0:00

stable coins and CBDC standards is

0:02

fascinating because that is a fight

0:04

too. And then it's like stable

0:06

coins versus Bitcoin, right? But

0:08

the stable coins versus CBDCs things, stable coins

0:11

are acting in a way where they're like

0:13

bottoms up, becoming a country,

0:16

if that makes sense. Countries are trying

0:18

to reason with it. And the one

0:20

thing the US is starting to

0:22

understand is that whatever this thing is, it buys

0:24

a ton of treasuries. I think what is going

0:26

to end up happening is the western block, for

0:29

lack of a better word, they're

0:31

putting their eggs in stable coin basket. What

0:49

is up, guys? I

0:51

am Guy Swan, the guy who has read

0:53

more about Bitcoin than anybody

0:56

else you know. And we

0:58

have a really good conversation today.

1:00

Roger Huang, we read a piece

1:03

by him very recently. I

1:07

will have the link in the show notes. But he

1:09

wrote the book, Would Mao Hold Bitcoin?

1:11

And the piece we read

1:13

was about the China ban and

1:16

the state of Bitcoin, how Bitcoin

1:18

survived it. And because of his

1:20

exploration of this, he's really become

1:22

a resource for the

1:24

perspective and the situation

1:27

in China and his connections

1:29

with giving him a bit of a

1:31

boots on the ground perspective and a lot of what's

1:34

going on. But he actually

1:36

has a lot of other really

1:38

fascinating perspective on

1:40

Bitcoin as quote

1:42

unquote resistance money. Bitcoin, when

1:45

it fits into, he's done

1:47

a lot of traveling and exploration

1:50

with kind of where

1:52

does Bitcoin fit into these rebellions,

1:55

to the resistance, to the

1:57

state. And we talk a lot

1:59

about Hong Kong. because I never

2:01

really personally got a

2:04

lot of detail about what happened with Hong

2:06

Kong and how people think about that and

2:08

where does Bitcoin lie

2:12

in that

2:14

whole puzzle and what role did it

2:16

play versus what role did it not

2:19

play. Does the narrative that we tell

2:21

that seems to make sense about where

2:23

Bitcoin lies and what's important to focus

2:25

on in Bitcoin, does

2:28

that play out in the real world? Is

2:30

that the reality of it? Or

2:33

when we actually look at what's happening

2:35

on the ground, is

2:37

the story a little bit different and

2:39

even sometimes a little bit simpler? But I

2:41

think both his background and

2:43

the things that he's explored and has invested

2:46

real time into and the length of time

2:48

that he's looked into and

2:50

been able to watch and

2:53

put his perspective towards Bitcoin's

2:55

history and seeing it

2:57

happen live, I think

2:59

it's just a really really valuable conversation

3:01

and there are numerous things. He's actually

3:03

working on a project in machine learning

3:05

and so we actually wanted to get

3:07

to a conversation about AI that

3:10

we didn't really get to dig into so

3:12

I might be having him on again at

3:14

some point because I just think there's still

3:16

plenty of things that we could have talked

3:18

about. But this one is just a fantastic

3:20

rip. I will have links and

3:22

show notes, links and details in the show notes so that

3:25

you can check them out and I

3:27

hope you enjoy this one. This is chat

3:29

113, China's surveillance state,

3:32

CBDCs, the shifting

3:34

paradigms, and the Bitcoin

3:36

wild card with Roger Huang. Roger,

3:43

welcome to the show man. It's really

3:45

really good to have you. We read your

3:47

piece, I guess it's been a month or

3:49

so back now, it's been a little bit

3:52

and your book actually

3:55

has been on my list. I haven't

3:57

really gotten through many books lately. The

3:59

only thing I've been able to consume

4:01

in mass is audiobooks and

4:03

I'm still on a book about thorium actually right

4:05

now but I've got you I've got you in

4:07

my list and I'm really excited about this one

4:10

because I mean as I just said I've

4:12

always felt like the the

4:16

perspective and kind of what's going on in

4:18

China related to Bitcoin has always been like

4:21

a big blind spot for me you know

4:23

the and it's been really

4:25

interesting to see because the the mining

4:27

ban and everything was huge it was

4:29

such a big thing in

4:32

kind of showing the resiliency of

4:34

Bitcoin but from

4:37

from that so so the book by the way for

4:40

anybody listening is would now

4:42

hold Bitcoin and you also

4:44

do a lot of writing on technical

4:47

stuff you've got a piece

4:49

that I read about privacy

4:51

and the samurai wallet guys

4:53

and stuff I think I was in Forbes that

4:56

was a for example they basically there's a

4:58

preface that I just want to say welcome to

5:00

the show man it's really good to have you

5:02

and I think there's going to be a lot

5:04

of things that we can cover in this conversation

5:06

yeah thanks no appreciate it really love to be

5:09

on the show listen to like several episodes and

5:12

yeah a fan of the show so just happy to be here hell

5:14

yeah I love the Bitcoin propaganda department hat by

5:17

the way I'm doing so much free advertising for

5:19

Vanek like but it does like it does feel

5:21

like kind of my vibe and you know what

5:23

I've been doing and I should probably do the

5:25

opposite as I go on the Bitcoin shows and

5:27

I wear the hat and then sometimes when non-bitcoin

5:29

shows I get a little bit shy but

5:31

I feel like I should probably do both I

5:34

should do both you should overdo it you should

5:36

overdo it you should make it even more obnoxious

5:38

for the for the non-bitcoin shows like all the

5:40

yeah because I have like all these like geopolitics

5:43

and like Asia shows and they're like please introduce

5:45

Bitcoin Taiwan and then like I kind of have

5:47

to struggle between like do I should I be

5:49

like a normal looking person for a bit you

5:52

should like pull like Bitcoin you know and so

5:54

it's a mix but yeah no I'm glad to

5:56

bring the hat and yeah Vanek if

5:58

you could uh throw some sats

6:00

my way, let me know. I'm wearing the

6:02

hat like everywhere. But yeah, yeah. That's

6:05

funny. So I'm

6:07

curious actually before we start out, what

6:11

is your, what's

6:13

your favorite topic to cover

6:16

around Bitcoin? Yeah.

6:18

What's your deepest thing to dig into that you

6:20

wish everybody would ask you about? Yeah,

6:23

no, it's a really good question. I think

6:26

like I started writing about like a

6:28

lot of like Bitcoin and human rights

6:30

kind of issues pretty early. So

6:32

I've been writing about Bitcoin since 2014. And

6:35

I've really been trying to research and during

6:37

the Hong Kong protests, actually, I was like

6:39

on the ground, like while protests were happening,

6:41

I was trying to find like, Oh, that's

6:43

crazy. Yeah, yeah. I mean, it

6:45

was it was during a week where the

6:47

protests were a little bit more dull down,

6:50

because that was when Taiwan's president, Tainh

6:52

Nguyen got reelected. And

6:55

so everybody from Hong Kong kind of like vacated. So

6:57

I was like the one week where I was like,

7:00

I'm gonna go, I'm gonna come, I'm gonna check out what's going

7:02

on. But I met some really

7:04

cool people like in the Bitcoin scene in Hong Kong, who

7:06

are still, you know, like, friends

7:09

and, you know, people that

7:11

I talked to every day these days. So

7:13

that was really cool. But

7:15

yeah, like, that was always a focus of

7:17

mine. And it was almost

7:19

like seeing where there were states of exception,

7:22

and where Bitcoin fits into that. So like, for example,

7:25

I wrote about Bangladesh, and

7:28

about how they took down the

7:30

internet, in order to prevent videos

7:32

of atrocity. So short story, there's

7:35

the student protesters, and

7:37

then the military, the Bangladeshi military

7:39

kind of went in and hundreds

7:41

of them died. And at one

7:43

point, they took down like all

7:45

social media, all social networks,

7:49

just like the entire internet was down. And

7:51

the whole point was so that people can like

7:54

communicate with each other and can like share what

7:56

was happening. And then by the time that kind

7:58

of lifted, Then

8:01

you had all the casualty reports and stuff like that. So

8:03

I've always been thinking about where do

8:06

you see Bitcoin meet the Navalny

8:08

Foundation, for example, they had

8:10

to raise money in Bitcoin because they

8:13

couldn't use the

8:15

Russian banking system. The Feminist

8:17

Coalition of Nigeria had to

8:19

use Bitcoin because the central bank co-opted

8:22

their domestic payment processor. So

8:24

whenever, that's what I love to

8:26

write about. It's like where the

8:29

metal hits the ground kind of thing.

8:31

Because I think Bitcoiners, I

8:34

love being in the community. I think we

8:36

sometimes, I think it's great, it's a great

8:38

instinct, but over-index on the security

8:41

threats. I feel like Bitcoiners are very

8:43

sophisticated, or at least, I

8:45

mean, I'm biased, I go to the Bit devs and stuff like

8:47

that. So maybe it's like the crowd of Bitcoiners I'm with. But

8:50

regardless, people are very sophisticated

8:53

about knowing their threat models.

8:56

However, the people

8:59

who probably need that knowledge the most

9:01

don't necessarily have it. So

9:03

when you have these human rights situations

9:06

where it's like people can't get their

9:08

money out, they're censored immediately, it's like

9:10

a really urgent situation. So that's where

9:12

I've always tried to figure it out.

9:14

And you read my article about how

9:17

Bitcoins are about China's bans. So I'm

9:19

always thinking about if there's a mass

9:21

protest, if there are things

9:24

that happen with the government's trying to censor

9:26

the way that you transact and the way

9:28

that you act because of the fact that

9:30

you're dissenting, what does that look like? And

9:34

Noster also plays a huge role in this because a lot

9:36

of- Oh yeah, for sure. Yeah. I

9:39

don't want to say a huge amount, but

9:41

there's quite a big audience in

9:44

China that downloaded Domus. No

9:46

kidding. Yeah, yeah. It was, yeah,

9:48

yeah. They got like onboarded and a few of them

9:50

have stayed like a couple, a lot of the accounts,

9:53

it kind of goes up and down, but there's still quite

9:56

a few people who post. That's just kind of cool to

9:58

see as well. So yeah, that's like the one. one thing

10:00

I wish, you know, that was kind of like when I

10:02

first got down the rabbit hole. And

10:05

I still try to write about that. And

10:07

I would kind of describe it as like trying

10:10

to find connections to FreedomTech

10:14

in these situations. So like during the Hong Kong

10:16

situation, kind of like what I described, I went

10:18

to Hong Kong and I was trying to find

10:20

out like, hey, was there like interplay between

10:23

the protesters and between Bitcoin

10:25

or FreedomTech tools and things like that, just to see.

10:29

And, you know, there were some intersections, but not

10:31

as many as you would expect. I can go

10:33

into more into the details, but my

10:36

whole kind of research thread has been

10:38

on like, where

10:40

does this kind of meet? And so,

10:42

you know, you have events like Oslo, for example, where

10:44

that kind of happens, but I still

10:46

see a little bit of a gap between the

10:48

activists and the FreedomTech. So yeah, that

10:50

was probably a really long answer. But

10:52

now, to sum it up, to sum

10:54

it up, like I think the one

10:56

thing is just really like when you

10:58

have these crisis situations, I mean, this

11:01

trucker protest, for example, Canada, that might

11:03

be an example. I was actually about

11:05

to bring it up. Yeah. Yeah. I

11:07

have thoughts on that too. But anyways,

11:09

I am Canadian, unfortunately, or for you.

11:11

It's okay, we forgive you. Yeah, yeah.

11:14

Glad to be forgiven.

11:18

Definitely not running for Canadian politics

11:20

anytime soon without much I mouth

11:22

off Canada. But you

11:25

know, the be so screwed so fast. I

11:28

know, I know, I know. Because they're so yeah,

11:30

I mean, that's like a hole in the rabbit

11:32

hole. I'll let me stay focused on

11:34

this one first. But

11:36

yeah, no, like the whole

11:38

thing is like when you have these state I think

11:40

it's just gonna like more and more people will encounter

11:43

that as we go. And

11:46

people will start to realize, you

11:48

know, why censorship resistance really matters. It's

11:51

a lack of a better word. Yeah.

11:54

Speaking of the trucker protest is being

11:56

I was kind

11:58

of connected to that. and during

12:02

all of that was unfolding and it

12:04

was funny is being kind

12:06

of close to it. It was interesting

12:09

to see how many

12:12

of the kind of the seemingly simple

12:14

side of just like what do you

12:16

do with it. We

12:20

did not have an action plan for

12:22

you know. I saw

12:24

it as it was a combination of

12:28

like a huge success in showing how

12:30

powerful Bitcoin was that you could send

12:33

it without someone stopping it you know.

12:35

Like you couldn't freeze the account. You

12:37

can't go, you can't stop

12:39

the go fund me of

12:42

the Bitcoin heading into Canada and it

12:44

all basically made it there. And

12:46

in fact one of the things that I think

12:49

they really don't appreciate because a lot of people

12:51

like oh because there was no privacy they

12:53

you know just watch these addresses and

12:55

stuff because you know on a tally

12:58

coin it was visible the addresses. But

13:00

one thing that I found was really interesting

13:03

just because I was kind of aware of

13:05

the the size of

13:08

funds that moved to different locations is

13:10

they explicitly didn't mention anything in any

13:13

of the memos or in any of

13:15

the watch these

13:17

addresses or anything about the lightning

13:20

that went there and a significant

13:22

amount of funds went over lightning.

13:24

And I thought that was interesting

13:27

that it wasn't like a lookout

13:29

for this. We're you know not

13:32

totally aware of how this would come in

13:34

but watch for payments from these places. Like

13:36

they just kind of like it

13:38

almost gave the appearance that the government was

13:40

trying to brag about the fact that we

13:43

can still see into this and still control

13:45

this. And they explicitly ignored

13:47

the things that were going to make it

13:49

like they didn't have omnipotence

13:51

over the situation. And a

13:54

lot of funds made it to them but then a

13:56

lot of funds did get deposited into exchange

13:59

accounts. and then frozen. I can't

14:01

remember the exact ratio. But

14:04

it certainly wasn't like 99% got

14:06

to the truckers, and that's what I would hope

14:08

to see. And

14:12

so because of that, in

14:14

fact, it wasn't short, it was shortly after that that

14:17

I had the idea just,

14:19

and this might actually be something that

14:21

you would be fascinating to just

14:24

be awesome to have you as a part of if this

14:26

ever, and you know, I'm just gonna throw

14:28

this idea out there, just so that somebody

14:30

else can maybe bring it to fruition, because

14:33

I don't have the time to bring it

14:35

to fruition. But I bought the URL BTC

14:37

war games with the idea of basically

14:40

playing a red

14:42

team, blue team. All right, how do we get

14:44

these people in this area of Bitcoin? Where

14:47

is it going to fail? How can

14:49

they use it? And just look at

14:52

explicitly what we have available to us,

14:54

and then kind of build packages, so

14:56

to speak of like, this is the

14:58

tool you want to use. This is

15:01

how you get around this block or

15:03

whatever. And, you

15:05

know, in what scenario, what can you use,

15:07

and then just basically build little

15:11

roadmaps for how to react to

15:14

certain, quote unquote, real world attacks.

15:16

Because like you say, you know,

15:18

there's a lot of sophistication about like, are they

15:20

going to spam? Are they going to do a

15:22

time warp attack? You know, like all of this

15:24

stuff about the lightning network and payments and cryptography.

15:27

But we forget about just how do you get

15:29

Bitcoin to somebody on the ground and in

15:32

a way that they can use it? You know,

15:35

it's a far more meat space problem than

15:37

it is a cybersecurity

15:39

problem, so to speak. So,

15:42

no, that's awesome. That's it's

15:45

definitely like a big topic. And

15:47

in fact, on that Hong Kong,

15:51

I would love to know more about what

15:53

happened in Hong Kong. It seemed like there

15:55

was a huge, like there was so much

15:58

on the internet. unfolding

16:01

and the military was coming in, there

16:03

were tanks rolling across the border. It's

16:07

one of those things that you see in politics a lot

16:10

where they're like these pseudo like, oh,

16:13

things have just changed hands,

16:15

but nothing really bad happened, but

16:18

you clearly see that the

16:20

power has shifted. It's

16:22

just the facade of, you're still in

16:25

charge, don't worry about it. And it's

16:27

like, yeah, but no, you're

16:29

clearly not. They're just doing

16:31

what the other person wants. So I'm curious

16:33

the breakdown of the situation, like what was

16:35

the totality

16:38

of the outcome there

16:40

in from your perspective and how did Bitcoin

16:42

play a role and is it still playing

16:44

a role in Hong Kong? Yeah,

16:47

no, I think it's a great

16:49

question. So

16:51

I've been following Hong Kong for a while.

16:53

I used to

16:55

go there pretty often. And

16:57

the reason why is because it was

17:00

at least one place in Asia where there's

17:02

not the great, well, close to China where

17:04

there's not the great firewall. I used to

17:07

go back and forth pretty often and then

17:09

I stopped to work, so I was just

17:11

annoyed by the fact that I had

17:14

the great firewall. But yeah,

17:16

I've never lived there for a very

17:18

long time, but I spent

17:21

some time in the city. I was there

17:23

during both protests. So there were two protests, actually.

17:25

There was one in 2014 and then

17:28

there was one in 2019. And

17:31

so I think what

17:33

ended up happening with the latest Hong

17:35

Kong protest, and it's really

17:37

a sign of how governments use these

17:39

states of crisis in order to make

17:42

things disappear, is then

17:44

COVID happened and

17:46

then they started implementing

17:48

restrictions. But it was

17:50

very obvious that the

17:52

targeting was towards disrupting. The idea was,

17:54

A, you can't organize anymore around you

18:00

know, you can't be doing this because there's

18:02

COVID, right? But they were

18:05

really trying to go after like, you know,

18:07

there would be like government assemblies, right? Like

18:09

people in the government would go actually, that

18:11

was one of the mass spreader events in

18:13

Hong Kong, if I remember correctly, was like

18:15

legislators went into a restaurant together. And that

18:17

was not like a priority for the Hong Kong police

18:20

to enforce, right? For like, pandemic reasons. But then you

18:22

saw like, oh, like anything that's

18:24

like protest related, you know, and China

18:27

did this in the mainland as well,

18:29

like they basically use COVID-19 restrictions. There

18:31

were these bank protests, for example. And

18:34

then one of the freakiest things was

18:36

they turned their like COVID QR codes,

18:38

read, like all the protesters, they

18:40

specifically targeted people who have been protesting and

18:42

just said like, you can't go out. So

18:44

like a version of that, maybe not as

18:46

like targeted as the way I described the

18:49

bank protests in China, but like a version

18:51

of that sort of happened in Hong Kong,

18:53

and that took all the energy out. And

18:55

I think that's like something to learn is

18:58

like states will use, you know, pandemic war,

19:00

like the states of exception, in order

19:03

to create new powers and

19:07

enforce them for their goals.

19:10

And in this case, I think the pandemic really took

19:13

the sales out of the protest movement. And

19:15

then they started, they implemented the new national

19:18

security law. And the new national security law

19:21

basically allows them so Hong

19:24

Kong, the original reason why they were protests

19:26

was because Hong Kong has a system, it's

19:28

called one country, two

19:31

systems. And the way it

19:33

works is that when there was

19:35

a handover, the United Kingdom gave

19:37

back Hong Kong to China in

19:40

1997. And as

19:42

part of that deal, there

19:44

was until 2047, where Hong Kong could

19:46

still run its own kind of government

19:48

separate from the mainland. Okay.

19:51

And so it's administered differently. So in Hong

19:53

Kong, there were like, newspapers

19:55

and journalists that were adversarial

19:57

to the Chinese Communist Party.

20:00

party, especially Apple Daily, Stan

20:02

News and a couple of other places. And

20:06

so Hong Kong was definitely like, the

20:08

mainland still had, you know, for example, they

20:10

kind of rigged it in a way. So

20:13

Hong Kong's leaders called the chief executives. Just

20:17

kind of badass. But

20:21

unfortunately, I mean, Hong Kong, one of the sad

20:23

things about is like Hong Kong is like really

20:25

cool in other ways. Like it's a free port.

20:28

There's like 0% tax. Like they're very like,

20:30

you know, like actually the government

20:33

itself, like the bureaucracy is like

20:36

reasonably well managed, right? Like you want to get

20:38

documents, you want to get stuff like that, you

20:40

can get it back. That's

20:42

a shocker. You

20:45

know, yeah, for some of us in some governments, right? It's

20:47

like, hey, I'm trying to fill out a form, I'll come

20:49

back in 80 days. Like the Hong Kong government's like from

20:52

everyone I've talked to and I've also dealt with them a few times.

20:55

Like they're reasonably efficient, like

20:57

which is kind of a shocker. It's very like Singapore

20:59

in that respect, right? Like they have like a lot

21:01

of like political controls. But like if you deal with

21:04

the government, they do actually like hold their

21:06

end of the bargain when it comes to like, getting

21:08

forms, files, like the taxes are relatively

21:10

low, they're like pretty business friendly in

21:12

some ways. But

21:15

unfortunately, their political control is

21:18

under the Chinese Communist

21:20

Party, right? Like basically, the chief executive

21:22

is appointed, it's kind of

21:24

this like weird semi democracy, it's

21:26

not universal suffrage. So the original

21:28

protests were like, let us elect

21:30

our chief executive, fully

21:33

universal suffrage, because the way it worked is like you

21:35

had 50% functional

21:38

constituencies and 50% like

21:40

votes by people. But the

21:43

functional constituencies are like Chinese

21:46

traditional medicine or like it's like experts that

21:48

are convened by the Chinese government. And so

21:50

essentially, the chief executive the election for like

21:52

the leader Hong Kong was rigged. Yeah,

21:55

explicitly rigged. It was built

21:57

in to be rigged. be

22:00

rigged. And so, effectively, and

22:02

China chooses the nominees. So,

22:06

like, in basically, like, anyways,

22:08

it's like, basically, basically

22:10

chosen by China. And

22:12

then the protests were all about, like, against

22:14

that. And then there was the back and

22:16

forth and everything like that. The protests lost

22:18

wind, China passed what was called the national

22:21

security law through, like, kind of a backdoor

22:23

into the, effectively,

22:25

what happened was that the there was

22:27

like a faction that was called the

22:29

pan Democrats and there was a faction

22:31

as pro China. I'm being very, like,

22:33

broad strokes here. But the Democrats all

22:35

resigned on mass. And so now the

22:37

Legislative Council is all basically

22:41

people who are pro CCP, effectively.

22:43

And then also the local government,

22:46

they like arrested a lot of

22:48

the people who ran, there was

22:50

like a primary where all the

22:52

Democrats got together and created

22:55

a primary election for

22:57

their candidates to run for the

22:59

next election for their

23:01

equivalent of Congress. And

23:04

like a lot of the organizers, a lot of people who

23:06

ran for the primaries were arrested, they're called the Hong Kong

23:08

47. And so they're

23:10

continue to be in jail. They

23:13

shut down the free press.

23:15

So Apple News, Jimmy

23:17

Lai, who founded it is now in prison

23:20

for conceivably for the rest of his life. They

23:22

also just recently had trials for Stan

23:24

News for publishing op ads, critical

23:27

of the Chinese

23:29

Communist Party, effectively. There

23:32

used to be tenement square rallies in Victoria

23:34

Park, 200,000 people would attend. And

23:36

they've imprisoned the organizer of that. It's kind

23:39

of been really sad. I mean, I'm actually just talking about

23:41

it from like a non political standpoint for a second, like,

23:43

I know a lot of friends from Hong Kong. They

23:46

all know someone who's been imprisoned, even

23:49

though, you know, they're not necessarily

23:51

political in that sense. So that's kind of like

23:53

what happened. You know, I went and I

23:56

was trying to find out if like Bitcoin played a big role.

23:59

And there were like some small things like for example Hong

24:01

Kong Free Press at one

24:03

point raised money through a BTC pay server.

24:06

And Hong Kong Free Press was kind of like one

24:08

of the more pro-democracy outlets. It was probably one of

24:10

the ones that was like maybe

24:13

had the risk of being like had all its founders arrested.

24:15

They did a lot of things and continue to do a

24:17

lot of things to make sure they tell the lie now.

24:21

It helps that they publish in English and not

24:23

like Mandarin and Cantonese I think in

24:25

that respect. But

24:28

they used to raise money. There was like

24:30

a couple of the like OTC

24:33

desks like one of them actually

24:35

raised funds to protesters but like in Bitcoin Cash.

24:37

So they were like handing out water bottles that

24:40

said like this was funded by Bitcoin

24:42

Cash not Bitcoin but you know still

24:44

that was like kind of a link

24:46

the OTC desks. But it was

24:49

kind of funny because I interviewed them about it and

24:51

then I actually wrote an article because I interviewed them

24:54

and I was like hey were there any like you

24:56

know because they split the

24:58

city into two. There was like yellow and blue

25:00

and the whole idea was like if you were

25:02

a blue business you supported the police. And then

25:05

if you were a yellow business you supported the

25:07

protesters. And so you'd have restaurants that would put

25:09

like yellow signs on their thing

25:12

and it would just show that like hey you're among like

25:15

allies of the protesters or whatever. So like people would

25:17

go they would choose to go to yellow restaurants right.

25:19

They would choose not to go to blue restaurants if

25:21

they were hand democrat. If they supported the

25:23

police it was like kind of the opposite right. And then

25:25

what happened was

25:31

like you know some of the OTC desks

25:33

they were like yellow you know they like

25:35

supported they raised funds and stuff like that.

25:38

But someone told me that I wrote an

25:40

article about one of them doing this. And

25:42

then someone told me that after I wrote

25:44

that article they refused to do any press

25:47

from that. I don't know. I don't know

25:50

that that article I wrote about the whole

25:52

like raising funds of Bitcoin cash did them

25:54

a lot of favors. I

25:56

think maybe there was some tension

25:58

there. I did talk to some of the exchanges that

26:00

were based in Hong Kong and it was asking them

26:03

if there was some like, you know, increases in price.

26:05

Because one of the things that was interesting about the

26:07

protests was like, they very much

26:09

were like, our way of protesting is through

26:11

economic exit. We want to exit the Hong

26:13

Kong dollar, we want to buy US dollars,

26:16

right? And then there were protesters that were

26:18

very aware of like the digital surveillance. So

26:20

they have these things called octopus cards, which

26:22

are like similar to public transit cards, like

26:26

anywhere in New York City or like the MetroCard

26:28

or DC card or whatever. And people

26:30

stopped using them because they knew that the police

26:32

were tracking their movements through the usage of these

26:34

cards. And so more and

26:36

more they were paying cash through,

26:39

you know, through

26:42

these systems. And then Hong Kong

26:44

like VPNs, like Signal, like encrypted

26:46

chat, all of it kind of like

26:48

the downloads kept on going up because people were really

26:50

afraid and I think some of them still are that

26:54

like the great firewall was going to extend into Hong

26:56

Kong. So that still hasn't happened in full, like you

26:58

can still access like Google and things without a VPN

27:00

in Hong Kong. But there was that

27:02

fear. And so people started getting more sophisticated about

27:04

the technology they were using. And

27:08

there have been like one or two Hong

27:10

Kong kind of like, I guess you could

27:12

say dissenting groups that use Bitcoin or have

27:14

done Bitcoin trainings. I don't want to say

27:16

they use Bitcoin, they use Bitcoin, they have

27:18

Bitcoin trainings. But yeah, it was surprising to

27:20

me, I don't think like there was much

27:22

as much like explicit movement, if that makes

27:24

sense. Like given how all the trend lines

27:26

seem to line up. Like I was always

27:28

like, from my perspective, right as

27:30

a Bitcoiner, I was always like, this seems

27:33

like the perfect ingredient. Like you have people

27:35

who are like, we want to voice our

27:37

descent by like exiting money

27:39

into Bitcoin, right. And

27:42

then, you know, you

27:44

had like this increasing awareness of like

27:46

digital surveillance, digital privacy, you

27:48

know, that you had to control your

27:51

own means of communication, you had to

27:53

get on Signal, you had to

27:55

get on all these other tools, because you know,

27:57

maybe the great firewall restrict you from communicating a

27:59

certain way. But there

28:01

wasn't as much. So I wrote an article that

28:03

was based on a couple of sources that showed

28:05

that there was more exchange volume on

28:08

Bitcoin. But like, for example,

28:10

just to give you some quick examples, like Bitcoin

28:12

ATM volume actually went down. And I think some

28:14

of the physical OTC desk reported that volume was

28:16

down. Cause so many people were protesting. It's

28:19

like one of those like, duh moments. You're like,

28:21

oh, it was more demand for Bitcoin in the

28:23

streets. But you're like, no, like they're also consumed

28:25

by protesting that like, no, and it's trying to

28:27

buy Bitcoin right away. So I

28:30

think there is like some

28:32

roots of that. I know that people

28:34

in Hong Kong are more aware because

28:36

one of the things that happened was

28:38

HSBC, for example, like preliminarily

28:41

froze accounts. They weren't

28:43

even like called on by the police to do

28:45

so. They literally like selected some

28:47

quote unquote risky accounts and they were like,

28:49

we're going to proactively shut these down. I

28:51

mean, there's also something that other states do.

28:54

Thanks for such shit. I just, yeah, I

28:56

know. I know it's such, it's such bullshit,

28:59

but so I think there's that awareness. It's

29:02

almost like one of the things I would say is like, I

29:04

think there are some Hong Kongers like

29:06

on Noster, there's some Bitcoiners, there's the

29:08

Hong Kong, from what I've heard, the

29:10

Hong Kong Bitcoin Association isn't necessarily like

29:12

super active, but there's like a super

29:14

active like

29:17

Bitcoin OTC scene, right? There's

29:20

like a thousand OTC shops. I was

29:22

just talking to someone who

29:25

like Hashki, I'm actually going to have the article

29:27

out pretty soon. They're one of the like three

29:29

licensed exchange providers. So there's a lot of activity

29:31

there. You can go there, go to

29:34

like a mall, trade Bitcoin for cash. And

29:36

I've talked to some people who have like

29:38

gone through that experience and like people are

29:40

trading like massive amounts of like cash for

29:42

lightning. They even transact in lightning, which is

29:45

kind of cool. You know, you can go there with Hong

29:47

Kong dollars, you can get like lightning back. Well,

29:51

you can get sad like through lightning. Yeah. I

29:53

mean, I've always thought that would be a really

29:56

interesting way to quote unquote, onboard people is accept

29:58

cash and then give change back. And

30:00

I'm surprised that that isn't like

30:03

more common. Like that hasn't become like

30:05

a thing. I always thought that would

30:07

be a fun idea, but as hard

30:10

as that, I guess that would probably be like

30:12

buying Bitcoin and then you immediately become an exchange

30:14

and all this crap. Yeah,

30:16

well in Hong Kong, that's like the default way. There's

30:18

like a lot of people doing that. There's like a

30:20

thousand shops. That's cool. With like really low fee rates.

30:23

So that's like, that's basically a standard though. Like that's

30:25

a... Yeah, there's all of the places.

30:27

It's actually like a mall where there's like dozens

30:30

of these all in one. That's cool. It's

30:32

like an OTC mall. Yeah, they also trade other...

30:35

I mean, I think about Hong Kong is like

30:37

it's very like web three crypto. So they all

30:39

trade other like, I mean, for

30:41

lack of like shit coins, they trade a lot. I mean, I

30:43

am sleep, but there is a lot

30:45

of space. You're totally free to call them shit coins on

30:48

my show. Yeah, I know. I know. I

30:50

got it. Yeah. I've been wondering about

30:52

that. Cause like my book says, cause I had a few people who

30:54

like bought it and they're like, Oh, I'm part of...

30:56

Cause you know, Chinese people are very, how do I put this? Like

30:58

a lot of them are like more crypto leaning.

31:02

I'll get into that a little bit, but they

31:06

buy it and I'm like, I wonder how they'll think about it

31:08

because like within like, I say like blockchain

31:10

is bullshit. And I say like, there's

31:13

so many shit coins. And then I go in all

31:15

these spaces with Chinese people and they're always talking about

31:17

all the blockchain projects they're invested in and like also

31:19

all the tokens they're in. And I'm just like, I

31:21

was just in a Twitter space yesterday. It was a

31:24

Mandarin one and people were like, Oh

31:26

my God, you're such an OG. You like

31:28

invested in plus token. So plus token was this

31:30

massive Ponzi and it's still so embarrassing

31:32

for people in China. But you know why it's so

31:34

embarrassing for people in China? It's this like high

31:37

school teacher who has like no, I

31:40

didn't even explain it to English, like, but

31:42

like no like culture, like

31:44

stole money from all these,

31:46

like Shanghai, Beijing, sophisticated technical

31:48

analysis investors or whatever. That's

31:51

what pisses them off more than anything else. Yeah,

31:53

like they're all talking about like plus token and

31:55

they're talking about Neo and all these tokens and

31:57

stuff like that. So yeah, I'm all for that.

32:00

I wonder how some Chinese people receive

32:02

the book. Literally it says shit coins

32:04

in print, I think seven or eight

32:06

times. It says blockchain is complete bullshit.

32:08

I was talking to this one guy

32:10

and he's talking to me, he's at

32:12

a Bitcoin meetup, he's like, oh,

32:15

I've got a blockchain carbon project. And

32:18

he's like, I really want to buy your book, I really want

32:20

to support it. He's like this older Chinese guy, he's talking to

32:22

me in Mandarin. I think it's a great conversation, I'm like, damn,

32:25

I know he's not gonna love it. It's

32:28

like a few chapters in, he's just gonna be like, wait,

32:30

this guy just literally called my life's work bullshit. But

32:33

anyway, so there's definitely

32:36

like, yeah, that's a whole other thread that we can

32:38

get into. But going back to Hong Kong,

32:40

there is that kind of trade, but

32:42

that's what I've been trying to tell people too,

32:44

because I think people have this narrative and it's

32:46

cleaner to be like, oh my

32:48

God, people are resisting

32:50

the government, so they're gonna put all their

32:52

savings into Bitcoin. But

32:55

that's not necessarily what's happening as much,

32:58

you know what I'm saying? For

33:00

some of the Hong Kong groups, for example,

33:02

Hong Kong Free Press used to take Bitcoin,

33:04

now they take BAT or whatever. And

33:07

then I think there was some Hong Kong

33:09

groups that were thinking about using Bitcoin. The

33:11

thing is, they're already taking a massive amount

33:13

of risk by being

33:16

dissenting, they're probably already in violation

33:18

of law. Just by being there

33:20

and publishing. Exactly. And so

33:22

it's like, they wanna take a double risk

33:24

and like double dip and kind of like

33:27

also be accused of money laundering or things

33:29

like that. So I think that's their concern.

33:32

It could be a very

33:35

easy attack vector to then

33:37

say, if you're just barely

33:39

skirting by, you're just painting

33:41

a flat, putting a big

33:44

red target on yourself of

33:46

being like, also, by the way, there's

33:49

a really easy way to twist this

33:52

other hundred list of laws to just put

33:54

us all in cages. Yeah, that's a good

33:56

point. And I mean, for them, I

33:58

mean, for lack of... sympathy for this

34:00

because I'm kind of like in between but I

34:02

have the luxury of being in between right like

34:05

they are like the US and Canada like they

34:07

they're like some of them are refugees there right

34:09

they're on there on the on the program like

34:11

they had to leave Hong Kong and

34:14

you know so there's like reliance on

34:16

the US banking system or like Canadian banking system

34:18

I don't think they're naive about like it

34:21

not necessarily happening again but you know when

34:23

the protesters were thinking about protesting they weren't

34:25

thinking like let's go it's a Bitcoin they

34:27

were thinking like much more like oh the

34:30

US is like you know like

34:32

our haven if that makes sense

34:34

so there is some of that but just

34:37

to tie it all together what I've been telling trying to tell

34:39

people is like you

34:41

know and people will say oh it's just

34:43

Chinese people investing in shitcoins and things like

34:45

that but the reality is that like China's

34:48

biggest fear is people exiting money

34:50

out of the system like in a way

34:52

that they can't control right like the Chinese

34:54

system is very strict about like the amount

34:56

of money Xi Jinping himself I don't even

34:58

actually think this is like a wise economic

35:00

decision he's like such a big fan of

35:02

like a strong yen he's like

35:05

a strong yen is strong

35:08

guy are you ready to be banned from China no I'm

35:10

kidding but like a

35:12

strong you and like he's such a like you

35:14

know I just think he doesn't know

35:16

anything about economics at all but he

35:19

he's just like a strong yen is such

35:21

an important part of China's economic policy right

35:23

and so people exiting money into

35:26

the system you know in the Chinese like the

35:28

the Chinese party state is kind of saying like

35:30

oh it's all gambling and all this stuff right

35:33

and to a certain degree as a as a Bitcoin

35:35

or in these spaces I do actually kind of agree

35:37

but I think there

35:40

it's like a more meaningful way of the set

35:42

because what what people are actually saying right regardless

35:44

of whether or not like you know I think

35:46

the clean narrative is to be like oh

35:49

and that was like the kind of narrative I was looking for

35:51

at the beginning when I was doing my research and the clean

35:53

thing would have been like you get a bunch of people who

35:55

are like oh I don't

35:57

want like China to take over

35:59

all my choices. So therefore, I

36:02

will like Orange Pillow myself and get onto Bitcoin.

36:04

And I was thinking like maybe that's a simple

36:06

version of the story. So that's the easy narrative.

36:08

Yeah, but that's not what it is. Like people

36:10

don't find and also like, I find also there's

36:13

Chinese people are like all kinds of I try

36:15

to like, you know, Chinese people separate from the

36:17

state. There's many different types of Chinese people. But

36:19

in general, one thing I find is that a

36:21

lot of Chinese people are very like, Jan, they're

36:24

very sharp about like making money. They're like very

36:26

practical. And so not

36:28

a lot of them are going to go to Bitcoin because it's resistance

36:30

money. And, and

36:32

like, no offense if it's

36:34

billed to them as resistance money, as much as I love the

36:37

book, I did a review of it, just like

36:39

if noster is billed to them as like resistance network,

36:42

that actually is probably like a counter

36:44

effect. But if noster is like

36:46

a fun place where they can make their own

36:48

choices, and they don't have to be censored, and

36:51

it doesn't require a phone number to register, which

36:53

is a very important thing in China, and you

36:55

don't need to download an app, because

36:57

the you know, the Chinese app store is

37:00

very monitored and censored, then

37:02

that's how that works. Same thing with Bitcoin. It's

37:04

like, if it's a way for

37:06

me to get money out of the system, and

37:09

it's a way for me to make return, because that's

37:11

actually like a really big thing right now is like,

37:14

people in China, they have like nowhere to turn with

37:16

their money. Like the economy is like

37:18

really in a kind of a struggle. I mean, it's

37:20

a relative struggle. China is projected to

37:22

struggle to grow to 5% GDP

37:24

growth. That sounds amazing from an American

37:26

perspective. But it would be the slowest

37:28

economic growth since 1976. Yeah, the

37:31

youth in China, there's a high youth

37:33

unemployment rate right now. And

37:35

a lot of young people are struggling with this

37:37

existential question of like, how do I even make

37:39

a livelihood? Right. And

37:42

so there are a lot of

37:44

these like, hey, like if you

37:47

are getting into Bitcoin, you

37:49

know, and there's a lot of Chinese people

37:51

who are doing getting into Bitcoin, through that

37:53

route, they're building businesses, they're buying Bitcoin, they're

37:56

buying tether. I mean, a

37:58

lot of it's also tether as well. but they're

38:01

getting into this alternative economy and

38:05

that is kind of like, I think,

38:07

a way of powering through. As a

38:10

result of that though, you may have

38:12

noticed like runes and ordinals and all

38:14

BRC-20 activity is very heavy

38:17

in China. I think it's like an Asia

38:19

writ large. Gotcha. And

38:21

I spent some time looking

38:23

through that. I mean, the

38:25

thing I hope is

38:28

like this is from my point of view because

38:30

I had the research and the research is just

38:32

like you see what's observed. But

38:34

then from my POV, I think

38:37

what it is is that like the easy way to

38:39

onboard the next like 100

38:42

million or 200 million people, they're already kind of already there

38:45

is by offering all these different

38:47

options, right? BRC-20, the

38:49

tokens or whatever. I generally think

38:51

some of them are going to go to zero

38:53

really quick, but there

38:56

is a lot of activity related to that. My

38:59

hope is that the people who onboard onto that,

39:01

they realize like, hey, this is like a totally

39:03

different economy, totally different way of thinking. And

39:06

I've started talking to some people in China

39:08

or who have left China who are based

39:10

in the Chinese system who are like, hey,

39:13

like we're used to just like mindlessly paying

39:15

with like WeChat pay and Ali pay, right?

39:17

And now it's like, I want to

39:20

do all my payments through LinkedIn. Now there's

39:22

not like a ton of these people, I

39:24

have to say. But I think

39:26

like, the more and more you get exposure

39:28

because the hope is that like the more you're

39:30

like, hey, like Bitcoin gives you

39:33

more choices, it allows you to do what

39:35

you want to do with your money. Like

39:38

the government can't tell you not

39:41

to invest in, you know,

39:44

butt coin or whatever, or whatever BRC-20,

39:46

right? That's like a really powerful thing

39:48

for Chinese people. Because

39:51

they're otherwise so restricted, they can't get money out

39:53

of the country. They can't invest in like different

39:55

things. They have to invest in certain stock

39:58

markets, or they have to- invest in Chinese real estate,

40:00

but all these things are going down. And

40:03

the hope is that almost

40:06

like using

40:08

Bitcoin and using it changes them because

40:10

they realize then they have

40:13

more choices in all different things. And

40:15

that the privacy... So the

40:17

one thing is that I think a lot of

40:19

Chinese people are very aware of the privacy implications

40:21

because their phone numbers are registered to a real

40:23

life SMS. It's not like, I mean, in

40:25

Europe, for example, it's the same thing. But

40:28

people do act on that. I have a story

40:30

like there was someone I

40:32

knew who was making calls overseas and someone

40:35

called them and said, stop making calls overseas.

40:38

The Chinese system is very monitored from

40:40

a telecoms perspective. The

40:43

most important thing that you can do

40:45

in order to secure your Bitcoin is

40:47

to use a secure, trusted,

40:49

long running hardware wallet in the

40:52

Bitcoin space and do one that

40:54

is Bitcoin only like the cold

40:56

card. Not only do they

40:58

have the cold card Mark 4,

41:00

which is the cypherpunk calculator, but

41:02

they also now have the cold

41:04

card Q, which has the large

41:06

screen, has a full QWERTY keyboard,

41:08

has a flashlight and a QR

41:11

code scanner. It is the cypherpunk

41:13

blackberry of the cold card series. And if

41:15

you are looking to keep your Bitcoin safe

41:17

and you want all of those advanced features,

41:20

you want to do some custom setup with

41:22

multisig. You want security features for those edge

41:24

case scenarios where you need a brick me

41:26

pin or a dummy pin that opens up

41:29

to a fake wallet. The cold card has

41:31

it all. And if you

41:33

don't want to complicate your setup or you

41:35

don't need any of those advanced features, you

41:37

can use it simply as a secure default

41:40

Bitcoin signing device. Keep your seed,

41:42

keep your keys off of your

41:45

desktop computer, off of your phone

41:47

and securely and easily use your

41:49

Bitcoin. If you do not

41:51

have a cold card or you haven't even checked

41:54

it out yet, go to coinkite.com. The link will

41:56

be right in the show notes. And don't forget

41:58

that when you are at your checkout. the

42:00

code Bitcoin audible all one word will

42:02

get you a discount that will also

42:04

be right in the show notes in

42:06

case you forget about it. Keep

42:09

your keys safe and get yourself

42:11

a cold card. I am

42:14

really curious about that specifically, actually. Yeah.

42:17

Like to what degree

42:19

is because it's

42:21

one thing to see videos and everything

42:24

on Twitter and stuff and then build

42:26

like a picture of what it is

42:28

in your mind versus. Versus the

42:31

reality of it. But

42:34

it does seem like they have one of

42:36

the they have the largest and potentially most

42:38

sophisticated surveillance and control apparatus in the world.

42:40

Yeah, possibly. And

42:44

I'm curious. One of the things that you brought up is

42:47

earlier on the conversation is the

42:49

banker protests and that all

42:51

of their QR codes went red. Can

42:54

you explain a the

42:57

relationship to the larger surveillance

42:59

apparatus that they have? Yeah.

43:02

What's the consequence of the QR codes

43:04

going red? Does that

43:06

still apply? Are these systems still in

43:08

place? And how broad do you know

43:10

in your in

43:13

your knowledge, how broad are these systems?

43:15

Are they all across mainland China? Are

43:17

these just in the big cities? Is

43:20

this how normal is this system? Yeah,

43:23

I want to I want to start off

43:25

by saying like I've like thought and researched

43:27

the surveillance state a lot, but

43:30

I'm not by no means like the expert

43:32

or the definitive expert. So there's definitely a

43:34

couple of resources out there. Just

43:37

I forget exactly. God, I always

43:39

forget. But if people just look up the technical

43:41

surveillance state in China, I believe there's a book

43:43

that a Wall Street journalist or someone like

43:46

published specifically on this topic. So

43:49

that's just first off. But in terms of

43:51

like my point of view on this. Yeah.

43:55

So the Chinese Party

43:57

state, I think and that was kind of

43:59

the article you wrote. over. For me, China

44:01

is like the red team. China

44:03

is the red team. You gotta

44:05

give the Chinese party say, gotta give

44:08

them something. I forgot all those memes.

44:10

You gotta give them something. They're

44:13

pretty sophisticated. I mean, it was interesting, we

44:15

talked about Canada and one nugget I'll give

44:17

to you and your viewers is

44:19

that Canada is

44:22

probably behind, but they do have, there

44:24

was a Bitcoin conference where at least their

44:26

tax authorities seem to be very

44:28

aware of lightning and they seem to be very

44:30

aware. So it's like different parts of the government

44:32

may or may not be, but generally in the

44:35

West, I think the tax authorities actually have the

44:37

most incentive to be the

44:40

most up to date on

44:42

that. Intrusive in terms of

44:44

that. Aggressive about how they

44:46

surveil and analyze.

44:48

Yeah. Right, right. But law enforcement

44:51

kind of, and in China it's somewhat similar, like

44:53

law enforcement sometimes are just like, what is this

44:55

thing? Like now we have to enforce like

44:58

this, you know what I'm saying?

45:00

It's kind of different. Yeah. No, I've, I've run

45:02

into that a lot with people. Yeah. Yeah. Yeah.

45:04

So, you know, it's like sometimes in China, for

45:06

example, they're like, literally it's like the M Y

45:08

the equivalent of the NYPD trying to make a

45:10

case and it just happens to be

45:13

in their jurisdiction. Right. So, but going

45:15

back to surveillance state, the, when I was talking

45:17

about the QR codes, China has a very

45:20

expansive surveillance state. It

45:22

is a really great red team because it

45:25

seems to understand technologies very well. So it's

45:27

been adversarial against Tor. So

45:29

it seems to understand it will fake

45:31

Tor requests and actually like

45:34

shut down your attempts to connect

45:36

to Tor within China by

45:38

querying your requests and seeing if

45:40

it comes back to a known

45:42

Tor relay. So

45:44

there's been like a lot of literature on this.

45:46

On Noster, I talked to Will from Domus about

45:48

this, right? Not only did they take down the

45:50

app, but they actually banned the

45:53

default relays that the

45:55

app had from VPN access. Cause the

45:57

relays are still like IP addresses, right?

46:00

So they were able to ban that. So

46:02

they seem to understand relays. They

46:05

seem to understand that the technology is built, and they

46:07

were really quick about that. Will told

46:09

me it was two days. Two days they

46:12

took down the app. That's

46:16

really surprising because Domus is you would think

46:18

not a huge deal. But within two days,

46:20

the app was taken down, and then within

46:22

a few days I think after that, they

46:24

were already attacking the default relays. So they

46:27

have a very

46:29

sophisticated and quick understanding of how

46:31

these technologies emerge. I'm

46:37

not sure, and this is why I refer to

46:39

the book, because I think it's an open point

46:41

of contention. It's like a

46:43

black box. Nobody really truly

46:45

knows how unified everything is.

46:48

There's a lot of data being collected.

46:52

But whether or not a department has access

46:54

to it, or agency has access to it.

46:56

How actionable is it? How many layers of

47:00

authority and insight do

47:02

certain institutions have? Exactly. But in China,

47:05

there's many layers of surveillance. And

47:07

we'll start with the first, which is

47:09

the bank protest stuff. They have a

47:11

lot of physical surveillance. They have

47:13

a lot of physical surveillance, a lot

47:16

of facial recognition. And

47:19

so if you're physically

47:21

protesting, it's

47:23

very dangerous. Because they have

47:25

cameras everywhere. They have cameras

47:28

everywhere. Have you ever been in China? One

47:30

of the oddest things is

47:33

just the number of cameras. It's like, even

47:35

like, I've heard the UK is also very

47:37

CCTV'd up. But if

47:40

you've been to China, one of the cities, I

47:44

remember walking through Tiananmen Square. I'm

47:46

just like, there is more cameras than people

47:48

at some points. Just absurd

47:50

how many cameras there are. And all

47:52

those cameras are backed up with facial

47:54

recognition. And then all the facial recognition

47:57

is tied to your state

47:59

IDs. So, you know,

48:01

people in China are very credentialed in that way. And

48:04

then that surveillance also extends

48:06

to your virtual activities. So

48:11

unlike, I think in the West there

48:13

are versions of this and you're starting to see some of this,

48:15

right? Like one of the things I want

48:17

to bring up in this conversation is like it's very easy

48:19

to be like China's super dystopian in many

48:21

ways. So that can't happen here. But

48:24

there are versions of it happening here. Or

48:26

in the West, for large, or whatever. So

48:28

for example, in the UK, you started seeing

48:30

that where people posted stuff and

48:32

then they got, you know, knocks on the door from the

48:35

police and things like that. There's people who have, you

48:37

know, posted things in the United States and they get knocked

48:39

on the door. So there is some

48:41

of that. But in China, I think the difference

48:43

is like it's pretty, it's more systematic. It's definitely

48:45

more systematic and they will

48:48

arrest people for much less. So

48:51

they've arrested people for like tweeting glory

48:54

to Hong Kong with like 40 Twitter

48:56

followers. Right? Good

48:58

God. Yeah. I

49:01

think the Chinese thing, the security state, why

49:03

it's a little bit scary to deal with, it's like

49:05

it's super random. Like they seem to

49:08

arrest people for very small things, almost as like a

49:10

reminder that they could. Yeah. You

49:13

know. And so back in the day in 2021,

49:15

I headed up this thing called the, you know,

49:17

I was on Clubhouse. I don't know if you

49:19

were on Clubhouse. Yeah, I was on Clubhouse for

49:22

a little while. Oh, cool, cool, cool.

49:24

Yeah. So I had the largest

49:26

like English language. We also did like the Mandarin

49:28

learners room, but we also had

49:30

this room called Tianxia, which is kind of like the

49:32

largest English language room in China. And

49:35

so we had discussions with people and yeah, people

49:37

said that they were called in to talk with

49:39

the cops. It's like chita.

49:43

So the local police enforcement, like, you

49:45

know, they are forwarded. Like if you have

49:47

online behavior, the state doesn't like, they

49:50

are forwarded that information. They can reach out to people.

49:53

So the surveillance state is very

49:55

sophisticated. It seems to collect a lot of

49:57

data and to some degree online activity. is

50:00

paired with offline law enforcement. And

50:04

another article I wrote pretty recently is like,

50:08

how they've

50:10

arrested people for quote-unquote trading virtual

50:12

currencies. And they seem to be moving

50:15

to this definition of like, Bitcoin

50:19

or digital assets are like

50:21

money laundering or have more implications of money laundering

50:24

if you're trying to trade with it. And

50:28

so when you look at

50:30

the arrests, like they do work with

50:32

like the, these are like local police

50:34

departments and they work with like exchanges

50:36

that have left China, I'm assuming like

50:38

whoa B Binance, OKX or whatever. But

50:41

they also work with like, there's

50:44

a chain analysis equivalent in China,

50:47

which was like created by a lot of the

50:49

like initial investors in crypto and stuff like that.

50:52

So I think there's like a very delicate balance because

50:55

one of the things that is kind of interesting to

50:57

think about, I wasn't able to write about this in

50:59

the book as much because I think it's very personal.

51:01

But some people in the

51:04

Bitcoin scene, in crypto scene have left

51:06

China, but some people have

51:08

not and still live in China.

51:11

And so the question is like, why

51:14

is that? Yeah, it seems like a

51:16

big risk if considering how they're potentially

51:18

treating it. What happened

51:20

with Telegram, right? It's like the guy got arrested

51:22

and all of a sudden Telegram changes policy. So

51:24

we do know that the Chinese police cooperates with

51:27

different exchanges

51:29

that have left, OTC desks, even

51:32

though those are technically illegal in order

51:35

to trace like on-chain payments and things like

51:37

that. I don't know, again, I don't

51:39

know how sophisticated they are with Lightning. I haven't really

51:41

seen that come up. But for

51:43

like trading on Tether, for

51:45

trading on Bitcoin, on

51:47

Mainnet, they seem to be

51:49

on-chain. They seem to be pretty

51:52

on top of that. So like most people use exchanges

51:54

or a lot of people use exchanges. So that's

51:56

kind of like another thing. Yeah,

51:59

the on-ramps. and off-ramps are

52:01

always like the tag back,

52:04

like the biggest obvious

52:06

hole in everybody's security

52:08

setup. Yeah. And the Chinese

52:11

government has worked, so I mentioned this plus token thing,

52:13

right? So at one point, the Chinese government seized all

52:15

the Bitcoin, which I think is like 190K Bitcoin, but

52:18

they've apparently slowly sold it. So they

52:20

are working with the OTC desks or

52:22

some OTC desks are working with them,

52:24

right? And so, assuming there's some cooperation

52:26

there. So all this to say, there's

52:28

a big surveillance state, so it's very

52:30

easy to track offline to online

52:33

movement. And so, if

52:35

you're protesting offline, that will

52:37

have consequences. If you're protesting online, that can

52:39

be tied to your real identity. When

52:41

we talk about the digital Yuan and

52:43

all this other stuff, that's just another

52:45

layer of data, another air layer of

52:47

reinforcement on top of that. I think

52:49

the open question about China, because there's

52:51

definitely a lot of people who suffer

52:53

consequences, there definitely seem to be some

52:55

kind of scoring system. But the question

52:57

is more whether or not

53:00

that's as comprehensive, that they have

53:02

a one number fits all kind

53:04

of approach on people, right? Versus

53:06

it being a little bit more ad hoc. At least

53:08

for the Bitcoin stuff, I've seen it be a little

53:10

bit more ad hoc. Because the

53:12

arrests that they have are a little bit random. For

53:14

example, I don't think the

53:17

local police department is aware

53:20

of all the people who are trading

53:22

Bitcoin. There's also 89 nodes or something

53:24

that are run in China. That's not

53:27

illegal per se. But my point is,

53:30

even the way they enforce the VPN

53:32

ban, because VPNs are banned in China,

53:34

they can't really find individual users. There's

53:36

a crazy amount of people in China

53:38

who use VPNs. So, it's

53:41

kind of this thing where it's technically

53:43

against the law in certain

53:45

respects. But the local police department,

53:49

they're busy enforcing whatever other crimes.

53:52

They're not necessarily systematic looking at

53:54

it. Enforceability at scale is really

53:56

difficult. And this

53:58

is true of a lot of... like

54:01

over complicated and over invasive laws is

54:03

what ends up happening is that just

54:06

the sheer lack of resources and

54:09

time to do so

54:11

is you just pick and

54:13

you make examples of people and you

54:15

try to scare everyone into following the

54:18

law because it is

54:20

truly unenforceable at scale

54:22

like you might end up just with more people

54:24

than you could possibly have prison space you know

54:26

I mean it just yeah

54:28

so it's it's a really interesting

54:30

and odd thing and it

54:33

makes sense that it would result in just bizarre

54:36

one-off arrests just just to make sure that

54:38

everybody in your social circle knows you could

54:40

still just be arrested for this yeah

54:43

no they do that they make examples that's actually

54:45

how chinese censorship works people have this idea that

54:47

it's like oh i instantly say a bad word

54:49

and a band that's not

54:51

how it works really the chinese

54:53

government like sets standards and

54:56

like makes it very clear to the companies we

54:58

want you to ban these these these these types

55:00

of people and then the rest

55:02

will kind of follow you know so

55:05

it's kind of like censorship by self-censorship

55:09

setting standards so

55:11

that people are afraid and people

55:14

chinese people are genuinely afraid and i think this is

55:16

part of some chinese people i think some of this

55:18

part of the reason why there's there is this like

55:21

sensitivity to digital privacy against

55:24

surveillance tech because i've seen people overseas

55:26

who refuse to talk about their views

55:28

on shijipi i'm talking about

55:30

like people in the united states yeah

55:32

they will like guard their devices and

55:34

stuff like that or they will not

55:36

talk about it so i think

55:38

it's just like this awareness of the surveillance state

55:40

is just kind of out there but yeah to

55:42

the enforceability point like it's just also i mean

55:44

i think in the west also that's also gonna

55:46

struggle um but in china like it's

55:49

just like not very enforceable and one of the points

55:51

i was gonna bring up because you asked about the

55:53

bitcoin mining is like there are

55:55

people i've had screenshots of people who are

55:57

selling acic miners openly in cinzen right

56:00

It seems like there are some local deal. I mean,

56:02

Daniel Baden had that report. I haven't been able to

56:05

get this specifically, but he had two or

56:07

three sources that refused to be named, of

56:09

course, because what they're doing is kind of

56:11

illegal. But they

56:13

were saying they still mind with

56:15

the cooperation local. So the thing

56:18

is the local governments control the

56:20

police departments. And

56:23

so whether or not

56:26

you enforce is

56:29

dependent on the local police departments. And the

56:31

local readers have a lot of sway in

56:33

that. So I do believe still a lot

56:35

of breaking up of the decision

56:38

making of the on the ground decision

56:40

making just because it's not, yeah,

56:43

that's that's interesting dynamic.

56:46

So there's local mining, I think that's happening

56:48

because you can talk with the police department

56:50

ultimately is what will matter when it comes

56:52

to enforcement of that, because they'll

56:54

be the ones who will be like, hey, there's

56:56

like a huge electricity spike or something, right? But

56:58

if the local, if you have

57:00

ends with the local governments, I think that's

57:02

like where you can do under the table.

57:04

They can't do it publicly, because the highest

57:08

level of Chinese government that's commenting the issue has

57:10

basically said that quit mining is bad. Yeah.

57:13

Yeah. So that's kind of like where

57:15

I think like the dynamic of the

57:17

laws seems like that would end

57:19

up creating a lot of like

57:21

small mafia sort of situations

57:23

where the local

57:25

government can basically exert whatever control

57:28

or punishment it wants, because again,

57:31

basically, everyone's breaking the law. So make sure

57:33

you give us that 30%

57:35

you owe us of this of this thing

57:37

that everybody knows is against

57:41

the law, but we're just going to let it happen. At

57:43

least historically, and in a lot of situations,

57:46

it puts people who are lower in the

57:48

totem pole with

57:50

far more power and ends up

57:52

creating a bizarre

57:54

kind of decentralization of violent

58:00

political control, you know,

58:02

like it's it's it's odd how it

58:04

how it actually splits up the the

58:06

economics of violence into localities

58:09

that yeah being little

58:11

fiefdoms that Basically

58:13

just use the fact that they

58:16

know that the government above them

58:18

can come in and destroy

58:20

this or Attack you

58:22

that they have the excuse to just

58:24

basically wipe you out at any point and they

58:26

basically capitalize on that as much as they can

58:29

Yeah Do you know if

58:31

that's true of the situation over there or

58:34

do you suspect or not have

58:36

any info in that regard? I

58:39

don't have like not specifically for Bitcoin related

58:41

stuff, but in general that is how China

58:43

works so there's

58:45

a really famous case of Bo

58:48

Shilai who was kind of the party

58:50

boss of the Chongqing City, which is

58:52

a very large city in China and

58:55

he actually his Wife

58:59

was suspected of murdering someone

59:03

Well his police chief. This is

59:05

kind of like what happened was this police chief had

59:08

to leave and tried to seek asylum in

59:12

The this is the chief of police like try

59:14

to see asylum on the US Embassy and Then

59:17

when that happened the the central government

59:19

was like, okay, we have to so

59:23

It used to be the case at the central

59:25

government before Xi Jinping the leader before that for

59:27

lack of a better word was like weaker not

59:30

as respected Was

59:32

not like so there was a lot more like

59:34

local kind of fiefdoms you can say She's

59:36

meaning has done a lot of things. He

59:39

has become an unprecedented Leader

59:42

since the shopping by

59:44

you know now he's gonna renew into another

59:46

term. That's never happened before It's been 10

59:49

years 10 years, right? Now

59:52

he seems to be like the paramount leader for

59:54

like longer and one of the things he's been

59:56

doing is this quote quote-unquote anti-corruption

59:58

drive and they want to arrest

1:00:01

what they call tigers and flies. And

1:00:03

so Bo Xilai and his mentor, who was

1:00:06

also kind of on the Politburo Standing

1:00:08

Committee. So there's like this, the Politburo rules

1:00:10

China, it's like 25 men, it's almost always

1:00:12

men. And then there's the

1:00:14

Politburo Standing Committee, which is even more powerful. I forget

1:00:16

the exact number of people sit on that. But the

1:00:18

point is like the

1:00:21

most powerful people in China. And previously,

1:00:23

there had never been any member of

1:00:25

that who had gone to jail since

1:00:28

Mao. There had never been.

1:00:30

And then Xi Jinping actually jailed, starting with

1:00:32

Bo Xilai. But

1:00:34

although that was happening under the previous leader

1:00:36

as well. But then they started arresting people

1:00:38

at more senior ranks than have ever been

1:00:40

arrested. And they've started going

1:00:43

after. Yeah, so this is

1:00:45

kind of the central, the party realizes it,

1:00:47

right? They realize like if corruption, you

1:00:49

know, there used to be all these sites on China

1:00:51

in Chinese internet, like one of the funniest things was

1:00:54

like, you have these local government officials, right? It's like

1:00:56

their public salaries are like nothing. But they're watching, they're

1:00:58

wearing all these Rolexes. There's all these like photos of

1:01:00

them wearing like the fanciest watches, right? And

1:01:03

so the party knows and Xi has always

1:01:05

said, like, I covered in the book,

1:01:08

a little bit would help my whole Bitcoin a little

1:01:10

bit. Like basically, the party is

1:01:13

very concerned about corruption. And that

1:01:15

bleeds into kind of

1:01:17

the way they think about overseas

1:01:20

money. They've actually like co-opted people to try

1:01:22

to bring them back to China, claiming

1:01:24

that they're corrupt or that they've gained their money

1:01:26

through corruption. But it is kind

1:01:28

of like what you've observed. They are kind

1:01:30

of like local fiefdoms, if that makes sense.

1:01:32

But now, the central government has been stronger

1:01:35

than ever. But China,

1:01:38

see, the thing is the local

1:01:40

governments, they raise tax revenue. It's

1:01:42

the most important thing for them. Yeah.

1:01:45

And because they

1:01:47

raise taxes mostly through real

1:01:49

estate value, property tax,

1:01:53

but real estate value has been going down in China.

1:01:55

And so now, the central

1:02:00

governments were struggling. And so the

1:02:02

local governments, to give you

1:02:04

more of a Bitcoin mining example, they

1:02:06

probably really pissed that Bitcoin miners left.

1:02:08

Because think about it, you have all

1:02:11

these stranded resources. And

1:02:13

the central government's like, oh, we're gonna

1:02:15

bring in HPC, we're gonna bring in

1:02:17

AI and stuff like that. But

1:02:21

first of all, it might not be a fit for

1:02:24

their stranded power. There

1:02:26

might be curtailment issues, or

1:02:28

they might need much

1:02:31

larger data center, like water needs or

1:02:33

whatever, right? Then that region is currently,

1:02:35

I'm thinking about Xinjiang, for

1:02:37

example. And- It's

1:02:41

not the same degree of granularity

1:02:43

in the setup that you can

1:02:46

do with Bitcoin. It's kind of

1:02:48

wild how variable

1:02:51

any excess capital or any excess energy

1:02:53

that you can just gobble up. You

1:02:57

know? Exactly. And so yeah, if

1:02:59

you're like a local Chinese government,

1:03:01

you're given the other

1:03:05

task you're given is poverty elevation. You

1:03:07

have to raise local taxes in order to spend it

1:03:09

to help people rise out of poverty. That's also your

1:03:11

number one goal. But then the central

1:03:14

government just like kneecapped you. It

1:03:16

just literally is just like, here's the source

1:03:19

of income. And they're businesses

1:03:21

that were just taking the stranded power. So

1:03:23

that's why I do suspect there are

1:03:26

some local government deals. And

1:03:28

because of these like fiefdoms that you're talking

1:03:30

about, they're happening under the table, it's definitely

1:03:32

like probably some amount of risk the

1:03:35

central government finds out. But also,

1:03:38

China is so fast. There's so

1:03:40

many things happening. And also,

1:03:44

that's also another thing that confuses a lot of people

1:03:46

and still confuses me, even though I guess I wrote

1:03:48

a book on the topic. It's like, is Bitcoin banned

1:03:50

in China? Is Bitcoin not banned? It's like, so

1:03:54

holding Bitcoin isn't really. Well,

1:03:57

yes, it's banned. But like, you know, what

1:03:59

does that mean? Right? Like, they haven't gone

1:04:01

after people who hold Bitcoin. They haven't really

1:04:03

gone after like, you know what I'm saying?

1:04:05

Like, there probably could be something like Venezuela,

1:04:07

where like, to my point, like, if the

1:04:10

national government was like, we're gonna just look

1:04:12

at power usage, consumption

1:04:14

habits, you know, we're

1:04:17

gonna take down every Bitcoin full node

1:04:19

that has a Chinese plaintext IP address,

1:04:21

we're gonna like ban, you know, Bitcoin

1:04:23

protocol related, you know what I'm saying?

1:04:26

Like, they're, they could be taking more

1:04:28

steps, if that makes sense. Yeah. But

1:04:30

the courts have ruled that Bitcoin is

1:04:32

property. But they've also made it

1:04:34

like really difficult to like, buy

1:04:37

or sell Bitcoin. And

1:04:39

so the idea is like, you know,

1:04:41

you can't use it as currency, it's kind of

1:04:43

like property. So I think that's kind of like

1:04:45

a compromise, because a lot of people in China

1:04:48

made money through, you

1:04:50

know, Bitcoin, right? And so I don't

1:04:53

think the Chinese government necessarily frowns

1:04:55

upon that. Because the idea is like, that's kind

1:04:57

of like, almost like a form of fdi. If

1:04:59

you think about it, this

1:05:01

is the swan Bitcoin app. And this is how easy it

1:05:04

is to just buy Bitcoin whenever you're feeling like it. And

1:05:06

I feel like it right now. And as it shows me

1:05:08

right here, I still have $9,388 worth of my $10,000 of

1:05:10

Bitcoin buying that has no fees whatsoever. And now I have

1:05:12

$10 more worth

1:05:20

of Bitcoin. I do

1:05:22

this quite often. One of

1:05:24

the really great things about swan

1:05:26

is the incredible number of resources

1:05:28

they have for learning and understanding

1:05:30

anything that you want to know

1:05:33

about Bitcoin. And

1:05:35

importantly, they're going to teach you why

1:05:37

you should not trade, they're not going

1:05:39

to encourage you to trade, they are

1:05:41

Bitcoin only, if you're looking for an

1:05:43

easy and reliable way to get into

1:05:45

Bitcoin, if you're looking to put Bitcoin

1:05:48

in your IRA, if you're looking to

1:05:50

put Bitcoin in your business, if you're

1:05:52

looking to do anything around getting on

1:05:54

a Bitcoin standard or getting exposed to

1:05:56

Bitcoin in your portfolio, check out swan

1:05:58

bitcoin.com/guy is my special. link and you

1:06:00

will find it very conveniently right in

1:06:02

the show notes. There's

1:06:04

an interesting dynamic. This

1:06:07

is one of the things about game theory is that

1:06:11

there are benefits and drawbacks to power

1:06:13

for Bitcoin. There

1:06:15

are so many different facets

1:06:17

and elements that why

1:06:20

I say yes, they've banned it and yes,

1:06:22

it's free to use is

1:06:25

they want to have their cake and

1:06:27

eat it too, which is the ultimate

1:06:30

benefit of every state apparatus. How

1:06:33

do we get its benefit without

1:06:35

banning or without allowing what

1:06:37

it does to hurt us, especially

1:06:40

in the context of capital controls. Xi

1:06:42

Jinping is very explicit

1:06:45

and very like hammer

1:06:47

down about capital controls, allowing

1:06:49

anything even if

1:06:52

it benefits them for the capital that

1:06:54

they get the potential threat for allowing

1:06:57

capital to free float out easily could

1:07:00

be a huge problem. It's this

1:07:02

weird balancing act where we're

1:07:04

not going to completely ban it and

1:07:06

where it's helping us, we're just going to

1:07:08

turn the other cheek and not worry about

1:07:11

it. It's

1:07:13

that thing, we're just going to selectively

1:07:15

punish where it becomes the law itself

1:07:17

mostly becomes meaningless and we're just going

1:07:19

to selectively punish what hurts us and

1:07:21

turn the other way if it's helping

1:07:24

us. Yeah,

1:07:26

and I mean, some people have, I

1:07:29

was actually going to try to write an

1:07:31

op-ed, but there was a Hong Kong professor

1:07:33

who wrote an op-ed that said like, hey,

1:07:35

the Bitcoin mining ban was such a terrible

1:07:37

decision by the Chinese government because all the

1:07:39

tax revenue flew to the United States. In

1:07:44

the op-ed, they argued like, if you want

1:07:46

it to be under government control, just have

1:07:48

it mined by state-owned enterprises. Yeah,

1:07:54

but yeah, he was like, there's a terrible mistake.

1:07:56

And I gave a talk at the Bitcoin Policy

1:07:58

Institute. I kind of made the reverse. point

1:08:00

because there was like American legislators in

1:08:03

the audience and I was

1:08:05

like, hey, like this is

1:08:07

the first thing China has given back. This

1:08:10

is a gift to the United States. Yeah.

1:08:12

Like China has spent so

1:08:15

much like, you know, developing, if

1:08:17

you think about it, like all the expertise

1:08:19

for like creating these chips, managing

1:08:22

chips at scale and stuff like that,

1:08:25

China is just like totally seized. Like

1:08:27

there's state guidance funds that like fund

1:08:30

all these things. You

1:08:32

know, the manufacturing element, like the whole story

1:08:34

of the world economy is how like the

1:08:36

United States has basically not

1:08:38

become a manufacturing superpower anymore

1:08:42

and is now kind of like

1:08:44

more of an energy superpower,

1:08:47

which is also kind of interesting as

1:08:49

a dynamic, but then also like a

1:08:52

services superpower, right? But if you want

1:08:54

to get like anything manufactured, that's why all the Bitcoin mining,

1:08:56

the A6, the first generation, it all came out of China,

1:08:59

right? Because they already had all the expertise for

1:09:01

like creating custom chips. Yeah,

1:09:03

they already had that. And

1:09:06

so I think by like, first

1:09:09

of all, there's like the direct benefits of like all the

1:09:11

local tax revenue, like whatever, like that's fine. But

1:09:15

also, there's the skills transfer.

1:09:18

There's like, I mean, it's like gonna be a

1:09:20

critical skill, I think not just for Bitcoin,

1:09:24

but also for like HPC, right? For

1:09:26

like anything to have like the electricians,

1:09:28

right? To have the people who understand

1:09:30

like, how do you manage the compute

1:09:33

to have people, you know, scale that up.

1:09:37

And so the fact that China just basically like

1:09:40

exported a bunch of its talent

1:09:43

that had set up all these things, right?

1:09:45

And then also just like, totally

1:09:47

isn't using its stranded energy resources. So

1:09:50

that's like totally going to waste. Like,

1:09:53

that gives other countries, I mean, noticeably the United

1:09:55

States because the US ended up gaining the most

1:09:57

from the Bitcoin mining man, essentially.

1:10:01

It went to all the pubcos. And

1:10:05

it's funny because I wrote this article before

1:10:07

the Bitcoin mining ban happened. But

1:10:10

you remember how Ripple CEO, like Brad or

1:10:12

whatever, was always like, oh, Bitcoin is under

1:10:14

the control of China. Yeah. Oh, yeah. Because

1:10:16

all their mining. Huge fudge, yeah. Yeah,

1:10:20

like huge fudge. And it just made no sense because it's like,

1:10:22

oh, yeah, the mining pools are Chinese. The miners are in China.

1:10:24

It doesn't mean like they're mining on behest of

1:10:27

the Chinese government. As we learned

1:10:29

because they were kicked out and

1:10:31

then they left like, you know, everywhere.

1:10:34

So it really was like a huge

1:10:37

strategic blunder. Like when you when

1:10:39

you really like think about it because

1:10:42

they had such a position,

1:10:45

it was a failure to recognize what

1:10:47

a freaking asset a strong

1:10:50

position in Bitcoin would have been. And

1:10:52

I think it was a short

1:10:55

term. How do we deal with control? Again,

1:10:57

going back to the whole positive

1:10:59

negative game theory thing, is it like how

1:11:02

do you balance how it's going to

1:11:04

help us because it undermines us at the exact same time? Yeah,

1:11:07

it's great. Yeah, they're trying to take

1:11:09

both. But yeah, one thing that's also

1:11:11

happening now is I know you've talked

1:11:13

about Trump babbling a bit. And

1:11:17

you know, I have my own opinions about Trump and I was there in

1:11:19

Nashville as well when he gave his talk. And I'm just like, this is

1:11:21

you know, this is its own thing.

1:11:24

I got to be a little bit more

1:11:26

moderated because I'm technically part of the team

1:11:28

because I published a book through Bitcoin mag.

1:11:30

But like, but like, suffice it to say,

1:11:32

I'm not like really a big fan of

1:11:35

like Trump's ability to be coherent

1:11:37

at any given moment. But

1:11:39

you know, the funny thing about that

1:11:41

is like there's this like, there's like

1:11:44

maybe like a thousand or ten thousand

1:11:46

people in China state apparatus are like

1:11:48

assigned to literally study everything he does.

1:11:51

Oh, my God, you're serious. No,

1:11:53

no, no, it's like their number one priority. It's like their

1:11:55

number one priority is to understand what the US president will

1:11:57

do. Right. And there's like that one. of

1:11:59

a chance for the US for the... I

1:12:01

remember there's this guy, Bill Bishop, and I

1:12:04

recommend for anybody who's more interested in China.

1:12:06

He's got like the Sinusism newsletter. It's like

1:12:08

a great resource. He like really, quote unquote,

1:12:10

the China watching. He's probably like the guy,

1:12:12

spent a lot of time in Beijing. Actually

1:12:14

used to be a market watch. Hopefully I'm

1:12:16

not outing him, but he's told me that

1:12:18

he is a Bitcoiner, which is kind of

1:12:20

cool. But we're trying to get him

1:12:22

to come out to some Bitcoin events and maybe like do

1:12:24

a panel together, but we'll see. See

1:12:27

about that. So he

1:12:31

has written

1:12:33

a lot about like kind of

1:12:35

China and Bitcoin. Sorry, I lost my train

1:12:37

of thought. Guy, you're gonna have to help

1:12:39

me. No worries. No worries. So I actually

1:12:41

want to go back to something

1:12:44

that you said kind of towards the

1:12:47

beginning for the

1:12:50

second section when we started talking about capital controls and

1:12:52

stuff, because the

1:12:54

Yuan or the UN, they

1:13:00

have a very interesting currency system. Yeah.

1:13:03

Because there's an internal

1:13:05

currency and there's an

1:13:07

external currency. And as

1:13:10

I understand it, they basically have a CBDC

1:13:12

now. And I'm

1:13:15

curious, actually,

1:13:17

can you give me a break? Like what

1:13:19

degree do you know about how that whole

1:13:21

system works and the

1:13:23

decision making behind that? Like why it works

1:13:25

that way? Because obviously Bitcoin

1:13:28

very much fits into how

1:13:30

well do the, like for

1:13:32

an internal and external currency, it seems like

1:13:36

you'd have to be pretty sophisticated. You actually

1:13:38

have to understand that there are international

1:13:41

dynamics for a currency that are different than

1:13:43

the internal, the domestic dynamics,

1:13:46

which is basically the huge problem that

1:13:48

the US has with the inability

1:13:51

to not run deficits. Like we

1:13:53

have to because we're a global

1:13:56

currency. So maybe

1:13:58

talk to that. The

1:14:00

degree to which China seems to kind of

1:14:03

get that having a world

1:14:05

reserve currency might not be a good idea

1:14:07

almost. But

1:14:09

I don't know, it seems odd. It

1:14:12

seems odd because it plays different than what

1:14:14

most governments I feel like think about in

1:14:17

the terms of their currency. Okay.

1:14:20

Yeah, no, this is something I covered in the

1:14:22

fifth chapter of my book. Okay, cool. I've

1:14:25

spent a lot of time thinking about. And

1:14:27

it is quite complex, but I'll try to drive us

1:14:29

to two or three takeaways here. So

1:14:32

the first is that the

1:14:35

Yuan is

1:14:37

the Yuan is the Yuan, the ECNY is a version

1:14:39

of the Yuan. There isn't like

1:14:41

an external or internal necessarily. Having

1:14:45

said that, yeah, so the Yuan, the

1:14:47

way it's stage managed now is it

1:14:49

floats against the US dollar in a

1:14:52

semi-trading range. And China's central

1:14:54

bank determines that. They

1:14:58

have an interest towards

1:15:00

making it slightly weaker because that makes

1:15:02

Chinese exports more competitive. But

1:15:05

at the same time, they can't make it too weak

1:15:07

because then Xi Jinping will get

1:15:10

mad because he wants a stronger Yuan. And

1:15:13

then there's like always a balance, right? Because

1:15:15

then they don't have the

1:15:17

imports. So I

1:15:19

do think China is trying to

1:15:21

make itself more of a global

1:15:23

reserve currency. It's doing that through-

1:15:26

Interesting, okay. Yeah, it's doing that

1:15:28

through like multilateral institutions. So one

1:15:30

in particular, so you mentioned

1:15:32

capital controls. And I think one really interesting

1:15:34

thing about that is that China is actually

1:15:36

loosening some capital controls. It's

1:15:39

allowing foreigners to withdraw money if they're

1:15:42

in the Shanghai free trade zone and stuff like that. Because

1:15:45

China is struggling a lot with getting

1:15:47

foreign direct investment into the country now.

1:15:50

The economic growth is slowing. There's

1:15:53

a lot of political stuff. What happened with Hong

1:15:55

Kong rightfully so, I think unsettled

1:15:57

a lot of people. So

1:16:00

now with China

1:16:04

kind of trying

1:16:06

to get more liberalization,

1:16:08

they want to have their cake and eat it

1:16:10

too. Because I think the idea, I was reading

1:16:13

this book called Cashless, which

1:16:15

is written by kind of like my flip

1:16:17

side. So I wrote a book about how

1:16:19

I think Bitcoin will change

1:16:22

China to a

1:16:24

certain degree. And this

1:16:26

guy, Richard something, wrote a book

1:16:28

called Cashless, where he thinks that all

1:16:31

Bitcoin is going to be BS, all

1:16:33

cryptos BS. And

1:16:35

that the digital yuan and the Chinese payment standard is

1:16:37

going to be the standard of the whole world will

1:16:40

embrace. And

1:16:43

one of the interesting points, one of the things he did say that

1:16:45

was kind of interesting though, was that he mentioned

1:16:48

it as a trade off, which I didn't really

1:16:50

think about, which is like if you have a

1:16:52

more controllable programmable digital money,

1:16:54

and that's directly under control of

1:16:56

the government, you don't actually need capital

1:16:58

controls. Or

1:17:01

you don't need capital controls in the

1:17:03

sense of it

1:17:05

can be more granular, it can be more programmable. You

1:17:08

don't have to set like a blunt limit of like you

1:17:10

only get can exit 50,000. You can look at different

1:17:13

regions, you can see if people are

1:17:15

preparing their funds to exit, you can

1:17:17

do all these things. And you can

1:17:20

individually assign this hypothetical example. I don't

1:17:22

think this will happen because right now

1:17:24

the Chinese Central Bank doesn't want it

1:17:26

to be interest rate bearing.

1:17:28

So they don't want it to, they want it to

1:17:30

just be like cash, the easy and why. But

1:17:32

in theory, they could make it

1:17:34

so that if they thought someone's trying to exit the

1:17:36

country, they could try to like restrict

1:17:38

that. Or they could like reward you

1:17:40

for keeping the money in the country or in the

1:17:42

easy life form by giving

1:17:44

you like interest rate. Or they could, they've

1:17:47

done in pilots, they could make your money expire.

1:17:49

So you could like, you'd have to spend it

1:17:51

within a certain time. The

1:17:54

ECNY, the digital yen is still

1:17:57

a representation of the yen. Now,

1:18:00

where I think people get confused a

1:18:02

little bit when it comes to Chinese payment ecosystems

1:18:05

is that there is a lot of

1:18:07

digital payment versus cash. And

1:18:10

so most people when they pay, they basically

1:18:12

pay with like WeChat Pay or AliPay, which are

1:18:14

these two apps that are connected to kind of

1:18:16

like your WeChat or Alibaba.

1:18:20

And so these ecosystems are

1:18:23

really the main way people in China pay.

1:18:26

They're just like online apps. They're connected to

1:18:28

your bank account in China. So

1:18:31

in that way, it kind of flows as like Yuan,

1:18:33

but that's like kind of the main default payment experience

1:18:35

for most people. The ECNY is

1:18:38

trying to do two things. One

1:18:41

is like domestically, it's

1:18:43

trying to be like a more viable option. I don't know

1:18:45

how successful they will be with this because WeChat Pay

1:18:47

and AliPay have a lot of like network effects. So

1:18:50

for example, like they have like 10X

1:18:52

the merchant adoption the last time I checked. So

1:18:56

the Chinese government is able to undo.

1:18:59

Yeah, yeah, yeah. And actually

1:19:01

one thing that's interesting about WeChat Pay and AliPay as well

1:19:03

is they've actually transacted externally. So I

1:19:06

think that might be what you were referring to

1:19:08

with external because there are a

1:19:10

lot of places including Canada, the United States

1:19:12

and in Europe where AliPay and

1:19:14

WeChat Pay are accepted. So you

1:19:16

can transact through like Chinese bank accounts and Chinese

1:19:18

Yuan through that there are merchants

1:19:21

that accept payments through. But

1:19:25

within China, there's like competition and I think

1:19:27

like WeChat Pay, AliPay are probably going to

1:19:29

win. But China's government is trying really

1:19:31

hard. They made it so that the ECNY has 0%

1:19:34

merchant transaction fee. They

1:19:37

made it so that you

1:19:39

know, the ECNY actually

1:19:42

is like essentially

1:19:44

free to use. And

1:19:46

then also they've like positioned it. So

1:19:49

they forced, I mean, forced a strong word,

1:19:51

but they basically made like the big aggregators

1:19:54

take on like ECNY as a payment

1:19:56

option, including WeChat and Ali. So you

1:19:59

can use ECNY. through these kind

1:20:01

of places as well.

1:20:04

But I think they're gonna struggle is like there isn't

1:20:06

like a lot of like merchants that,

1:20:08

because a lot of the long tail of like

1:20:10

WeChat pay and Alipay, it's

1:20:12

like people who are like

1:20:15

merchants who are literally like have a

1:20:17

WeChat account and they have a QR

1:20:19

code and you just send it to them directly. So it's

1:20:22

not like they're using, you know what I'm saying? So

1:20:24

yeah, that's where they're not taking the ECNY because they

1:20:26

don't have an ECNY merchant account and they're not like

1:20:28

taking it on that way. So

1:20:31

that's where China's I think they're struggling

1:20:33

with like some of the ECNY adoption

1:20:35

there. I had

1:20:37

this event in New York City of Pupkey and

1:20:39

Elizabeth Stark was there. She asked a ton of

1:20:42

questions about this. So I'm

1:20:44

hopeful that someone is

1:20:46

thinking about lightning stuff. But of course, like it's

1:20:48

kind of illegal in China, but that

1:20:51

would be my hope for a lot of those merchants. Anyways,

1:20:54

the one takeaway would take from this is that

1:20:56

there is one yuan. The

1:20:58

ECNY is an

1:21:00

offering in a digital payments ecosystem

1:21:03

where China is also the most

1:21:05

cashless society. Because of

1:21:07

that, there is a lot of ability to

1:21:09

surveil digital payments. And most

1:21:12

people pay digitally by default with companies

1:21:14

that are controlled by the Chinese, well,

1:21:16

that are controlled by elites close to

1:21:18

the Chinese state. And I think that

1:21:21

the People's Bank of China would prefer

1:21:23

that it go through the government currency.

1:21:25

And they built this explicitly as kind

1:21:27

of a response to Bitcoin and Libra.

1:21:30

They accelerated it during Libra, but they

1:21:32

started researching it in 2014 right after

1:21:35

the Bitcoin regulations on how

1:21:37

to forbid Bitcoin from being in

1:21:39

Chinese banks. So the last

1:21:41

thing I'll say about this whole

1:21:43

complex system is international. You mentioned the World Reserve

1:21:45

currency. Bit. So

1:21:48

I started writing about this since 2019. And

1:21:50

I do think one

1:21:52

takeaway from this, I'll expand on this, is that

1:21:54

China is trying to become more of a World

1:21:57

Reserve currency. And the way it's doing it is...

1:22:00

trying to set standards for CBDCs.

1:22:03

This is actually like a very underappreciated

1:22:05

point, but they're working through

1:22:07

the Bank of International Settlements, which is kind

1:22:09

of the central bank for central banks. And

1:22:12

they are trying to pilot because out of

1:22:15

all the countries, they're the ones with the

1:22:17

most, it's live in 29 cities, you can

1:22:19

use it in the public transit systems in

1:22:21

Beijing. So China's trying to

1:22:23

really set the standard for CBDCs. And

1:22:25

what's really interesting with that is that

1:22:27

even ideological rivals like India, are looking

1:22:29

at this and they're like, well, as

1:22:31

a state, it's in my interest, monetary

1:22:33

supremacy, every central bank is aligned with

1:22:36

each other. I think there's

1:22:38

like 83 or 90% some high amount of

1:22:40

all the central banks in the Bank of

1:22:42

International Settlements, which basically has all the major

1:22:44

central banks as well. I think it has

1:22:46

like 90 central banks or something as

1:22:49

members. From

1:22:51

a central banker perspective, they love

1:22:53

CBDCs, of course. And they hate

1:22:56

Bitcoin, because this is exactly

1:22:58

oppositional to what they're trying to do.

1:23:02

And so China's trying to create

1:23:04

these standards, similar to

1:23:06

how it tried to create some internet

1:23:08

standards with Huawei for mobile. So it's

1:23:10

looking for like gaps. And,

1:23:13

you know, with CBDCs, the thing is the

1:23:15

states is explicitly

1:23:17

not going to do anything, right? Which

1:23:20

I think is a really good thing. But

1:23:22

at the same time, there's this idea of

1:23:24

like, well, China is trying to do a

1:23:26

lot of CBDC stuff with emerging

1:23:28

economies. And that, you know,

1:23:30

what is the response to that? I mean, I think from

1:23:33

a Bitcoin perspective, it's like, well, you'd love

1:23:35

to see those transactions in Bitcoin. But

1:23:38

obviously, the states we're talking about

1:23:40

are trying to transact otherwise. And

1:23:43

one of the more interesting things in this

1:23:45

is like, they want a fiat currency. Yeah.

1:23:47

Well, because they want to deal with

1:23:50

the government directly. Yeah. That the

1:23:52

Chinese government will never settle with you in Bitcoin, necessarily. I

1:23:54

think this is kind of part of the game

1:23:57

theory of Bitcoin becoming a global

1:23:59

monetary. You do need many

1:24:02

countries that are like kind of essential in

1:24:04

the supply chain for it to really kind

1:24:06

of like work out

1:24:08

in that way. So right now the ECNY, one of

1:24:12

the things they're trying to do is they're trying

1:24:14

to create a SWIFT alternative. So SWIFT is kind

1:24:16

of like the global system, AMITs, that's US European

1:24:18

allies. So they're suddenly, they

1:24:20

created this thing called M-bridge and

1:24:23

it's basically a bridge between different CBDCs.

1:24:27

So one thing about the digital yen is

1:24:29

it's not distributed ledger technology

1:24:31

or anything like that. It's just

1:24:33

a direct ledger from the government. And

1:24:35

so China has started buying oil from

1:24:37

the United Arab Emirates in

1:24:40

ECNY. Oh, I

1:24:43

didn't realize that. This

1:24:45

is explicitly an attack on the

1:24:47

petrodollar. Yeah. Right?

1:24:49

And this is kind of the

1:24:51

space where Bitcoin

1:24:54

still can't really play, unfortunately.

1:24:57

Because you would need multiple

1:24:59

nation states that are

1:25:01

importing and exporting critical goods to

1:25:04

each other for this to really matter.

1:25:06

To have an interplay. Yeah,

1:25:09

exactly. And you still have to

1:25:11

kind of beat the hump of

1:25:14

China Central Bank is still buying a lot of gold

1:25:16

in order to replace US debt. Because China

1:25:18

is trying to defer away from

1:25:20

US debt, but it's buying gold. It's

1:25:24

obviously not going to buy Bitcoin right now. They do

1:25:26

still hold some Bitcoin. I think

1:25:28

there is still a world where there

1:25:30

can be convinced that not holding Bitcoin is

1:25:32

a mistake. But

1:25:34

that's kind of like what's happening with the

1:25:36

ECNY internationally. I do think that the play

1:25:39

is to make it more of like the

1:25:41

standard since the US dollar is not

1:25:44

going to be programmable. And then nation

1:25:46

states are not going to pick and

1:25:48

choose. Most of them are not

1:25:50

going to currently pick and choose between Bitcoin and a

1:25:54

digital central bank digital

1:25:56

currency. They still want to settle in amounts

1:25:58

that are like large enough. They

1:26:00

want to know that it's backed like one to one by

1:26:03

the central bank in like another country. So the way I

1:26:05

compared it and actually the way I know if the book

1:26:07

is like China's kind of like trying

1:26:09

to API its way into other countries

1:26:12

and that works better because it is

1:26:14

another country. Yeah. Like the route

1:26:16

makes more sense. So like it's

1:26:19

not a bad it's not a bad strategy.

1:26:21

If you see kind of the CBD like

1:26:24

all of the powers that be basically

1:26:26

are aligned to try to build their

1:26:28

own CBDC and if you can have

1:26:30

the infrastructure in place to integrate their

1:26:32

CBDC with your economy and especially when

1:26:34

you're the largest exporter in the world,

1:26:36

you know, like it becomes a very

1:26:38

interesting dynamic of how much power you can

1:26:41

now have over the quote unquote new the

1:26:43

new internet

1:26:46

based system, the

1:26:48

new currency structure than

1:26:50

the old. And

1:26:52

it also puts a very interesting

1:26:55

light on the

1:26:58

potential embracing of stable coins

1:27:01

with Trump and the US is

1:27:04

that this could be

1:27:06

a, it would actually

1:27:08

be a move to say, oh,

1:27:10

well, the CBDC infrastructure is not going to be

1:27:12

the one that runs everything. It's going to be

1:27:15

the tethers and the stable coins of

1:27:17

the world. And we're going to put our plate, we're

1:27:19

going to put all our cards into that basket. You

1:27:21

know, like this is, this is where we're going

1:27:23

to move. And now the push is who's, who's

1:27:25

going to be faster and who's got the better

1:27:27

infrastructure for adoption versus

1:27:31

does it help the people? Does it help the central

1:27:33

banks? Does it help the governments? And you've

1:27:35

got this new power play of how the

1:27:37

hell is everything going to unfold? And all

1:27:39

the while, here's this Bitcoin wildcard sitting on

1:27:42

the side, trying to figure out how trying

1:27:44

to see how all that shit's going to fit in. And every time

1:27:46

there's a hype cycle, everything's going to change. You

1:27:48

know, everything's going to be up in the air again as to

1:27:51

which way the balance is shifting. I

1:27:55

think the stable coins and CBDC standards

1:27:57

is like fascinating because that is a

1:28:00

fight too. And then it's like

1:28:02

stablecoins versus Bitcoin, right? So, but

1:28:04

the stablecoins versus CBDCs things, stablecoins

1:28:06

are acting in a way where

1:28:08

they're like bottoms up, becoming

1:28:10

a country, if that makes

1:28:13

sense. Like countries are trying to reason with

1:28:15

it. And the one thing the US start

1:28:18

like, they're starting to understand

1:28:20

is that whatever this thing is, it buys a

1:28:22

ton of treasuries. Yeah. Yeah.

1:28:25

Like it buys a ton of treasuries.

1:28:27

Yeah. And so actually, I

1:28:29

was reading that Tether

1:28:31

wants to be the largest net buyer

1:28:33

of treasuries, like above

1:28:35

all other nation states. And this is at a

1:28:38

time when surprise me, it would be good for

1:28:41

them for what they're doing. And it would be it would be

1:28:43

crazy because what you would have is you'd have a banking, essentially

1:28:46

a pseudo banknote

1:28:48

system that was actually fully backed for the

1:28:50

first time. Yeah. Which

1:28:53

is crazy to think about, you

1:28:55

know, like, yeah. And

1:28:58

in the short term, I think countries will understand

1:29:00

that a little bit more than they will understand,

1:29:02

like how to interact with Bitcoin. You know what I'm

1:29:04

saying? Like from a bottoms up perspective. Yeah. Yeah.

1:29:08

And so that kind of becomes a fight. It's

1:29:10

like, I think what's what is going to end

1:29:12

up happening is the Western block, for lack of

1:29:14

a better word, they're putting

1:29:16

their eggs in the stablecoin basket. There's gonna be

1:29:18

some complaints. I think it depends on like, you

1:29:20

know, obviously, if there's like a Harris administration or

1:29:22

something, I mean, I'm sure they'll be, you

1:29:25

know, but Gillibrand was one of the sponsors

1:29:27

for the stablecoin act with Lummis. So

1:29:30

I think there is still, you know, some democratic

1:29:33

kind of support, no matter what my whole

1:29:35

thesis is like, because this thing is buying

1:29:37

so much US debt, and US

1:29:39

foreign US share of foreign reserves is

1:29:41

at all time low, or one of

1:29:43

its lowest points, 58%. Like, because of

1:29:45

that, you're gonna have to be dependent

1:29:50

on this bottoms up demand. Like you

1:29:52

might not like it, the Wall Street Journal might write

1:29:54

things like the demand is coming from criminals or like

1:29:56

whatever. Yeah. Sure. But

1:29:59

they are buying the

1:30:02

debt and the debt will be issued more

1:30:04

and more. So I think

1:30:07

Tether has a role

1:30:09

to play in that dynamic in terms of

1:30:11

like, and when I talk to people who

1:30:14

are more involved with discussions on the Hill,

1:30:16

like in Congress and stuff like that, they're

1:30:19

always talking about like, no one cares about

1:30:21

like, all they care about is stablecoins.

1:30:24

They just cared about stablecoins. And

1:30:26

like the dynamic of it, like how

1:30:29

to regulate it, like what's the deal

1:30:31

with that? I think that the tricky

1:30:33

part, and I've been trying to hit

1:30:35

at this in my articles without seeing like a crazy

1:30:37

person, but I'm like, you know, if you actually think

1:30:40

Bitcoin, which I believe Bitcoin is going

1:30:42

to be the superior money and the reserve, you still

1:30:44

have to find a way to, you have

1:30:47

to orange pill several countries. And

1:30:51

preferably almost all

1:30:53

at once, if that makes sense. Like there is

1:30:55

a critical mass of like countries. And I know

1:30:57

that like in theory, there's a game theory like

1:30:59

approach where it's like, hey, like you have other,

1:31:01

but in practice, what's going to end up happening

1:31:03

is like, I think if

1:31:06

you have like the United States and Trump

1:31:08

says like, doesn't matter what he does

1:31:10

actually, but if he just says that

1:31:12

he has his policy, other countries are

1:31:14

going to start like looking at this,

1:31:16

right? Including China. And so I think

1:31:18

like the stablecoin

1:31:21

conversation is going

1:31:23

to be something in the like

1:31:25

short term, medium term, but

1:31:28

then the long term, you have to ask yourself like,

1:31:31

well, at the end of the day, the

1:31:33

US dollar is backed by like Fiat will

1:31:35

and like, you know, the government is

1:31:37

structurally going to print more debt. Just

1:31:40

there is no way around that almost

1:31:42

like I don't like I just, if

1:31:45

you look at like the deficit, the

1:31:47

mass is just the mass. There's no

1:31:49

exactly it's mandatory. It's mandatory spent triggers.

1:31:51

And the other thing is, okay, this

1:31:53

is like, where I'm a little bit

1:31:55

pessimistic, because I also watch the Chinese

1:31:57

internet and I watch the Western internet.

1:32:00

And like my conclusion to take away from that is

1:32:02

like there's probably gonna be a war. I don't know

1:32:04

why I just think Maybe I'm like

1:32:06

maybe I just haven't taken my my happy pills

1:32:09

maybe I should just you know, but I go on X

1:32:12

and then I'm looking at like what's going on and then I go

1:32:14

on like like

1:32:18

Like wishing like like like

1:32:20

we chat and I'm like this is what's

1:32:22

going on the conversations like there's some crazy

1:32:24

Conversations that people I mean, there's a Twitter

1:32:26

account that people can follow called great translation

1:32:28

movement But people say some wild things

1:32:30

like when Pelosi came by like a lot of people were

1:32:32

like let's shoot her playing down right now So

1:32:36

it's pretty wild pretty wild like

1:32:38

a lot of nationalistic I think

1:32:40

bullshit happening So obviously

1:32:42

it's like I'm you know Like social networks are

1:32:45

not like a great place Part of

1:32:47

the reason why I love nostrils so much is like it's more

1:32:49

sane compared to all the social networks I feel like social networks

1:32:52

making it crazy by default the way

1:32:54

they work. It's so does so bonkers

1:32:57

Yeah, yeah, will and I talked about that on

1:32:59

the TPB like a while ago like yeah He

1:33:02

had some really good thoughts on that. But anyways It's

1:33:06

it's like wild but

1:33:08

I I think that Whether

1:33:11

it's the social media toxicity or like underlying I

1:33:13

do think there is that underlying current of like

1:33:16

I don't know if they're there there might

1:33:18

there already are two proxy wars that yeah,

1:33:20

the US it has support and finance and

1:33:23

I think that You

1:33:26

know when you look at like the switch into

1:33:28

world reserve currency There's usually a war involved like

1:33:30

I mean the United States dollar became predominant because

1:33:33

it was like the surviving industrial power of like

1:33:35

After World War two. Yeah, and it was

1:33:37

it had all the gold reserves and because it

1:33:40

was like the manufacturing hub So

1:33:42

it was able to export everything. I think

1:33:45

this is kind of like my medium term View

1:33:48

on this is that like the stable

1:33:51

coin of Bitcoin distinction will matter when

1:33:53

people realize like Doesn't make

1:33:55

sense for all of our world monetary

1:33:57

system reliant on one nation state, especially

1:33:59

a nation state that

1:34:01

may be in a block with other nations.

1:34:03

You're already seeing that happen because all the

1:34:05

BRICS countries are getting away

1:34:08

from US reserves, they're getting away from

1:34:10

US pensions. Because you

1:34:13

need a neutral standard. Everybody

1:34:15

uses email because you can't like China

1:34:17

and the US, they can't censor that.

1:34:19

So you need something in between. So

1:34:21

I think that's where Bitcoin and stablecoins

1:34:23

will make the difference. Because then the

1:34:25

other thing that will happen is if

1:34:28

there is war, and

1:34:30

I hope there isn't, but if there is, I think

1:34:33

that's where people will start

1:34:35

to really realize the censorship

1:34:39

resistant properties of Bitcoin really come

1:34:42

into play. Because tether is so

1:34:44

centralized. The company could decide to

1:34:46

burn your tokens for whatever

1:34:48

reason. Yeah, they have

1:34:50

to freeze accounts. They've done it before with-

1:34:53

They've frozen accounts. Yeah, they've frozen. That's part

1:34:55

of the dynamic of them being still able

1:34:57

to function. Even though they're less regulated than

1:35:00

like a circle, like when the

1:35:02

FBI or the NSA or wherever the

1:35:05

men, the hoods or whatever come

1:35:08

in, they are ready to, they

1:35:11

still have to act.

1:35:14

I think that's going to be really

1:35:17

interesting dynamic. I think Bitcoin is going

1:35:19

to flip, but it's going to take

1:35:22

some events. So

1:35:24

yeah, if I want

1:35:26

to sum up one thing I want people to take

1:35:28

away from this, it's just like Bitcoin

1:35:32

and China still really matter, the global dialogue.

1:35:36

And I think for Bitcoin to become like a

1:35:38

world reserve currency,

1:35:40

actually, if we're really serious

1:35:42

about that, it does involve

1:35:45

understanding the underlying nation

1:35:47

state models, but also

1:35:49

the competitor. One of the competitors is

1:35:52

China and it's CBDC exports. And

1:35:54

another competitor to a certain degree is

1:35:56

stablecoins. And how- Bitcoin

1:36:00

or Skine interface and whether

1:36:02

that's providing superior alternatives. One

1:36:06

thing I also wanted to add is the Chinese

1:36:08

stuff. I do find

1:36:10

it interesting that you have to build a financial system from

1:36:12

scratch because a lot of finances

1:36:14

in China are restricted. Your options to

1:36:16

take P2P loans and things like that

1:36:19

are very, very restricted. This is where I

1:36:22

think, just going off the queue

1:36:24

of the usage of covenants and things like

1:36:26

that, this is where

1:36:28

you could start seeing that being appealing

1:36:30

to a category of the

1:36:32

next billion. The easiest next billion

1:36:34

is Chinese people who are deprived

1:36:37

of basic

1:36:39

financial services. Yeah, and

1:36:41

then also giving them services

1:36:43

that they can't really access

1:36:45

except through the tightly controlled Chinese

1:36:48

banking system. That's

1:36:51

an easy next

1:36:53

billion if done. To a

1:36:55

certain degree, that is already

1:36:57

happening, though it's

1:36:59

more like buying tokens and things like

1:37:01

that. But when you

1:37:04

have the whole shebang, I think

1:37:06

that's when it really matters. Yeah, I feel like this is

1:37:08

kind of the default. A lot of people used to put

1:37:10

their money on FDX. And

1:37:12

the thing is with that is like a game. Yeah,

1:37:15

that's not, it sucks for them. And some people

1:37:17

still in Asia, especially, they keep their money on

1:37:19

Binance. The thing, the reason why they do that

1:37:21

though is because you have access to so many

1:37:23

different financial options that you would not have access

1:37:25

to otherwise. You know what I'm saying? So if

1:37:27

you can build that without

1:37:30

the exchanges, I think that could actually

1:37:32

be a really powerful layer for that

1:37:34

next billion. And then the other

1:37:37

stuff is I think going to be nation

1:37:40

state game theory. But when we talk

1:37:42

about that, that's like, I don't know,

1:37:44

I don't think there are many reasons for China to

1:37:46

adopt it quite now, unfortunately. I don't

1:37:49

want to take up a ton of your time,

1:37:51

but I think this is probably a good place

1:37:53

to lead into the conclusion here, is

1:37:56

are you going to stay on

1:37:58

a five to 10 year timeline? Yeah.

1:38:01

How hopeful are you that

1:38:03

we lead toward a better,

1:38:06

not really

1:38:09

horrible future and

1:38:13

positive on the Bitcoin side? And

1:38:16

is that the same view

1:38:18

that you have or is it very different when

1:38:20

you look at like a 30-year timeline? You

1:38:24

know, I'm really bullish on a

1:38:26

30-year timeline. I'm like extremely bullish on

1:38:29

a 30-year timeline. It's

1:38:31

actually kind of counterintuitive for me because I actually

1:38:33

think, I almost think of it as like, it's

1:38:35

either going to, it's either

1:38:38

or. Like either Bitcoin is going

1:38:40

to be the world's, it might

1:38:42

be something in between, but it won't be

1:38:44

very interesting if that's the case in 30 years, I

1:38:46

guess is the way I would put it.

1:38:50

I'm just like extremely bullish that it will

1:38:52

all come to pass eventually just

1:38:55

because of the dynamics of how

1:38:58

state debt is structured, like

1:39:01

what the drivers are going to be, what

1:39:04

that will mean for many countries. I

1:39:07

just wrote about this. One third of all

1:39:09

countries now are in the process of being

1:39:13

close to sovereign default. They

1:39:15

may default on their obligations. This

1:39:17

is one third. And this is

1:39:19

after COVID because what happened is COVID

1:39:22

basically applied like a systematic like spend

1:39:24

up for everyone. So

1:39:27

30 years for

1:39:29

me, it just tells me like, I just

1:39:31

think about it from the perspective of like, compute

1:39:33

is the most valuable thing. You're

1:39:36

going to need money that transacts across space. That's also

1:39:38

a trippy thing to think about. Physical

1:39:43

money is just going to be like

1:39:45

gold right now. I think I'm very,

1:39:47

very bearish on for

1:39:49

like a number of different reasons. I think like gold is

1:39:51

like once you have energy

1:39:54

figured out, like gold's

1:39:57

industrial uses are very... like

1:40:01

low relative, but like compute, this

1:40:03

is like the where you

1:40:05

dedicate your compute is like the most

1:40:07

prescient. Like it's actually like where

1:40:09

the economy is gonna go for the next like 20, 30

1:40:12

years. So super bullish on that

1:40:14

and super bullish on like the network effects.

1:40:16

I'm super bullish on like how far we

1:40:18

are, but yet like how much progress there's

1:40:21

been. Like the fact that the

1:40:23

ecosystem has so many educators, the fact that

1:40:25

the ecosystem has so many things being built,

1:40:27

the fact that so many people from different

1:40:29

countries are coming together. And this is Bitcoin

1:40:31

at like, it's like,

1:40:33

I don't even want to see it's a teenager right

1:40:35

now. You know, I want

1:40:37

to say like, we're still like, kind

1:40:39

of at the infancy a little

1:40:42

bit. It's like seventh grade. Seventh,

1:40:45

maybe seventh grade. Yeah, maybe like seventh