to do is to distinguish between two concerns here, energy use and externalities. Let's take those in turn. Energy use is just this question. Is it worth it? Is this somehow wasteful or a bad use of our energy? Now, here's how we often answer questions like that. We let markets answer the questions. Is it a wise use of energy to light my apartment right now? To run some air conditioning? I have a fan running to me right now. I could turn it off and save some energy. Is that a wise use of electricity? The way we answer that question is by making me pay for it. I signal how much I value something by buying electricity. And I'm, this is expensive electricity in Singapore. It's maybe 20 cents per kilowatt hour, and I'm running a fan here that suggests that I value my physical comfort to a fairly high degree. And that's how we allocate energy with markets. Bitcoin is no different. Bitcoiners, by paying fees to miners and by accepting the dilution of their Bitcoin holdings through the creation of new Bitcoin that goes to miners, are paying miners to secure the network for them. So they are buying energy. It's not that Bitcoin uses energy as if it were some abstract buyer of energy. No, Bitcoiners pay for energy by paying miners. There's nothing as such wrong with paying for energy use as long as it's worth it. And I think that Bitcoiners show that they think it's worth it, and that's why they pay so much for energy. So maybe that's a fairly shallow question is just, is it worth it? You let people decide that for themselves. Do they want to pay for the energy use? If so, they pay. The more troubling and difficult question is, are there spillover effects for the rest of us? And when hydrocarbons are involved, as they often are in energy production, the answer is yes, because when you burn hydrocarbons, it creates greenhouse gases. Now, there was a time when a significant portion of the energy used to mine Bitcoin derived from burning hydrocarbons, and that was quite troubling. But the long trend line actually shows that portion of the mining energy budget going down dramatically over time. So reliable numbers aren't totally easy to get right now, but we know it's far less than half of Bitcoin energy budget is derived from carbon-generating energy production sources. And in fact, there's a reason built into Bitcoin's economics that would predict this trend will continue in a fairly dramatic way. Mining is a tough business. It's a low margin business, and there are fixed rewards. So you're competing against every other miner in the world for a fixed pie, and the pie only gets smaller as the number of rewards go down every 4 years by half. So every miner in the world is competing against every other miner for this tiny little pie of rewards that makes margins thin. They can't pay that much for energy. What's the cheapest energy in the world right now? As it happens, it's energy on the margins of our grids in both space and time. It's energy that's far away from human populations. That's the spatial dimension. And it's energy that's far away from human populations temporally. For example, at night when we don't have the lights on. Now, this energy in the margins of our grids in both space and time also has this interesting feature. It tends to be the greenest. And the most carbon-neutral energy that we've got, the most sustainable, the most renewable, the best for our environment. So the fact that miner margins are thin and getting thinner as they compete wildly against each other for a shrinking set of rewards that are fixed drives them to the margins of our grids in both space and time. So they have to seek out the cheapest energy on the margin. That means putting a Bitcoin miner on top of a new hydro plant that's far from any city. That means running miners only at night or only in West Texas where the sun is shining and when it's shining or when the wind is blowing and when other buyers of the energy don't actually want it and so on. So Bitcoin, because of its fixed rewards, actually has this mechanism that is self-decarbonizing in kind of really pleasing way that maybe nobody could have predicted 10 years ago. This is a fairly recent discovery, let's say within the last 5 years, As we've seen Bitcoin scale up fairly dramatically, we start to see these effects grow dramatically as well. So for this reason, I think that there are ethical concerns with buying and holding Bitcoin, but they're actually being mitigated over time. And that the trend line is really good for those who are concerned about the effects of Bitcoin on our environment and on our future.

I would also say that you tend to hear the criticisms of Bitcoin's energy use by people who also give other criticisms of Bitcoin. Rarely hear people say, I love Bitcoin, I love the idea of resistance money, but it's using so much energy. It's usually people who say Bitcoin is a Ponzi and it's using so much energy. And so I think it's not a criticism that comes from people who understand Bitcoin's value and are trying to wrestle with its energy use. It's people who don't understand Bitcoin's value and add this to their other criticisms. It's also interesting that people who really need Bitcoin and are using it are the targets of this attack against Bitcoin, which is, I think, a disingenuous attack. And it's as though people are fine with their own energy uses, swimming pools, air conditioners, laundry, dryers, things like that. They use those all the time. They never criticize them. They only criticize the thing that they don't use. And either they don't know that Bitcoin is serving as resistance money for people in authoritarian regimes and people whose local currencies are hyperinflating, or they care about those people and their ability to have a flourishing life less than they care about their own laundry getting dried and their own comforts inside their homes in the summer.

So I want to wrap up here with one question here. I want to give each of you an opportunity just to share one more thought, insight, point. Could be something from your book or something not in your book. But what would you like to leave us with here?

We'll start with you, Craig. There's a belief that Bitcoin facilitates crime on a much higher basis than other kinds of assets. And before we tackle that belief, I just want to go through two small questions. First question, if you were a criminal and you wanted to hide your criminality through your financial transactions, what kind of money would you want? And if you just think it through, it's clear that you'd want the US dollar and likely in cash. And if you look at the real world, that's exactly what we see. So why would you want those two things? Well, you'd want something that's highly liquid, and, and the dollar is the most highly liquid asset on the planet. And you'd want something that's easily private, which is what physical cash is. So if you have physical cash dollars, you have the criminal's dream money. And something like one-third of cash transactions are suspected or thought to be used in illicit or criminal activity. And that's pretty high. Now, if you hear certain government officials talk about Bitcoin, so this is the second question, how much would you expect Bitcoin and Bitcoin's transaction volume to be used in crime? I think you'd expect something similar, something higher than 10% for sure, and probably higher than the US dollar, 30, 40, 50% maybe. But if you look at the 2024 Crypto Crime Report, which is a report that's put out annually, well, the 2024 is this year, of course, but it's put out annually by a company named Chainalysis. And they find that something like 0.3% of Bitcoin transaction volume is going towards illicit addresses for illicit uses. And that's Very low. So, and why would that be? And that's because Bitcoin isn't easily private. If you're a big player, you have a billion dollars to move or hundreds of millions, and you make one mistake 10 years from now, uh, you're on the hook. It's that easy to make a mistake when you are moving a lot of volume in Bitcoin. And Bitcoin, it's just not as highly liquid as the dollar. So I think that the government response should be more proportional. If you really wanted to stop crime and money laundering in the States is something like, it's equal to about 2 to 5% of our GDP. It's $800 million to $2 billion. That's high. You'd apportion your law enforcement engagement proportionally to the dollar rather than to Bitcoin. Not that crime doesn't happen in Bitcoin. There are new kinds of wrongdoing, new kinds of crime that Bitcoin enables, like Ransomware, and it's a serious problem, but it's something that we can mitigate through just better cybersecurity. So when I see the recent government response to Bitcoin's relation to crime, I see something that's built on misinformation.

Andrew, what would you like to leave us with?

I'd like to leave you with a pitch for the book, and this is specifically for financial advisors. Interest in Bitcoin is high and it's likely to only get higher from people thinking about investing in Bitcoin. And the reason is fairly obvious. It's a scarce asset where interest is already high and that offers resistance opportunities in a world where authoritarianism is also going up. So supply is fixed and everything we know suggests that there are reasons to see demand go up as well. So interest will remain strong in Bitcoin. What do we do about that? I think that Bitcoin is weird in many ways as far as investments go, and a lot of people have ethical qualms about it. And that's really what our book is about. It's not about the investment side, but it's about thinking about the ethics of it and whether this is good or bad for the world. So here's my pitch for the book. We can help not make a case for buying or for selling or taking a position on Bitcoin, but we can help you think about Bitcoin carefully and in a comprehensive and neutral way, asking questions like, is Bitcoin good for the world? And would I want Bitcoin to be in the world if I didn't know who I'd be? We have chapters on financial privacy, on censorship, on energy use, on Bitcoin's security model. We have a chapter that addresses 17 objections in a row to Bitcoin and its aptness for use as money and as resistance money. And we do this all within philosophical framework thinking about these things neutrally. So if you're in a position where you want to talk to people about Bitcoin or they have questions, we can help not answer the questions, but at least approach them thoughtfully and in an informed way with lots of recent data.

Brad, what say you as we wrap up here?

I would like to leave you with the thought that Bitcoin is special. Bitcoin is different. If you go on CoinMarketCap and you look in the top left, it says cryptos: 2.4 million plus. Bitcoin was of course the first cryptocurrency which came into existence in 2009. And since then there's been 2.39999 million plus cryptocurrencies to have followed in its wake. And our book is about Bitcoin and is not about these other cryptocurrencies. And you might wonder why we focus on Bitcoin and why we don't talk about cryptocurrencies or why we didn't pick a different cryptocurrency to talk about. And there are 3 reasons for that, and I'll just go over them really briefly. The first one is Bitcoin's founding. Bitcoin was founded by a pseudonymous person, and as you said at the beginning, Steve, we still don't know who it is. This is a, over a trillion-dollar asset that has an inventor that would be very potentially enriching to find. And this person owns the private keys to over 1 million Bitcoin, and nobody's been able to find them. They also didn't start by rewarding themselves with a bunch of Bitcoin. The very first Bitcoin block had to be mined by Satoshi to get the network started. And then every block after that could be mined by absolutely anyone in the world. There was advanced notice of the code and you could run the code and you could compete for that very second block. The first block Bitcoin reward is unspendable. That's so interesting. It's 50 Bitcoin, which at the time was worth absolutely nothing. But even there, Satoshi decided, I'm going to make this unspendable. Um, so it's a transparently fair launch. No sales, no insiders, not even the inventor themself, whoever that happens to be. This is the founding that probably can't any longer be replicated. The second reason Bitcoin is different is the design. The proof-of-work consensus mechanism involves miners competing to publish transactions in a way that incentivizes them to do so honestly, to participate honestly in the network. And the design ensures that it's an open network that anyone can get involved in. And we've talked about a lot of the features of the design, so I won't talk too much about that. The third one is the network, right? Bitcoin is the oldest. That doesn't mean it's the best. MySpace was older than Facebook, and yet Facebook came along and supplanted it. The usual course of things is that things get better and they improve upon previous things. People have had 14 years now to improve upon Bitcoin, and they, at least by market cap, have been unable to do so. People are voting with what they value, which is their own local currencies, and they're trading things for Bitcoin at a much higher rate than they're doing so with other people. Additionally, we can look to actual use cases of Bitcoin. We have a letter penned by something like 20 human rights activists and advocates in 20 different countries saying how they use Bitcoin in human rights campaigns. You can find that at financialinclusion.tech. There are circular economies that exist solely around Bitcoin that are both geographically close to each other, like cities that are using it, and then circular economies spread out geographically, as Craig alluded to, over the internet. When we look to the actual network Bitcoin has developed in its 14 to 15 years in existence, we see people using it in a variety of different ways, but using it as money. And along all of these dimensions, Bitcoin is different from any of the other potential cryptocurrencies. And that is why we focus the book and we focus our own work on Bitcoin.

All right, that's all for today. Make sure you like and share this podcast through your favorite social platforms. And for more great podcasts, visit us at barons.com/podcast. Take care and be safe.

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