Audible for the best Bitcoin content out there. This is a crypto Connie quick read. Welcome back to the show guys. Sorry about the slow start to our week here. I've got a totally new recording setup in a new location in the house. So this should make recording later into the night and still getting work done while people are here a lot easier. So hopefully this will actually up my volume of Stuff that I can get done, but this is the crypto economy with guys Swan and I am your host guys Swan the guy who's read more about Bitcoin then anybody else, you know, and if you didn't I wanted to announce something before we jump into this one. If you didn't see the Twitter post, I was invited to speak at bit block boom 2020 that the awesome the Bitcoin maximalist conference in Dallas, Texas. So honored to be a part of Of that and that's just really really exciting exciting and I've got so many ideas as to what the talk about. I've been sharing a bunch of them with the crypto economy telegram crew, but if you want to join me cool news is we've got a discount code CC for crypto Kana me that is definitely the way to do it that will save you 30 percent off of the tickets. So if you want to hang out with me want to hang out with a ton of Bitcoin maximalist and go to An awesome conference. It is going to be a hell of a good time. It was so much fun last year. I highly highly recommend it that is bit block boom 2020 and hopefully I'll see you guys there. Alright, let's go ahead and jump into our piece today. We're starting right into a read. This is another one from Parker Lewis and Unchained Capital We are continuing with the gradually then suddenly series and this one is titled Bitcoin is not not too slow. in Peter teal 0 to 1 he outlines the impact new technology has on building a nonzero-sum future while the book is focused on individuals and companies Bitcoin as a monetary system is the ultimate zero to one technology leap for historical examples teal highlights the Advent of the steam engine as well as the shift from typewriters to computer processors among others he also It's a view that innovation has largely stagnated since the early 1970s while noting that technological progress since then has been more 1 to n than zero to one Bitcoin fixes. This Bitcoins Innovation is not only 0 to 1. It is fundamentally distinct from the class of innovation. That is the focus of teals book Bitcoin is a monetary protocol built on. On digital scarcity the impact of which will be far broader than steam engines and computer processors. Bitcoin fixes this there's a new meme floating around the internet whatever the problem Bitcoin fixes this negative yielding debt Bitcoin fixes this wealth inequality Bitcoin fixes. This endless global war Bitcoin fixes this financial crises Bitcoin fixes this rage culture Bitcoin fixes this we're not exactly sure how just yet but it's an articulation of the balancing effect a sound and stable monetary. We'll have on every aspect of society money is the coordination function of society. It allows hundreds of millions of people to cooperate who otherwise would not have a basis to do so and Bitcoin is the tool that will allow for more peaceful coordination because it is both unmanipulated oil and devoid of moral hazard. How it globalizes is the one to n problem not in the express sense as teal describes what the solutions to scale Bitcoin will naturally be incremental the nonzero some collective benefit that follows may not literally cure every ill in the world. But the invention of a step function change monetary network is fundamentally different than any single product because money is the Economic good that coordinates all other economic activity. quote the problem is precisely how to extend the span of our utilization of resources beyond the span of the control of anyone mind and therefore how to dispense with the need of conscious control and how to provide inducements which will make the individuals do the desirable things without anyone having to tell them what to do end quote fa Hayek the use of knowledge in society Hyatt writes about the invention of money and the price mechanism as the tool that allows Society to dispense with the need of quote conscious control Bitcoin is the superior successor to this mechanism and it's zero to one Innovation is digital scarcity not payments or speed of transactions while Bitcoins property of scarcity still needs further stress testing. It is a profound. And what makes Bitcoin unique never before Bitcoin has any asset let alone a digital one been finitely scarce. The end result of its Innovation is the hardest form of money that is ever existed. That is the zero to one achievement and a phenomenon that almost certainly will not be repeated. Every other problem that Bitcoin will have to overcome is more pedestrian relative to scarcity digital payments the idea that human Ingenuity can create digital scarcity, but that we then cannot layer on Payments Technology does not logically follow Payments Technology is just one of the many 1 to n innovations that will be built on top of Bitcoin to Lies its adoption not only are payments easier to solve. It is also not a critical path that needs solving today. The primary use case for Bitcoin today is as a savings mechanism not payments over time as adoption increases and as more infrastructure is built Bitcoin will evolve into a more transactional currency, but that process will occur gradually not suddenly. And as the shift occurs, Bitcoin adopters will continue to leverage Legacy monetary systems and Legacy payments rails. Not a payments rail. The Bitcoin blockchain will never be a layer for Mass payments, but there is a considerable amount of debate on this topic many hold the view that for Bitcoin to be quote successful. It needs to be a One-Stop shop combining the roles of currency issuer settlement layer and payments rail while Bitcoin fulfills the first two functions beautifully currency issuer and settlement layer. It is categorically not a payments rail. Both for reasons of speed and scale Bitcoin fails the payments test the good news. We don't need the Bitcoin Network to be a payments rail much of the confusion in the philosophical rather than technical debate stems from the opening Salvo of the Bitcoin white paper, a peer-to-peer electronic cash system peer-to-peer has been interpreted by some to imply that Bitcoin needs to be able to handle. Every last transaction in the world between any two Piers separately others believe that if Bitcoin transactions cannot occur as the scale or speed of Visa or Mastercard, it is structurally flawed essentially according to Skeptics if Bitcoin cannot meet both of these standards it fails on its promise. Thankfully it does not for additional background Bitcoin blocks are solved every 10 minutes on average. Ever Bitcoin blocks are not solved precisely every 10 minutes on a fixed schedule. The next block may be solved in one minute or 20 minutes 30 seconds or 36 minutes the network adjust such that blocks are solved on average every 10 minutes. How could a merchant or transaction processor live in a world either this slow or unpredictable Separately Bitcoin blocks have a limited amount of space to include transactions while there is not a fixed transaction capacity in Bitcoin by count each Bitcoin transaction consumes a limited amount of blocks space as a function of limited capacity blocks include approximately 2700 transactions on average with 10 minute average block intervals six blocks per hour 24 hours per day. A 365 days per year that equates to a network capacity of approximately 145 million transactions per year, which is the equivalent of approximately 4.6 transactions per second visa on the other hand processes 124 billion transactions per year at a rate of around 4,000 transactions per second. See here a link included. added How can Bitcoin be the purely peer-to-peer engine that powers the Global Financial system if it operates at nearly one one-thousandth the scale and speed of Visa alone. The reality has always been that if Bitcoin or to have a non zero value the consequence would be a system so valuable that any base layer would not be able to handle all transactions without sacrificing. Centralization or censorship resistance without these properties Bitcoin would not be a zero to one Innovation and its value function with breakdown. Ultimately the Bitcoin protocol layer provides the function of currency issuance and final settlement, but it is not capable of storing every small purchase including your Starbucks for the rest of time for everyone. If it were the latter all transactions by all people no matter how big or how small would have to be validated in stored by every other person on Earth without a mechanism to align the interests of network participants a tragedy of the commons problem would exist in the end result would be a less secure currency system subject to centralization instead. We accept a mechanism to limit transaction throughput at the base layer. Are shifting aspects of Bitcoins peer-to-peer transactional architecture two separate layers that integrate with Bitcoin. These trade-offs have been made in order to secure the foundation of Bitcoins monetary system decentralisation leads to censorship resistance, which makes possible the fixed Supply. a snapshot of the Bitcoin white paper with highlighted a purely peer-to-peer version of electronic cash many point to this text from the Bitcoin white paper released by its synonymous founder as evidence that Bitcoin was always intended to fulfill every payment by every possible Network peer it does say quote purely peer-to-peer after all however, more important to bitcoin than anything written in this summary or any interpretation is Bitcoins consensus mechanism. Everything critical in Bitcoin is enforced by a consensus of network participants, including its fixed Supply and ultimately the capacity within each Bitcoin block which limits the number of transactions it can process. This is the fundamental difference between Bitcoin and the Legacy Financial system monetary policy by consensus rather than by Fiat. Bitcoins founder created a system that ultimately removed critical decisions from any Central Authority instead deferring to the wisdom of Market consensus. It is a system that is flexible enough to be adapted but rigid enough that any material change is very difficult. As a consequence Network peers have to decide on a decentralized basis how best to scale Bitcoin. It is through this consensus mechanism that Bitcoin dispenses of the need for quote conscious control. Everything comes with trade-offs in Bitcoin, there are two holy Grails a fixed 21 million Supply and preventing the currency from being spent multiple times the double spend problem. The value of Bitcoin is derived from its ability to secure both of these functions on a decentralized trustless basis and both are inextricably linked to Bitcoins fixed network capacity. think of the capacity when in each Bitcoin block as valuable digital real estate all Market participants seeking to clear Bitcoin transactions have to compete for Block capacity scarcity and network capacity is the function by which Bitcoins shared resource is optimized or think of it as Bitcoin solution to the tragedy of the commons competition for the scarce resource ensures that the resources used efficiently and that it's value is maximized ultimately scarcity causes Market participants to compete with each other bidding up the value of the Network's capacity rather than shifting negative externalities on to the rest of the network. In Bitcoins free market the highest value and most profitable transactions are prioritized without scarcity and transaction capacity. This value function would break down. It is less important that we optimized for transaction capacity and more critical that scarcity exists. No one really knows the optimal amount of transactional capacity at any point in time partly because demand is ever-changing but also, Because it is generally growing over time. The critical piece is that capacity is known and scarce which allows Market participants to plan and ultimately to compete the commons is never depleted instead participants compete and innovate to figure out how best to utilize a scarce asset. Scarcity ensures that the commons is not abused and creates a predictable rate of growth in the overall size of Bitcoins blockchain, which ultimately protects and promotes decentralization as discussed in a prior addition miners secure the Bitcoin Network by devoting real world energy resources to run cryptographic hashing functions in to solve Bitcoin blocks by solving blocks. The miners validate history in clear current transactions, which are then checked invalidated by the rest of the network in return miners are paid in Bitcoin devote resources to secure the network and get paid in the Network's native currency Bitcoin. The actual compensation paid to minors comes in two forms newly issued Bitcoin and transaction fees in order to devote resources to do. To secure the network miners have to reliably expect that aggregate compensation will hold its value into the future approximately every four years. The newly issued Bitcoin paid to minors gets cut in half the Bitcoin happening today with each block 12.5 new Bitcoin are issued in approximately eight months when the next having event occurs see Hear that amount will be reduced to six point two five new Bitcoins per block approximately four years after that 3.125 new Bitcoins per block will be issued. This process will continue until we reach the smallest unit of Bitcoin one one hundred millionth and thereafter. No new Bitcoin will be issued. This is the issuance function that governs Bitcoins fixed. Apply 21 million and as a derivative function, it also shifts compensation to secure the network from Mostly new Bitcoin today to ultimately a system relying completely on transaction fees. But how does this relate to visa and transaction capacity? If it were not for the scarcity of capacity and each Bitcoin block there would not be a mechanism to create a transaction fee Market scarcity and block space creates competition between Market participants to clear transactions, which causes them to bid up the value of real estate and to use it efficiently without a fee Market the only mechanism to pay minors to secure the network would be to altered. Coins fixed monetary policy and increase Supply but recall that scarcity in Bitcoins fixed Supply 21 million is the basis of its store of value property, which is where the rubber meets the road by creating scarcity and network capacity. We also ensure the Integrity of Bitcoins fixed Supply, which makes the whole value cycle function. Working within this reality scarcity is a far more important property than either the speed or ultimate capacity of transaction throughput fixed network capacity leads to the limited transaction capacity which leads to the themarket which ensures the fixed supply of Bitcoin. and because the real problem Bitcoin is intending to solve is that of money in global QE not payments those that store wealth in Bitcoin would much rather secure the money supply then sacrifice its long-term integrity and credibility for transaction throughput In short the future of Bitcoin is far more secure in a world where all Market participants can depend on it having a reliably fixed in scarce Supply while accepting lower transaction throughput or speed as trade-offs. What good is high transaction throughput and faster speeds if the fundamental value of the underlying currency is at risk the existing Financial system has already made the opposite trade-off for us High transaction throughput and fast transactions by way of centralization, but with the cost of an architecture susceptible to systemic monetary debasement. Bitcoin represents the alternative and we are not about to make the same mistake twice. Bitcoin does not equal Visa. Ultimately Bitcoin is not competing with visa for Supremacy and Global Payments instead Bitcoin is competing with the dollar euro Yen and gold as money in any comparison to Visa its transaction volume or transactions speed is fundamentally flawed Bitcoin fulfills the role of currency issuer and final settlement as a result. The proper comparison would be between Bitcoin and the It as currency issuer and as a clearing mechanism. No one makes the mistake of confusing the functions of visa for that of the New York fed, but for some reason the comparison is often made between visa and Bitcoin. while it would require time and investment visas payment Network could sit on top of the Bitcoin Network to fulfill payments much the same way it sits on top of the existing banking system rather than clearing the currency through a central bank Final settlement of transactions would clear through the Bitcoin Network in the existing architecture the payments layer visa and the settlement layer banking Network and central banks are separate and distinct the principal problem Bitcoin intends to Solve has little to do with the former but instead with the mechanism by which currency is issued in cleared think the fed and QE Visa helps move dollars, but Visa is not the dollar. It is a technology company that provides a service. It has 17,000 employees Bitcoin has none. Whether credit or debit Visa is an inherently trust based credit system while consumers generally associate swiping a Visa card or the equivalent at a point of sale terminal as payment. It really is not instead balances are checked transactions are authorized and settlement occurs later dollars are not actually cleared through a central bank or settled at the point of sale. Every time a transaction is processed individual transactions are also never Really cleared instead transactions are batched together netted and settled at a later point in time only then our accounts credited with proper balance has someone someone attempts to equate a Visa transaction with final settlement that it's just not the way the world works. But that is the comparison that is implicitly being made when someone attempts to compare Visa with Bitcoin. Bitcoin versus the Federal Reserve When compared against its real competition the fed the ECB boj Etc Bitcoin begins to look like a Ferrari final global settlement approximately every 10 minutes 24 hours a day 7 days a week 365 days a year on a permissionless basis compare this to the existing permission to financial system, which is subject to multiple layers of bank and Central. Bank intermediaries and is only open during quote business hours. This is the great missed Nomar that exist within Bitcoin those that believe Bitcoin to be too slow or lacking in network capacity are comparing Bitcoin to the wrong application. We could set up a network of banks on top of the Bitcoin Network in the payment system would function as it does today. The pushback on this point is the risk of centralization if Bitcoin were to just sit in centralized Banks, it would increase the possibility that the Bitcoin Network could be co-opted and undermined by a network of Banks and central banks whether to force changes to network consensus rules or to censor end users. Ultimately. This was Gold's failure as a monetary medium. It was susceptible to centralization which then spawned Fiat currencies, which have turned. To be easily manipulable while this is unlikely and hopefully not how Bitcoin scales money and Payments Technology are distinct problems. The fundamental reason being that there are two sides to every value transfer one side almost always involving money and the other as the Fulfillment of goods and services payments layers help provide a bridge. Because of the nature of trade the two sides of value transfer generally and naturally occur by different processes and different points in time. Think about the settlement of currency on one side and the transfer of title to a home or car on the other or payment for a good on Amazon and the Fulfillment of that good two days later two different processes occurring at two different times and it is important to recognize that Bitcoin has no knowledge of the outside. World whether identities or the second leg of a value transfer. All Bitcoin knows how to do is issue and validate currency whether a Bitcoin is a Bitcoin. This is really the function and limitation of any base currency system payments layers provide a bridge between currency settlement the fed or Bitcoin and the Fulfillment of goods and services gold solved mask. Comments via Bank centralization the dollar the fed and large payments processors such as Visa Bitcoin likely solves payments through a technologically Superior mechanism, but we have time to solve what is a separate and distinct problem from that of money. Scaling Bitcoin is 1 to n if we solve the problem of money through digital scarcity first 0 to 1 the technology advancements to scale transactions and ultimately solve payments are 1 to n. It is not credible to think that human Ingenuity can solve the former. But then fail on the incremental derivatives. It is not just a matter of Hope and Faith instead. It is one of reason and logic considering both the advancements in scaling solutions that are already being pursued and the challenges relative to the problem Bitcoin has already solved permissionless innovation in the economic incentives inherent in Bitcoin will coordinate and accelerate solutions to any number of future challenges Market participants have an incentive to increase the value of the network and to innovate to scale the network, but the solutions will have to work within the Network's consensus or Garner sufficient consensus to change the rules. Because of the nature of Bitcoins economic incentives, it is far more likely that scaling Solutions work within existing consensus rules one such example of an advancement to scale Bitcoin within the Network's consensus is the lightning Network the lightning Network Builds on top of Bitcoin as a trust minimized layer to scale transaction capacity, which Still Remains fundamentally distinct from payments fulfillment. However, if successful lightning will be used to create Bitcoin payment channels that enable far greater transaction throughput at far lower cost the scale and speed of which would rival Visa while it may not be the ultimate solution. It is an example of the Innovation that Bitcoin is fostering lightning is also only one of many solutions that are actively being developed in competition will drive us toward the best scaling Solutions of which there may be a combination of many The approach to scaling Bitcoin is a slow and conservative process Bitcoin is too important to follow the Silicon Valley Mantra of move fast and break things instead. It's move slowly and don't break anything. If a Global Financial system is to be built on a decentralized monetary system. The foundation must be protected at all cost. Ensure the security of the base monetary layer Bitcoin first and then allow Network participants to innovate on top of it in a permissionless manner. Remember that Bitcoin is only 10 years old. We are in the very Inception of Bitcoins monetization event and infrastructure is still being built to allow for the proliferation of this new technology. It's a little ridiculous to contemplate the problem Bitcoin has already solved and then immediately pivot to a quote but why not mass payments today line of thinking especially when considering that Bitcoin in its clearing function is already faster and more reliable than comparable mechanisms for final settlement of dollars Euros Yen or gold then when understanding that the fundamental use case for Bitcoin today is as a long-term savings. Mechanism not to fulfill payments. It becomes more clear that not only is the problem misdiagnosed but also that the desired Solutions can wait, we will need the ability to fulfill payments in the future, but we have time before we get there in due time. We're going to have our cake and eat it too. All right. That was the awesome addition to the gradually then suddenly series by Parker Lewis Bitcoin is not too slow. Let's go ahead and hit our sponsor and I want to break down a lot of really fascinating segments and points that he goes over in this piece. For anyone who has a podcast anchor cannot be beaten particularly for trying to get off the ground their entire platform is free. This includes unlimited hosting both in audio that you upload and how much your listeners download. I have uploaded an incredible library of audio now and I've never paid anchor a dime. In fact, they connect me with other sponsors and have run an ad consistently on my show. So they've paid For exposure to my audience that's really hard to beat even if we ignore that I can record directly in the app or my browser. I don't need any other software. If I don't want it I can edit at sound effects clips and they automatically publish to all of the top podcasting platforms. I never had to do a thing. So if you were thinking of starting a show or already have a podcast, there's no better platform out there check out anchor by downloading the app or go to Anchor dot f FM today Alright again just to remind everybody this is another of Parker Lewis has series on that think he's on part 10 of the series now and this is just the fifth installment of it. But this was called titled Bitcoin is not too slow and it was only Unchained Capital blog where all of these are posted. I highly recommend if you got some time to sit down and read so this whole series is amazing. I highly highly recommended. I love that he starts off. he's actually got a quote early on talking about how the the idea of the market and the price system is to create a mechanism to create a system of organization that doesn't require conscious thought and it's specifically because the ability to utilize all of the information all of the data in society is not possible except through a collective mechanism by allowing essentially the boots on the ground closest to the problems in the data and the people that they're working with to make the final decisions about their value and their involvement in it and then collectively when everyone has basically independent command over their own resources in their own lives and their own associations and cooperation with people in their lives. Well, then you extend that out and you have a essentially a Market result that is able to accumulate or account for and a literally impossible amount of information and that's from the use of knowledge in society from F A Hayek and it's a great analogy or or basically concept to bring up to two how Bitcoin basically leverages this by creating a monetary base and allowing permissionless Innovation to a much simpler problem the problem of creating payments. And if you haven't heard that one, I personally love that section. It's a little bit deep in the weeds for economics. But I have I think it's two episodes that we dig into the use of knowledge in society and I talked about it a lot and try to break it down. So it's a little bit easier language to make sense of but that's such a such an amazing piece and it's such a critical idea. That's a counterintuitive in a lot of different ways. And it's also so nuanced. It's so easy to forget that's actually one that I will refresh myself on from time to time of my own show just because I always want to keep that perspective of how important it is. And how much information is actually being accounted for by giving people the freedom to command their own resources. When you have a central party like some board of like self-aggrandizing arrogant Economist thinking they're just Going to account for everything by watching prices, you're already negating or manipulating prices. Excuse me, you're already negating all of the information and all of the knowledge the millions of people the billions of relationships and lives and the amount of time that it took each one of these people to you know, do this the number of resources that they found the Alternatives that they had in their situation through billions hundreds of billions of transactions that led to the market price and They're just going to manipulate the result of that and that it's then going to have some sort of effect on all the information that led us there. It's actually it's actually pretty similar like a decent analogy I think is thinking that we can solve the consequences of a disease or something and that that means the disease is gone away. Like let's say I've got tuberculosis or something and you know, I'm coughing a lot. Well, as long as I take some NyQuil to stop the coughing Oh, well, then we're good to her closest isn't there anymore now, you've just hidden the fact that my body is telling me something is terribly terribly wrong. And that's what the price is. It is a consequence. It's a side effect of what's actually happening and to think that you can manipulate the money the prices all of these things. This is what creates these awful imbalances that Bitcoin is here to solve. That's why we need a tool as powerful and decentralized and As Bitcoin and that's why this concept that he uses that I'm going to steal the crap out of I mean, it's something that's out there but I like the 0 to 1 and then 1 to n. I've heard the zero to one thing Alex vets. He talks about it there Gigi. I mean so many people in the Bitcoin space tried to get that idea across and it's so important because Bitcoin was a single invention. It's a it created digital scarcity for the first time ever and it created a centralized monetary base and anything that we want to do with that anything we want to use to do we want to be able to leverage that monetary security and that that Independence that that ability to coordinate actions and agreements with people to cooperate with others without all of the trust necessary without the risk of manipulation corruption that our current Legacy system puts us at like That risk we'll all of those are one to end. All of those are not they are they're tiny tiny problems in comparison to the problem that just got solved with Bitcoin as another quote that he has towards the beginning that he reiterates a number of times through this piece and I he should have repeated it twice as often was that where's the quote? I got in here every other problem that Bitcoin will have to overcome is more. Edit pedestrian relative to scarcity digital payments the idea that human Ingenuity can create digital scarcity, but that we then cannot layer on a Payments Technology does not logically follow and that's does. It's funny. I've always kind of thought of it as some Faith or hope which he kind of alludes to later on. Is that while the market can solve that problem, but that felt like a cop-out to me one when I would think For myself that like, okay, like I know Payments Technology is going to get solved and I don't have to have a clear explanation right now for why that is going to happen. I think lightning network is an amazing tool that goes so far in setting up a new network that can make this problem basically inconsequential but it doesn't scale a thousand X right now. It just doesn't like with my current experience it somewhere. Between a 10 to 20 x 4 payments just with myself and if that's like common across the network. Well, then, you know, it's a 10 to 20 X increase in payments where you would have to Atomic swap or splice or doing own chain transaction 1 out of every 10 or 20 tons, which is a massive Improvement. And at this stage the fact that we can get that level of additional scaling in payments already and the incremental improvements will create Exponential progress in that that only getting like five percent more effective results in a massive result for how to allocate these things in there so many different Technologies around it's just not a big issue, but I did tend to think of it or set the frame of reference in my own mind that I kind of just had faith that it was going to get sorted out because the markets really good at sorting stuff like that out. Putting it in this perspective, um a demonstrates exactly how logical it actually is that it's actually got nothing to do with fate. It's about basic rationality in the degree of problems that are being solved and that's just such a beautiful way to put it is that digital payments are easy shit. Like they're just not that hard we can get we've solved that a hundred different ways many many times in the past. Um, there isn't one. Solution to it. We can have thousands of solutions. If we need to we can have a varying degree a huge range of the degree of trust in these payments that we that we allow for, you know consumer payments versus big payments versus, you know, like censorship resistant payments and all of these other decentralized networks on top of it. We can have a whole range of all of this stuff. We can make the shitty proof of stake trade-off only layer on top of Bitcoin. But if we do it on the new network, we have no Foundation to settle to if something goes wrong, which is why this is such a zero to one invention. This is this is a this is a discovery because we only have one really good solution to the trust problem to the decentralized monetary system problem, but we have an unlimited number of solutions to the payments problem first we could just Put our entire current system on top of it and we've got something that's vastly better than what we've already got but we already have a decentralized permission list base to start from in which anyone can innovate on so we're limited to none of the problems or restrictions or permissions or regulations anything that's needed on the Legacy system all of that vanishes when we're building on top of Bitcoin. It is literally like Saying well the internet a why do we need the Internet? We already got radio. We already got pictures and photo albums. We already got TV. We already got mail. We've already got Telegraph. We got all these Technologies already. Why do we need a permission list layer to basically do it all on one thing. That seems silly right? Well, no, it's because we can now innovate in any way whatsoever. All of those systems were permissioned all of the you can't you? Can't just broadcast radio. You can't just create a voicemail for AT&T as a person in my home. Like you have to go work for AT&T and update their entire infrastructure. It's about creating a market for permissionless Innovation. And with that a global ecosystem of millions hundreds of millions of people that have a stake in making this thing valuable in using it for as much as they It's to minimize their trusted relationships with other people to secure their own sovereignty in their own money. Having that incentive system in place only permissionless programmable monetary base. There's nothing that can compare payments are so not important in that concept. Like it's just it's gonna get solved because it's not nearly as difficult as the problem Bitcoin is solving right now. As Parker Lewis says it is not a payment Slayer. It's a monetary system. It is a issuing and settlement system. There's another great quote that he's got a little bit further down that this is the fundamental difference between Bitcoin in the Legacy Financial system monetary policy by consensus rather than by Fiat that is the Breakthrough revolutionary Innovation and anything that compromises that mechanism of consensus that that mechanism of Defending that monetary policy in exchange for something. Is Trivial as payments is absolutely absurd particularly when trying to think of the payment system or the payments problem as a base layer thing is just hilariously dumb like the the base layers never going to handle all of these like everybody Compares it to Visa Visa is not the only payments Network in the in the world. There are many different credit card and debit card companies. There are payments Technologies as PayPal this In MO is all of these things. There's Visa is a drop in the bucket of the payments problem and the idea of trying to actually wrote about this pretty extensively in was it like seven misconceptions of the Bitcoin scaling problem? I think really old article one of the early episodes of the show. I'll try to remember to link to it. So you guys can go back and listen to that one if you would like but I talk about comparing like Visa payments and stuff. Like we're talking about a system that is going to allow for streaming money as Andreas Antonopoulos puts it and it we're going to have hundreds. If not thousands of different scaling options at our disposal will probably see a couple of dominant ones just like you see, you know, You know a couple of dominant protocols built on top of the internet and that's just because integration will be simpler and there will be something that scales a lot better than the others or at least has the highest trust minimization in the scaling of that I think is going to be lightning Network because lightning network is unbelievably and just an awesome tool particularly with some some of the recent developments like turbo channels that are going to be hitting with services like Olympus. Jack mailers we read his announcement of that on the show and that's such a fascinating concept with Breeze wallet. There's so many great Technologies and the development is happening so fast, it's hard to keep up with but again, there's going to be there's going to be a plethora of these and lightning network does not have to be the end-all be-all in fact because of how extraordinary that lightning contract is It could just as well be something that ends up basically providing liquidity for Capital markets. Like it actually can actually be more of its own like secondary settlement layer on top of Bitcoin that allows for massive transactions between large businesses and Enterprises like we could actually see I personally think we'll see very very well-funded lightning channels. Become a part of creating a business agreement with someone that when Apple is going to buy all of their glass from Corning for their iPhones and stuff. Well, then they part as part of their agreement. They say well we're going to have a Channel with you know, a hundred ninety million dollars worth of value in it worth of bitcoin in it for this set period of time while our contract is still live and then we can do with what we will like from then on out, I don't think I don't think that's a not even a stretch and be what an amazing position for apple and Corning to be in to hold a contract where after they after they make an exchange for something like that that they can still settle between themselves maybe even with a third-party put a third signature in their of their Law Firm or you know, some some intermediary that's going to help settle any dispute between the The second part of that like he talks about this a Parker talks about this a lot in the article, which is great is that payments is a two-step thing that happens in two completely different stages first, there's money then there's the deliverable of the good or the service and that's why I think lightning networks insurance and collateral like contract essentially smart contract could be so powerful in providing a source for something like that. That they basically have some sort of a time lock unless there was a third person who basically says, okay, I have proven or I have validated for myself that the good or the service in question has been delivered and therefore now nobody has to wait a month or whatever to settle this to the Bitcoin chain, whereas before there would be some sort of a time lock and this these are this is something that could easily be done right now with the lightning Network. It's just that the infrastructure is not They're managing the keys to be a real pain in the ass. The the static backup function is not quite there amps. There's a lot of different reasons why it would just be a huge headache right now, but they're mild incremental improvements over the period of a couple of years that could basically solve all of these issues. And theoretically they're already solved. It's really just a process of implementation at this point, but going back to my original point with talking about like streaming money and stuff on the analogy that I use Used in the misconceptions about the Bitcoin scaling problem was that to think that we're going to use Visa as our metric for how many payments we have to worry about on the Bitcoin network is analogous to taking the number of faxes that were done in the 80s or maybe the number of like actual handwritten letters to each other in order to predict how many emails were going to send or in order to predict how many? Times we're going to have a conversation with other people in 20 years only internet is that that's the ultimate scaling goal if faxes and snail mail were our metric for how much we had to scale the internet. It would have been hilariously off Mark. I have so many conversations with so many people. I have like 40 telegram chats open at all times and I'm talking with many different groups. I'm on social media. I send emails multiple every Eagle day I get a get a bunch of emails and that's with a bunch of filters to immediately cut out anything that says subscribe or unsubscribe in it and move and Mark all of this stuff is red. I get like 20 important emails everyday after all of my filters. I've I kill my fax allocation in before I'm awake in the morning. And that's why in the article I say that trying to use Visa as your metric and thinking of payments in the same way that we've always thought of them as strictly like going to a consumer like like going to Starbucks and buying a coffee if we think of it like that. It's it's just as ridiculous as thinking in the reverse in the snail mail and fax machines for or faxes For What were what the volume of information and communication will be on the Internet. It's just painfully ignorant and short-sighted and what we actually need to realize is that Visa is not a drop in the like Visa alone is not a drop in the bucket of the scaling problem. It is a drop in the ocean. We are going to be talking about millions of payments a second. We're going to be talking about entire networks. That didn't make Visa look laughably ridiculous because we have we Payments going every single time that we update packets were watching a video. We're going to have streaming payments as a possibility in this new realm and I don't think I don't think comparing two visa. I think not only is trying to accomplish visa on the base layer 8 absurd proposition, but thinking that Visa is The Benchmark we have to worry about is that is equally absurd it equally misses the mark of what the actual end game. here is And something that he kind of he brings up not quite the same way that I usually talk about it in some of the past pieces that we've gone into but it basic basically he says the real problem that Bitcoin solves is that of money and Global QE that we have a independent decentralized monetary issuance and ownership settlement. trust lists ownership settlement in that it like ownership settlement that is entirely independent of any other system institution Authority politics anything ownership that is independent to this the Bitcoin system itself on and that is the power that is the unbelievable value and it is only because through the consensus rules Bitcoin creates an Artificial environment and an environment that is isolated to everything else in the digital space where certain types of data are treated with an explicit set of rules. And without those rules without verifying without creating a barrier for information that invalidates those rules that cheats those rules in running full nodes without creating a network that is ensuring that only only the data within that artificial environment is explicitly within those rules. There's nothing there. There's nothing there. It's all arbitrary. If we are not enforcing the artificial environment which is explicitly and only a derivative of the consensus rules. And we've not got anything there. We've got no assurances. We've got no Integrity of The Ledger and transaction throughput Isn't worth shit. I love the he was like, we've already done that. We already did that the current Financial system already makes that opposite trade-off. No Integrity highly trusted massive amount of payments. We already did that. We don't need another one of those. He's got another great line in here just about which is funny because I don't really think to bring this up when I'm talking on this is point typically but it's so true is that it doesn't matter whether you're using debit or credit or like whatever Visa is just a credit system. Like it's not there's no settlement in that like like we think of payments but like Bitcoin is a final settlement that every 10 minutes every time there's a block there's hundreds of thousands of dollars worth of settlement on top of You don't have any of that with Visa you don't get so mad at all until way later. Sometimes multiple days because of how it clears on particularly. If you're having to go like a Crossing Borders or something like that where at five o'clock, you know, Visa settles to the bank and then five o'clock the next day the bank settles and if you're going overseas, well, then they have to settle with an intermediary like International Bank and then that settles with the local Bank in the other country. He and each one of those takes like a full business day to actually settle. So that's why I like overseas payments or sending money overseas can sometimes take three or four days is because that's typically the number of Institutions that it's having to move through because they only settle towards the end of their day and even that settlement is not settled it stilled reversible and like like final at that. It's all still Authority based. So so much of that can still be undone or manipulated just by the politics or the authority involved in saying okay. There was a transaction or there wasn't obviously it is not even remotely permissionless and thinking that Bitcoin should do the degree of settlement that it has for every single payment ever is to basically say that the Innovation that it has in settlement in creating a trust. Trustless independent monetary base with no Federal Reserve with no Central Bank where consensus is establishes the rules and where the underlying monetary system cannot be changed. It is literally almost it is incredibly difficult to change and we're settlement is cumulative where the amount of barrier that force field of proof of work around your transaction is Stronger and stronger the longer you hold Bitcoin Bitcoin is a Time Value. It is a Time dependent amount of value in assurances of your ownership. Like when you if I made payments with my Bitcoin every single 10 minutes. Well, then I only ever have a you know one blocks worth of assurances that I'm the final owner of that Bitcoin that that my change address is in fact controlled by me, but if if I hold it for a year. Well that I have entire years worth of blocks proving that I am the owner. You aren't utilizing Bitcoin. If you only hold it for 10 seconds, you're utilizing none of the powerful feature in the unbelievably revolutionary aspect utility of the system, which is that the longer you have it the more you are absolutely certain. It's yours. That is the utility of Bitcoin. To think that we're supposed to do payments every single second and that's the utility of Bitcoin know that's the utility of some sort of payments Network. They will have on top of Bitcoin but the ownership of Bitcoin that force field around anyone's ability anywhere in the world to edit your ownership. That is the value of Bitcoin. You are only utilizing Bitcoin if you are holding for an extended period of time, that's how you utilize. Its Value proposition. That's why he calls it payments. I mean a savings technology, which is the only way out of our huge mess. We need savings technology PR Richard talks about all that all time. You're not following Parker Lewis and Pierre Richard now that I brought him up, you're really missing out. So go do that. And there's another great line. There's another great line for you finish this thing out is that Quote it is important to recognize that Bitcoin has no knowledge of the outside world whether identities or the second leg of a value transfer. All Bitcoin knows how to do is issue and validate currency. In other words decide whether a Bitcoin is a Bitcoin. I thought that was a really really great way to put it the thing that Bitcoin does. Is validate is confirm Beyond any doubt that one Bitcoin is one Bitcoin. That's what it does the fact that it does transactions at the same time on the base layer is just as simply a function of that process and as Parker Lewis said the ability to aggregate payments the ability to create Payments Technology with this independent monetary base. Create a financial system on top of it is a 1 to n invention or innovation. It is something that we can have thousands millions of incremental improvements to as the time comes we need it and simply put we don't need it yet. That is not the major problem of society that is not where the hundreds of trillions of dollars of imbalances lie that need to be solved that Problem is in the central bank system that problem is in the underlying financial markets in derivatives in the fractional in the global fractional Reserve System that is where the bulk that is. Where are huge problems and imbalances and wealth inequality and Corruption and manipulation come from and that is the problem Bitcoin is solving that is a hundred trillion dollar problem payments. Our peanuts in comparison to that problem. That is why it makes no sense to think you can solve the former but not the latter. It's like saying you can create a combustion engine that runs on gas and creates incredible power density for the amount of fuel that it takes but you'll never figure out how to put wheels on the thing. Is his last section reminds me of the Bitcoin in software reliability stuff that article that we did by Beauty on such a great piece. Just talking about the mission critical nature of a Bitcoin and why the typical Mantra does not apply here and then he goes into this as well. And this is another great line. The approach to scaling Bitcoin is a slow and conservative process Bitcoin is to Hornet to follow the Silicon Valley Mantra of move fast and break things instead, it's move slowly and don't break anything. It's really hard to stress that enough because the the mentality of most developers that get into this system don't realize what they're dealing with that because this is an artificial environment. Screwing with the the parts of the system that create this environment which we've which was seemed deemed impossible literally an impossibility in computer science just 10 years ago. Screwing with those with that part of it makes no sense whatsoever. And it is the opposite of making progress because you need you need to protect the foundation at all cost only then can you actually build things on top of it? If your game is running into this problem right now, they want to do a theorem 2.0 and it breaks like half of the applications built on top of it. So people are just moving away. They're migrating away from the system. Either that or they're trying to prevent the etherium from being quote unquote fixed because the thing is so bloated and of course can't scale is everybody has been trying to tell them for ages in the foundation is in fact week. It is highly trusted in fira is basically deciding what an aetherium is and what it isn't if we made foundational changes to TCP IP or HTML or HTTP or something every six months every year. Here the whole the internet would stop working until everybody upgraded how ridiculous is that you have to ossify these core protocols or you can't build anything on top of it because making even a minor change could break so much stuff on top of it. It just it's just a terrible terrible idea. It is a slow and conservative process to update Bitcoin a highly recommended Bitcoin in software reliability. Liability by Beauty on I don't remember what the episode is, but I'll put it in the show notes. All right, we'll do we'll finish this out here. We're good. I really love the rant on this one. I've always just I've been loving this gradually then suddenly series Parker Lewis just such a good job of breaking these things down and always manages to put it in a way that I haven't quite thought of yet. So I feel like I'm getting something out of every single one of these pieces on an ongoing basis all on topics that I could have swore. I've read and knew everything about and always encouraging me to go. Go back and listen to stuff like the use of knowledge in society, which I love so I will definitely link to all of that stuff. I'll link to let's see the use of knowledge in society Bitcoin software reliability. I'll link to the previous four episodes of the gradually then suddenly series here and there was something else I wanted to hit. Oh, yeah, the my own article to misconceptions about Bitcoin scalability. So I'll link to that one as well. So plenty of other of other things to dig deeper into if you want to go down the rabbit hole of this topic, but this was Bitcoin is not too slow. So thank you guys so much for listening. Don't forget to check out Unchained - capital.com Their blog is awesome. I read everything they publish now and definitely definitely follow unchain capital and Parker Lewis four tons of great content and input on so much of this stuff. Thank you guys so much for listening. This is the crypto economy and I am guy Swan the guy who has read more about Bitcoin than anybody else, you know, don't forget to join me at bit block. Boom this year. Definitely definitely get your tickets as Early as possible and don't forget to use discount code or offer code CC that will save you 30 percent on those tickets and hit me up on either the Crypt economy crew telegram or Twitter DM me or whatever so that we can all hang out. So anybody wants to come meet me and hang out a bit block boom. I'm going to get drunk. I'm going to talk about Bitcoin. I'm going to have a really fun speech and it's going to be a grand. Grand time. I absolutely had a blast at 2019 and and crazy excited to do it all again this year. So thank you guys so much. Don't forget about the discount code and yeah subscribe to the show. So you don't miss all of the amazing Bitcoin content made available in audio and of course share it out with everybody, you know in the Bitcoin space and lastly if you want to hang out with the crypto economy crew in the telegram chat. Do not forget you can always support this show by becoming a patron at patreon.com slash the crypto economy as little as one dollar a month gets you into that crew and lets you hang out with us and it really does go a long way and it means all the world to know that you guys are appreciating listening and sharing out this stuff. So thank you guys so much for doing that. And yeah, thank you to all my patrons, I think. Yesterday was like Patron day or something. I got some sort of an email at it. So thank you guys so much for being a patron. In fact, John Valles. John Val is just came became a patron. I wanted to shoot out shout out for him and his show on he had me on the show sometime back. Oh, you know month couple months ago so much fun. Absolutely loving John valises stuff. So definitely check that out. I will link to his show so that you can check that out. That's Bitcoin rapid-fire really really good stuff over there. All right. Thanks so much for listening guys, and I'll catch you tomorrow with another episode of the crypto economy. Take it easy guys.
The 5th installment of the always fascinating "Gradually, then Suddenly" series from Parker Lewis and Unchained Capital. What is the real problem that Bitcoin solves, and how does it compare to the alternatives? Are mass payments an impossible problem, and isn't Bitcoin too slow to be global money? This piece is packed with digital gold, so don't miss it! Link the the original article so you can get a head start and check out all the other incredible writing at Unchained-capital.com. Don't forget to follow Parker on Twitter for more of his work: https://www.unchained-capital.com/blog/bitcoin-is-not-too-slow/ https://twitter.com/parkeralewis  Other great episodes and content to go down the rabbit hole on this one! https://www.patreon.com/thecryptoconomy  ---   This episode is sponsored by  · Anchor: The easiest way to make a podcast. 