Speaker 1: So the big question is this, how do investors like
Speaker 1: us get access to the ideas, information, and most importantly,
Speaker 1: the right people that give us the tools and information
Speaker 1: we need to make informed and educated decisions to have success.
Speaker 1: That is the question, and this podcast will give us
Speaker 1: the answers. This is Mark Moss, your host. Let's get
Speaker 1: this started. Hello, and welcome to another episode of the
Speaker 1: Market Disruptors podcast. Today I am sitting down with Philip Bonello,
Speaker 1: previously with Ikey Guy Fund. He has been doing research
Speaker 1: into bitcoin and crypto for a number of years and
Speaker 1: has some amazing insights from all the research that he's done.
Speaker 1: And today we dig into a paper, a investment thesis
Speaker 1: that he's put together based off of the book The
Speaker 1: Sovereign Individual. If you haven't read the book, I highly
Speaker 1: recommend it, but today we'll give you the cliff notes
Speaker 1: of it. But there's three points that the book makes
Speaker 1: and he makes into this investment thesis, which is well,
Speaker 1: I'm not gonna spoil it for you're gonna have to
Speaker 1: pay attention, but we get into some great talks. The
Speaker 1: book is amazing. It was written in seven on the
Speaker 1: internet was just in its early stages, and it's amazing
Speaker 1: how prophetic this book is and all the things that
Speaker 1: are coming coming to fruition today. It seems like the
Speaker 1: book was just recently written. So anyway, it's a great conversation.
Speaker 1: You're gonna learn a lot about what this technology is doing,
Speaker 1: the shift that's happening in the world, the behavior changes
Speaker 1: that are happening right now, and what the world, you know,
Speaker 1: the global macrof picture of the world is doing right
Speaker 1: now to really push the adoption of the branding technology.
Speaker 1: A great conversation, a great book, and let's just go
Speaker 1: ahead and just jump right into it. Everyone. Welcome to
Speaker 1: the Market Disruptors Podcast Today. I am joined by Philip Vonello.
Speaker 1: He has previously had a research over at Ikey. Guy
Speaker 1: has been researching crypto assets and bitcoin um and has
Speaker 1: some really good insights. He's written a paper recently about
Speaker 1: a book on the sovereign individual and kind of an
Speaker 1: investment thesis around that which was was amazing, kind of
Speaker 1: rock the world. Everyone's been talking about it, and so
Speaker 1: I wanted to have him on to discuss that. I'm
Speaker 1: super excited. Welcome Philip, Hey, thanks Mark, thanks for having me. Yeah.
Speaker 1: So um, you know, we've we've we've had the privilege
Speaker 1: to talk a little bit. I read your paper, Um, so,
Speaker 1: lots of stuff to dig into. But before we do that,
Speaker 1: maybe just kind of fill us in a little bit
Speaker 1: on what you've been working on and kind of where
Speaker 1: you're at right now. Yeah. So, like you said, I
Speaker 1: worked in sorry for a little bit, uh than with
Speaker 1: head research. I guy. Recently, I've just been taking some
Speaker 1: time off exploring different kind of avenues. And one of
Speaker 1: the things that I've been digging into a bunch of
Speaker 1: just kind of a worldview. So, as you mentioned, I
Speaker 1: recently published kind of an investment thesis based on the
Speaker 1: book The Sovereign Individual, which is a really trucient book
Speaker 1: written in I'm almost embarrassed to say that I read
Speaker 1: it recently because it's such a a lot of a
Speaker 1: lot of people in the bigcoin space really love The
Speaker 1: Sovereign Individual the book, and it really was an eye
Speaker 1: opener for me. Yeah. So the last couple of years
Speaker 1: you've been doing research, Um, tell us a little bit
Speaker 1: about the kind of research that you've been doing though. Yeah.
Speaker 1: So in two thousand and eighteen, I really dug in
Speaker 1: and tried to understand why any of these crypto assets
Speaker 1: were valuable. So what that kind of led me to
Speaker 1: is building out a series of different frameworks. So essentially
Speaker 1: the way that I look at the entire crypto asset
Speaker 1: world is through the ones of productive assets and non
Speaker 1: productive assets. So you can think think of non productive
Speaker 1: assets as something like bitcoin. By holding X, you don't
Speaker 1: get any any why there's no exhougenists cash flow, right, um,
Speaker 1: similar to something like gold. Uh. And then in the
Speaker 1: productive asset category, if you hold X, you get why right,
Speaker 1: there's an exhaugenists cash flow coming into the system. Uh.
Speaker 1: Something you know that's something like Auger, right, where with
Speaker 1: Auger you can you can stake rep and you're going
Speaker 1: to get a certain amount of and returned to the
Speaker 1: proportion of REP that you stay. So that really led
Speaker 1: me to build out a series of valuation models. It
Speaker 1: really helped frame my thinking for the entire space. Uh.
Speaker 1: And I kind of took that thinking and evaluated the
Speaker 1: broader ecosystem and um kind of how value accruise in
Speaker 1: the in the whole system. In the crypto stack, I
Speaker 1: would say, so you really dug into these different assets
Speaker 1: and kind of classified them into productive and nonproductive. Um.
Speaker 1: But then were you also kind of looking at UM.
Speaker 1: It sounds like you were also looking at maybe like
Speaker 1: the act the macro economic picture as well, to see
Speaker 1: where do these new assets, where do they fit into
Speaker 1: the big picture of kind of where the world's at. Yeah,
Speaker 1: So a lot of what we did I was thinking
Speaker 1: about the macro perspective, given what's going on in the
Speaker 1: world right now, what is the demand for these crypto assets? Uh,
Speaker 1: you know bigcoin sets that are really pretty interesting space,
Speaker 1: and that it's both a risk asset but it's trying
Speaker 1: to be this reserve asset. I think the rest of
Speaker 1: crypto is pretty solidly and kind of the risk asset
Speaker 1: category M and then and then taking a step deeper,
Speaker 1: it's okay, based on that macro perspective, what is the
Speaker 1: crypto macro looking like right now? And broadly the crypto
Speaker 1: macro a lot of time is influenced by Bitcoin, and
Speaker 1: so we use a lot of enchain metrics to kind
Speaker 1: of study cycle UM and and how we think all
Speaker 1: coins are going to react to the bigcoin cycle and
Speaker 1: how bigcoin is gonna react and so on and so forth.
Speaker 1: And then and then the final level was digging deeper
Speaker 1: into each one of the projects, analyzing the product that
Speaker 1: each one of them had, and then the asset that
Speaker 1: each one of those had with relation to the product. Um.
Speaker 1: Like I said, a lot of these are nonproductive assets,
Speaker 1: and in our view, there's not really a link between
Speaker 1: that non productive asset, uh, and I guess you know
Speaker 1: the product. Yeah, yeah. I I like looking at the
Speaker 1: macro view, especially when you're dealing with like technology like this,
Speaker 1: because it gives you I I kind of feel like
Speaker 1: the bigger picture is almost easier to see than the
Speaker 1: small picture. Like if someone says, hey, Mark and I
Speaker 1: get asked us all the time, like where's bitcoin going
Speaker 1: to be in a week or in a month, And
Speaker 1: I'm like, I don't really know, but I kind of
Speaker 1: have a feeling of where it's going to be in
Speaker 1: five years from now. Um And and a lot of
Speaker 1: times I think about it like you watch one of
Speaker 1: those movies where people go back in you know, in
Speaker 1: a time machine, and if they touched one little thing
Speaker 1: and then they go back to the future, it makes
Speaker 1: this massive impact. And that's kind of like we can
Speaker 1: see these little things happening today that have that massive impact.
Speaker 1: That's pretty cool. UM. So thanks for giving us that
Speaker 1: background I think it's important to to get your perspective
Speaker 1: as we move into this. But so, so you wrote
Speaker 1: this kind of investment thesis off this book The Sovereign
Speaker 1: Individual Um, which as you said, is kind of big
Speaker 1: in the in the in the bitcoin space, maybe because
Speaker 1: it was for telling of what was going to happen, right,
Speaker 1: I mean the book was written there wasn't really I mean,
Speaker 1: the Internet was a round, but it wasn't even really
Speaker 1: hadn't even really taken hold yet. So for them to
Speaker 1: write this book at that time was a pretty big,
Speaker 1: pretty big deal. It was like they did a good job.
Speaker 1: So kind of give us the overview of what the
Speaker 1: books about and maybe your investment thesis you pulled out
Speaker 1: of it. Yeah. So, I mean one of the things
Speaker 1: that's that's really interesting about the book is that they
Speaker 1: do a pretty good job of predicting bitcoin. You know,
Speaker 1: they think that there's going to be a currency that's
Speaker 1: backed by gold. So they're a little off in that respect,
Speaker 1: but but still pretty incredible insight. I Mean, broadly, what
Speaker 1: The Sovereign Individual talks about is the logical violence, uh,
Speaker 1: and how that has really affected big trends throughout history,
Speaker 1: so especially starting with kind of the agricultural movement. With
Speaker 1: our with humans moved to agriculture, we started to have
Speaker 1: their mergence of personal property, and with their emergence of
Speaker 1: personal property, violence at scale uh really became valuable. So
Speaker 1: we we saw the rise of these different types of
Speaker 1: bureaucratic entities, these different kind of organizations to really uh
Speaker 1: ah provide protection for groups of individuals who needed that protection. Right.
Speaker 1: And and then as we move into the information age,
Speaker 1: a lot of that stuff gets turned on its head. Uh.
Speaker 1: So there's there's reduced information asymmetry. Uh, you know, there's
Speaker 1: the potential for money that is outside the control of
Speaker 1: a central government. And then encryption completely changes the logic
Speaker 1: of violence and the way that individuals can protect themselves.
Speaker 1: So for the first time, really, um, an individual can
Speaker 1: hold let's say a billion dollars and and there there
Speaker 1: the way that they protect that billion dollars is just
Speaker 1: about as good as the way that the US government
Speaker 1: would protect that billion dollars. Right. Encryption decreases the cost
Speaker 1: of protection and decrease. It also decreases the leverage that
Speaker 1: violence has on people. Yeah. Yeah, So let's let's unpack
Speaker 1: that a little bit. So you talk about information technology.
Speaker 1: So the Internet was information technology, right, so decentralized information.
Speaker 1: So previous to the Internet, Um, information you said had
Speaker 1: eight what do you call it? Asymmetric information? I forget
Speaker 1: to work just there's uh information asymmetry. Right, So certain
Speaker 1: certain organizations have control over all this information and they
Speaker 1: distributed only to their members and think about about it
Speaker 1: like that. Yeah, and so information was controlled and really
Speaker 1: you could chase this all the way back to you know,
Speaker 1: Martin Luther times in in Europe and whatever, the four
Speaker 1: dreds where the church kind of controlled the scripture and
Speaker 1: it wasn't until the printing press came out that then
Speaker 1: it was able to spread that information. And that's what
Speaker 1: broke the power at the church had over and uh
Speaker 1: and the Internet has taken that a step further, right,
Speaker 1: So we have kind of leveled the plane field on information. YEA, yeah,
Speaker 1: that's exactly that's exactly right. Um, I mean yeah, sorry,
Speaker 1: go ahead, Well I was gonna say so because the
Speaker 1: information is now spread out and across borders, across the globe.
Speaker 1: You made the point, right, it's broken down the jurisdictional barriers.
Speaker 1: So now instead of like one country that kind of
Speaker 1: has all the information Now it's kind of starting to
Speaker 1: be global. Yeah, absolutely, and I think that's um, that's
Speaker 1: one of the biggest drivers to this, this broader trend.
Speaker 1: Everyone has access to the same information, so everyone can
Speaker 1: be educated in relatively the same way. And when everyone
Speaker 1: can be educated in the same way, then everyone can
Speaker 1: do mostly the same jobs, jobs that used to be
Speaker 1: considered skill to work. Right, And so when you think
Speaker 1: about kind of mean reversion, uh, the people who used
Speaker 1: to do that skilled work in the developed countries are
Speaker 1: are used to these high wages, but now they're being
Speaker 1: undercut by people who can provide those those same that
Speaker 1: same level of work for potentially a quarter of the
Speaker 1: quarter of the cost, right, And so it seems relatively inevitable,
Speaker 1: inevitable that there's going to be this mean reversion from
Speaker 1: both the developed countries and the developing countries. And so
Speaker 1: I think that was that was one of the key
Speaker 1: insights that I took away from the book m just
Speaker 1: this idea of decreasing information asymmetry. There's a decreasing value
Speaker 1: to location, so the exit costs are are much easier.
Speaker 1: You know, let's let's say, uh, my wages personally are
Speaker 1: are going down. I can no longer afford to live
Speaker 1: in l A, So I have to go to a
Speaker 1: different jurisdiction, a jurisdiction that might be more business friendly. Uh.
Speaker 1: They have lower taxes, um. You know, they have subsidies
Speaker 1: for starting up entrepreneurial ventures, um and and and it's
Speaker 1: really easy to do that because I can run I
Speaker 1: can run my business from anywhere in the world. We're
Speaker 1: we're previously you know. Uh, there's there's a lot of
Speaker 1: value in being in the central locations. And we haven't
Speaker 1: quite seen that shift fully yet, but you can see
Speaker 1: the beginnings of it. I mean it's it's definitely not
Speaker 1: fully shifted, but we've definitely seen the beginnings of it.
Speaker 1: What's interesting is, at least I don't know, I haven't
Speaker 1: fact checked it, but a decade ago maybe there's an
Speaker 1: author Daniel Pink He wrote a book called A Whole
Speaker 1: New Mind, And basically the point that he made in
Speaker 1: the book is that, um, the whole world has been
Speaker 1: set up for technical roles. College teaches people technical, SA
Speaker 1: t s are technical. All the jobs were technical, right, engineers, etcetera.
Speaker 1: But because of the Internet, as you're saying, UM, now
Speaker 1: it's taken technical roles and made them commodities. And so
Speaker 1: now being the engineer or whatever, the codeer, the developer
Speaker 1: is not where you want to be because now that's
Speaker 1: been commoditized, right, I can hire does dozen them over
Speaker 1: in New Delhi or whatever. And so he calls it
Speaker 1: a whole new mind because we kind of have a
Speaker 1: creative side and analytical side of the brain supposedly, And
Speaker 1: he said, in order to be successful in this new age,
Speaker 1: you have to use the creative side of your brain.
Speaker 1: And instead of being like if you think of like
Speaker 1: an orchestra, instead of being the best troumbone player, the
Speaker 1: best horn player, you're the conductor. And I can't play
Speaker 1: the music better than any of those people, but I
Speaker 1: can make them make beautiful music together. Yep. And and
Speaker 1: and those people today have more leverage than ever before. Right,
Speaker 1: So uh there's creative people, yeah, the creative people. Right.
Speaker 1: So essentially, entrepreneurs and investors have more leverage than they
Speaker 1: ever had before because, uh, they can be really creative.
Speaker 1: They can coordinate all these resources while they're sitting in
Speaker 1: the living room. Right. Um. On the flip side of that,
Speaker 1: workers have more competition than than ever before. So uh, yeah,
Speaker 1: you know, work, work, works, smart, not hard, you know,
Speaker 1: there maybe something something to that. Yeah, well, the school
Speaker 1: systems definitely have not kept up with the with the
Speaker 1: changes of technology, and so there's still training everyone to
Speaker 1: be technical, technical, technical, but we've gone to a creative
Speaker 1: world and so um, there's a there's a big challenge there,
Speaker 1: which we'll get into. I know, you start talking a
Speaker 1: lot about education, and that's the part that I'm pretty
Speaker 1: passionate about. It's interesting though, you know when you look
Speaker 1: at what's going on in the world today with you know,
Speaker 1: all over the world right now, right from Iran and
Speaker 1: Lebanon and Hong Kong, especially Hong Kong, but Chile, and
Speaker 1: I mean you name it right, it's erupting and especially
Speaker 1: like in Hong Kong. Um but it, as you called it,
Speaker 1: borderless information reduces jurisdictional barriers and and I find it
Speaker 1: like hard to believe that in this world today a
Speaker 1: country can still own you, Yeah, like your own you're
Speaker 1: you're basically slave, right, You're owned by the country. And
Speaker 1: how in the US, right half of my wages go
Speaker 1: to the government and I can't leave. Yeah, I mean
Speaker 1: I think that's a cheat problem. I think there are
Speaker 1: some technical challenges to that. Right, our systems are set
Speaker 1: up in a way that we inherently give over our
Speaker 1: data when when we use a given application. Um. But
Speaker 1: like what you were talking about as far as high taxation,
Speaker 1: it's gonna be really interesting interesting in the coming years
Speaker 1: with kind of the wealth tax, you know, the whole
Speaker 1: movement of tax the billionaires, um, and potential for something
Speaker 1: like m M T. Right, Really wealthy people especially will
Speaker 1: probably be leading the charge of Okay, how do I
Speaker 1: protect my well here? Um? I might have to either
Speaker 1: protect it from seizure or if they're protected from inflation, right,
Speaker 1: And you know, the coins are pretty pretty interesting tool
Speaker 1: for that. If you look at how um, you know,
Speaker 1: life has evolved, um, I mean not since the beginning,
Speaker 1: but just you know, you look at like Game of
Speaker 1: Thrones or whatever, right, and it's just like little tribes
Speaker 1: and the one would attack the other one to see
Speaker 1: older resources. And so you know, you kind of had
Speaker 1: to get these like kingdoms which then became countries, and
Speaker 1: still countries were taken over the countries to steal their resources.
Speaker 1: But now moving into like this more information age, which
Speaker 1: I guess we'll get to like a near encryption part,
Speaker 1: which is now we can protect our resources in a
Speaker 1: completely different way, which means the threats that we have
Speaker 1: are not the same as they always have. Like someone
Speaker 1: can't just come take over my house because my assets
Speaker 1: aren't or my you know, it's not in my house, right,
Speaker 1: it's like digital or whatever. Yeah, and you know, there
Speaker 1: there are still levers to be pulled in the physical world.
Speaker 1: You can still be attacked physically, still be killed, right, Um,
Speaker 1: but more and more assets are outside of the purview
Speaker 1: of of kind of government government interference, outside of just
Speaker 1: physical coercion. I and and that that's a really interesting trend. Yeah. Yeah, So, um,
Speaker 1: while I see the information being uh this kind of
Speaker 1: commercial or more or list kind of jurisdictional thing dropping,
Speaker 1: it's gonna be interesting to see how that plays out. Um.
Speaker 1: I know you quoted um Jil Carlson and she had
Speaker 1: talked about how the Internet grew up and it and
Speaker 1: it created this borderless um you know, mind share, information share,
Speaker 1: but financials got left behind. And it reminded me of
Speaker 1: a story I saw Eric Vorhees right a while ago
Speaker 1: where he kind of talked about, imagine if we had
Speaker 1: this internet and instead of this Internet, that connected the
Speaker 1: whole world and we all shared information. Imagine if we
Speaker 1: each had our own little regional internet and we just
Speaker 1: had the United States Internet and there was a China Internet. Well,
Speaker 1: I guess there was a China Internet, but you know,
Speaker 1: each country had their own little internet, and how different
Speaker 1: it would be. And then he made the point, well, okay,
Speaker 1: now that you've imagine that, well, that's exactly how money works.
Speaker 1: And so um. Anyway, it's interesting to to kind of
Speaker 1: look back and see how the information has been decentralized
Speaker 1: and how hopefully money's next there. Yeah, which takes us
Speaker 1: to the second point of your paper, which was that
Speaker 1: or from the book, which is the creation of non
Speaker 1: sovereign digital money. And I guess that kind of creates
Speaker 1: competition with the money, which once we have competition with
Speaker 1: the money, then you said, it decreases the power of
Speaker 1: inflation and taxation. Yeah, and and so so take take
Speaker 1: a quick step back. You know, when I started thinking
Speaker 1: about this thesis broadly, I looked at it through uh
Speaker 1: kind of sources of demand and I use acquired defend
Speaker 1: bond learn and feel as kind of the sources there
Speaker 1: and what are what are those? Those are? Those are
Speaker 1: like the five human motivations. Yeah, and you know, we
Speaker 1: can like it's up for debate what what are the
Speaker 1: primary human motivations? But I, uh, we we know for
Speaker 1: sure greed and fear right to at least yeah, yeah,
Speaker 1: you know, so acquired defend. But I think there you know,
Speaker 1: there's a there definitely is an inherent desire to learn,
Speaker 1: there's a there's a design are to be loved, So
Speaker 1: that's kind of the bonding. And I think there is
Speaker 1: a desire to feel or to escape right from from
Speaker 1: your mind or what have you. And so U four
Speaker 1: of those are borrowed from the book Driven, which which
Speaker 1: talks about it in a different context. But I the
Speaker 1: reason I wanted to look at things, uh through the
Speaker 1: lens of demand is because I really like the way
Speaker 1: that Jeff Bezos framed uh. You know, he he talked
Speaker 1: about people ask them all the time what's changed or
Speaker 1: what's going to change in ten years, and he always says, well,
Speaker 1: it's a lot easier to look at what's not going
Speaker 1: to change, right, And I think broadly you can look
Speaker 1: at human motivations and how they're not going to change. Um.
Speaker 1: But what's interesting in the crypto space is that I
Speaker 1: think there is a behavior change that needs to happen, right,
Speaker 1: So we're very much focused on, uh, this idea of
Speaker 1: acquire agreed right now, and to an extent, have ignored
Speaker 1: kind of our defensive practices. We outsource, we outsource protection.
Speaker 1: And this is evident in and the way that we
Speaker 1: use applications today because all like Facebook has all of
Speaker 1: our data, Google has all of our data. Right. Um,
Speaker 1: it's just the way that it's set up. And people
Speaker 1: people brought like pretty much don't care. So one of
Speaker 1: the trends that I see is is as it um
Speaker 1: is that we'll see this, uh, this motivation of defend,
Speaker 1: this need for defensive technologies to increase, right, and so
Speaker 1: so the idea of digital money is kind of a
Speaker 1: defensive technology. People don't really care about it until they
Speaker 1: have to. You ask most people right now, they say, oh,
Speaker 1: the U S dollars. Fine, it's it's the US dollar, right.
Speaker 1: But I think there's all different levels to that, right.
Speaker 1: So I work with all types of investors and go
Speaker 1: through training stuff. And it's like in the beginning, when
Speaker 1: you're young and you have and you don't have much money,
Speaker 1: you're just risky, right, You're greedy, I need to get
Speaker 1: more money. But as you get older and you have money,
Speaker 1: than it switches and now you have to protect that money.
Speaker 1: Were like, you're young and single and you're thinking about yourself. Well,
Speaker 1: now I'm a father and I have kids, and like,
Speaker 1: you're better to be sure I'm ready to protect that family. Right. So,
Speaker 1: I think our motivations as humans are the same, but
Speaker 1: they change as we go through life. Maybe yeah, yeah,
Speaker 1: that that's definitely possible. And uh, I think it's probably
Speaker 1: an environmentally dependent um you know, some someone someone in
Speaker 1: Venezuela is definitely a lot more sensitive to the idea
Speaker 1: of inflation than someone in uh from the US. Um
Speaker 1: And and I think I think that those environmental factors
Speaker 1: definitely affect the demands our motivations. So so so that's
Speaker 1: kind of what I what I argue in the paper
Speaker 1: that we have this technology, we have the ability to
Speaker 1: opt out of these systems. We understand the supply right,
Speaker 1: twenty one million bitcoin. That's a great narrative, but I
Speaker 1: think a lot of people are you know, they're they're
Speaker 1: arguing about demand. Where is the demand going to come from?
Speaker 1: And uh, as we see more capital controls, as we
Speaker 1: see increase inflation, as we see increased taxation, then the
Speaker 1: demand for an asset like bitcoin will increase. And with that,
Speaker 1: it's also the idea of kind of these self sovereign
Speaker 1: and technologies. So right now bitcoin is firmly speculation right exchanges, funds,
Speaker 1: data providers, rugrad services, that's where all of the investment
Speaker 1: is going. There was this idea of decentralized exchanges. Um,
Speaker 1: they haven't gained a whole lot of adoption, h but
Speaker 1: I think that's gonna be. They're going to be very
Speaker 1: important at some point. At some point. Uh, self sovereign
Speaker 1: custody is going to be very important at some point,
Speaker 1: Like the user experience for custody has to improve. Well,
Speaker 1: I think you made You made the point that those
Speaker 1: things emerge when there's a need, and that's kind of
Speaker 1: capitalism and its best right. So it's like, um, there
Speaker 1: is starting to be a need for having a non
Speaker 1: sovereign digital money. And as you said, right in the
Speaker 1: US people don't see that, but in Venezuela or you know,
Speaker 1: Lebanon or Iran, when the bank's just open back up
Speaker 1: after whatever a month, like they have a need for that. Um,
Speaker 1: the essentialized exchanges. We haven't really seen a need for that,
Speaker 1: but once we see more increased you know, regulatory crackdowns,
Speaker 1: there will be a need for it. And then and
Speaker 1: then my hope anyway is that we'll we'll see that
Speaker 1: start to pop up again. Yeah. And and in some ways,
Speaker 1: these fully decentralized systems UH aren't necessarily the way to go.
Speaker 1: You know, like you look at bit macs, you look
Speaker 1: at finance, you look at usd T. They aren't wholly
Speaker 1: immutable or not centership resistance or completely centership resist and
Speaker 1: you're still depending on a third party, right, But they've
Speaker 1: been able to kind of skirt regulations and they've been
Speaker 1: extremely successful, you know, almost because of that. Yeah. But
Speaker 1: if we're sticking on the back to point number two,
Speaker 1: So we talked about point number one was the information
Speaker 1: reducing the jurisdictional barriers. Number two was creation of non
Speaker 1: sovereign digital money um and and I think you're talking
Speaker 1: about inflict the the sovereign individual. The information technology is
Speaker 1: helping to push that digital money obviously because it's built
Speaker 1: off of the Internet. UM and it's decreasing the power
Speaker 1: of inflation. So right now, the governments around the world,
Speaker 1: including United States are are pushing inflation on us right there,
Speaker 1: stealing the value of our money. So that is a
Speaker 1: reason that's causing this creation of this non sovereign money.
Speaker 1: And yeah, and and I guess a competition for money,
Speaker 1: right definitely. And I think right now, the logical conclusion
Speaker 1: there is Okay, well, I'm gonna buy gold rum. But
Speaker 1: but then, um, you think about transporting golden, You think
Speaker 1: about the ability for someone to seize your gold. You
Speaker 1: think about the ability for something for you to store,
Speaker 1: let's say a couple of billion dollars for the gold.
Speaker 1: You know. Talking about these really wealthy people, I think
Speaker 1: that's where the trend is probably going to start because
Speaker 1: they see these problems. They'll see these problems before everybody else.
Speaker 1: And and that's where we'll see the difference, right in
Speaker 1: this the reason for the center to persistence and um,
Speaker 1: and the more the more that governments inflate their money
Speaker 1: and sees people's money, the more they're going to be
Speaker 1: pushing people to options like this, right yeah, absolutely, Yeah,
Speaker 1: it's kind of unstoppable. I think. I guess we just
Speaker 1: have to ask ourselves to the questions, do we think
Speaker 1: governments will magically wake up and be fiscally responsible at
Speaker 1: some point or will they continue to push it as
Speaker 1: far as they can push it. And again, going back
Speaker 1: to human motivation, I think we know the answer, right, yeah, yeah,
Speaker 1: you know, the these systems are set up in a
Speaker 1: way that they want to get real people. The people
Speaker 1: in power want to get reelected. The easiest way for
Speaker 1: them to get reelected is for their economies to do well.
Speaker 1: For their economy to do well, they should probably print
Speaker 1: more money so that the equities markets continue to boom. Yeah.
Speaker 1: So the third final point was the encryption. That encryption
Speaker 1: produces the cost of protection um and decreases the leverage
Speaker 1: of violence scale. And we touched on that um. But
Speaker 1: I guess when you add all that together, I mean,
Speaker 1: it's the encryption you're saying, is is protection for us?
Speaker 1: And I guess with point number one about information, So
Speaker 1: we could have information that could be protected, uh and
Speaker 1: and secret or private, but then also then money we
Speaker 1: can create our money, save our money and then encrypted
Speaker 1: all I mean going to that point yeah and um
Speaker 1: so so yeah, we we have the ability currently to
Speaker 1: send information around the world in in an instant but
Speaker 1: like you mentioned, there there are there is the ability
Speaker 1: to censor a lot of that a lot of that information, right,
Speaker 1: and so that's where this idea of kind of these
Speaker 1: crypto applications comes in. And my as a hobby kind
Speaker 1: of brought this idea of dissident technology, which I think
Speaker 1: is as as an elegant way to describe the value
Speaker 1: proposition of crypto more broadly, um, it's it's it's something
Speaker 1: this whole movement is really to be able to exist
Speaker 1: outside of the purview of government protection. It's kind of
Speaker 1: saying we can protect ourselves now, let us and and so,
Speaker 1: and encryption is is a really interesting thing because it
Speaker 1: makes it easier. It makes it easier for me to
Speaker 1: protect myself just as and pretty much just as easily
Speaker 1: as a large corporation, um can protect themselves. And then
Speaker 1: also what do you think about a large corporation versus
Speaker 1: an individual. A large corporation is a honeypot, right, And
Speaker 1: if you're if you're keeping your assets with that with
Speaker 1: that organization, that corporation, their their encryption probably isn't any
Speaker 1: better than encryption that you have available. Um. So, so
Speaker 1: you look at the reward for attacking that organization versus
Speaker 1: the reward for attacking the individual and it it tilts that,
Speaker 1: it tilts that scale. Yeah, and we see it happen
Speaker 1: all the time, right target and experience, and they're all
Speaker 1: getting hacked. The n s A was hacked, and when
Speaker 1: they hacked the n s A, they stole their hacking software,
Speaker 1: right because they are those honeypots. And it's kind of
Speaker 1: like if if you would go rob a bank that
Speaker 1: had a billion dollars, or would you go rob a
Speaker 1: billion banks that had one dollar each? Yeah exactly, it's
Speaker 1: like that that so you but you talk about how
Speaker 1: like as individuals have more control of their property than
Speaker 1: we have more need to defend that property, which I
Speaker 1: kind of made like as I get more money or
Speaker 1: as I get a family, and how we've been outsourcing that.
Speaker 1: And I think back to kind of like how you know,
Speaker 1: the banking system started, so you know whatever the eighteen hundreds.
Speaker 1: Previous to the eighteen hundreds, I would just store my
Speaker 1: gold in the ground somewhere or whatever um and then
Speaker 1: eventually I could just put it in a bank and
Speaker 1: then that bank would be I'd be outsourcing the security
Speaker 1: right to that bank. So maybe it's only been a
Speaker 1: couple of hundred years we've been doing that. I mean,
Speaker 1: do you see that being this big behavior change, you
Speaker 1: think that that's gonna have to be made. Yeah, So
Speaker 1: I think, you know, I think it's really Yeah, it's
Speaker 1: been since really the agricultural revolution, since the emergence of
Speaker 1: personal property, that we've kind of had this outsourcing and
Speaker 1: protection because you know, like the biggest guy in town,
Speaker 1: the most powerful guy in town, that's the person who
Speaker 1: who you can hire to protect your assets, right, and
Speaker 1: he gets some of his guys around, and now he
Speaker 1: has this little army and you pay, you pay that
Speaker 1: leader to protect you. Right. And that that in in
Speaker 1: in different forms and fashions, has kind of persisted. Um.
Speaker 1: And now with the idea of this dissident technology crypto broadly,
Speaker 1: I there are two there are two levers that people
Speaker 1: kind of think about. I think in the crypto world
Speaker 1: it's like cost efficiencies and um, it's the idea that Okay,
Speaker 1: there's no middleman anymore, and so now there's decreased rent
Speaker 1: seeking and and I can buy that to a certain extent. Right,
Speaker 1: some some of the costs will come down, but there
Speaker 1: there still is rent seeking on the part of someone
Speaker 1: within the or some people within the system. Right, Um,
Speaker 1: and the the efficiency isn't that, it's not that great.
Speaker 1: What is a big kind of like the ten Ex
Speaker 1: improvement is the defensibility of these systems. And and that's
Speaker 1: where I think, Uh, that's where I think we need
Speaker 1: to see demand. And right now we're everyone in cryptos
Speaker 1: like why aren't people adopting any of these things? And
Speaker 1: I think it's just it's just to demand issue. Right, Um,
Speaker 1: there hasn't there hasn't been enough ruined to to demand
Speaker 1: these type of protective services. Um, even though we have
Speaker 1: had that Equifax, you know, equifacts hack, Facebook, Yahoo, like
Speaker 1: all all of these big all of these big hacks
Speaker 1: and hum, these large data holders really mishandling our our property,
Speaker 1: right um. And and so we're gonna have to see
Speaker 1: a shift of behavior from kind of this this motivation
Speaker 1: of acquired to this motivation to defend your your digital
Speaker 1: assets as as we increasingly have more digital assets. Yeah.
Speaker 1: But when you talk about dissident tech, maybe just unpacked
Speaker 1: that what are what are you talking about like that
Speaker 1: as kind of like a whole or maybe as that
Speaker 1: can asset Yeah, I'm talking about both like things that
Speaker 1: can resist censorship and things that are generally anti fragile,
Speaker 1: so UM and like fight against the government or to
Speaker 1: a certain extent that you know, that's one of the
Speaker 1: that's one of the use cases. But it's also um
Speaker 1: like you think about like mesh networking versus some of
Speaker 1: the r I s p s currently there. These are
Speaker 1: central points of failure and they're easy, they're they're outdated
Speaker 1: in many respects, and they're easy to take down. UM.
Speaker 1: Whereas if if you can create these these networks that
Speaker 1: are really resilient, and even better than resilient, they're anti
Speaker 1: fragile as people try to attack them, you're making them
Speaker 1: stronger something something really like like bitcoin. Uh, that's that's
Speaker 1: kind of the holy grail, and I think that's what
Speaker 1: we're starting to work towards. But we're starting to see, yeah,
Speaker 1: very really does for for those that don't know exactly
Speaker 1: what he was just talking about. So what we're seeing
Speaker 1: like in Iran right now is they took down the internet. Uh,
Speaker 1: the Internet went down in Iran because they don't want
Speaker 1: them communicating, or or even in Hong Kong, we don't
Speaker 1: want the protesters communicating, and so they have mess networks,
Speaker 1: which basically allow phones to communicate one by one and
Speaker 1: kind of create their own network that can't be taken down.
Speaker 1: And so, um, I mean I think that that this
Speaker 1: type of technology is in a direct response to that
Speaker 1: stuff that's that's happening. Um, you made a quote about, um,
Speaker 1: the balance of the lion and the lamb, and how
Speaker 1: if the I think you said, like, if the lion
Speaker 1: got faster, there would eat they would eat too many
Speaker 1: of the lambs. And if the lamb got stronger than
Speaker 1: the lions would starve, and there needs to be this balance. Um,
Speaker 1: do you see like the lion being the state and
Speaker 1: the lambs being the citizens. Yeah, basically, essentially nation states
Speaker 1: have benefited from being very strong militarily, they provided protective services.
Speaker 1: But now the equation is has changed drastically. More happens
Speaker 1: outside of the purview of the state. Individuals can protect themselves.
Speaker 1: Information isn't controlled as much by the state. And so
Speaker 1: my the way that I described as us lambs individuals
Speaker 1: have grown wings. You know, we can we can kind
Speaker 1: of avoid the lion, avoid this predator. And and it's
Speaker 1: it's this this idea that nation states will continuously have
Speaker 1: to treat citizens more like customers, right, and that would
Speaker 1: exactly you know, wouldn't it be nice? And it it should,
Speaker 1: that should be the way that things happen. Right, we
Speaker 1: give so much money to these these sovereigns, but are
Speaker 1: are they the best people to handle the money? Right?
Speaker 1: And you start you start to think about that, and
Speaker 1: it seems far fetch that that a nation would treat
Speaker 1: you as a customer. But I think Singapore is a
Speaker 1: great example. In Singapore's reference frequently in the Sovereign Individual,
Speaker 1: which was written and now we can look at Singapore,
Speaker 1: you know, twenty years later, and it's it's pretty shocking, right,
Speaker 1: Singapore has been incredibly business friendly and what has happened.
Speaker 1: A lot of businesses has moved to Singapore. It's interesting
Speaker 1: that we even have to say that, especially as both
Speaker 1: of us it in the United States right now, because
Speaker 1: in the United States, it's supposed to be like a
Speaker 1: servant leader, right Like it's supposed to be the people
Speaker 1: that are supposed to be serving the people. It's a
Speaker 1: government of the people for the people. However, there's been
Speaker 1: a massive shift over the last probably decade or so
Speaker 1: where now I think the average person looks at the
Speaker 1: government as as a ruling class right there, they're not
Speaker 1: representing us anymore. They're doing as they want, and now
Speaker 1: for us to even have to talk about that, like
Speaker 1: they should curious as a customer, Like, no, they should
Speaker 1: look at us as their bosses. Yeah, but anyway, that's
Speaker 1: not the case. But yeah, maybe it's hard, it's hard
Speaker 1: to imagine, but maybe at some point where, um, with
Speaker 1: those three factors, as you said, right, with the with
Speaker 1: the widespread use of information breaking down the barriers that
Speaker 1: we could move to the country that best suited our needs,
Speaker 1: and then they started competing for us. Yeah, exactly, with
Speaker 1: more happening outside of the purview of governments, the ability
Speaker 1: of individuals to protect their property through encryption, decreasing decreasing
Speaker 1: information asymmetry, and decreasing the value of location, people can
Speaker 1: easily go to other places. And when when people start
Speaker 1: to leave, then revenues start to decrease. Right. Problem The
Speaker 1: problem is is, as you identified, kind of like the
Speaker 1: five of human motivations, one of those being greed, which
Speaker 1: seems to be bigger and more powerful than the other ones,
Speaker 1: especially with certain individuals. And so you're always going to
Speaker 1: have these people that are gonna want to control, right, So,
Speaker 1: like you know, uh, we see it in the Parent
Speaker 1: Teacher Association. I see at my homeowners association. We see it,
Speaker 1: you know, at the presidential level. Um. So it's like
Speaker 1: one country says, hey, come set up here. We're like,
Speaker 1: you know, business friendly. But then eventually someone's gonna want
Speaker 1: to control that. Do you think that that greed factor
Speaker 1: always is going to take over? Absolutely? Yeah. I mean,
Speaker 1: but I think all of these things are just checked right,
Speaker 1: and as a few businesses, as a few billionaires, you know,
Speaker 1: start to leave jurisdiction that has high taxes and high
Speaker 1: inflation to a jurisdiction which is more friendly towards these
Speaker 1: wealthy people and more friendly towards businesses, then then I
Speaker 1: think more countries start to take notice. You know. I
Speaker 1: think we're both in California, which is probably u at
Speaker 1: least the second worst state in the in the nation
Speaker 1: behind New York, if not the worst state for taxes
Speaker 1: and the way they treat businesses. And we've seen businesses
Speaker 1: leave the state in droves. The rich have left the
Speaker 1: state in droves. The rich have left New York in droves,
Speaker 1: and they're all headed to lower tax regions no state
Speaker 1: tax regions, Texas, Florida, etcetera. But yet the States haven't
Speaker 1: decided to change. If anything, they've gotten, they've doubled down
Speaker 1: on it. Yeah, I mean we'll see, we don't know.
Speaker 1: I think this is the trend. But I think timing
Speaker 1: is timing is a big question. Yeah. Now you made
Speaker 1: you made one point, um that I wanted to touch
Speaker 1: on where Um. I guess the first point was about
Speaker 1: information and now with the widespread information and allows us
Speaker 1: this arbitrage to live kind of wherever we want. And
Speaker 1: you talked about how it's an especially interesting sector. You
Speaker 1: made the comment, um, because of the way that it
Speaker 1: gives people this you know, ability to access information, um,
Speaker 1: which can really take hold. And how you're expecting like
Speaker 1: the edge industry to grow to ten trillion you said,
Speaker 1: by um and add a hundred teachers. Wh Where did
Speaker 1: you kind of come up with that thesis that thought, Yeah,
Speaker 1: these these are estimates that I found in a fairly
Speaker 1: comprehensive report. I actually should probably link it in in
Speaker 1: the in the paper. But UM, I think that education
Speaker 1: is really the the gating factor here because it it
Speaker 1: kind of allows the rest of it to fall into place. Uh.
Speaker 1: And when you think about education, people can become educated
Speaker 1: really easily. Uh, They have also the information at their fingertips.
Speaker 1: Uh what is what is maybe a little bit more
Speaker 1: difficult is the accreditation. And when when I think about
Speaker 1: the real value of universities right now, it's it's in accreditation.
Speaker 1: Right like you went to Stanford, you went to Harvard,
Speaker 1: you went to Yale. Uh that that that holds power
Speaker 1: right there, you know. And uh, um, but that power
Speaker 1: is being reduced. I made a video about this. Um.
Speaker 1: A lot of the big fortune companies have taken away
Speaker 1: the requirement to have a college degree. Now, Apple, A,
Speaker 1: T and T, Marriott Hotels, they've all taken away that
Speaker 1: requirement now. Yeah, and so that's that again, right, like
Speaker 1: the one little change in the drastic difference it makes.
Speaker 1: And so by changing that, it takes away that that
Speaker 1: accreditation piece, and so that's gonna help us, right. I
Speaker 1: agree with that viewpoint. That's why I was just curious
Speaker 1: about that. I think that's probably the biggest shift that
Speaker 1: we'll see. Yeah, and I think that that opens up
Speaker 1: an opportunity for someone to make a really good accreditation service,
Speaker 1: right whatever it may be. Like, um, I think it
Speaker 1: was Eric Tornberg he was talking about, right, what is
Speaker 1: like the next linked in the next iteration of LinkedIn,
Speaker 1: because linked In in in a way is is providing these
Speaker 1: accreditation services and it's like an online resume, But can
Speaker 1: you take out a step further further or is is
Speaker 1: it do you have an online portfolio or you know,
Speaker 1: what does this tend to look like? And and there's
Speaker 1: a big opportunity to own that that point kind of
Speaker 1: my my thought on that is uh, because h is
Speaker 1: is that we're already seeing this shift, right and and
Speaker 1: they and they said like in the next two years,
Speaker 1: I think like jobs and the US are projected to
Speaker 1: be gig jobs. And so what we're starting to see
Speaker 1: is like I want to specialize in running Facebook ads,
Speaker 1: and I can work for five or six or ten
Speaker 1: companies to run just Facebook ads, and I can be
Speaker 1: the best Facebook ads guy. Where I can be a copywriter,
Speaker 1: or I can be a video editor and I can
Speaker 1: just be a video editor. I can be a bookkeeper
Speaker 1: and I don't have to be hired full time with
Speaker 1: this company to be a bookkeeper. Just be a bookkeeper
Speaker 1: for twenty companies, right um. And so it allows me
Speaker 1: to just learn how to do bookkeeping, or learn how
Speaker 1: to do Facebook ads, or learn how to do whatever
Speaker 1: and I can watch YouTube videos for that, right, Um,
Speaker 1: and then I can just offer those services on a
Speaker 1: gig basis. And people think gig jobs are bad, but
Speaker 1: they don't they have to be um. And maybe just
Speaker 1: that whole because like as you already made, the case
Speaker 1: that we agreed on is that like that that technical
Speaker 1: role is diminishing M and so, UM, maybe I don't
Speaker 1: need that college degree to go get that job at
Speaker 1: a T and T. I could just become a bookkeeper
Speaker 1: and work for ten companies on the side and live
Speaker 1: in a jurisdiction that has cheap rates, and I could
Speaker 1: live a very good life exactly. Yeah, I completely agree
Speaker 1: with that. Uh yeah, I think we'll we'll continue to
Speaker 1: see more of that because, uh, people are going to
Speaker 1: become more and more disgruntled in developed countries because because
Speaker 1: they expect high wages and they pay a lot of taxes,
Speaker 1: they pay a lot through inflation. Uh, and they pay
Speaker 1: a lot just for their property. Right. Yeah. Yeah, Well,
Speaker 1: some good stuff we went through. UM. I want to
Speaker 1: wrap it up with one last point here, one question.
Speaker 1: And so you said that, Um, you think the tipping
Speaker 1: point will be in the next ten years. Um, I
Speaker 1: guess based off of your thesis and what you're seeing.
Speaker 1: You think the tipping point when this really all kicks
Speaker 1: in isn't ten ears. Yeah, and I think that that
Speaker 1: revolves mostly around, uh, the idea of distance technology and
Speaker 1: centership resists in digital money. Um, it's pretty wild right now.
Speaker 1: But I mean you you read the Sovereign Individual, it
Speaker 1: sounds like it was written last week, to be honest,
Speaker 1: right there are It talks a lot about the rising
Speaker 1: nationalism and like these neo Luddites and um, higher higher inflation. Uh,
Speaker 1: these trends of taxation. And it's it's pretty wild too
Speaker 1: to read, to read the Sovereign Individual today because it
Speaker 1: it honestly was just so oppression. UM. So I you know,
Speaker 1: the ten years is kind of a guest. You know,
Speaker 1: it's it's hard to time these things, right, but yeah,
Speaker 1: just based on how things are, how quickly things seem
Speaker 1: to be moving, um in the press in the press today, Yeah,
Speaker 1: it seems like just in the last six months, seeing
Speaker 1: the increase in rise or in the last year, the
Speaker 1: increase and rise in UH in in demonstrations and protests
Speaker 1: and and and the need for this distant tech as
Speaker 1: you're talking about seeing the mesh networks and facial recognition
Speaker 1: stuff being pushed just in the last couple of months,
Speaker 1: and in Iran and Hong Kong it's almost like the
Speaker 1: governments are wanting to usher this and even faster. So, um,
Speaker 1: I agree with you. Timing it's almost impossible. Um, but
Speaker 1: at the rate we're going, maybe ten years might be
Speaker 1: a long shot or a long time we'll see. Yeah,
Speaker 1: definitely possible. I don't know. Cool, well, good stuff, phil If.
Speaker 1: I appreciate you taking the time to go through that. Um,
Speaker 1: Like I said, there was a great book. Anyone that's listening,
Speaker 1: you should just go read the book on your own.
Speaker 1: There's a a lot of good stuff. We can't sum
Speaker 1: it up in forty five minutes here. So Philip, I
Speaker 1: know you're I guess where's you're on? Twitter? Obviously you
Speaker 1: posted this on there. Is that the best place for
Speaker 1: people to keep up keep up with you or anything? Um? Yeah,
Speaker 1: I have a substack that you can find on Twitter.
Speaker 1: I'd say Twitter is the easiest place to start. Phil
Speaker 1: J Banello, UM, yeah, cool, and we'll link to that
Speaker 1: in the show notes for everybody. So Philip, anyway, thanks
Speaker 1: for thanks for joining today. Thanks a lot market It's fun. Hey,
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