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Speaker 1: Pushkin from Pushkin Industries. This is Deep Background, the show

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Speaker 1: where we explored the stories behind the stories in the news.

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Speaker 1: I'm Noah Feldman. This week marked an important watershed in

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Speaker 1: the history of crypto and cryptocurrencies. Coin Base, one of

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Speaker 1: the leading exchanges for buying and selling crypto, went public,

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Speaker 1: and although appropriately enough, its share price was a little volatile,

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Speaker 1: it has achieved a very substantial valuation above the eighty

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Speaker 1: five billion dollar mark where it first launched. Simultaneously, Bitcoin,

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Speaker 1: the most popularly traded of the different crypto assets, remains,

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Speaker 1: notwithstanding its own volatility, at a price higher by almost

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Speaker 1: four times than what it was just a few months ago. Bitcoin,

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Speaker 1: the most popularly traded of the cryptocurrencies, retains a price

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Speaker 1: much much higher than it was just a few short

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Speaker 1: months ago. I am thoroughly fascinated by the phenomenon that

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Speaker 1: is crypto. For one thing. Among my friends, opinions seems

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Speaker 1: to be very deeply divided. On the one hand, are economists, investors,

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Speaker 1: capitalists of all kinds who tend themselves to be highly

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Speaker 1: skeptical of the idea that there's something of enduring value

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Speaker 1: or meaning in this new asset class. On the other hand,

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Speaker 1: are enthusiasts, open minded, creative tech people, many of whom

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Speaker 1: have themselves invested heavily in crypto, who are wildly optimistic

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Speaker 1: about the possibility of this asset class not only to endure,

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Speaker 1: but to grow and to develop and to spread. Alongside

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Speaker 1: this fascinating debate is a further question about the nature

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Speaker 1: of power. Who has power over finances? Is it individuals?

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Speaker 1: Is it the nation state? Is it a distributed international

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Speaker 1: network of the kind that, via the blockchain, is sought

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Speaker 1: to be created by the cryptocurrencies? A few questions could

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Speaker 1: be more relevant for this year's theme on deep background

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Speaker 1: the theme of power. To discuss all of these issues

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Speaker 1: with me, I'm joined today by a pioneer in crypto,

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Speaker 1: Bobby Lee. Bobby was the co founder and former CEO

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Speaker 1: of China's first bitcoin exchange. Right now, he's founder and

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Speaker 1: CEO of Ballet, a startup that helps people securely store

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Speaker 1: their digital assets in its own unique wallet. On top

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Speaker 1: of that, he's a member of the Bitcoin Foundation's Board

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Speaker 1: of Directors, and he's the author of a forthcoming book,

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Speaker 1: The Promise of Bitcoin. All in all, a perfect person

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Speaker 1: to answer my persistent crypto questions, Bobby thank you so

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Speaker 1: much for joining me. Let me start with the most

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Speaker 1: basic question, which is what exactly do you think crypto is?

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Speaker 1: Is it a currency or is it something else? Yeah,

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Speaker 1: this is a great way to start. So colloquially we

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Speaker 1: call a cryptocurrency, and bitcoin was the first to come

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Speaker 1: to market as a es central secryptocurrency in two thousand

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Speaker 1: and nine, and even the white paper called it peer

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Speaker 1: to peer electronic Cash's I think that's how it got

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Speaker 1: the name cryptocurrency. This year marks my ten year involvement

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Speaker 1: with bitcoin, and through my ten year journey I have

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Speaker 1: come to the current understanding is that cryptocurrency should be

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Speaker 1: more considered as a digital asset class rather than currency.

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Speaker 1: And the reason is that in society, when we think

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Speaker 1: of currency, we think of the money we use in

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Speaker 1: day to day, whether it's a paper notes, the coins

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Speaker 1: and bills, whether it's a forigm currency like the euro

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Speaker 1: or the Canadian dollar. And even though cryptocurrency in Bitcoin

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Speaker 1: have used the term currency in cryptocurrency digital currency over

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Speaker 1: the last ten to twelve years, I'm more and more

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Speaker 1: am a believer that fundamentally the power and the strength

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Speaker 1: of bitcoin is in its usefulness as a digital asset.

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Speaker 1: As a sort of a global reserve asset class. So

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Speaker 1: to answer your question promptly, it's more of an asset

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Speaker 1: than the currency that people are used to. That's really

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Speaker 1: helpful and it's totally reasonable. But most assets are either

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Speaker 1: a promise of future payment in some currency or form,

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Speaker 1: or an ownership stake in some legally constructed entity in

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Speaker 1: some form, or they're tangible, right. I mean, that's I

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Speaker 1: think if you know, we had to sort of do

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Speaker 1: assets one O one, we probably say, at least before

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Speaker 1: the emergence of crypto, that those are three classes of

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Speaker 1: what assets could be. Crypto doesn't seem to be any

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Speaker 1: of those three things. So I'm wondering what does it

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Speaker 1: mean to call it a digital asset class. Yeah, that's

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Speaker 1: a that's a great point. Basically, the tributional asset classes

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Speaker 1: people are most familiar with are the ones you talked about,

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Speaker 1: like stocks. Stocks fundamentally represent ownership in a company, which

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Speaker 1: is an entity that can make money through sales, revenue

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Speaker 1: through providing products and services to the community. So that's

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Speaker 1: the notion of a stock in a company. Bonds are

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Speaker 1: also an asset class. That's a notion of debt you're

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Speaker 1: lending your money to someone else, in this case the

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Speaker 1: United States government or any other foreign government, or even

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Speaker 1: a corporation like corporate debt, corporate bonds, and the ideas

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Speaker 1: that you lend it to them with a notion that

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Speaker 1: they're taking a risk to make the money, and then

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Speaker 1: you get rewarded with an interest rate. And the third

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Speaker 1: class is real estate, which, as you pointed out, it's

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Speaker 1: something very tangible. It's like a home, a plot of

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Speaker 1: land where you have title to it, and then it

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Speaker 1: gives you the government, society gives you the right to

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Speaker 1: stay in that or stay on that property. You own

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Speaker 1: that property and derive income, rental income, or whatever business

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Speaker 1: you do. And then the other asset class, the major

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Speaker 1: ast classes precious metals. So these are commodities. Most people

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Speaker 1: know them as gold and silver, but if you want

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Speaker 1: to just expend that, we also have things like diamond, jewelry,

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Speaker 1: and if you expend that further even fine art, more

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Speaker 1: tangible goods. The value of those kind of tangible assets

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Speaker 1: is in the eye to beholder. Why is that worth

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Speaker 1: something when when the only when it's only pretty right,

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Speaker 1: you can't eat it. I think that's a really good

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Speaker 1: clarifying question and I think we can direct it straight

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Speaker 1: at crypto because yeah, I think everyone can buy that.

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Speaker 1: There's something arbitrary about saying we value gold, or we

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Speaker 1: value silver, or we value diamonds. The question is whether,

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Speaker 1: if that's what crypto is going to be, is it

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Speaker 1: in some meaningful sense comparable to those assets. And I

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Speaker 1: think maybe that's a good place to then focus. Yeah,

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Speaker 1: so looking at gold and silver I think is very

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Speaker 1: insightful in terms of helping people understand why crypto, especially bitcoin,

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Speaker 1: can be valuable even as something that's sort of in

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Speaker 1: the ether. You can't touch it, you can't see it. Right,

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Speaker 1: For a lot of people, the virtual aspect of it

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Speaker 1: scares people. Imagine something like my mother who has never

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Speaker 1: seen or touched her. You know, she doesn't understand what

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Speaker 1: bitcoin really is is just a stream of numbers. Right. So,

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Speaker 1: going back to gold and silver, the reason why multiple

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Speaker 1: societies and multiple regions all around the world all ended

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Speaker 1: up using gold and silver as a monetary instrument, there's

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Speaker 1: a fundamental reason to it. It wasn't like there was

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Speaker 1: one king we said the whole earth shall use gold

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Speaker 1: and silver as money. Gold and silver evolved to become

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Speaker 1: money as instruments of monetary transfer independently in different, many

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Speaker 1: different regions all around the Earth. Okay, And I think

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Speaker 1: to crack that sort of mystery is to look at

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Speaker 1: the properties. It turns out that it's really fungible, it's

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Speaker 1: got this shiny look. But the really interesting thing about

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Speaker 1: gold is really dense. It means that for every similar

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Speaker 1: unit of volume where there's cubic inch or cubic centimeter,

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Speaker 1: it's very very heavy. And it turns out something dense

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Speaker 1: cannot it cannot be counterfeited using something lighter, whereas something

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Speaker 1: lighter can be can be counterfeited using something heavier. So

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Speaker 1: for that reason, I think, now certainly gold is not

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Speaker 1: the most heaviest element. But the fact that I was

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Speaker 1: just gonna I was just gonna say, Bobby, I mean,

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Speaker 1: I think what I naturally would say in response to

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Speaker 1: that is sure. One of the features that gold had

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Speaker 1: that made it useful was that because it's dense, it's

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Speaker 1: harder to fake. Of course, history is literally with people

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Speaker 1: who try to fake gold, and people try to use

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Speaker 1: lead and a whole range of other dense metals. Silver

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Speaker 1: was a little less dense, but it also managed to

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Speaker 1: become an effective exchange of value. But what I really

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Speaker 1: want to press us on is what are the features

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Speaker 1: of bitcoin that would be comparable and also why we

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Speaker 1: need another assets that's comparable to a gold and silver.

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Speaker 1: So bitcoin being a digital sort of ascid digital good,

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Speaker 1: digital currency, it shares none of the physical attributes or

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Speaker 1: properties of gold and silver. However, what it does share

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Speaker 1: is in terms of digital form, it is fungible. Okay,

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Speaker 1: So unlike a house. For example, if you have a

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Speaker 1: large house and now you want to retire, you can't

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Speaker 1: just say I want to sell off my unused garage

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Speaker 1: and go on a vacation with that money. Right the house,

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Speaker 1: You either sell the whole body. You were saying those

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Speaker 1: are arguments for a bitcoin as a currency, But as

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Speaker 1: you were saying, that's probably not the right way to

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Speaker 1: think about it. Now, I think we need more conceptual

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Speaker 1: clarity here, because assets can be translated into currencies. Right,

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Speaker 1: So if I'm owning, you know, pork belly futures, that's

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Speaker 1: an asset, an intangible asset. The pork bellies are still

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Speaker 1: on the pig, but I can trade them because there

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Speaker 1: is agreed upon mechanism that makes them fungible. A measure

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Speaker 1: of how much pork we're talking about accepted by a market,

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Speaker 1: and because I can translate them into currencies, so they

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Speaker 1: are salable assets. But no one would say that they

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Speaker 1: are currencies. You know, you bring up a good point.

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Speaker 1: So pork belly, technically the pork bellies you're talking about it,

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Speaker 1: it's probably the traded form, the commodity's futures former version.

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Speaker 1: These are future contracts. You're not literally talking about pork

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Speaker 1: belly that's on a live pig, right, So that's it's

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Speaker 1: what fantasy terms. It's like a derivative. So when you

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Speaker 1: say you want to then convert that to something else,

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Speaker 1: like like a supermarket, you know, grocery shopping, you really

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Speaker 1: need an into medium. And this is where the word

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Speaker 1: money comes in. That's why money was invented in a society.

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Speaker 1: So before money came about, it was all barter. As

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Speaker 1: you know, back then we didn't have pork belly contracts.

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Speaker 1: But if we did have prop valuy contracts, the contract

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Speaker 1: is worth this much value and you can only exchange

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Speaker 1: it for something else that's worth that much value because

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Speaker 1: there's no intermediate money to break it down and allow

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Speaker 1: you to spend smaller amounts. So money was a human

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Speaker 1: invention allowing people to exchange different valuable things, items and

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Speaker 1: promises so that they can save their value and use

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Speaker 1: it across time. Money is what transports value through time.

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Speaker 1: I'll drop the what's the difference between currency and money

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Speaker 1: as to philosophical a question? So I do understand that

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Speaker 1: the genius of the creation of crypto was to draw

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Speaker 1: on the metaphor of gold and silver, Right, why do

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Speaker 1: we need this new set of things? Let's say in

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Speaker 1: the best case scenario, crypto goes alongside gold and silver

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Speaker 1: and is treated sort of like the way gold and

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Speaker 1: silver are. Why do we need another asset class like this?

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Speaker 1: So technology has progressed really fast, and the Internet has

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Speaker 1: fundamentally changed how society operates, and up until bitcoin, how

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Speaker 1: does value transfer on the Internet. It's always through a

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Speaker 1: third party, meaning if you and I were to do business,

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Speaker 1: if I owe you money, I could send it to

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Speaker 1: you by PayPal, Venmo, or a bank transfer, Swift, wire transfer,

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Speaker 1: and so on so forth. It always involves a third party.

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Speaker 1: Over the last twelve years of Bitcoin's existence, it turns

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Speaker 1: out more and more people agree that what bitcoin can

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Speaker 1: provide society on the Internet in terms of payments is useful.

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Speaker 1: The evidence speaks for itself. Over the last twelve years,

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Speaker 1: we've seen more and more dollars worth of bitcoin being

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Speaker 1: transacted on the so called public blockchain, and I think

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Speaker 1: that trend will continue. So the only way to do

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Speaker 1: that transfer value through the Internet and the direct peer

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Speaker 1: to peer fashion. Today, at least the market degrees, bitcoin

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Speaker 1: is the most popular way to do that. From a

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Speaker 1: market capitalization and a sort of brute amount of volume

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Speaker 1: that goes on for bitcoin. I've a lot of people say,

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Speaker 1: you know, it doesn't make sense, but I'm a little

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Speaker 1: confused by it still because I've heard a lot of

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Speaker 1: people say that the original idea of crypto was just

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Speaker 1: what you said. It would be the online currency that

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Speaker 1: we would use to transact business on the Internet, and

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Speaker 1: for that reason, there was a logic to it, and

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Speaker 1: I think that made a good deal of sense. And yet,

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Speaker 1: because it turns out so far, at least that the

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Speaker 1: value of crypto, including bitcoin, has been extraordinarily volatile, that

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Speaker 1: has made people pretty skeptical of the idea or some

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Speaker 1: people at least that this will be the means of

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Speaker 1: exchange on the Internet. Add to that the fact that

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Speaker 1: there are governments out there in the world that don't

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Speaker 1: love the idea of their currencies over which they have

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Speaker 1: a certain amount of regulatory control, not total, but some

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Speaker 1: regulatory control being displaced, and who are also worried about

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Speaker 1: unregulated uses of currency transfer over the Internet. If that's

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Speaker 1: the case, then the argument for the value of crypto

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Speaker 1: then shouldn't be based on it as a means of

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Speaker 1: exchange on the internet, as something else, some store of value.

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Speaker 1: And I took that to be behind your initial statement

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Speaker 1: that it's too simple to think to think of crypto

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Speaker 1: as just a currency. It sounds like the arguments are

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Speaker 1: kind of constantly in motion. You know. If someone says, well,

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Speaker 1: is it a store of value? People say, no, no,

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Speaker 1: it's not a store of value. Primarily it's a mechanism

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Speaker 1: for doing business on the internet. Then someone says, well,

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Speaker 1: it's kind of hard to do that. People say, well,

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Speaker 1: it's a store of value, and it hedges against inflation

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Speaker 1: in the same way that holding gold might heade you

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Speaker 1: against inflation. And so that's the part that I'm just

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Speaker 1: a teeny bit confused by. Yeah, here's how I would

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Speaker 1: approach it. Okay, So bitcoin fundamentally is money, So let

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Speaker 1: me make that statement loud and clear. Bitcoin is money.

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Speaker 1: The usefulness is of money doesn't mean it has to

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Speaker 1: only be used for payments. Money has to hold its value.

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Speaker 1: So to clarify, for example, look at gold is money,

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Speaker 1: right traditionally people who leave gold is money, And the

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Speaker 1: same thing with the US dollars. We know for fact

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Speaker 1: that in a gift day, in a giving twenty four

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Speaker 1: hour period, this much gold goes around being exchanged for

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Speaker 1: people to buy and sell, okay, meaning trading hands. Okay,

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Speaker 1: now it turns out for gold and sober people don't

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Speaker 1: do that anymore much. Okay. However, for the US dollar,

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Speaker 1: we know how much US dollars traded is exchanged from

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Speaker 1: person to business and so on in a given day. Okay,

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Speaker 1: that's a large number. However, more US dollars stays put

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Speaker 1: in a given day than the amount of US dollar

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Speaker 1: that moves around. So my point is both of those

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Speaker 1: are valid and legitimate use cases of the US dollar,

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Speaker 1: meaning the US dollar as money is not just valuable

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Speaker 1: because it's changing hands to pay for coffee or grocery shopping,

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Speaker 1: but it's also extremely valuable the fact that staying put

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Speaker 1: sitting in the bank account, so this is what happens

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Speaker 1: with bitcoin as well. So Bitcoin today is valuable as

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Speaker 1: a digital asset, as digital cryptocurrency because of its two features.

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Speaker 1: One is it can be used to send as payment

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Speaker 1: of value between two individuals directly on the internet, or

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Speaker 1: it can also be used just staying put holding value.

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Speaker 1: Now to your point about what about the fact that

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Speaker 1: bitcoin prices fluctuate so much, And my explanation for that

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Speaker 1: is simple. One, Bitcoin is still young. We are in

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Speaker 1: the thirteenth year of bitcoin. Bitcoin is only twelve years old.

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Speaker 1: It hasn't even become a teenager yet. In my opinion,

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Speaker 1: bitcoin deserves to be in the greatest of all asset classes,

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Speaker 1: like housing, real estate, stocks, like bonds, like derivatives, and

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Speaker 1: like precious metals. We'll be back in a moment. One

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Speaker 1: thing you know a ton about, and I'd love to

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Speaker 1: get your thoughts on, is how the Chinese government has,

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Speaker 1: in the past and will in the future attempt to

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Speaker 1: regulate or engage bitcoin. And I'd really love to hear

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Speaker 1: your thoughts about that. And here's why. Sometimes one hears

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Speaker 1: big bitcoin optimists talking about how one of the huge

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Speaker 1: benefits of bitcoin as an asset class is that you

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Speaker 1: can sort of view the individual owner can evade central

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Speaker 1: governmental scrutiny. And what it makes me wonder is can

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Speaker 1: the Chinese government, using the regulatory tools that has available

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Speaker 1: to it, really substantially regulate the use of cryptocurrencies. Does

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Speaker 1: China suggest that other governments, even governments that are more

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Speaker 1: concerned about individual liberties like property rights, will also be

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Speaker 1: able in the long run to engage in pretty aggressive

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Speaker 1: regulation of bitcoins such that it's not really going to

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Speaker 1: be an asset that's in some way free of government regulation. Yeah,

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Speaker 1: that's a great question. I think there's a very important topic.

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Speaker 1: It's very timely as well. So here's my perspective. There's

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Speaker 1: a lot of confusion about the term regulating bitcoin. So

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Speaker 1: each country's government certainly has a right to regulate and

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Speaker 1: allow or disallow business activities. That said, today China openly

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Speaker 1: does not allow banks, exchanges, restaurants, and others to circulate

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Speaker 1: and transact in bitcoin. That's just a hard rule. It

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Speaker 1: may not be written in law, but all the implementation

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Speaker 1: is such that even in private, banks and exchanges are

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Speaker 1: told you cannot through this business relate to bitcoin. However,

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Speaker 1: bitcoin itself as as a pure commodity that cannot be

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Speaker 1: touched because it is decentralized, meaning no matter how the

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Speaker 1: Chinese government might hate bitcoin, might disallow it to circulate

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Speaker 1: in China, bitcoin itself can still exist and will still

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Speaker 1: exist and will not be squashed by Chinese government. Does

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Speaker 1: that make sense? So's there's a very minor distinction there.

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Speaker 1: It's a very important, it's a very subtle distinction that

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Speaker 1: people need to understand that bitcoin itself cannot be squashed

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Speaker 1: due to the decentralized nature. Let me ask you another

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Speaker 1: question about the creation of this asset class. The metaphor

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Speaker 1: of mining was used by the creators of crypto, and unfortunately,

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Speaker 1: it turns out that much like literal mining, which is

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Speaker 1: terribly destructive to the environment, and which people will do

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Speaker 1: anyway because they really want the gold and the silver

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Speaker 1: or the diamonds that they can get out of the earth, similarly,

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Speaker 1: mining crypto is detrimental to the environment, potentially extremely so.

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Speaker 1: I read recently that the amount of energy that's currently

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Speaker 1: being used in mining bitcoin is comparable to that used

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Speaker 1: by the country of Argentina in a year. In some

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Speaker 1: parts of the United States and of the world, it's

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Speaker 1: as high as ten percent of total energy use, and

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Speaker 1: we're already starting to hear environmentalist voices saying this is

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Speaker 1: a disaster, you know, much like mining was originally. Does

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Speaker 1: that seem to you to put a damper on the

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Speaker 1: possibilities of crypto? In other words, does sustainability effectively become

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Speaker 1: a limitation on the capacity of crypto in the long run. So,

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Speaker 1: unfortunately I don't share that perspective, And let me explain

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Speaker 1: to why. So, as you pointed out correctly, traditional mining

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Speaker 1: is very destructive, is very energy intensive. Any sort of

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Speaker 1: industry where they pull natural resources its destructive to the

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Speaker 1: earth if you look at it more holistically, any action

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Speaker 1: we do, when done to the excessive damages the earth

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Speaker 1: and the environment. So it's all about moderation, whether it's

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Speaker 1: fishing in the North Sea, whether it's it's mining. Forgive me,

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Speaker 1: humans have never been very moderate when it comes to mining,

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Speaker 1: you know. I mean the whole idea of a gold

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Speaker 1: rush is to embody the idea that people are not

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Speaker 1: moderate when it comes to mining, and so I don't

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Speaker 1: expect that people will be moderate when it's absolutely So

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Speaker 1: my point is, this is a government problem, it's a

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Speaker 1: regulation problem, it's a society problem. It's not a problem

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Speaker 1: unique with bitcoin. So even before bitcoin came around, if

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Speaker 1: you look at the petroleum oil industry, I mean, that's

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Speaker 1: hugely destructive. You know, if you want to pick on

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Speaker 1: we should pick on the energy industry self. Right, Why

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Speaker 1: do we rely on fossil fuels. We can criticize the

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Speaker 1: energy industry, and I'm very happy I do so on

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Speaker 1: my show, and I think it's totally legitimate to criticize it.

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Speaker 1: But what we're talking about here is not energy that's

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Speaker 1: being used for some necessary function to drive the economy.

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Speaker 1: We're talking about the inventions brand as you were saying,

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Speaker 1: of a brand new asset class, and that brand new

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Speaker 1: asset class doesn't need to exist, right. We could go

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Speaker 1: back to the drawing board like the clever people who

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Speaker 1: created cryptocurrencies did, and say, let's do something new. Let's

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Speaker 1: come up with a new asset class where mining it

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Speaker 1: does not require the destruction of the environment, and then

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Speaker 1: perhaps we could come up with some alternative. And I

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Speaker 1: think it is reasonable at this stage. As you were saying,

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Speaker 1: crypto is brand new, and if we look at something

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Speaker 1: that's brand new and is harming the environment, it seems

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Speaker 1: as a regulatory matter entirely plausible to say, let's ban

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Speaker 1: mining it, and if you ban the mining of it,

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Speaker 1: you will have greater protection for the environment. I disagree.

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Speaker 1: I very much disagree. The reason people mind bitcoin is

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Speaker 1: because the market forces convince people to want to mind bitcoin.

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Speaker 1: There's no directive by some evil empire that says thou

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Speaker 1: shalt mind bitcoin at the at the detriment of the

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Speaker 1: Wait wait wait wait wait wait wait wait a minute,

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Speaker 1: Wait a minute. The free market doesn't care at all

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Speaker 1: about the environment, right. The very definition of why you

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Speaker 1: have environmental regulation is that, left unregulated, the free market

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Speaker 1: would destroy the earth. As in fact, I agree with you,

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Speaker 1: so think about it. If you want to regulate, you

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Speaker 1: should regulate the energy. If we bann fossil fuel, if

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Speaker 1: we banned coal production power plants, then bitcoin mining will

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Speaker 1: be all renewable energy and solar energy, wind energy, geo

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Speaker 1: thermal energy. If we ban all fossil fuel by regulation,

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Speaker 1: then by definition, bitcoin mining will still continue to be

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Speaker 1: unrenewable energy. I don't agree because although I strongly support

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Speaker 1: the limitations on the use of fossil fuels for energy,

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Speaker 1: the reason it's taking us a long time to get there,

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Speaker 1: as human societies. Is so much of our economy is

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Speaker 1: already bound up in useful methods of consuming those fossil fuels,

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Speaker 1: and it's taking There's a long transition period in historical terms,

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Speaker 1: as you transition economies to new forms of energy production,

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Speaker 1: and so adding in a new massive energy suck raises

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Speaker 1: the question of costs and benefits. So that's really the issue.

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Speaker 1: To me, you'd have to let me just finish. You'd

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Speaker 1: have to convince me that the benefits of crypto outweigh

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Speaker 1: its costs, and that to me, would be the regulatory question,

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Speaker 1: the same way it would be for any other a

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Speaker 1: human activity that takes up a lot of energy. No,

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Speaker 1: it's all subjective. Okay, here's what I mean by that.

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Speaker 1: So back to about democratic elected governments. What I love

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Speaker 1: about democratic governments. In the end, the government has right

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Speaker 1: to set the regulations. But in the end, the government

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Speaker 1: is also elected by the people. If the people of

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Speaker 1: the citizens of the country want to allow fossil fuel

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Speaker 1: learning cars and fossil fuel burning airlines and airplanes, then

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Speaker 1: so be it. But maybe one day the people will say, hey,

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Speaker 1: I'm fed up with fossil fuel, I'm fed up with

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Speaker 1: a greenhouse. Blah blah blah. Let's span all internal combustion

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Speaker 1: engine cars. Let's span all planes and only allow for

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Speaker 1: electric trains. Right, that's a valid approach too. And if

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Speaker 1: the people want to want to elect a government that says,

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Speaker 1: let's put the ban on all cryptocurrency, then so be it. Right.

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Speaker 1: All I'm saying is the people today have chosen to

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Speaker 1: embrace cryptocurrency, and by virtue of the amount of activity

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Speaker 1: that's going on and people doing it right, that's just

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Speaker 1: the evidence of people embracing it. The value is always

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Speaker 1: in the eye of the beholder. Babbie, I really want

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Speaker 1: to thank you for sharing your ideas and your expertise.

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Speaker 1: Thank you for joining me. Thank you. No, I'm really

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Speaker 1: grateful to by leave for joining us. On deep background,

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Speaker 1: I confess that I do feel still a little bit

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Speaker 1: confused about certain crucial aspects of crypto in the aftermath

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Speaker 1: of our conversation. For one thing, should we think of

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Speaker 1: crypto as a currency a form of money, or should

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Speaker 1: we think of crypto as an asset class that is

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Speaker 1: not indeed a form of money or a form of

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Speaker 1: currency in the way that gold and silver are. The

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Speaker 1: reason I asked that is not purely philosophical, because it

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Speaker 1: has everything to do with whether the world needs a

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00:25:43,156 --> 00:25:46,476
Speaker 1: new asset class, and that question, in turn has to

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Speaker 1: do with whether the world will tolerate a new asset class.

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Speaker 1: Here's where the power of governments and regulators comes in.

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Speaker 1: I'm convinced that if governments really decided that they didn't

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00:25:58,316 --> 00:26:02,876
Speaker 1: want crypto to continue, they would have the capacity, ultimately

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00:26:03,116 --> 00:26:06,436
Speaker 1: to make it so difficult to engage in the sale

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00:26:06,556 --> 00:26:09,516
Speaker 1: and trade of that asset that the sale of the

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Speaker 1: asset would inevitably decline. And although in a decentralized world

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Speaker 1: of computers the assets still might quote unquote exists somewhere

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00:26:18,556 --> 00:26:21,636
Speaker 1: out there, they would really very much be likely to

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00:26:21,676 --> 00:26:25,236
Speaker 1: decline in value if it was very costly to access them.

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00:26:25,916 --> 00:26:28,996
Speaker 1: So what we need to know is what will governments do.

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00:26:29,596 --> 00:26:33,916
Speaker 1: Will environmental regulators decide that this new asset class is

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00:26:33,956 --> 00:26:36,316
Speaker 1: just too costly in terms of what it does to

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00:26:36,356 --> 00:26:40,356
Speaker 1: the environment. Will government regulators be too worried about the

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00:26:40,396 --> 00:26:45,836
Speaker 1: possibility of people using crypto for unlawful purposes, or more broadly,

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00:26:45,836 --> 00:26:48,836
Speaker 1: of undercutting the power of the nation state to control

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00:26:48,876 --> 00:26:52,156
Speaker 1: the finances of its nation and of the people who

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00:26:52,236 --> 00:26:58,276
Speaker 1: live there. These are ongoing, pressing and challenging questions. Crypto

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00:26:58,396 --> 00:27:02,756
Speaker 1: in some sense is the digital manifestation in financial terms

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00:27:02,796 --> 00:27:07,596
Speaker 1: of the Internet. To that extent, crypto assets would continue

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00:27:07,636 --> 00:27:11,556
Speaker 1: to exist wherever there was an Internet, even if government's

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00:27:11,596 --> 00:27:16,156
Speaker 1: made it more difficult to access that. And in that sense,

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Speaker 1: especially with a broader public embrace of the possibilities of crypto,

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00:27:21,956 --> 00:27:25,116
Speaker 1: it does seem entirely possible that even if it is

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00:27:25,196 --> 00:27:28,196
Speaker 1: bad for the environment, we are still going to see

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00:27:28,316 --> 00:27:32,636
Speaker 1: a significant expansion of crypto. If that's the case, all

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00:27:32,716 --> 00:27:36,156
Speaker 1: it takes is for people to converge on the belief

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Speaker 1: that the asset is valuable, and that will make it so.

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Speaker 1: That might sound like magic, but it isn't. It's no

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00:27:44,356 --> 00:27:48,756
Speaker 1: different than the basic economic logic of all money and

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00:27:48,876 --> 00:27:54,036
Speaker 1: of all currency. My takeaway from my conversation with Bobby

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00:27:54,076 --> 00:27:56,556
Speaker 1: Lee about crypto is that there is much more to

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Speaker 1: be said. It is an issue that we will revisit

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00:27:59,676 --> 00:28:02,716
Speaker 1: here on a deep background, either in a further conversation

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00:28:02,796 --> 00:28:06,876
Speaker 1: about crypto in its extensions, or more broadly when we

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00:28:06,916 --> 00:28:11,836
Speaker 1: talk about financial and economic forms of power. Until the

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Speaker 1: next time I speak to you, be careful, be safe,

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00:28:14,876 --> 00:28:17,516
Speaker 1: and be well. Deep background is brought to you by

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00:28:17,556 --> 00:28:21,916
Speaker 1: Pushkin Industries. Our producer is Mo laboord our engineer is

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00:28:21,916 --> 00:28:26,236
Speaker 1: Martin Gonzalez, and our shorerunner is Sophie Crane mckibbon. Editorial

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00:28:26,276 --> 00:28:30,756
Speaker 1: support from noahm Osband. Theme music by Luis Guerra at Pushkin.

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00:28:30,996 --> 00:28:34,996
Speaker 1: Thanks to Mia Lobell, Julia Barton, Lydia, Jean Coott, Heather Faine,

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00:28:35,276 --> 00:28:39,716
Speaker 1: Carl mcniori, Maggie Taylor, Eric Sander, and Jacob Weisberg. You

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00:28:39,756 --> 00:28:42,436
Speaker 1: can find me on Twitter at Noah R. Feldman. I

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00:28:42,516 --> 00:28:44,916
Speaker 1: also write a column for Bloomberg Opinion, which you can

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00:28:44,916 --> 00:28:49,076
Speaker 1: find at Bloomberg dot com slash Feldman. To discover Bloomberg's

478
00:28:49,076 --> 00:28:52,196
Speaker 1: original slate of podcasts, go to Bloomberg dot com slash

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Speaker 1: podcasts and if you liked what you heard today, please

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Speaker 1: write a review or tell a friend. This is deep

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Speaker 1: background