Seeing crypto for what it is and how to live with contradiction with Brett Scott

Speaker 0 0:08 – 1:23

I'm here in Berlin, talking to Brett Scott on the podcast. If you don't know Brett Scott, Brett Scott was, like, one of the first people, I think, that I had on the podcast. I was, like, I was, like, fanboying really hard whenever and I was, like, when was that? Was, like, '20 '20 or twenty twenty twenty or 2021. I think 2020 because Okay. It was fairly early. And it's during I remember it's during the pandemic. But, yeah. I mean, you're known for being, like, at least for me, like, one of the, you know, one of those very good writers when it comes to money from a left wing perspective and it also, like, had a lot of space for writing about cryptocurrency. So I think you're also for a long time, like, one of the few people that were writing about cryptocurrency to any extent from more kind of like progressive Sure. Yeah. Point of view. Which is very difficult for me to because I remember before I started the podcast, I was like, no one's doing it. Until, like, I found like a I think maybe a talk by you, at one point about it. I was like, oh, he did he wrote like, this guy wrote something that was, like, I don't know. The only kind of other things were maybe, like, very academic or just, like, very, like, hypercritical in a way that that it just, like, didn't resonate with. So Yeah. Yeah. I used to try and go and, like, hang out in the Bitcoin scene a lot and

Speaker 1 1:23 – 2:04

explore it. I have, like, an anthropological impulse. So even when I sense there's, like, a political dynamic that I don't necessarily resonate fully with, I still like to immerse myself in the scene. Mhmm. And and I see what people are experiencing. Yeah. So, like, early Bitcoin, I used to, like, hang around a lot in that crew, explored it a lot, wrote pieces about it and stuff. And at a time when a lot of other left wing people, I guess, tend at least at least in the left wing intelligentsia tend to just reject stuff. Yeah. Kinda dismiss it. Not not all, but, you know, quite there's a there's a significant tendency. Yeah.

Speaker 0 2:05 – 2:52

But so from from what I remember, from talking to you before is that you were involved in a lot of the Bitcoin stuff in in The UK. And from what I understood, you at one point, whenever there was, like, the split the the block wars, between, like, Bitcoin and and Bitcoin Cash. Actually, I was one I was curious to hear about, like, as a veteran of the block wars and, like, in in in that split, do you have any thoughts? I think, when I look at it, there is something to say. I think both sides were kinda silly anyways, but there was something there's a certain veneer of, like, it was like the, a point of, like, clash between, like, the two narratives of Bitcoin, of Bitcoin being cash or Bitcoin being digital gold. Yeah. Yeah.

Speaker 1 2:52 – 6:05

I mean, I wasn't heavily invested in that debate. Bear in mind, I mean, you know, stuff like cryptocurrency was a sort of fairly small part of my overall work. Sure. My overall work has always been about the politics of finance more generally. I mean, I worked in the financial sector and stuff like that. So, you know, one of the reasons I was exploring stuff like Bitcoin is that I was exploring alternative finance and alternative money more generally. Mhmm. So and I would see Bitcoin as, like, one small subset of that topic. So I wasn't, like, a 100% immersed in it. I mean, if you're a 100% immersed in a topic, then small deviations seem like these giant momentous events. So people in the Bitcoin scene, like, stuff like the Bitcoin Cash split was this, like, epic, like, battle and stuff. To me, it was a sort of, like, small marginal difference of disagreement between people who basically agree with each other on some stuff. Right? Right. Right. But because I was doing work on physical cash and the promotion the protection of physical cash in the normal monetary system, people in in the Bitcoin cash scene sort of, to some extent, saw me as a potential ally in their attempt to say, you know, like, Bitcoin should be this cash like instrument to be used for commerce rather than this speculative object to be used for, you know, hoarding. Right. Right. So I was taken along to the the first big Bitcoin Cash international meeting, which they called Satoshi's Vision, and it was in Japan. You went to Japan? Yeah. Yeah. Roger Ver, you know, and his crew got me there. I mean, I don't know if he personally really cared that much for my work, but, like, he had to sign the letter to get the Japanese visa. Right? Okay. So, you know, so I was brought in to try and give maybe they thought I was gonna give maybe ideological support Uh-huh. For their bid to be seen as the most cash like instrument Uh-huh. Or the sort of true Bitcoin. But I, again, I wasn't particularly vested in that debate. I, to some extent, would see both Bitcoin Cash and Bitcoin as suffering from many of the same flaws, albeit I actually resonated more with the Bitcoin Cash community in the sense that I I kind of appreciated what they were at least theoretically trying to do. Right. Right. So but, you know, I didn't I wasn't like a heavy a heavy participant in the block horse. Saying that necessarily. It's a good idea. But I mean, socially, very interesting seeing that. The history. And going back to this kind of, like, anthropological stuff. I mean, for me, I have an anthropology background in hanging out in, you know, places with with all these, like, hard line libertarian, seasteader types who, like, desperately wanted to believe that the world could be run using Bitcoin cash. I mean, it's like it was very interesting. Slightly sad sometimes as well. You know? So, people's beliefs or desperate desperately hoping for something to change in the world. And Mhmm. Yeah. I'm sure you know there's lots of kind of, like, quasi religious elements in the Yeah. Yeah. The crypto world. So For sure. For sure.

Speaker 0 6:06 – 6:08

I mean, there are religious elements to capital.

Speaker 1 6:09 – 6:35

For sure. I think I would But I mean, I I suppose the the the whole Bitcoin cash versus Bitcoin thing is very interesting because, you mean, Roger Ver was originally considered, you know, Bitcoin Jesus Right. Right. Yeah. In the original community. And then he kinda became this, like, Charlotte and Judas to the the original Bitcoiners. And then he became a profit for a new breakaway. And they're all trying to, like, gain legitimacy by pointing to the white paper and, like, claiming that they it still became very, like, religious wars. Yeah. Yeah.

Speaker 0 6:36 – 6:38

But now he's now I don't I have no idea

Speaker 1 6:39 – 7:15

where he is or what he does. Yeah. Well, that community then slips into a bunch of other communities. It was like Okay. Yeah. Probably. My my my most enduring memory of the bit the first Bitcoin Cash conference was Craig Wright coming to do his big keynote address to an opening song of Metallica Enter Sandman, which he ran he ran down the the sort of, like, aisle to the to the stage with this Enter Sandman playing Uh-huh. And then kinda, like, jumped on and then was, like, waiting for the music to be turned off and, like, sort of, like, standing there while people try to shoot it people try to figure out how to turn the music off.

Speaker 0 7:16 – 7:18

I hope that's recorded.

Speaker 1 7:18 – 7:19

I don't know.

Speaker 0 7:21 – 8:02

Yeah. I think so, like, one of the things, so it is very interesting that you, I think, are kind of a rare breed of someone who is, like, willing to enter into kinda, like, intellectually trespass into other types of political, ideological dominated spaces, I guess, including the Bitcoin one, as, like, part of your research in in money kind of, generally. But I was interested to know know more about, like, why what is your interest in in money comes from and, yeah, how you got to to this point to Yeah. Sure. Think that you you're like a metaphor master of of money.

Speaker 1 8:04 – 8:48

Yeah. I you I have to use metaphors because that's like how my brain works. I have to try and I have to try and explain stuff to myself through metaphors. Yeah. But, yeah, money I mean, I probably have few different, roots to becoming interested in money. First one is, like, I come from a anthropology background. And anthropology actually has a much deeper tradition of thinking about money than economics does, largely because anthropology you know, if you think about the sort of colonial times when anthropologists were first emerging, they were often connected to colonial exploration. Right? So you'd be sent out to places that basically were not capitalist economies.

Speaker 0 8:48 – 8:49

Mhmm. Alright?

Speaker 1 8:50 – 11:28

So you're coming from some capitalist country, and you're going out to somewhere that doesn't necessarily share your same perceptions in the world and often has very different economic structures. So from the very beginning, anthropology has had this engagement with non capitalist or precapitalist societies, or at least societies that are only partially integrated into capitalism. There's lots of problems with early anthropology, lots of ethnocentrism and and so on, but it there's still the strong tradition in anthropology of not assuming that market economies are the norm. Right? Whereas in economics, they tend to just assume from the very beginning that market economies are sort of universal and the default mode of human operation. Sure. And that makes a big difference to how you then analyze money. So economists tend to just assume away a bunch of stuff. They got these very crude ideas of money that emerge from the underlying assumptions, whereas anthropologists have had to grapple more with, you know, different forms of money, non monetary exchange, even stuff, for example, like shell money, which is often you know, if you hang around the crypto scenes, you'll constantly people find people, like, talking about shell money and stuff, or, like, the the stone money of the Island Of Yap. Right. Alright. And they'll but they'll often apply a highly marketized way of thinking about these things. Whereas an anthropologist would often, for example, like David Graeber. You know, there's many anthropologists who would actually, you know, look at how these types of money operate in their own context. And for example, stuff like shell money wouldn't be used for commerce. It would be used for stuff that actually, like, normal money can't buy, like calling up the spirits of the dead or compensating them somebody for insulting their honor. You know? These types of things, which you wouldn't ordinarily be able to pay somebody for. Right? So there's very lots of differences. So anthropologists have a lot more interest in that kind of stuff, so I come from that background. But then I also actually worked in finance and in sort of high finance, partly as a kind of experimental adventure to kind of immerse myself in that world. And one of the shocking things in high finance or mainstream finance is just how little people understand about the monetary system. Like people who work in high Yeah. Yeah. And that's what that was really fascinating that actually you really didn't need to know anything about the monetary system in order to do highly complex financial instruments. Actually, most traders and stuff have very crude ideas of what the monetary system is. They don't they're not required to know because it's all these specialist tasks that they you just assume that money works.

Speaker 0 11:29 – 11:29

Right.

Speaker 1 11:30 – 12:31

And actually that was became very interesting. So I learned a bunch about, you know, sort of high finance stuff, but no actual when I was working in finance, very little stuff about the actual monetary system. So I I started to delve more into that, and then also became in became involved in alternative finance and alternative monies, actually, prior to the crypto world. So stuff like mutual credit systems, local currencies, and things like that. And if you engage with those systems, you're also forced to engage with, money more generally. So, yeah, I guess these are different routes I've taken to, exploring money. And then more recently, I've specialized to some extent, at least in my public life, in being a defender of the physical cash system. And that often requires having to build out a bunch of ways to describe money and stuff so people can understand the politics. Mhmm. Yeah. That's a Yeah. Yeah. And also, you know, money holds the entire capitalist system together, so it's quite a useful thing to to explore if you wanna try and understand capitalism more generally.

Speaker 0 12:31 – 13:34

Yeah. I want to get into that, but first, I kinda wanna ask, talk a bit about, like to me, it seems like actually anthropology is like a good kind of, maybe, like, academic practice in order to, like, analyze contradiction. Yeah. In in many ways, and, like, I think a lot of a lot of your work, and you've said this before. I can't remember where, but you talked about how you suggested people to be more comfortable with contradiction or to be able to, like, learn how to live with contradiction rather than necessarily, like, I don't know, dismissing things because of a contradiction. Yeah. Yeah. And I imagine that you probably come across that a lot, because this a lot of your work on, like, the war on cash, about protecting the physical cash system, it attracts a lot of people on the right, or there are people on the ideological right who would say similar things, but then kind of, like, veer off into, like, a right wing politics. Sure. Yeah. Yeah. How do you kind of deal with these contradictions in the in the most Yeah.

Speaker 1 13:35 – 17:30

I mean, I I this is probably a time to have a whole con discussion by itself. But Yeah. There's a strong tendency at least in, I guess, like, maybe western standard philosophy, of seeking non contradiction. Mhmm. Also to these kind of pure views of the world. I have quite a strong existentialist kind of vibe, and maybe in existentialist traditions is there is more grappling with the fundamental contradictions of existence. Mhmm. You know? Like, for example, you perceive yourself as an individual, and yet you cannot survive without other people. You know, that's like a contradiction in itself. Right? So all these angsty discussions about whether a person's an individual or not, there isn't really an answer. Right? You're kinda like both. So Right. Yeah. And it's kind of a bit pointless trying to search for the answer. Right? That these things don't the the the belief that there are these either or things. Like, are we selfish or altruistic? I mean, these these these questions are slightly pointless Right. Right. To me. Yeah. We are many different things at once. Right? And I think, that is actually something that you do find also echoed in anthropology, at least in sort of more modern anthropology, to some extent, which is partly comes from encounters with people who have the same emotional and genetic makeup as yourself and yet hold very different ways of being in the world. Not only different, like, views on the world, but also entire different, like, practices and stuff. Alright? So at some level, there's a there's a core, like, shared humanity in the world in the sense that we all are these creatures on a planet trying to survive, and we all share the same sort of angst to some extent. But then we've got very different ways of expressing it. Right? So, I do I do think that our political discussions would be a lot more interesting if we accepted that basic starting point Mhmm. That, you know, all human beings at some level are are sharing in some common experience, but then have totally different strategies and means of of, making sense of that. So when I'm, you know, even I've even I even try to, like, not say, you know, like, right wing person or left wing person. Sure. Yeah. I'll try to say stuff like person who has tendencies that we we call right wing. You know? So so because a human being is, like, not defined by, you know, their political beliefs. Right? Like, they they and they can channel different political beliefs at different times. So many people that you currently call right wing are actually just people who happen to be an influence in a particular direction or happen to be emphasizing a per a certain part of themselves. But that's not the only part of themselves. Right? There's many other parts of themselves. Right? Yeah. That we actually share. So I think that's important in politics is to just recognize that, you know, even the obnoxious, like, anarcho capitalist, like, racist guy at the Bitcoin Cash meetup who tells me that, like, you you know, like, white people should be the, are the only, like, should be, like, the gods of the world. I mean, these people this this this guy, luckily, she would say stuff like that. I still have to try and bear in mind. It's like, there's some reason and some context that he's formed this belief in. Right. Right. I don't understand it personally. I don't have any emotional access to it, but to him, it somehow makes sense. And I don't quite know how it makes sense, but it's, like, something I could try try to uncover and try to work out and try to sort of, figure out. And that sort of helps me to maybe be in different ideological scenes at different times. I also come from South Africa, which has got a lot of, like, crazy stuff going down. So Mhmm. In South Africa, you kind of have to be, to some extent, like, open to the fact that people have crazy beliefs.

Speaker 0 17:31 – 17:56

Yeah. It's, like, one yeah. To me, it's it's almost like, I don't know. Like, keeping keeping in mind that you're talking to a human who has, like, like, the reason that they are speaking in a certain way is because they have some sort of experience that has led them to believe that, rather than kind of, like I think when that's forgotten, you end up treating that person as, like, an object disconnected Sure. Yeah. Yeah. In existence.

Speaker 1 17:57 – 18:11

And there's also sorry. No. Go ahead. There's also, like, a terrible bias in modern thought of imagining that people come to ideas through rationality. Right. Which is just like a kind of an absurd belief.

Speaker 0 18:12 – 18:14

Right. Right? You're you're along with the rationalists.

Speaker 1 18:15 – 19:21

To me, it's just like people and I don't mean that we don't have rationality. It is maybe like an element of our being. We do have ability to to rationally abstract thought. But, like, the the reason why certain ideas resonate with us is that they they emotionally resonate. Alright? And often, like, battles of ideas are sort of proxy warfare. It's like a proxy way of of, like, emotions battling. Mhmm. This is also why I'm not always that interested in sort of pedantic accuracy. Right. Right? Because, I mean, you can rock up in an academic department or, like, the world's best universities, and you'll find extremely smart people who have exactly the same information, who will come to totally different positions to each other. Mhmm. Alright? Right. So there's no there's no sort of, even the world's most, you know, intelligent people will disagree, which you know? And and the reason why they'll disagree is precisely because they got different emotional and political impulses. Alright? That that's they're gonna use to sort of curate their the information in the world. And I think you gotta take that seriously and try to sort of meet people there. Alright?

Speaker 0 19:23 – 19:48

And yeah. So that's the kind of vibe I I have. Yeah. That's fair. I mean, definitely, if I think at least if I think about myself, like, for sure, my politics is obviously, like, going to be heavily, influenced by my personal experience. And, like, I'm going to read things through the lens of that. So, like, I can't, you know, I I I can't, like, think of myself as, like, some, I don't know, completely logical computer that has, like, found the answer.

Speaker 1 19:49 – 20:48

And even if you had found the answer, nobody would actually necessarily care. Because Right. You know, if you went to everybody and you say, I have discovered the ultimate truth, they would look at it and they'd Drop it off. And be like, oh, yeah. Well, there's there's there's actually a different one there I kinda prefer. You know? And, again, not that we should we should give up the attempt of of trying to have integrity and thought, but I think it's a bit of an illusion to imagine that, like, stuff that makes sense to you Yeah. Should necessarily make sense to everybody else. Because the reason why something would make sense to you is it's sort of like, you know, it aligns to some kind of experience and emotions that you you yourself only have probably or you and a shared group of people, but it's you can't assume that somehow everybody else should should resonate with that same thing. And that's what, you know, that's what the hard thing of dealing with, like, you know, for example, far right people and stuff like that. It's like, okay. Like, what's going on here? Like, what's the, what experience are they having of the world that this stuff makes so much sense, you know, to them?

Speaker 0 20:48 – 21:06

And same for all the political groups. Yeah. Sure. I think I I liked what you said earlier because we were on the panel, for Circle's, Entropy a few days ago, and they were kind of looking I think the phrase, like, putting privacy in by default is kind of the thing that he said. And then I think you meant you said, like, cont putting contradiction

Speaker 1 21:06 – 21:54

Yeah. Yeah. Yeah. Default and Yeah. I was I was asked in this other podcast, like, if you had one political wish and you were kind of, like, if you could have it fulfilled, what would it be? And I I actually just said, I'd love to see everybody appreciate contradiction. Mhmm. Because I think it would help so many things. Right? You'd, in terms of, like, having productive debates about how to solve global problems. You know, if people had some basic appreciation that, like, there are fundamental contradictions in the world that can't be resolved, and this is gonna probably express itself in conflicting thoughts, we'd probably be a lot more empathetic towards each other. Alright? We're probably more prepared to work together. Alright? It's the sort of the absolutist types of positions or the assumption that there's universal

Speaker 0 21:54 – 22:19

things that that tends to make politics really, really hard. Right. Is that do you think that has to do maybe as well with, like, the I mean, particularly just the things that you are advocating for that just happens to be a lot of, like, more right leaning tended people? Then so then you have to kind of, like Yeah. What for you to, like, put forth? Yeah. And a lot a lot of my work that I do, I I'm forced to engage a lot with people on the right.

Speaker 1 22:20 – 24:05

This includes money more generally. There's a long tradition if you're looking at monetary systems of people who will come from the right, who also are concerned about monetary systems, often for different reasons. But they will they will turn up at my events. They'll, you know, tell me things that, like, you know, the reason why we're all screwed is because there's fractional reserve banking and that the Rockefellers are behind it, for example. Whereas from a left wing perspective, you might say, well, the banking sector is an extension of, like, corporate capitalism and its shareholders, right, which are like pension funds. Right? You might have actually some of the critiques of something, but you come in from very different perspectives. But, specifically, more recently in the realm of, like, I'm doing defense of the cash system. There's a quite a strong contingent of, I come at it from I have a very left wing position on why we should defend cash, but there's a very strong contingent of of right wing thinkers now who've taken it on as part of their kind of suite of ideas. Right. Because, you know, the the you know, a lot of these a lot of political groups work with, they they kinda curate issues into bundles. Yeah. So it's like, if you're a right wing if you wanna signal that you're part of a particular political group, you've gotta be, like, anti work, you've gotta be, like, anti CBDC, plus you gotta be anti, like, vaccines. And so you there's this whole kind of, like, series of things that that they'll kinda curate as being sort of a part of a bundle that you take on. Yeah. And being pro cash has been included in the current right wing bundle. Uh-huh. I'm trying to get it included into the left wing bundle as well. Right. Right. But it's a bit of a you know, it takes takes a while. If you had to what what kind of bundle do you think,

Speaker 0 24:05 – 24:11

pro cash, pro, like, I feel like urbanism would go well with that. I don't know.

Speaker 1 24:12 – 25:20

Yeah. There's actually different bundles you can have. Like, in the centrist bundle, you can actually you could also insert a pro cash position into a centrist bundle. It's quite tricky to do it, but, a lot of my arguments for the defense of cash right now for centrists involve talking about balances of power. Right? You need to keep a balance of power in the monetary system, and one of the ways to do that is to keep physical money. And actually, centrists resonate with that message a lot. Right? Because it doesn't involve having to throw out, you know, digital, right, which is politically unassailable for the sort of sort of standard kind of mainstream person. So, you know, that's how you that's how you you try to include into the central stuff. And the sort of left wing camp, the the the at least the more kind of radical left camp, the cash position is anti corporate. It's pro public. So that's a way of doing it. In the right wing camp, it's all about, like, you know, protecting real money from the sort of, like, clutches on the the digital state. There's a lot of contradictions in the right wing position, actually, and it's it's quite interesting to sort of engage with that.

Speaker 0 25:22 – 25:33

So yeah. Cash is But by but by advocating for a a cash system, you're able to open a door for them. I feel like to, like Yeah. Invite them into your mind palace.

Speaker 1 25:33 – 26:33

Yeah. Yeah. A lot of my work right now on and this is my book, Cloud Money, was all about. The original title of Cloud Money was for the hardback cover was, the subtitle was Cash Cards, Crypto and the War for our Wallets. But for the paperback, they actually changed it to Why the War on Cash Endangers Our Freedom, which is actually quite, let's say, a sort of a libertarian y right way right wing style of language, actually. And what's quite interesting in the current version of Cloud Money or the pay the paperback version is that actually on the front cover, I've got an endorsement from Yanis Varoufakis and Kate Raworth Right. Who are both, like, left left wing thinkers. But then I got this very, like, coded right wing sort of, like, subtitle. And I'm I'm kind of intrigued at, like, how those two interact with each other. Yeah. When the sort of, like, lefty looks at it and then and then the sort of person who's or, you know, and so I'm I'm I'm finding it interesting sort of engaging in this debate with, different political groups.

Speaker 0 26:35 – 27:18

Yeah. Yeah. No. I mean, yeah, I took I tried to take a similar thing with with my book. The subtitles, I guess, is a bit more how capitalism ruined crypto, how to fix this. Like Yeah. You know, if you're, the average person in crypto, you're I mean, I guess, in in this particular moment, it's like, we are in a bit in a bear market, and there has been, like, a pretty big decrease in interest and, like, capital flowing in. Yeah. So I think a lot of people who, like, still really believe that, like, I think they're it's a chance to kind of, like, help them question their ideas about Interesting. Yeah. You probably it's probably quite a You put metallic at the top. Yeah. Like, yeah. Yeah. Very cool. Yeah. That's interesting, actually. That's right. Thinking similarly to try and invite people into my mind palace.

Speaker 1 27:19 – 27:27

Yeah. To be like, okay. You're having a moment of reflection or something, and here's an alternative take. Yeah. Mhmm. Yeah. That's cool.

Speaker 0 27:28 – 28:02

But so, money. Can you explain I know you've done it probably a million times in your life. But for someone who's listening who does not know very much about the monetary system, do you wanna go through, like, how you would, I guess, explain the monetary system to people who, like, I don't know, someone who's like, yeah, but I like my credit card because I don't like to carry cash with me. And that's, like, a very convenient Yeah. Thing for me to have. How would you kind of present the monetary system and kind of, like, get politics to someone like that? Well, the first thing to say is that there's a difference between,

Speaker 1 28:06 – 28:19

sometimes you'll find this debate. People will say, like, what is money? Alright? It's like it's always this, like, big, like, existential question. And I sometimes find that question, like, a little bit, you know, it's like it's like asking, like, what is art?

Speaker 0 28:20 – 28:24

Like, it's like it's not a real singular thing. We have historical examples,

Speaker 1 28:25 – 36:02

right, of what these things are. What we currently call money has a particular structure to it. Right? Mhmm. So our current monetary system has a very specific, multilayered structure. And there's a big problem in society where people often don't recognize that multilayered structure. They'll sort of just generically refer to it as money, and they'll I sometimes call this the atomy, the one type of money illusion Alright. Yeah. Where people will think, for example, that the British pound or the euro or the dollar is a single currency, when in reality, it's a whole sort of ecosystem or constellation that sort of orbits around a center as it were. And, actually, there's multiple different issuers of, for example, the US dollar, issuing money in different forms, in different, kind of layers. And so so, yeah, like, I when I'm trying to highlight the politics of of money, it helps to have a first step, kind of like a an appreciation of those layers. And, yeah, one of the core metaphors I try to use, which I think you've already heard before, where I'm trying to sort of help a person to get a sort of initial step into understanding the current structure of the monetary system is I will ask them to think about casino, you know, and casino chips. Right? So, like, you know, if you walk into a casino and you hand over cash to a casino, they're gonna push out chips to you. And you can make a very strong mental distinction between those chips and the cash. Right? You know that the casino now owns your cash behind the counter, and you have these chips. And you can pass these chips around inside the casino. And then if you happen to have them at the end of the night or not, or whoever has them at the end of the night can go back to the cashier and can redeem those chips back for cash and leave the casino. Now Now most people have a very strong understanding of what's going on there. They can say, oh, there's two types of things here. There's the cash behind the counter, and there are these chips that I that I hold. And they also understand that when they hold the chip, they don't actually own the cash. Alright? They can only claim the cash that they hand the chips back in. Alright? And it's actually quite a good sort of opening way to start thinking about the monetary system more generally because, the banking sector does a related thing to that. If you hand the banking sector cash, they're gonna issue out the digital equivalent of a casino chip to you, basically. And that's what will often very confusingly be called bank deposits, but you can also just call it bank money or digital casino chips. So those are the units in your bank account or these digital casino chips, and the banks have taken ownership of your cash. And, so what you know, once you've sort of grasped that metaphor, you can immediately start to see some things about what's called cashless society. And a cashless society is a society where you're dependent upon these bank issued digital casino chips. And not only bank issued, you then have sort of third layer on top of that, where there'll be like players like PayPal, for example, who are gonna take your bank money and then issue their own money on top of that. Right? And so there's sort of these three chained layers to the monetary system. There's a lot more complexity to that, and there's some problems with the metaphor, you know, but at some basic level, that's a good starting point to start to understand. So, you know, cashless society is when, you know, you you lose access to that first layer of money and are forced to use the second and third layer of money in digital form under the control of corporations. Mhmm. And there's a bunch of structural problems that emerge emerge from that. The other important thing to, like, bear in mind is that in the sort of second layer of our monetary system, which is controlled by the banking sector rather than rather than the state, The banking sector, unlike a casino, has the ability to push out a lot more of these digital casino chips, as it were, than it has in layer one reserves. Right? And in the old days, they used to call this fractional reserve banking. It's more accurately referred to as credit creation of money. They just can create these these, new units of second layer money in order to and they'll do it when they're giving out loans. Right? So if you rock up and you have it like a whatever. You're trying to get a mortgage or you're trying to get whatever or you're trying to start a business, they'll just issue out this new layer two money to you. Right? And that's a political that's a political process. Right? Then the banking sector gets to decide what parts of the economy they're gonna mobilize or not. Alright? They're highly prepared to say, you know, like, mobilize the mortgage markets because they can take your house as collateral, but they they might not wanna do it for, you know, stuff that's more socially useful, for example. Right? And so one of the big critiques that emerges of the banking sector is that they they have this power to create money and mobilize whole sections of the economy, but they selectively choose to use it for only certain things. And that's political. That affects the composition of your economy. That affects, you know, who's getting what, right? So, there's a bunch of politics. And in the cashless society, you're basically totally captured by that second layer of the money system. And, you know, this is why I would go into sort of protect the cash system to say it's super important to keep this, balance of power such that we are keeping, you know, balance between these different layers and different issues. But it also this this sort of, scenario also played into the origins of Bitcoin. Right? Because bear in mind, in the nineteen nineties and stuff, people were looking forward into the Internet age. Mhmm. And they were saying, you know, if we end up in this scenario where we where we don't have access to physical cash, we're gonna basically be captured by these big digital players. Mhmm. Now people in the crypto scenes didn't necessarily have a sophisticated vision of how the monetary system was operating. They didn't necessarily think about the layers. They might have had this sort of crude mythology of thinking about money, but they basically instituted a certain thing, which is digital money Fairly correct. Requires a bunch of intermediaries who can see what you're doing, and they can choose to stop what you're doing. So there's the underlying intuition behind stuff like Bitcoin is basically sound. But rather than saying we should protect the physical cash system, the intuition in the crypto world was like digitization is inevitable. Therefore, we must build a kind of sort of decentralized version of a digital cash in order to to, so it's quite interesting looking at the crypto world because often they'll contest certain aspects of of the money system and, you know, saying, like, hey. We we should have not have the central players, but they won't contest other elements of capitalism, for example, acceleration and automation. Alright? So they'll be like, we you cannot stop automation. You cannot stop acceleration. So let's go with it. And that's like a difference of me, for example. So, like, when I'm doing work on protecting the physical cash system, you'll have people in the crypto scene who are like, oh, that's kind of interesting, but don't you think it's futile to try to hold on to some sort of analog, non automated, non digital thing? Right? And that's, you know, that, for example, a point of divergence that I start to have with them. Right. It I mean, I think this particular

Speaker 0 36:03 – 36:48

view probably come I mean, it comes from, like, the contradiction of probably, like, the techno utopianism of, like, you know, or is it, like, the sovereign individual with, like, maybe, like, I mean, an understanding of of of it's like you want to be you want to have your own individual power, but at the same time the Internet is a bit of a surveillance machine or, like, it's something that, we are not digital beings, and therefore, you have to rely on some sort of digital infrastructure Yeah. In which they can see everything. So you have to, like how do you deal with the contradiction of keeping your, you know, personal liberty on a technical Yeah. On the on this Of course. Yeah. Communications mechanism. And so, yeah, they have this whole, yeah, they create then this narrative about about all this stuff. Sure. Yeah. Yeah. Of course. And then there's lots of

Speaker 1 36:48 – 36:59

from an ideological perspective, there's really this fascinating stuff going down in in crypto land. You know? Like, he says, like like, yeah, like these sort of,

Speaker 0 37:00 – 37:03

fantasies of the individual and stuff like this. And,

Speaker 1 37:04 – 39:55

you know and and that's but that's one of the interesting kind of parts of of crypto is, like, you have these, like like, for example I mean, this is a bit of an aside, but, like, one of the things I find most fascinating in the crypto world is, like, the the underlying libertarian position has a has a contradiction in it, right, which is that they'll have a have a sort of, a kind of a statement about human behavior, which is to say that, you know, humans at some level are fundamentally selfish. Alright? There's a there's a version of that argument going on there somewhere saying, you know, not only are people selfish, but actually there's a virtue in pursuing your own egotistical ends. So there is, at least in some parts of libertarianism, this, like, ethical egoism, which is to say, the only truly correct thing to do is to follow your own interests. Right. Right. And that this is like a kind of, it's like a variant of utilitarianism except, like, applied to, like, your own interests. So you should do what maximizes your own self interest rather than what maximizes the collective interest. And that's basically like economics has that position sort of embedded in into it at some level as well. Right? But it creates these sort of, like, problems. For example, you know, like like, they'll they'll be, like a lot of libertarians won't know if they've sold out, if they start pursuing their own interests by working for the government. Mhmm. Or, like, you know, like, Pelenta. You know, a classic example is, like, run by these, like, libertarians, but they, like, sell states' surveillance software, right, and services. And they're, like, you know, I'm going on a bit of a rant like, random side here. But, who's the guy who runs Palantir again? Peter Thiel. No. Yeah. His his Joe Lonsdale. Yeah. His his protege. You know, I've watched Joe Joe Lonsdale being on a stage once, and I was at Singularity University in in The US, and Joe Lonsdale rocked up there to talk about Palantir to for for the students. Yeah. And he went on this long thing about how he supports the seasteading movement, about building stateless cities on the sea. And this is like he says this in the same breath as he's like selling state level surveillance equipment or or, like, expertise. Right? He didn't see a contradiction in this. Right? It's like, isn't there, like, a massive ideological contradiction? But in his mind, like, he's like a businessman. So he's like, it's as a businessman, it's in my moral interest, so it's morally correct for me to pursue, profit. And if that means working for, like, the government, then fine. But, like, he had this other compartment in his mind for being, like, anti government. And I figured you find this, like, loads in crypto with these these strange, like, contradictions in libertarian thought around Yeah. Of course. You know? We're actually sort of, like, highly pro capitalism, but we were kind of, like, wanna reject the idea that capitalism involves, like, centralization

Speaker 0 39:55 – 41:29

of power and mass corporations who take stuff over and Right. Anyway, I'm kind of kind of No. I think I mean, like, yeah, I've I've noted it before just like there's a I mean, yeah, there's a bit of a it's it's a bit of a meme, but there's a pipeline between like, you start off as, like, a hyper or individualistic libertarian and you end up coming, like, really far right into, like, authoritarian kind of fascism, oftentimes. Yeah. It's a bit of a meme. For sure. And that's a big trend. Because I think that's how when you, over time, deal with the contradiction, depending on which side of the thing that you like of the contradiction you are more into, you can veer into, like, this authoritarianism where then you just, like, reject kind of the other half of the contradiction. Just go full in. Yeah. Yeah. For sure. For sure. But, so the money system, I think, you know, in case people are are are trying to keep up, like, from based on my understanding, right, there's often this, incorrect notion that it's the governments that makes money per se or, like, adds money to the economy. Usually, it's retail banks, who create credit. And that's, like Yeah. A big majority of of the money that gets added into the economy. It's something that's often missed and is part of and so it's often ignored in, like, the the libertarian kind of narrative. And therefore, the original crypto narrative or Yeah. The most common one about, like, you know, money printer gobert. It's really, like, retail banks take out taking, like, reason, like, central banks kind of incentivizing retail banks to take out loans from them Yeah. To credit to the economy.

Speaker 1 41:29 – 41:57

Yeah. And then there's a symbiotic connection between the different layers in the money system. But, actually, operationally speaking, most of the money creation takes place by commercial banks. You know? Like, so, and yeah. You think if you think about it I mean, I'm trying to think of, like, how you how you explain this. Like, the monetary system was always expanding and contracting constantly. Right? There's always new money being created and destroyed as people.

Speaker 0 41:57 – 41:59

Destroyed via taxes.

Speaker 1 41:59 – 42:37

Yeah. Not only taxes, but by paying back loans. Right? So so so you can kind of see that there's a sort of a symmetrical processes going on. So there's, like, in a normal monetary system, you'll have these different layers of issuance. So, like, for example, the government's issuing money. But then the banking sector's also issuing money. Right? The banking sector issues a lot more money than the government when it's when it's making loans, for example. But then there's a reverse processes as well. When people are paying back loans, money's being destroyed. Mhmm. Right? And also, when people are paying taxes, for example, or any kind of payment to the government, money is being destroyed as well. So these these constant simultaneous issuances and destructions of money going on.

Speaker 0 42:38 – 42:41

At different places of the economy. Yeah. Yeah. Exactly. Exactly.

Speaker 1 42:41 – 47:15

So, you know, where where for example, you know, you can you can even map this in your own life. You know, if you have a loan with a bank and you like well, there's even a credit card. Alright? And you have to pay back your credit card. Like, every time you're pushing, you know, pay, you're destroying some money. Right? That was that money was created through the through the credit creation of money in the banking sector. It was sort of second layer money gets destroyed when you repay your credit card. Similarly, when you're about to when you're, like, filing your tax return, you go into your bank account and you say, like, you know, you you type in the government's bank account into your transfer box and you say, you know, send money, what's actually gonna happen is that, you know, the bank is gonna wait. There's a bunch of mechanics. But in the end, the final analysis is gonna manifest as, money going into the central bank account of the government, and that's where money goes to die. Right. Right? Like, that that money doesn't exist. That's like a kind of that's like a black hole. It disappears. It's the alpha and omega node. Exactly. Exactly. Right? And then so so and people you'll and this is one of the big topics you'll find in, like, communities like the modern monetary theory, like MMT and stuff. They're focused a lot on these processes. But the basic point is that there's this this money creation is constantly going on, and, you know, a lot of it's happening at the front lines of the banking sector. So, you know, like, for example, you're sitting in Commerce Bank or you're sitting in Barclays, in London. And I don't know. Some, like, it's he's a very cliched example. Like, I don't know. A property developer comes and they're like, we're gonna we wanna build some new mall in the outskirts of Birmingham. There is land there. There's a labor market where we can ask people to work for us. We have all the various components available to make this thing appear out of the ground, but we need the money to do it. Alright? And the banking sector will say, okay, here we go. We're gonna issue a bunch of new second layer digital casino chips to you. Now they're in your account. Boom. Right? There's a loan. Now you can use the payment system to send those to other people to make them turn up to build your building. Mhmm. Alright? So they'll then use the payment system to transfer all those units, and people will rock up, contractors will get paid. Mhmm. And the the bet that's going on in the banking sector is that in the process of mobilizing that new those new resources, which include, like, natural resources and human labor, something is gonna get created, which will create new monetary flows, right, which will in turn enable the things to be paid back at some point. So in many ways, the the banking sector is, like, creeping around, mobilizing parts of the economy. If you have a romantic perspective on this, you'll imagine that they're doing some kind of, like, they're doing God's work. They're sort of helping people get employed and stuff. But as Job creators. Job creators. Well, they're enabling, like, they're giving quote unquote liquidity, I hate that term, but like they're enabling the economy to breathe. Right? In the absence, because think about it, in the absence, imagine there's a there's a there's a bare plot of land and a bunch of people who want to work. Alright? In an original human economy twenty thousand years ago, if you have a bunch of people facing a bare plot of land, they don't need money to, like, rock up there and make do something. Right? Right. Like, we're gonna make food on this. Yeah. They'll just do it. Right? They have the ability. It's like you have your body in the land. You're gonna do something. Right? Whereas in the capitalist economy, you basically cannot operate on your intuitions unless you have money to tie it into the process because you're part of this vast, like, independent organism. So the banking sector will, like, step in there and sort of provide the money to, like, enable that those processes to happen. At least this is the sort of romanticized theoretical vision of banking. So, you know, in a healthy banking sector, if it was well structured and it had good incentives and stuff, hypothetically, you could imagine a productive banking system that said, hey. We're gonna mobilize people to build renewable energy resources. It's not gonna create inflation because they'll be building as we create new money, they'll be building useful things that will neutralize the inflationary effects. It'll help us to live a better lives and so on. And so the politics of, like, alternative finance and financial reform tends to be around, you know, how do you steer those processes? How do you get better outcomes of it? You know, what happens when your entire banking sector is controlled by these giant corporations who don't give a shit and they only wanna serve as shareholders and so on. You know? That's the kind of Yeah. So then, like, in this so, like, because,

Speaker 0 47:16 – 48:16

you know, these assumptions and the structure exists in the banking system already, like, my kind of, my feeling about it, and I'm I'm curious if you, like, you agree or disagree, it's kinda like that. There is this, yeah, there's a lot more power to retail banks, because they're able to have direct access to central banks to, to get loans for them to then loan out, to the economy. But, usually, what's kind of happened is that these banks are very I mean, they're conservative in many ways, and so they, they're more incentivized to give out loans to other corporations that they kind of focus their clientele on, like, big corporations because they're going to take out bigger loans, and, you know, whatever. They have more capacity to make good on those loans, they probably feel as well. Sure. Yeah. So as kind of, like I don't know. As they become bigger, they want to deal with bigger customers. Yeah. Scale seeks scale.

Speaker 1 48:17 – 50:50

Yeah. Yeah. So then and That's a that's a story of capitalism, actually. You know? And I suppose the sort of romanticized libertarian visions of capitalism, they'll imagine somehow that it's a realm of these sort of small mom and pop shops who are all trying to, like, do, you know, do their thing. But that's, like, a very marginal part of actual capitalist systems. Right? Actual capitalist systems, you have gigantic oligopoly structures where the oligopolies wanna deal with each other. Right. Right? The banks are sort of in competition with each other, but they're mostly, like, collaborating. Right. And, you know, this is a big part of cashless society. Like, a lot of human beings actually like cash. But if you look at a big corporate retailer, for example, they hate cash. It's like Uber, for example, doesn't want individual customers rocking up saying, like, oh, can I hand cash to your driver? They're like, no. No. No. You're gonna send a message to your bank and tell your bank to to, transfer to our bank. That's what you're gonna do. And it's gonna happen in an automatic fashion. Right? We don't wanna have to deal with you. Right? Because at scale, you wanna automate everything and then and scale everything up, and that means dealing with other super large automated players. And so this is why, you know, big tech and big finance always sort of fusing together. Too many costs involved. Yeah. Yeah. So this is this is a big thing going on in the financial sector, all the time. These these massive players are are kind of, like, scratching each other's backs and stuff. And Mhmm. Or even when or even when they're sort of trying to deal with small players, you know, like Lloyds Bank or something in The UK, giving out lots of mortgages to individual people, it'll try to automate those processes and standardize those processes such that it doesn't actually have to deal with those people as humans. They they say, like, you're not really humans to us. You're sort of this necessary evil that we have to deal with in order to make profit, but we're not gonna deal with your idiosyncrasies your idiosyncrasies as human beings. You're gonna have to go through a bureaucratic process to interact with us, a standardized rule set. Right? You're gonna have to show us a bunch of things, have a bunch of automated, like, you know, credit checks and things like that, and then we'll decide based on essentially, like, algorithms rather than, you know, a human banker who's gonna sit there and decide if you could get a loan or not. And then once we have your mortgage issue it out, you know, we're like, package that up into a big bundle and do, like, super large scale, like, risk management processes. Like, we don't care about your individual mortgage. So this is this is a big thing in in finances that, like, they're operating at such scale that they don't really care about individuals.

Speaker 0 50:52 – 53:02

Hi, everyone. If you're enjoying this episode so far, be sure to subscribe, leave a review, share with a friend, and join the crypto leftist communities on Discord or Reddit, which you can find links to in the show notes. If you're enjoying the episode or find the content I make important, you can pitch into my efforts starting at $3 a month on patreon.com/theblockchainsocialist to help me out and join the nearly 100 other patrons that contribute financially, which really helps since making this stuff isn't free in terms of money or time. As a patron, you'll get a shout out on an episode and access to bonus content like q and a episodes where you can submit and vote on questions you'd like me to answer, and I'll give my thoughts in roughly twenty minutes. The current bonus episodes have so far explored plenty of topics, including how co ops and DAOs relate, whether there is a socialist blockchain, a review of previous crypto events I've been to, and recently a video reaction to an episode of The Deprogram. Of course, I'll still be making free content like this episode to help spread the message that blockchain doesn't need to be used to further change capitalist exploitation if we put our effort into it. So if that message resonates with you, I hope you'll consider helping out. Sure. Yeah. So, like, kind of the the way I kind of, try to frame, like, a reframe the money, kind of question for a lot of, libertarians is kind of, like, it's not about it's not that we need, like, a hard money in order to make things more equal, for people. I think that's kind of the thing that a lot of people get, like, well, Bitcoin is a better money because there's only, 20 there's only ever going to be 21,000,000, so we all know how much it's going to be, and that makes it more fair. And the problem is that, like, governments prints all the money and therefore, you know, they have all the power. Like, I'm sympathetic to, like, I don't know, whatever, large actors do have, like, way more power in the system, but it's like it's more it's like private actors that have special access to money creation that everybody else do not. Yeah. So it's like a very it's clearly very anti democratic. And so, like, I don't know. I kind of think of it like the closer you are to the flow of money, like, the easier it is to make money. It sounds, like, very obvious, but I think, you know, banks can easily make a lot of money because they're, like, next to the spigots. You know?

Speaker 1 53:04 – 55:13

Yeah. One of the most interesting things in crypto is that historically like, something like libertarianism or at least, for example, anarcho capitalism, these these belief systems are they're almost not designed to be actually implemented. They're they're they're they're more supposed to operate as platonic ideals. Yeah. Like a kind of, like, unachievable on top of an unachievable, like, you know An asymptote. A flare that sits there in the sky. And then it's like people know they're never gonna get there, but they're like, well, it sort of helps us to structure our actual world. Alright? So so a lot of, like, libertarianism and and stuff is like is like an ideal type rather than something that actually exists. You'll find versions of this in left wing thought too. These sort of unachievable ideals that sort of act as a kind of like a, you know, like a beacon. Mhmm. And what was really interesting in crypto is that there's sort of one element is that they they kinda like broke that, what's maybe I could sort of tacit agreement that you're not actually supposed to try to act out the ideal. They suddenly had, like, tools to try and literally code the ideal. Right? And then tried to actually do it. And it hits up against the reality of what actually happens if you in some in some ways, you don't want to enact the ideal because you'll suddenly realize that it doesn't work. It's better to just have it floating there in the sky. Okay? So in crypto, they'll be like, okay, we're gonna use Bitcoin to, like, encode the hard ideal of, like, a hard money. And so, like, okay, well, what's gonna happen? Well, the actual fiat money system will, like, run circles around you and eat your system. Right? It'll turn your hard commodity money into a object to be traded in the fiat money system. That's what it's gonna do, de facto, in the actual capitalist system. And for you to not see that, you're gonna have to engage in a bunch of, like, cognitive dissonance to keep your belief alive. Right. Alright? So I don't know if that makes sense, but there's there's there's a very fascinating, like, innocence in the crypto world where they actually believe that the ideal was supposed to be achieved. Right.

Speaker 0 55:14 – 55:26

But I think it's an innocent but it's, like, also as well, like, I mean, a lot of people, I think in the past couple of years, I feel, have been maybe a little bit disillusioned or disenchanted by

Speaker 1 55:26 – 58:21

the fact that it hasn't happened. Yeah. Yeah. Well, exactly. This is what what happens if you actually try to enact the ideal and you realize that it's it's a kind of, like, it doesn't really exist. Right? It's a, it's it's like, you know, have you ever heard and I don't wanna pick on people with libertarian tendencies here, but, like, have you heard the word freedom, for example, in libertarianism? It's it's it's like position as if it's supposed to mean something absolute. There is no such thing as an absolute freedom. Like, it's it's a word. It's like an English word. That's all it is. Right? Like, what it actually manifests as in your physical being is very confusing because, like, if you think about it, like, what is freedom supposed to mean? You don't even have freedom in your own body. You have to eat every day. Right? You don't have freedom to decide that you're not gonna do that. I mean, at some level, maybe you do. But, like, it's at some level, it's, like, slightly absurd to imagine that there's a pure essence called freedom. Right. Or a pure essence called anything. Right? Like, and so so really these types of, like, these words are really these sort of abstract concepts that act they're not there to actually be achieved. They're there to sort of, like, influence our behavior as, like, beacons. Right? Mhmm. And you sort of will deploy these words to try and, like, influence behavior. Right? But if you actually had to, you know, you know, create a a sort of, like you know, people who who create sort of intentional societies do this. So they're, like, we're gonna encode a very hard set of rules about how you're supposed to behave. And then you suddenly realize that it's, like, just falls apart. Right? So, like, the history of, like, libertarian, like, free states and stuff. Like, you try and like live by this ideal, and then you realize that it actually is a giant shit show. Right? And then everyone's just illusioned by the ideal. So I think it's a bit similar to this in like Bitcoin. And they'd be like, okay, we've discovered the perfect money. It's like, okay. And yet, like, why is it doing all this, like, really messed up stuff? And Why hasn't everyone adopted it already? Yeah. Yeah. And why is it that, like, it's priced in US dollars and, like, nobody in the banking sector really gives a shit? Right? It's like, well, because in the actual capitalist economy, this thing doesn't operate as the ideal thing you imagine it operates. What it's operating is is a commodity to be traded. Mhmm. Alright? And that's in a way what it is. Right? And so so, yeah, this is one of the most fascinating elements in the crypto world, is these sort of almost I mean, there's different ways of putting it, like, puritanical, innocent, naive beliefs that you can somehow enact these types of, like, ideal type, you know. And the amount of time I mean, I was on I was on Twitter or x, whatever you call it yesterday, and I saw Max Keiser. You know, Max and I used to, like, kind of have some level of alignment until he went, like, totally, like, you know, full Bitcoin. And he had this whole weird long long tweet rant where he's like, Bitcoin is the perfect money. Right. And I was like, that's so counterintuitive to me. I would, like, never say something like this. I don't like, the belief in a perfect form is, like, so

Speaker 0 58:21 – 58:22

abstract.

Speaker 1 58:23 – 59:58

It's so, like, platonic. Like and I I use this word platonic ideals, but, like, you know, like, if you I don't know if you know, like, about, like, Plato and stuff. Yeah. Yeah. That's, yeah. You you create this, like, sort of this this realm of, like, these, like, strange things that float beyond beyond the human realm. Right? And it's like, there's like Max Keiser saying it. Like, Bitcoin is the perfect money. And it's like, if that was actually the case, like, why why does it, you know But really, I think it's also like I think it's one of the questions, like, for who? Yeah. Who is it a perfect money for? Yeah. But but again for him. It's going back to this contradiction thing. It's like he's got a, like, a non contradictory way of thinking. He's like, there is a perfect way of being. Right. It's like, how on earth did you come to the under the the the belief that there's a perfect way of being? That's like in a strangely like, it's so puritanical. It's so, like, it's, like, des desperately seeking some kind of certainty that doesn't exist. And that's what I find so counterintuitive in that. But I could also maybe empathize. I can say, like, okay. There are some people in this world who desperately want some kind of certainty. They desperately wanna be told that there is a perfect way of being, and there's a there's a perfect thing. And then Bitcoin, perhaps, for some people, stands as the perfect incarnation of money. And then it's sad because you'd see the reality, which is that, like, it's just a commodity being traded in normal markets. And you're like, wow. It must be like a weird web. Imagine having to live with that all the time, that cognitive dissonance where you're constantly seeing that this ideal of yours is just treated like a asset to be traded by, like, traders. You know? Anyway, I'm kind of walking. No. It's I feel I feel like I'm just doing these long, like, like, six No. But they're great. They're great.

Speaker 0 59:58 – 60:06

But, Brett, one Bitcoin is one Bitcoin. Dove. Why? It's so deep. That's so that's so deep. I didn't realize that. If you all believe that Bitcoin is money,

Speaker 1 60:07 – 60:57

then Bitcoin will become we just need people to believe That's true. You know, and that it's it's like also, like, if you're driving in a car and you're and you're like you're looking out the window and you're like, actually, the car is not moving. What's happening? Is it the road below me is flying in the opposite direction. It's like, yeah. Well done. Or like, I'm I'm, you know, I'm I'm busy, like, being is that there's like there's like a a kite, like, whooshing around the vortex of of a of a hurricane. And I'm like, actually, the kite is staying static. It's the hurricane that's racing around it. That's what's going on here, you know. Then that's like how you protect your belief, right? So so like you're like, oh, you know, Bitcoin is the single thing that's staying static while the rest of the monetary system is racing around it. It's like, wow. That's, you know Yeah. You can't choose to believe that if you want. What's

Speaker 0 60:58 – 61:56

yeah. So, like, one of the, the arguments that I kinda I took from you that I put in the book about money was, your thing on counter trade that's Yeah. And I I mentioned this. I I I tried to spread the word to to Vitalik whenever I was talking to him. But, that oftentimes I mean, people will say, like, oh, but I can buy things with crypto. I can go online and, you know, send them some crypto, and then I get I get my thing. Yeah. But what oftentimes happen is that you're paying crypto in the price of, what is the actual money? So I'm paying, like, $10 of Bitcoin to buy this thing. Yeah. You're paying with its its resale price. Yeah. So what we're essentially doing is is a counter trade. We're using the commodity of crypto to trade for the other commodity I'm trying to buy. Yeah. Yeah. It's not exactly barter either. It's like we have an imaginary price in our head, that is linked to the mon monetary system as, like, a Yeah. Yeah. Yeah. Yeah. And this is a way that we, actually get around the actual monetary system.

Speaker 1 61:57 – 65:57

And this is, like, a good thing that Yeah. I actually think, you know, I I do a lot of at least when Bitcoin was sort of its, like, most zealot zealot what's the word? Mania. Zealotish phase, which took me a couple years ago and stuff. You know, I'd often have to have these sort of debates with people who are heavily invested in it. You know? Now I'd raise this point that, you know, a large part of the crypto world operate through counter trade, which is basically the process when you're using something's monetary resale price as a guide for how much of it to exchange for something else that has a monetary resale price. Right? And you can you can do counter trade with any object in the world. Right? You can you can use a computer. You can use a mug. You can use, you know, whatever, like wooden, floorboards. Okay? I'm just randomly chipping things that's rude. Right? Anything that has a monetary price, you can do counter trade with. Right? You can say, you know, these cushions here cost €50, but your microphone costs, I don't know, a €100. I'll give you two cushions for that microphone. Mhmm. You know, if you're an alien from outer space looking from this, looking at it, and you'd only seen this example, you might say, oh, well, these people engage in barter. That's one way of perceiving it. Or else you might say, oh, they seem to use cushions as a currency. Right? That person gave two cushions for that one thing. That must be the the money system. Right? I got a lot of pillows in the bank account. Yeah. What was actually happening there was, like, rather than reselling the cushions for a $100 and giving you the $100, we just superimposed those two interactions over each other, canceled out the money part of it, and then just like handed each other the goods, which is a sort of a clearing process, which makes it look like, no money was involved or else that the one of those things was the money. But if we're doing cushions with up to a microphone, it'd be quite easy to see that both of those things have some other utility beyond exchange. Right? So we'd be like, that's a sort of barter like type of interaction. But if I disguise the cushion with a bunch of, like, monetary branding and Paint it with a dollar sign on it. For example, it becomes very easy to say, oh, that was a monetary transaction. It's very similar in the crypto world. You have these sort of very poorly defined digital objects, which have a bunch of which themselves are just limited edition numbers, actually. But you you you can you can as a sort of a side activity, you create a cultural field around them where you have a bunch of language and and branding that sort of creates monetary imagery around these objects. And then you can countertrade those objects using their speculative monetary price that you derive from, like, a dollar market. And then you can through that process, you can engage in the illusion that what's happening is a monetary transaction when, really, what's happening is countertrade. Mhmm. And this is very, very hard for people to to to grapple with. And, actually, when you show somebody that, they desperately wanna reject it. Because if you're heavily vested in the crypto community, that's a sort of seen as an existential threat to actually recognize that what's happening is countertrade. Whereas I would tend to say, actually, that's a very interesting feature of these systems, and, actually, you should embrace it. You should just call crypto tokens or at least lots of them counter countertradable collectibles, digital collectibles. And, actually, there's nothing wrong with that, and that's actually a useful property. And that's actually, you know, if I'm a political dissident, for example, I can use a countertradable collectible as a way of bypassing typical monetary exchange. Right. So it's a way of saying that Bitcoin doesn't compete with the money system. It rides on top of the money system. Right? That's, obviously, doesn't go along with the belief system of many like Bitcoiners or not not only Bitcoin as many other crypto communities. But I personally think that's actually there's nothing wrong with saying it. It's a Sure. It's a very successful countertrade system, probably the world's biggest countertrade system that we've ever seen. Yeah. That's what kind of,

Speaker 0 65:59 – 66:51

kind of the thing that I, have, you know, had to come across a lot is that, like, you know, Bitcoiners or whoever crypto people will say that's, you know, crypto is money. It's like or a better form of money or whatever the new money. And then someone, you know, who's skeptical, most likely from the left, will say, like, No. It's not. You're lying because it doesn't do this and that as money it should do. And therefore, you're it's it's bad. It's a scam. Yeah. Yeah. And, like, Margaret was like, well, it's not money and it doesn't really matter. That's, you know, the reason WikiLeaks made a made a bunch of money or, like, where people have to donate is because they were they were, of course, financially blockaded, and then they were able to, take in Bitcoin to to get around, to subvert the monetary system. And that was like, subversion of the monetary system is like a practical I mean, it's like a useful

Speaker 1 66:52 – 70:52

Sure. Yeah. Thing to do and tool to have. One of one of the one of the nuances of this, though, and maybe this is why it's a lot of the politics of Bitcoin come in is that Mhmm. K. De facto, it's a counter tradable collectible. A limited edition set of money branded objects that you can that have a monetary price, and you can use their monetary price to engage in exchange, their resale price, essentially. So if I'm in El Salvador and I'm in a restaurant, for example, in Bitcoin Beach in El Salvador, typically a restaurant will have set prices on a menu, say 20 US dollars for this thing, and they don't change the menu every thirty seconds. Right. Alright. If I asked to pay them Bitcoin in Bitcoin Beach, they don't have a set Bitcoin price. What because what's actually what they're actually gonna use is a counter trade ratio. So they'll first have to check what the current going price of Bitcoin is on its speculative market. They'll then calculate a counter trade ratio and say, like, how much Bitcoin would have to be sold in order to equate to 20 US dollars. Alright? So it'd be like, oh, you wanna pay us, quote, unquote, pay us in Bitcoin for this meal? Okay. Pay us this much. It'll equate to 20 US dollars. That's a counter trade. Right? So you're basically paying with the US dollar resale price of the Bitcoin. Right? Now that's that's what's de facto going on. But ideologically, it's very, very hard to let go of the sort of mythology of a big money because, normally, a counter trade object will have some other use beyond exchange. Alright? So for example, let's say I'm counter trading cushions for microphones. The cushion, if I'm imagining it as a being, it doesn't have any existential anxiety as to what it is. It's like, I am a cushion. I make things comfortable for you. The A microphone doesn't have any existential anxiety. It's like, I amplify your voice and put it onto the computer. Right? They they don't have any sort of identity problems. Right? They don't require they they they don't have any need to masquerade as being a monetary system. Right? Whereas if you take a, you know, a invisible digital object that has no, essence value. Essence beyond the fact that it's a number written out after a bunch of energy is expended, it actually has a lot of existential anxiety as to what it is. Right. Alright? So the claiming to be a money system is a very, very important part of how this thing, tries to get a monetary price. Right? And if you say, you know what? You should just accept the fact that you're not a monetary system and just accept this role as a counter trade object. It poses a kind of existential threat, the same to the to this thing. Right? So, actually, for the Bitcoin community, it's incredibly important to constantly try to differentiate it as a sort of better form of money to the actual system. And, unfortunately, the main way they're gonna do that is by the main way to differentiate yourself is to resort to a bunch of extremely conservative monetary ideology about hard money. Right? Now bear in mind, it's not a monetary system. It's a countertrade object that needs a marketing pitch. Alright? But the marketing pitch has to be drawn from conservative monetary ideology. So even if this thing ends up being useful as a countertrade object, as an ideological system. It ends up being like a kind of a like a a means to spread conservative ideology about money. And this is one of the most damaging aspects of the Bitcoin system, is it's useful as a countertrade object, but as an ideological movement, it's like spreads a whole bunch of extremely conservative thinking about what money is and what it should be. Alright? And, yeah, like, that's the kind of the main and this is also puts off lots of, like, lefties, for example. They'll kinda, like, buy into these debates about, you know, the marketing community around Bitcoins pushing out all the super, like, conservative thoughts about money even though Bitcoin doesn't actually compete with the actual monetary system. Right. Yeah.

Speaker 0 70:53 – 71:11

So how about when it comes to stablecoins? That I think that is maybe Sure. Yeah. Some people, they might bring up, like, well, I couldn't have I have dollar pegged coins that I can issue that are the same value of as the US dollar. Therefore,

Speaker 1 71:11 – 71:45

it is essentially the US dollar. Yeah. And then it it is. You know? And, actually, I hate that term stablecoin. It's kind of a slightly ridiculous term. And bear in mind the original reason why they called them stablecoins. They were supposed to be like, it's like Bitcoin except stable. Alright? So, like, this was this was a taxonomical strategy. Right. Right? It's like it's it's of the same class of object as Bitcoin, but it somehow has a sort of stable thing. It's like, no. The the better way to describe it is like, it's like PayPal except implemented on a decentralized, like, you know,

Speaker 0 71:45 – 72:08

database rather than a centralized one. But I guess it kind of alludes to kind of like the the reasoning why they thought it needed to exist as, like, a either getting more people in who are, like, more conservative about, like, you know, exposure to volatility of markets or, like, as a thing to traders that they can, like, you know, you can put it in a safe spot whenever you're getting out of a trade or something.

Speaker 1 72:09 – 72:35

Well, it's it's a totally different class of, if you're looking at tokens in the world, like, there's a bunch of different, like, primitives for tokens. And, you know, you can split them into a bunch of, like, categories. Like, for example, there's, like, the blank token. These these are the kind of words I use. Like, a blank token is a token that has no characteristics beyond the fact that it's a token. You know? So like

Speaker 0 72:35 – 72:41

a a piece of plastic with, like, nothing written on it. It's like a blank token. It's sort of like an empty signifier.

Speaker 1 72:41 – 75:52

Right? And Bitcoin is like a blank token. It it in itself, it has no actual characteristics beyond the fact characteristics beyond the fact that it can be moved around. And then it has a sort of marketing apparatus that sort of pastes imagery over that token. You then have, for example, like, a a badge. You know, like a badge is a token that's handed to you when you do something in particular. Alright? You know, you were a good boy at school. You did well in your test. Here's a badge for you. Here's a gold star. The gold star represents something that you did, but you can't actually go and use that gold star for anything. Right? You can show your parents and say, look. I was a good boy. If but but it doesn't do much beyond that. It doesn't guarantee you access to anything. You can't, like, rock up at a a nightclub and say, look. I got a gold star. This means you have to give me entry. They'd be like, well, it means nothing to us. Right? Where and then you have, like, access tokens, for example, like access tokens or things that do explicitly give you access to something. And and so, like, a a stablecoin, at least the sort of traditional ones, are in more in the realm of access tokens and, you know, and that's a very different thing. That's like most money operates as access tokens. And so, you know, and and I was sort of saying earlier on, like, about how the monetary system, you can sort of see it in these layers. The stablecoin systems, at least the sort of again, like, things like Tether and Circle and stuff, they're basically not that different to PayPal, which is a part of a third layer of the money system. It's like you hand them bank dollars, and they issue you, basically, a voucher Mhmm. For those bank dollars, and then you can move that voucher around. And with PayPal, you're moving the voucher around using a centralized system. With a stablecoin, you're using some decentralized system to move the voucher around. But in the end, they're both pegged or or sort of tethered back to the, sort of bank the banking sector. And in a normal monetary system, those chained layers, start to collapse into one. Right? So you most people don't make this distinction between the different you know, I mentioned that the atomy, the one type of money illusion before. Like, they start to just say, oh, there's, like, another pound or, like, another dollar. They start to collapse the, different layers into a singular term and start to basically see them as interchangeable. And often they are interchangeable, right, directly. And so that happens with stablecoins too, actually. People do see them as interchangeable with US dollars, and they become part of the overarching network and sort of psychological structure of the US dollar system. And so they operate far more like a monetary system than something like Bitcoin would. Actually, you'd probably use dollar denominated stablecoins to price Bitcoin. Right? That's, you know, so now. It it become Effectively the same. It becomes part of this the overarching dollar structure. And that is actually authentically probably interesting and quite subversive at just at some extent at least. So Right. Depends on the design, maybe. Yeah. And, obviously, the algorithmic stablecoins are a lot more, like, controversial because they're authentically attempting to untether. Right. Right? But that would normally involve a bunch of, like, algorithmic trickery that probably involves lots of weird counter trade moves. And eventual collapse of artificially synthesize the effect of holding a a US dollar. Yeah.

Speaker 0 75:53 – 76:03

Could you actually quickly if you can, like, kind of deep, like, or just, like, name the layers of the monetary system up to, like, a stable coin? Like, what's Sure. Like, base

Speaker 1 76:05 – 81:10

what what what economists would call m zero? I I don't like that term. This is called layer one Right. Money. Easier for crypto people to understand. Yeah. Layer because layer zero in any economy is actual human beings in, like, the world in, like, ecologies. Right? Uh-huh. But, like, the layer one money would be, like, at least in our current system, issue let's say, like, you know, in The US, like, issue by Federal Reserve or the government. And there's a particular structure to government money. Right? So it's issued out and pulled back in through taxation, and other things and has a particular sort of logic to it. But then there's a sort of layer two money is bank issued money, or digital casino chips is another one of the metaphors for it. And layer two money is, like, much bigger in quantity than layer one money because the banking sector is issuing out those that money to, when it's issuing loans and stuff. And that's what you see in your bank account. Right? That's that's those are the units in your bank account. Layer three money is players that will take your layer two money for themselves and issue them issue you their own units. So for example, like PayPal, like, what what what's PayPal's business model? It'll get you to make a bank transfer to it. So now in its JPMorgan bank account, it has your your your previous digital casino chips. Right? It now has. And now it can take the interest that you might have otherwise earned on that. Mhmm. Alright? And can also scrape fees off you for moving its units around. And, like, the main business model of, like, players like Circle USDC and stuff is to take the interest that you would have otherwise earned on your layer two money. Alright? They they'll they'll get you to transfer money into their bank account. They'll then either, like, they'll they'll probably go into, like, money markets, and they'll use it to, like, buy short term government bonds or something, and they'll make small amounts of interest off off that. Right? And that's how they make money. You can also and so so stablecoins will be part of, like, third layer, but then, like, part of the third layer is also, like, any kind of what's called, like, an e money provider or e money institutions, which are basically institutions that have to fully back themselves with layer two money to issue their own money. So if you're, like, part of, like, an online poker community, for example, and you have, like, an you have, like, a little account that you go onto and you can you can top it up with money. Right. You're basically initiating a bank transfer into their bank account. Kind of gift cards almost. Yeah. Yeah. And then they're gonna credit your account with third layer of money. And they say, oh, look, you have this money here in your account. And it's like, that's a third layer of money. And same with, like, Amazon, all these players. Right? And it's the same with, like, local currencies. Like, many of these local currencies actually are sort of third layer systems Mhmm. Where they'll basically issue out a sort of a third layer voucher that could be used locally. There's also, like, a fourth layer to the money system if you start to, like, get really conceptual, which is like the shadow banking sector. Sure. Yeah. Where there's all these, like, weird money like instruments being passed around and stuff like that. But so it's generally layer three kind of because they don't have a banking license, they're technically not going to be ones who create credit. Yeah. Yeah. Like, layer three is, like, you don't you you're not a bank. You don't have an account at the central bank. You don't have the permission to do credit creation of money, which is a process whereby you issue far more, digital casino chips than you have in reserves. Yeah. And bear in mind what a bank does, like like, you always gotta think about with with all money issuers. They they each have their own reason for issuing money. When a state is issuing money, it's doing it to get resources. Alright? So it's getting stuff from you. Okay? That's how states provision themselves by issuing out money. But in on the background, they're getting, for example, like military service. Alright? Like, that's kind of stuff. Whereas the the reason why a bank issues out money in a second layer is to harvest loan agreements from the public or from people. Alright? So they issue out all these, like, digital casino chips. And then on the other side, they're pulling back these loan assets to themselves. And that's a very risky process because that can backfire. But in the pro if they do that correctly, it leads it kinda creates a sort of pressure differential over time, which will suck money back to them. When it comes to players like PayPal, they're not allowed to do that process that banks do. So they're issuing up money to you to harvest your bank money and to get fees from you. Alright? And so there's different sort of, reasons why players will do it. An online, you know, like, gambling portal will say, okay. You know, load money onto your account. Mhmm. It's like because they want you to have a certain amount of money sitting there, third layer of money, so you stay in the ecosystem. Mhmm. So they will have to be regulated as e money providers. Right? Because it's like, well, now you have to do sort of, you know, anti terrorism checks and stuff to see people aren't, like, using the system to to launder and so on. Mhmm. Mhmm. Yeah. Yeah.

Speaker 0 81:12 – 81:54

So I wanted to get to, one last thing maybe. You recently wrote a piece called Zero is the Future of Money Mhmm. Which was super interesting and, I think very interesting because it came from, I imagine, like, partially your experience at, collaborative finance. Like, the event in Yeah. Yeah. CoFi. Yeah. Yeah. At the commons hub. And CoFi is sort of, like, the the new meme that, trying to create. But, yeah, I guess it was an attempt to kind of, like, synthesize, the different aspects of different kind of types of monetary systems being, like, the fiat kind of world, the mutual credits, like, local currency world and cryptocurrency and how Yeah. Yeah. What kind of how they can be kind of synthesized into something

Speaker 1 81:55 – 81:57

since we knew. Sure. Sure. Sure.

Speaker 0 81:58 – 82:20

Ted, do you I mean, I think what I, respect, I guess, from you is that you, like, are making this attempt at kind of, like, more directly trying to answer, like, the question of money when it comes to crypto. Like, what does crypto actually provide rather than, of course, it's, like, kind of complete dismissal. There seems to be some things that are interesting.

Speaker 1 82:20 – 89:56

Yeah. So I wrote this piece, Zero is the future of money on my Substack. So if you wanna maybe the people can read it. That's probably the best way to do it. I'll link it. Yeah. Yeah. Yeah. So and that that piece was basically it wasn't it's intended as like a gateway piece to sort of push people in a new direction. Yeah. It's not like a detailed exploration of, like, exactly what you should do. But it's it's it's basically was saying, I set it up as a thesis, an antithesis, and a synthesis. Right. So number one. You're a galleon. Yeah. Well, that that that structure goes beyond yeah. Sure. So, yeah, like, sort of the thesis is me describing the existing normal monetary system, and that's, like, one. Minus one, which is the supposed antithesis, is, like, the mentality in the Bitcoin world. I'm talking about how people in Bitcoin try to reject all the aspects of the so called fiat money system. Mhmm. In particular, trying to reject both the hierarchy and the dynamism. Mhmm. Because in our normal monetary system has both hierarchy, has all these layers of these sort of chained players who have power, but it also has dynamism. It's it does it's not static. It's moving all the time. Right? It's contracting and expanding and stuff. Right? So in the Bitcoin world, the antithesis was imagined to be like, well, we'll supposedly have no hierarchy, but we'll also have this very rigid static system. The main form of dynamism in a Bitcoin system is the fact that you can chance for the tokens around. Right? So the supply stays kind of static, but you can move it around. Right? But that compared to, like, a normal monetary system that's incredibly rigid, it's incredibly, like, yeah, it doesn't have much dynamism at all. And as I said, it mostly operates as a counter trade system. Yeah. So but, you know, it's quite interesting. You can take different aspects of those systems and start to synthesize them. That's when I get to zero. So, like, thesis one, antithesis minus one, synthesis zero. Yeah. And that's looking at how you can sort of take the dynamism of credit money, which is what you find in the normal, normal monetary system, and maybe combine it with some of these sort of ideals around decentralization that you get in the crypto community, albeit with a slightly different vision of decentralization. Because bear in mind, in in standard crypto, decentralization tends to mean taking one very large infrastructure that's controlled by particular people and making it controlled by, like, nobody. So that the ideal of decentralization is to have, like, a huge system that nobody controls. Right? That's very that's a very different vision of decentralization to, say, the original decentralization movements, which is to say, you take one large infrastructure that's controlled by particular people, and you break it down into much smaller ones that are controlled much more locally. Right. Right. So the original vision of decentralization and sort of, like, anarchist movements or, you know, like, local economy movements and stuff wasn't to say that you shouldn't have anybody in control. It's just that local control should be more localized. It should involve have more democratic processes. Right? So I'm taking some of the, you know, and this is and then I'm sort of, basically saying, you know, mutual credit and these sort of older, these older traditions of alternative currency where people appreciate, essentially have a sort of way of thinking about money as a, the means via which interdependent networks are formed and how people enter into into and out of obligation with each other, how you can sort of take the sort of the the wisdom of mutual credit communities and start to weave it together with the sort of the technological infrastructures of crypto and start to find some very interesting things. And and the main reason I'm writing this piece is that I want people who've got excited about crypto, but who've subsequently become disillusioned to find a new direction. Right? Because there's lots of creative energy in crypto. There's lots of stuff. You know, people saying, oh, this is exciting technology we can work with. But then they've been pushed down kind of a dead end in terms of, like, the monetary thought into this very sort of, like, conservative way of thinking and stuff. All obsessed with, like, sort of adversarial thinking and, like, kind of speculation and saying, you know, there's a whole other world of currency experimentation that can be done if you start to move this alternative way of thinking about money. And so in that piece, I'm also going into sort of commodity versus credit thinking of money, which is like a whole big topic in itself as well. But, yeah, I mean, that's, you know, most people in the world maybe the last thing I'll say about that piece is most people in the world are very used to having what I would call a commodity orientation to money. And a commodity orientation to money doesn't mean that you think that money is a commodity. It's a sort of a mental model whereby you sort of metaphorically think of money as if it were a commodity. Mhmm. Alright? So for example, take our normal monetary system. It isn't a commodity system, and yet people will still, in their heads, talk about it as if it was a commodity. Mhmm. Right? They'll imagine that it's something you gotta grab and kind of like store and hold and all this kind of stuff. Right? So they have a very strong experience of themselves of money as this kind of like, I think it's just like a kind of an asset you gotta somehow, like, keep control of. And that's a commodity orientation to money. To have a credit orientation to money, you've got to see money as something that actually emanates from you Mhmm. Rather than something that you have to try and grab towards yourself. Right? Mhmm. So and and to understand credit thinking and money, you've got to understand that, like, the central this gets a bit, like, trippy, but, like, in an interdependent system Uh-huh. It will tend to, at least in theory, always net out to zero. Okay? So, like, how would I describe this? Like, even in your own body, for example. Right. Think about it if you're like, even like you're a Robinson Crusoe kind of person, like, you you're always kind of fluctuating above and below zero all the time. Right? You eat some food, but then your energy runs down, and you get tired, and you've got to eat more food. Right? So you're always, like, fluctuating. Right? There's no there's no stable point that ever exists with even within a single human body. Right. Alright? And similar with human communities, you're always entering into and out of obligation with each other, and that's fluctuating around a kind of point of balance as it were. Right? You're as a as a community, you're always fluctuating Right? Some one person has more energy. Another person needs to get something from them. They're then kind of, like, moving towards they're moving in and out of obligation to each other. And, actually, that's a very good starting point for understanding monetary systems because often monetary systems are intermediating in this process of interdependence. And proper monetary systems have both asset and liability sides. Right? So the sort of positive and negative sides. Mhmm. And mutual credit, for example, is an attempt to create these sort of community run monetary systems where people explicitly recognize that all positive credits in the system are mirrored by negative credits. Alright? And they net out to zero. And so that's the sort of zero is the future of money concept,

Speaker 0 89:56 – 90:59

but it relies upon having a very strong understanding of, like, interdependence and stuff. So Yeah. I think probably made sense. No. I mean I mean yeah. I think it's it's I've definitely, like, heard it before of, like, thinking you I mean, yeah. It's using, like, metaphors from ecology as a way to kind of, like, I don't know, think about human, social, interactions, before I think it it it makes a lot of sense. I think one of the things that is difficult to maybe wrap for people to wrap their heads around is that usually I mean, one, mutual credit systems have this, like, plus or minus. You at least, like, kinda like default. And this is a very generally, we think of, like, if you're in the negative, that's really bad. You're, like, you're in debt and you owe someone something. Like, I had a I had a conversation with, you know, a left wing friend of mine, and they were saying that, like, in a mutual credit system, it doesn't solve anything because then you're just in debt and you're stuck because you're going to be in this situation where because you're gonna be negative because Well, this this involves the illusion that you're not always in debt anyway.

Speaker 1 91:00 – 96:48

Alright? And so this is what's fascinating about it. De facto that the the human condition is you're always in debt. Mhmm. Right? You don't survive unless you have other people giving you stuff. Right? And, again, as I said, even in your own body, you have this going on. Right? You're having to cons you know, you can try to, like, not eat for a few days, but at some point, your body's gonna say, you have to go do something now. Right? You're not you're not you don't have this radical freedom to just override that. And so as a sort of fundamental primitive, we're always in debt, in some in some form. Right? And that's not negative. That's what it means to be alive often. Right? Mhmm. One of the main reasons why this sort of negative perception of debt forms is that in a standard capitalist system, under a standard monetary system, we only experience the asset side of money. Mhmm. Alright? So we experience money as being these positive units that you've got to try and grab. But bear in mind, from the other side of that, a money a money issuer experiences money as a liability. Right? When the bank is when when banks are issuing out those digital casino chips, those are on the liability side of its balance sheet. It's stuff that it owes. Right? And same thing for the same thing for the state, actually, with the sort of units of state money. At some level, they're actually kind of, credits that that can be redeemed back for stuff in the state. They're experienced as a liability. Alright? So the only reason that we can experience money as an asset is that there's a hidden shadow side somewhere else that takes on the liability side. Alright? Now when you're trying to build your own monetary system, you have to take on that responsibility for accepting that that you're on the liability side. Alright? And, normally, when we're talking about debt, if you're in the position in a normal in a normal money system and you only experience the asset side, you're normally talking about when you're borrowing money. Right? So you're saying, the debt is measured in money. Whereas in a mutual credit system, your debt isn't measured in money. It's measured in goods and services. Alright? Which is the sort of fundamental, primitive state of being in, state of interdependence. Alright? I mean, I'm trying to think about being a baby, for example. Yeah. Like, you have to get actual things from your parents. Right? You don't care about money. You have to get, like, actual real goods and services. Right? And there's a kind of like an existential sort of, like, position there. You cannot get out of death as a baby. Yeah. And actually parents will not perceive as what they're doing as, like, racking up racking up credit. Right? But at at some level, we have a fund basically, we do not survive as human beings unless other people provide goods and services for us. Right? And and I think this is a so so there there's there's kind of, like, a type of primordial version of, lots of sort of credit in society is actually for real goods and services rather than for money. Right? So, like, but, yeah, we because we're only used to experiencing the asset side of money, we start to associate debt with becoming, like, you know, indebted in monetary terms. That's I didn't explain it very well, but, like, this is one of the core things to kinda, like, grapple with. And so yeah. If, like, if you're truly interested in forming a monetary system, you have to accept debt. And actually, one of the most fascinating things you'll see in the crypto world is that people, because they're so steeped in only experiencing the asset side of money, like most of us are, they imagine that what a monetary system is is the act of creating a bunch of positively numbered objects that you dump on top of people, and then you hope that they somehow miraculously turn that into a monetary system. Alright? And so but what would actually happen, if you if you if you if you got a group of a 100 people and you had a bunch of, like, objects that you said, okay. We have to turn this into a monetary system now. What will actually happen is that you'll have to find a way to zero those objects. So, like, if if you gave everybody a thousand objects and said, create a money system, like, that that number a thousand will become the new zero in the system. Mhmm. It'll get neutralized, essentially. Right? Like, you'll have to start from zero being named as 1,000. And so so, like, you know, if basically, if you issue everybody a thousand units, it's the same as issuing them nothing. Right. Right. Yeah. So so in an interdependent system, what's actually gonna happen is that those units will get neutralized to a new zero point, and you'll only measure deviations from that. So it's only when, for example, one person goes to 1,100 and another person goes to 900 that a 100 units of money have been created in the system. So there is a negative. You just, like, you see it as a positive. Exactly. And some of the dark arts of creating alternative money systems is that you try to con you try to, like, trick people with positive object or, like, positive number thinking. So you'll say you'll you'll design a mutual credit system, and you'll say, rather than calling the point of balance zero, we're gonna call it 1,000. So that everyone imagines that they've got positive credits in their account because they're used to being scared of being negative in the normal money system. Alright? So we're gonna be like, well, let's let's, as a a trick, name what zero is 1,000. And then the person gets to zero, and actually, in reality, they're minus 1,000. Yeah. Yeah. But they're like, oh, well, I guess I've run out of money now. And it's like, no, what's actually happened is that you've gone into a point of debt in an interdependent system, and you're required to go back to 1,000 to enter balance again. The end of your credit line, perhaps. Yeah, exactly. So, yeah, you're basically naming the end of your credit line as zero rather than minus 1,000. Right? So there's a lot of, like, trickery with, like, taking these sort of standard commodity imaginations of money, and, you know, which, again, most people suffer from. And Yeah. Yeah. So yeah. Alternative currency designs are really fascinating when you're trying to, like, work with people who are used to another monetary system. Yeah. Definitely.

Speaker 0 96:48 – 97:48

So, like, I wanna kind of this is maybe a little bit speculative, but, like, if we think about like, in a mutual credit system, like, I can I can say, like, it's probably this type of system is less depersonalized than the current monetary system? As in, like, the person who takes on the liability maybe knows you. Like, there's, like, a relationship between the, the person who has the asset and the liability. And so, like, there could be situations where, like, you know, technically, this person owes me or something or, like, this person is, like, in the negative and we want to create a stable state again. Like, I'll help my friend. I don't know. Maybe I don't I don't really care about painting my wall, but it could use, like, a paint job. So Yeah. I you know, hey. I wanna paint my paint my wall. Here's some here's some mutual credits, and you're back in a more stable state. In a world where mutual credit scales then, there's a potential that things become more depersonalized similar to Sure. Yeah. Yeah. The fiat system.

Speaker 1 97:50 – 102:16

Does that change that? Bear in mind, it's important to never analyze an alternative money system in isolation. Yep. You know, you can engage in the fantasy of, like, what if the mutual credit system becomes the entire monetary system of the global world? I mean, they're, like, well, that's a fantasy. Right? You got to think about what it actually is. What it actually is right now is an alternative system that exists on the outside of the actual main system. So in the in the early stages of a mutual credit system, you gotta be thinking about it as a type of counter power. Yeah. Alright? It's you know, going back to the Bitcoin world, there's a difference between analyzing Bitcoin for what it is versus the sort of ideal, you know, fantasy. Mhmm. In the ideal fantasy, you analyze it as being the world's monetary system. In reality, it's an object traded in the world's monetary system. Right? So if you start from the reality, you get a better you start to be more, like, practical about it. You're like, okay. Given that that that's the case, what do we do? Similar with, like, a mutual credit system, which has a very different monetary ideology and sort of structure behind it, but, like, you gotta think about it as being a counterweight to something else that exists. And how you gotta think about how people in the actual sort of mainstream economy will interact with it, given that they're probably earning most of their money somewhere else. And, yeah, so so that's the kind of one of the fascinating things about mutual credit systems, though, is the the scale makes a big difference because, you know, de facto in any human economy, we are interdependent, you know, even in our super large scale, you know, capitalist economies. We're I'm a sovereign individual. What do you mean? Exactly. So, so like, the the fascinating thing about sovereign individual imagination is that you essentially have lost awareness of your interdependence. Because of the scale of the system, you've come to engage in the fantasy that you're actually separated from everyone else. Okay? Because in a large scale system, it's very easy to do that. It's very easy to to not be able not see who you're dependent on. Alright? But, basically, every single person you're doing a monetary transaction with is somebody who you're choosing to engage in an interdependent relationship with. Right? You don't have to choose everybody, but you, on average, you have to choose a subset of everybody. Right? And so the monetary system basically enables these different routes, different sort of, pathways you can take to fulfill your interdependence. Okay? And then there's politics in who you choose to fulfill that. You know, you could choose your mate, or you can choose some, you know, random stranger. Okay? But in the end, you have to you're you're interdependent, and you have to find a pathway to satisfying that that that situation. In a normal monetary system, because it's such a large scale, we can often it enables you to engage in the fantasy that actually you're totally separate, and you're, like, quite a quote financially independent, insolvent individuals, blah blah blah, whatever. Right? Right. Which is, you know, it's it's fascinating that actually a lot of libertarian thought emerges out of a context of super large scale capitalist economies that are underpinned by nation states. Because, actually, if you're not in that situation, you will never engage in the fantasy that you're an individual. Alright? You know? In a small scale economy, you're very, very aware that you're dependent on everyone else. Okay? So in a mutual credit system, it actually it's a monetary system in the sense that you're issuing these units and stuff. But because it's a smaller scale, you tend to have much higher awareness of the the the situation that, you know, actually, economies are cooperative organisms. Right. Right? And so you tend to have a stronger kind of communitarian ethos in a mutual credit system even though what's going on is forms of exchange. Right? Mhmm. But, of course, if you scale the mutual credit system to, like, a massive size, you would start to have those forms of alienation creeping in where you stop seeing who you depended upon Mhmm. And you start to engage in this fantasy of independence. Right? And so that's, you know, a fascinating element of these these systems. And Sure. Sure. If you scale the mutual credit system to, like, a global scale, you would probably start to find financial institutions setting up on it as well. Sure. Right? They'd be like, oh, people have set up these, like, self issued credits and there's a central administrator for how it works. We can now take those credits and make our own credits on top of that. They'll start doing credit creation of money. They'll create their own, you know, sort of second layer monies on top of that and so on. So engaging with mutual credit systems is actually a very interesting way to engage with how the normal monetary system actually, you know, it's a sort of it uses similar primitives

Speaker 0 102:16 – 102:56

in a way. No. I don't know if that answered, Neil. I mean, yeah. I mean, I'm just thinking coming to mind is, like, the Circle ZBI project since, I mean, we were on the panel and, like, it's part of the the application. They have, I think fairly recently added the feature now, the function that you can, create, like, a joint, entity that then takes part of the mutual credit system as well. So, like, there's going to be, like, this, Yeah. Yeah. Yeah. The creation of institutions would still happen even in a system that is, like, mutual credit where rather than the creation of money being siloed at, you know, the central banks and and retail banks. But even if it is amongst everyone, there's a still, probably a need for the creation of institutions that,

Speaker 1 102:58 – 105:03

that flows. Again, I think it's always important to, like, just, like, emphasize this point. You have to look at these things. You can't look at them in isolation. Mhmm. It's like you you have to sort of see how they interact with other entities in the in the economy. So, you know, in a way, when when I sometimes when I'm just for example, go back to the Bitcoin debate because, you know, like, have you ever seen these, like, YouTube videos where they're like or or I don't know, maybe like speculation online where they're like shark versus crocodile. Right? They're like, what would happen if a shark had to take on a crocodile? Who would win? Right? Oh, yeah. Yeah. And it's like, well, you know, I'm from South Africa. It's like, yeah. Crocodiles live in freshwater. Sharks don't. Right? And so and then you have this hypothetical imagined battle between these two things that don't exist in the same universe. And it's like, we could engage in the speculation, but in reality, if a crocodile had to swim out into the sea and be in salt water, it would be at a massive disadvantage against a shark, right? Because crocodiles don't, you know, there are, I mean, there are some salt water crocodiles, but like, let's take a freshwater crocodile versus a salt water shark. You know, to make this a realistic scenario, you have to actually imagine what the actual situation would be. And it's similar with like these sort of, people engage in these sort of abstract debates about whether Bitcoin's a perfect monetary system or not. It's like, who cares? What it actually is in the quote unquote saltwater of the fiat system is an object that's traded and totally like the system runs circles around it. Yeah. Alright? In some hypothetical other universe where you set up, you could have this debate about what it could be. Similar with things like, you know, circles UBI or your your mutual credit systems and stuff. It's like you could engage in the the thought about, like, what if it became the whole monetary system, but that's not the the situation. Right? So, I think it's super important to think about any alternative economy project like that. It's like, how is it influencing an overarching ecosystem of other players? Right. So I guess your your kind of stance maybe on that is that, like,

Speaker 0 105:05 – 105:31

like, it doesn't make sense to think about the mutual credit like, mutual credit alternative currency systems, like, before it even becomes, like, big enough to, like, I don't know, to to to get rid of, like, the current existing monetary system because, like, might as well use it now and have it now that rather than, like, imagining how bad it will be if if then that was a new dominant one because we're not Yeah. But you you you should be thinking about

Speaker 1 105:31 – 106:56

Holding contradiction in your head. Yeah. Yeah. And also just like like, have, like, ideas of counter power in your head. It's like it's like the object of the system isn't that it's gonna take over. It's that you create these sort of spaces of alternative action and stuff and sort of new possibilities. You don't have this, like, sort of absolutist abstract position where you sort of isolated vacuum sealed thought experiments. Right? And many I I often get sent because I'm, you know, I've spent quite a long time in the sort of alternative money space. I'll often get these emails from some, you know, for example, like a retired engineer who, I don't know, used to work for British Aerospace, who I'm I'm just making this up. But this is the kind of person, they'll be like, Brett, I've seen your stuff, and I've worked out the perfect money system. And they'll show me these these formulas and engineering schematics of, like, the perfect money system. And they're like, I need to popularize this idea. Like, you know, why aren't people taking it seriously? I'm like, yeah, have you thought about the politics of this? Like, the actual world doesn't operate on perfect ideas. It operates on, like, messy human beings who engage in political systems. So even if you believe you've worked out the hypothetical perfect idea, it's kind of, like, meaningless. You have to you have to sort of think about how that interacts with, like, actually existing human political structures. Right? Yeah. And so, yeah, we're filled with all sorts of people telling us, like, the perfect money system. But, like, very few people who actually think about, like, you know, who

Speaker 0 106:57 – 107:03

like, how are you gonna make that actually happen? Yeah. Yeah. You know? Like, first having some experience in trying to make

Speaker 1 107:04 – 108:32

a currency system in the first place probably cool. Yeah. Or, like, just have a degree of humility, you know, where which is like, you know? And that'll probably help quite a lot in terms of, like, thinking realistically about these things. Yeah. And, yeah, maybe the final metaphor I'll share about this is like is like, you know and this is sometimes, let's say, like, for example, the Bitcoin community, there's this phrase, like, in decent English where you say you call a spade a spade. And in English, that's normally assumed that you're sort of, like, just kinda calling bullshit on something. You're like, I'm just gonna say what you actually are rather than engaging in some kind of, like, you know. But actually, if you think about it, spades are very useful. There's nothing wrong with being a spade. So when I go and say something like, Oh, Bitcoin's a counter trade object, like, that's fine. Like, there's nothing wrong with that. That's useful, right? Like, that could be useful. The main people who, like, get antagonized by that are those who engage in the sort of fantasy thought experiment of it being like a golden sword. They're like, no, it's not a spade. And they think it's an insult. It's like, no. It's just this it's it's this thing. It has a particular kind of structure in use. And it's similar with, like, a lot of other alternatives. You'd be like, okay. Well, what does this actually do? Like, the fact that I don't engage in the kind of speculative fantasy of it, you know, being something else is not an insult. It's just trying to take it seriously for what it is.

Speaker 0 108:33 – 108:37

Yeah. I agree with that. I think it's

Speaker 1 108:38 – 108:40

it. I feel like I've been going these long, like, rambling rants.

Speaker 0 108:42 – 109:12

Great. I love listening to those rants. I know you've been, yeah, quite a while. Almost two hours now. I know. Forty five. So any, like, last things you want to leave with people, thank you so much for taking the time for the second time again Yeah. Cool. For talking to me and yeah. I highly recommend people to read Brett's work. I have gained a lot from it. And it's helped me a lot in sort of developed my own arguments and and thinking around, cryptocurrency. So yeah. I'm I'm in debt to you.

Speaker 1 109:13 – 110:10

I'm at And I and I to you as well. And I to you. No. I mean, the podcast has been a great resource for many people, you know, so and also your book now as well. So, thank you. But, yeah, if my stuff people wanna, like, see more, there's my book, Cloud Money, which is actually mostly about the politics of cash versus digital money. It also does go into crypto a lot, but, you know, it's it's about big tech meets big finance, basically. Mhmm. So if you wanna get a sort of insight into into that, like, battle going on right now, that's what but if you want my more kind of my work in alternative currency and stuff like that, my Substack, Altered States of Monetary Consciousness, which is bretscott.substack.com, is the place to check out my more, like, esoteric musings, perhaps, and some descriptions of money systems. Yeah. More metaphors to to be found. Yeah. Like, play with metaphors, see what's useful, what works, and what doesn't.

Speaker 0 110:11 – 110:13

Nice. Well, cool. Thanks a lot.

Speaker 1 110:13 – 110:15

Yeah. Thanks. It's been cool.

Seeing crypto for what it is and how to live with contradiction with Brett Scott

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