Tech Themes thru History—Harder, Smarter, Faster, Stronger | The Saylor Series | Episode 3 (WiM003)
WiM Media · 2020-12-07 · 1h 16m · View on YouTube →
they're dominating because they're able
to
deliver force
faster harder stronger smarter
so if we ask the question what is money
money is the highest form of energy that
human beings can channel
bitcoin
is channeling human ingenuity
into making it better
and and every commodity is channeling
human energy into making it worse the
lowbrow or the
the
the historic
colloquial term is total right hold on
for dear life or just total or save
whatever and the highbrow term would be
adopt as a treasury reserve essay
[Music]
hey guys so as you learned uh by
watching the what is money show
bitcoin is the single most important
asset you can own in the world today
and so this begs the question which i'm
often asked how does one build their
bitcoin position
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suggest first you decide on an initial
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go ahead and establish the initial
position with a one-time buy and then
start dollar cost averaging towards your
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cost basis
and finally i suggest to everyone to
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exchange is not bitcoin it's a bitcoin
iou
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through bitcoin alright thanks
hey guys welcome back to episode three
of the what is money show
here in the sailor series
so we've covered with michael saylor so
far uh the rise of man
through the stone
stone ages through the iron ages we went
into the dark ages we saw how mankind
can have a misstep that causes him to
regress a thousand years
and up into the steel and industrial age
and
today uh we're gonna go even further
into the future and the the the arc of
all this is
we're seeing
how mankind uh does take these
evolutionary steps forward in terms of
both his morality and and the tools um
that he conducts his life with
and we we see as michael says that the
natural selection
through this process helps mankind
become smarter faster stronger
and we're coming to see that
actually the defensive attributes of
technology tend to be
more important than offensive attributes
over time
and um
this is just leading us deeper into
and closer to bitcoin which you know as
we'll talk about later is the ultimate
monetary defense of technology
and uh in that sense
humans the reason we're able to progress
in this way the reason we're different
than any other animal is because we are
actually capable of harnessing and
channeling energy across
uh these field lines of our intellect so
we can we can form these abstract
concepts and ideas and then actually
energize them by harnessing harnessing
energy in the natural world
and
that's why
in a geopolitical sense you know naval
power has been the force that sort of
governs
the world you know he who dominates the
sea dominates the world
and uh in that context we're looking now
as we progress into the digital age
as digital space being this this new
high seas if you will
and um
so in this episode we're going to get
into a lot of that and then we'll also
finish off by talking about
an area that mr sailor is an expert in
which is the history of scientific
revolutions
and we're going to talk about in
particular the the technology diffusion
s-curve
which is when a new idea starts to
permeate a society it starts out
relatively slowly before it hits its
inflection point and becomes rapidly
adopted at an accelerating pace before
finally uh hitting a point of full
market penetration it starts to level
out
and this will be uh important to
comprehend in terms of not only all the
innovations we've seen recently
especially the internet but also the
path that we would expect bitcoin to
continue to follow
and then finally we'll touch on
[Music]
war you know and how it is an accelerant
innovation
um and how it can it can accelerate us
down that path of the technology s-curve
and leaves us eventually with with
technologies that would be
perceived as miracles to primitive man
right as michael will say later that
sufficiently advanced technology is
indistinguishable from magic so
i hope you're pumped you know we're
still building this big foundation
getting into modernity um and this is
going to be one of the final episodes
that gets us there so with that let's
get into episode three so i remember the
name of the of the jewish bankers it's
the
warburgs if you want a great
vignette
on on
why it's important to have have capital
that's mobile
study uh just read any history of the
warburg and what what their family went
through and what all the jewish families
went through
in the 30s in germany
and what the bankers had to do to move
capital out of the country
and um
and you get
you get a very poignant um
punctuated uh
appreciation for the need of having
secure
capital that you control
um
so
there are some i think general themes of
technology throughout history
if you look across all of these
the general theme is is
human beings marching toward being
harder smarter faster
and stronger
and um
everyone that succeeded all every empire
every individual every company
they all found a way to be harder
smarter faster and stronger
um
george r.r martin
he wrote a bunch of books he's known for
game of thrones but he also wrote a
bunch of books
on superheroes or at least he called
them wild cards
and it's about a bunch of um
superhero or super people that have
genetic mutations and
and um they get it from some virus
and it's a it's a universe full of
normal people
and then uh and then jokers people that
have been hideously disformed by this
virus and then aces people that have um
been given superpower and
he takes a very
modern view of it and he says he starts
to analyze superpowers
guy figures out he can shoot laser beams
out of his hands or another
woman can be invisible or some dude can
be a thin man
and he goes
there are a lot of these superheroes but
but after a while we quickly realized
that the most powerful ones
were the ones with defensive
super powers
defensive attributes overcome all the
offensive attributes
in a battle so for example
the guy that's indestructible with no
other superpower
can pick up a machine gun and kill
everybody
and you can shoot him a million times
but he's indestructible
whereas the guy with laser beams jumping
out of his hands he's just as mortal as
you and me
and uh and you hit him with one rock he
goes down and he's dead
so it's the it's the impossible to kill
ones
that end up winning all the battles
between superheroes and the smackdown
and the ones with the sexy things are
sexy really cool
superpowers they're useless
because because the guy that's got none
of those he just gets a bazooka and he
just fire i was like i'm indestructible
so i'm gonna set off an atomic bomb in
the city and kill everybody but myself
because i'm indestructible right it's
pretty easy to win the war
if you're indestructible
and um
it causes you to come to conclusion
about
you know history and who wins in history
unbreakable is better
anti-fragile
is best
so the superhero that's good is the one
that you hit him and you can't hurt him
but the superheroes that are most
frightening are the ones where
you shoot him with a laser beam and now
they can shoot your laser beams back at
you
and
and you mind read them and they absorb
your mind reading and they can mind redo
and you fly the speed of sound and now
they can fight the speed of sound it's
like
like that character and
what is it an x
i think it's rogue an x-men or yeah or
siler and heroes or maybe rogue it's the
one that absorbs your power and plays it
back at you
you know pretty soon it's like i'm
indestructible and i have every other
power and you just better get out of the
way yeah and that's anti-fragile right
yeah i'm looking for the fight like i'm
looking for people because i'm just
going to absorb their thing
so
you see that theme through history
uh the really successful um
governments empires organizations they
kind of
they're continually fighting they're
continually absorbing
the romans absorbed the carthaginian's
navy in 90 days
but but it's it's easier said than done
right
that it wasn't like some roman
politician that said these are
carthaginian ships they're inferior to
us we will invent our own ships
it's like not too proud to copy
not too proud to absorb it
um
this kind of principle can explain the
success of the united states and the
wars of the last century or more it's
like um
why do we
why did we win in world war one world
war ii why you know why is america
america well
there's two narratives or there's
millionaires here's one one is because
we're more patriotic and we're righteous
and we're better
the other one is
the europeans
were fighting in europe
and we
so
we were fighting
they were soft when you're dropping
bombs in the middle of suburban germany
right you're attacking the soft
underbelly of the citizens
in germany
or the soft underbelly of the citizens
in france or you know the battle of
britain right
this is uh
this is the the citizen population being
ravaged by a war
and that destroyed their economies right
destroyed their cultures right same
happened in russia
same happened in italy happened
and it's happened in china the chinese
fought a war in china soil
the japanese fought you know sort of a
portion of a war right on their own soil
with atomic warheads
on the other hand the us hadn't fought a
war on u.s soil since 1865.
okay so who's harder right
back to this missile idea right
if you can throw a missile 3 000 miles
and your enemy can throw a missile back
300 miles at you
it's pretty simple i have a rifle you
have a pistol
i stand back a thousand
feet
your pistol's good for 200 feet
i take 100 shots
eventually one hits
you're a perfect shot
it doesn't matter
longer arms
so
this this idea right are you
are you unbreakable or or what is back
to terrain what is the terrain the
geography determines a lot of things
um
if you take
a modern
ship if you if you take
take a take a
a modern yacht built in the year 2020
with every piece of modern equipment on
it
now try to sail it
to afghanistan
you probably won't get there
something will probably break
try to sail it
try to sail it to rome without stopping
in a port along the way
you probably won't make it
robert nobody does
like they all stop and hide somewhere
it's really
hard to move stuff over the ocean
thousands of miles
it's really hard now
why don't you try to sail an armada of a
thousand ships three thousand miles
in order to invade
america
right germans couldn't sail
13 miles
you know across the straits of dover
right
you know the japanese couldn't cross
from japan to china during the kamikaze
you know
and that's not very far
it's really hard
it's only one guy that ever pulled it
off william the conqueror in 1066 nobody
else managed to cross 13 miles that's
your hydraulic moat
it's really hard it explains the culture
of the uk
it explains
the culture of the united states it
explains a lot of other cultures it
explains the balance of power i think if
you just say
here's someone that you couldn't kill
who could kill you
i i had the option
to fight on your turf
but you did never have the option to
fight on
my turf now
that in and of its way is the reason
that uh security
uh
is so incredibly important to
the bitcoin network
what is important is that it not break
that it not that it doesn't
if i'm indestructible i don't have to be
the fastest
the shiniest
the whatever anything
i just have to be indestructible
if i'm indestructible
what
the indestructible man goes and buys a
machine gun and he's the most powerful
superhero in the room
right right right the indestructible
blockchain
goes and buys a digital app
or another crypto network as a you know
an
off-chain app
or a nexus a lightning
or a binance
or a coinbase or square cache or
whatever
and it's just fine it's the most
powerful
network in the room
because the thing
that made it the winner was its
indestructibility its immortality
right not the fact that it could shoot
laser beams from its fingers or it was
beautiful
or it could fly with pretty wings or it
was invisible right all of these other
things like privacy transaction all
these other things
they're features and they're interesting
but they pale compared to the
characteristic of immortality
right
being indestructible in the here and now
pretty useful superhero power
being indestructible and never aging
double useful superpower
and as for the rest
if you're an open software protocol
someone's going to code an extension to
your protocol to give you every other
cool power anybody wants
like i can find a way to construct every
other superpower by
by
hook or crook and that makes me
anti-fragile and now i'm like the
frightening
impossible to stop
that's superhero great analogy uh
cause of mine that old saying that if
you wait long enough by the river
you can see the bodies of your enemies
float by you know it's like because
bitcoin is unchangeable and it's just a
rock-solid
absolute scarce quantity of 21 million
and that is the primary property and
money that matters right as you i love
the analogy you gave too of
when someone asks you about the eps of
your company they only care about the
fully diluted cap table right who gives
a if you've got 18 outstanding
whatever whatever just just tell me the
fully diluted number and that's what
bitcoin is right it's like you know it
doesn't matter if there's only three
million have been lost or 18 million in
a half mine so far and three and a half
to go it's all that really matters is
that fully diluted figure of 21 million
and that the scarcity cannot be
compromised and then it has enough
anti-fragility on top of that to absorb
other market-proven features that's all
you want in money right
yeah the mining rate
it's like like a secondary um
particular effect that happens in the
first few years of its evolution but
exponentially becomes irrelevant it's a
second order
driver the first order drivers
you know are the hardness infinitely
hard
and then
adoption and utility
and inflation
in the um in the fiat reference frame
that it's operating in
um
a couple more points i you know
that are worth making on um
technology and
and
human history
humans
triumph
throughout history
by channeling energy
right that that all of these things come
down to how did i channel energy
so
navy power
right the british the british navy ruled
the sea
the phoenicians the venetians the greeks
the romans the americans today
controlled the seas via their aircraft
carriers and by naval power
and naval power is just bringing
overwhelming force to bear
faster
stronger force that's faster that's
harder than any other force anywhere on
earth i park in an
aircraft carrier somewhere
you know and death reigns from above
and um
so we've seen all empires are driven by
a naval power
in time
we invented airplanes
you know
and then air power became the thing
right
and uh air power is all again about
death from above right the most powerful
navy idea is airplanes flying off an
aircraft carrier first it was the
battleship i show up in your harbor and
i blast everything then it became
air power
and uh if i could get above you
and we saw this conclusion
it is impossible for a modern nation
state to function if it does not control
its own airspace
if
you saw that in the first gulf war the
second gulf war
the united states or
especially the united states air force
could pretty much bomb any country back
to the stone age in a matter of a week
once they lost their
air supremacy once you lose control your
airspace there's no hope for you
you can take out every port
every power reactor every generator
every serious building they're all gone
death from above there's nothing you can
do
you're at the bottom of the gravity well
right and with technology today someone
can sit out six miles up
you can't shoot down a plane moving high
speed six miles up you have to fight the
gravity while to get there they're just
working opposite it's an energy thing
right so i'm moving from a lower energy
state i'm on the ground moving armies
around to a high energy state i have a
boat i'm moving heavy medicines around
to a higher energy state i'm above you
dropping munitions on you
then after that
became nuclear power right you harnessed
nuclear power and that ended world war
ii pretty definitively in a hurry
then we go to
space satellite power
and you go up in the gravity wall some
more
and that manifests itself primarily with
gpes right
if you look at the impact of having your
global positioning satellites that's
what allows me to drop a laser guided
bomb or a drone anywhere on earth and
guide it day or night to anything right
and that's a massive source of american
supremacy controlling those gps
satellites
right and uh you lose them big problem
too
right
one of my favorite books and i noted is
the moon is a harsh mistress
and in it robert heinlein
he writes about a bunch of um loonies
basically
libertarians that live on the moon that
believe in making their own way and
and their motto is there ain't no such
thing as a free lunch
abbreviated to tons of and he introduced
that idea
and they take it to the extreme which is
like your air is not even free on the
moon you pay for everything you pay for
water you pay for food you pay for air
everybody pulls their own weight
no one waits for a bailout there's no
bailout coming from anybody
you know and uh they're not big fans of
authority and i don't like being told
what to do
and and uh the plot of the book kind of
winds on that they're they're being
oppressed by um
earthlings
who are making them work as slaves and
they're taking 90 of their economic
um economic productivity and shipping
back
basically their future to earth and
they're and they're gradually
suffocating and starving them to death
and uh and it's just onerous taxation
without representation
but uh onerous
so the learnings decide to fight back
you know with the help of an ai computer
the first ai computer i have to remember
the name of the computer is mike
by the way
right
and their technique is they realize they
got a catapult and they start tossing
rocks
down the gravity well
and they just take a big rock
put it in their catapult and it doesn't
take that much force to you know toss it
off the moon because they're low g
right they're tossing a rock out of a 1
8 g or whatever and it hits the it hits
the earth goes into a trajectory and of
course it starts picking up speed
and by the time it lands
it's
like an atomic warhead
wow they just start tossing them at
random places
until the until the uh the federation
empire that's oppressing them
decides that maybe it's had enough
wow
and of course the lesson is right it's
humans
channeling energy but they're channeling
gravitational energy and a lot of it and
there's a lot more energy
than the stuff that we have
all through human history since a
million years ago to today
it's really the story
of intelligent people looking around for
where is the energy coming from
and how do i channel it in a network in
order to achieve something
harder smarter
faster
stronger that's such an interesting
point
it's back to the terrain of the battle
right they're holding the ultimate high
ground being on the moon
and another thing this this calls to
mind is um i don't know if you've read
the book the sovereign individual
i don't know if i read it all i've read
i've heard of it but so the the
yeah i've written written in the late
90s and it's been
relatively prescient in a number of
domains they predicted
the rise of what they called narrow
casting as opposed to broadcasting which
we call social media today they
predicted the rise of anonymous digital
cash being disruptive to the nation
state which we would think bitcoin is
and they also predicted the
digitization of securities so other
property rights going away from a
government
function to be to be
provided via software
and one of the things that was
interesting there is they
they compared digital space to the high
seas basically saying the high c the
reason whoever controls the high seas
controls the world is because that's the
most frictionless environment right you
can move things
uh with the least energy on the seas
once you can conquer them so whoever
controls that domain sort of runs the
world but also because it's frictionless
it's very difficult to project
dominion over the high seas right so we
have we don't have law really we have
international waters kind of everywhere
in the world and they compared that and
analogized it to digital space
where it's this frictional and
frictionless space that whoever is
dominant there will be dominant in the
21st century but it will also be very
difficult to project the minion so you
won't have it'll be unregulated largely
so they're using that to kind of make
the case for
for digital cash and the fact that
people would be able to escape
uh oppressive regimes right once you get
your capital in the digital space you're
sort of no longer under the thumb of the
government or the local oppressive
monopoly so i just think it's
interesting how it always just comes
down to the terrain right
[Music]
yeah
and i agree with you on that
and um
i i agree that the digital domain has
has weakened all the geographic terrain
constraints
um
it's pretty clear that
information is flowing across borders
and even when people try to stop it
um they're uh
they're defeated by vpns and
not browsing and
you know
other techniques
and we see we see places where
information is illegal it's leaking
where capital is uh what's illegal to
move capital is leaking or it's illegal
to move information is leaking where
one person's um
one person sedition is another person's
news or truth
depending on who controls the government
and uh
that's something
i wrote about in uh my book the mobile
wave you might be interested to note and
i think 1998
we created a product called narrowcaster
oh really
yeah we made a lot of money off it and
it did just that it actually sent out
personalized information so
i was i was always a big fan of that so
i think
it's it's interesting the way that's
evolving
probably
probably the key theme
there is
technology is empowering the individual
and giving them more sovereignty that's
right and it's it's harder
and harder
in those ways for the government to
control
what information you get and then how
you manage your assets
right
it's a very
twisty complicated subject because the
government's getting more power over you
in some areas as they get less power of
you and other areas right
and it's spinning fast
and you could argue that that trajectory
is taking us closer to a reflection of
natural law right because natural law
would would say that sovereignty in here
is within the individual
our our rights are not given to us from
government they actually
uh
inherit naturally within us
so it seems to me that
and it's complicated because we've never
seen a world like that right again we've
always needed government to sort of keep
the peace and
enforce contract law and satisfy
property rights but now in digital the
digital age at least there's the
possibility of some of those functions
kind of falling to software
yeah as more and more
things dematerialize the software and
they and they move into cyberspace
it seems like it
it gets harder for any one government
to assert control over the things that
take place virtually
so
there's a lot of virtual
empowerment going on but
there's a lot of other things going on
too yeah
yeah
you know
i guess i i would end i'd end this
section with
just a couple of
dynamics that i think i i've seen over
and over again the technology
you know um when i was in mit i studied
the history of science and
i read about the structure of scientific
revolutions and i just i studied all
different types of
technology diffusions and
and um there are certain things that pop
out
you know a lot of times you'll see an s
curve
where
it'll start slow
and it'll accelerate until it reaches
diminishing returns and then all of a
sudden it's not an interesting
technology anymore you see that a lot
but
one of the lessons of history is
it's very difficult to figure out when
the curve starts
and
it's hard to stop it once it starts but
it's it's a lot easier to invest in it
and to forecast it once it starts
but
before it starts people will say well
next year this will commercialize or in
two years or in five years ten years
you could be off by two years you could
be off by a hundred years
like you remember uh
google glass
yeah
how big that was gonna be and
and how that was a lead balloon and how
many years is it after google glass and
it's still not going to happen
next year either
technology
fails
until it succeeds that's another trend
and another theme so you see over and
over again people pick a technology to
say it'll never work it'll never work
it'll never work
in the year
1902 before the wright brothers flew
that next year
if you'd asked the most learned people
on earth they would have given you a
hundred reasons why airplanes will never
fly
and they would do a hundred examples of
how they didn't fly
and they would talk you to death
and uh the thing about these paradigm
shifts is
oftentimes
it's not the learned individuals that
make the breakthrough
aircraft
wasn't uh aircraft weren't designed by
professors of aeronautics and
astronautics and
engineering and fluid dynamics and
mathematicians they all failed miserably
right the wright brothers were bicycle
mechanics
they had a bicycle shop
tinkerers
they're the ones that ushered in the age
and uh they did it against all
conventional wisdom
and on the other hand leonardo da vinci
tried to develop his own flying
contraption every brilliant person for
hundreds of years tried it failed
all failed and then some dudes in dayton
ohio that have a bicycle shop succeed
um it happens like that
you know the story of um
john harrison
inventing uh discovering a method to
determine longitude on the ocean which
is it's articulating the book longitudes
amazing story
everybody knew how to find latitude it
was easy you just sight against the
north star but longitude is very hard
because all this they're spinning all
the time required massively complicated
calculations they gave it to the
newtonian professors
at cambridge and oxford the smartest
mathematicians in the world the smartest
astronomers in the world no one could
figure it out
finally they posted a 10 000 pound prize
and john harrison
who was not a mathematician his clock
maker
figured it out and the way he figured it
out is he made a clock that was accurate
and they put one clock
on the this ship and they set it
to the greenwich observatory the royal
observatory which is in greenwich
england
hence the term greenwich mean time
greenwich mean time comes because you
sail down the timbs past the royal
observatory in greenwich you set your
clock on that and then you have another
clock
and then every day at noon if you're in
the caribbean you look up and then you
set that clock and then you just
subtract the time on the one from the
top of the other multiply by 15 degrees
and you've got your lawn longitude
it was a tinkerer's solution to
a problem everybody else wanted to solve
it with star charts
and tables and complex math
but of course
ships captains in the middle of the
caribbean or in a storm they can't do
complex math they're just
stay alive
so you see lots of examples
in history where people try to do
something and they either accidentally
discover it like penicillin or um a
tinkerer discovers it and not the
educated and then all the professors
crap all over it
and they all swear it'll never work
and the tendency is
is either to reject it people don't like
change
or it doesn't get embraced until
everybody dies
or until there's a war
and war has a way of opening your mind
because
when someone drops a bomb on your head
and you're burning or screaming then the
pain causes you to take a more
open-minded attitude so a lot of stuff
happened after world war ii and happens
in various wars and you can trace
without human history that drives
innovation faster
you know generational change will drive
it faster
people keep trying it and then
just because it's failed a thousand
times what doesn't mean it won't succeed
but when it does succeed
then it's probably unstoppable for a
while
and hence
you know you just get to this phrase
which is cut which is kind of
punctuation for
modern technology
arthur c clark writes
any sufficiently
advanced technology
is indistinguishable
from magic
and it was a great quote
it's a quote that i put on the back of
my prospectus when my company came
public in 98
i believed it then
we have thousands and thousands of
examples of magic things in our lives
today
literally magic things
that are just technical things
it's always been that way and
and to a to a primitive man right a
rifle looks magical
or an airplane
and now
and we're starting to deal with uh with
some software technologies and digital
technologies that
don't just look magical to a primitive
man
they're gonna look magical to a modern
right
because they just really are getting
pretty magical
[Music]
all right guys so that was episode three
of the sailor series
hope you enjoyed that we continue our
progress towards modernity
um and laying this really solid
intellectual foundation
uh through the lens of technology
anthropology
uh civilizational development military
all of these aspects that lead us to the
importance of bitcoin as mine
and uh as i said to the in the intro
i like to think of this whole arc as an
evolutionary process right i actually
consider that
evolution is the inorganic form of
innovation or you could say that
innovation is the organic form of
evolution so it's all
they're both about
colliding ideas together and with
reality to test which
ideas strategies
and approaches work best right which
offer the highest utility
to the the organism or
human being
that's that's set an intention in a name
and um it's through this this iterative
process as sailor says it makes us
harder faster and stronger
and
i think what's what's starting to shape
up here because i think you'll see is
that
the defensive attributes tend to be even
more important than offensive attributes
so
if you have an ability to defend
yourself say behind a wall of water like
here in the united states we're defended
on both sides by like by large walls
water in the atlantic and the pacific
ocean we have this natural
defensive advantage
so it's uh
really difficult to
invade us
um without having long-ranging weapons
uh when we dominate
the naval territory already right like
we are the dominant naval force because
of our access to the oceans and our our
protection from from hostile powers and
i liked the the analogy that
sailor gave when he talked about
um the superheroes the the george rr
martin superheroes that
i think they were called the aces where
the
it wasn't the superhero with the most
uh
the best offensive capability right the
laser beams out of the eyes whatever
that became
uh dominant it was actually the one that
was indestructible because you could he
could essentially subject himself to any
situation
and survive so uh which reminded me of
that saying that
which i think is from sun tzu
might be laozi if you wait long enough
by the river you live to see the bodies
of your enemies flow by so it's this
point that if you
are optimized for survivability
that tends to make you the dominant
competitor over time right time is on
your side whereas time would be arrayed
against all of your competitors
and it's time being the ultimate judge
of all things
it really
is a it's probably the defining feature
or the defining competitive competency
you could have is just really high
resiliency or robustness or ideally even
even anti-fragility where you're
actually improving
um from the hostility you face in the
world
uh and advancing through adversity
so that was that was interesting and you
know clearly plays really well into the
bitcoin narrative
and um
you know we're looking at
again how the terrain had shaped battles
throughout history and why
america fighting in europe and say world
war ii was much different than war
taking place on american soil as in we
were fighting and attacking the soft
underbelly as sailor called it um
but we we weren't exposed to that same
level of attack ourselves you know with
a small exception of pearl harbor
and
that's why
the nation that controls the sea
controls the world because that is the
terrain
that it's the hardest to project power
and dominion across so whoever is
dominant there just runs things you can
you can move energy
uh around the world much more quickly
and bring force to bear much more
quickly anywhere in the world and so
when you look at
bitcoin through that lens
it's like
it's already the longest and most rigid
chain
so it is already
become dominant um it is
if you look at digital space and compare
it to the ocean bitcoin has dominated
digital space
for monetary networks right it's
impossible to compete with it as money
because it's already perfected all the
properties that make money money and
it's done so in this terrain uh this
digital terrain that that everyone
all other competitors would be competing
for which is it's very low friction
right very low friction
domain so you can move things the speed
of light in the digital space
and you can defend things with
cryptography at very low cost right you
can basically erect these impenetrable
walls of encrypted energy at relatively
low cost so bitcoin is just
has optimized for that it gives us
a way to store the vital life energy
that is
money behind a wall that basically
cannot be breached and that that
i like that military analogy pointing to
it as a very fundamental breakthrough
and the other thing there we didn't talk
about this in the episode but that i
think about is
it sort of balances this
super
this anti-fragility or robustness um
with also a degree of adaptivity so even
though bitcoin is the longest chain the
most rigid it has these unbendable rules
that favor its holders it also still
maintains its ability to adopt new
features that are beneficial to it and
one of my my favorite authors and good
friend brandon he's written about this
this is called
in the mycelial space it's called
horizontal gene transfer so when a
mycelium
which is the the underground
informational network of a fungus like a
mushroom
when it encounters a threat in the
environment
it can actually code new enzymes and
proteins and defensive backgrounds
against that threat
at one particular spot right these
mycelial mats can be you know tens of
hundreds of square miles in size but if
it encounters a threat
in creates a formula to neutralize it
and even any one spot
of that of that mycelial mat it can
incorporate those lessons into the
entire organism
so it's actually
learning from interaction with its
competitors at the edges but then
incorporating all of its lessons into
the entire organism which is something
that that bitcoin's capable of doing
um
so that's kind of a tangent but but
pretty interesting stuff undergrows the
bitcoin
and then
as we said earlier it's
what distinguishes us as human
is that we have this unique ability
they decide as say they described it
earlier we're the only animal that plays
with fire right
so we we have this special ability to
mold our behavior in a way that allows
us to
harness energy
and then we can channel it you know
where we can create these abstractions
of thought and speech
uh and i in the ideological space
and then we can use that energy to
energize these formulas that we've
created and that's what makes us human
right that's what we do when you look at
anything you look at a table or a house
or a computer
all of these things began as ideas
that we then
funneled energy into right we've
harnessed energy in the natural world
whether it's hydrocarbons or fire
uh which is kind of the stone age energy
network
um solar radiation whatever it may be
and we channel that energy into the the
manifestation of these ideas and that's
what helps us
uh become more productive and and enjoy
a higher quality of life over time so
it's such a radical new way to look at
humanity and really makes you appreciate
being human
and um
i think to
you know we again we're talking about
the naval power and how that's shaped us
throughout history
it's
the naval power naval power was the
predominant aspect of what determined
which nation is in geopolitical control
but what i think and i got this from a
book i read called the next 100 years
that predicted in the 21st century it
would actually no longer be control of
the seas that mattered so much but it
would come to be control of space
and you see that somewhat in us military
dominance today in that
we control the seas actually with our
aircraft carriers which essentially
means we can control the airspace of
nations
so again back to fighting
the battle on
the terrain that favors you most
by going into
the sky right we're able to get again
this very frictionless space of air but
we're also able to take advantage of the
gravity well that is the planet so we
can drop bombs
um that you know at a very low cost for
a plane to release a bomb is essentially
no cost once it's up there but it brings
this gigantic force to bear on its
terrestrial targets
and that's why
you know it's in that sense we can
consider air power today being this
extension of naval power
as it has the highest optionality right
it has the greatest most degrees of
freedom both offensively and defensively
it's really hard to shoot down one of
these aircrafts moving at supersonic
speed
which gives it a lot of defensive
capability but it also can bring a lot
of force to bear on you really quickly
by dropping bombs or shooting missiles
and all of this is facilitated by
control of that frictional space and the
sea which is the aircraft carrier which
itself is really hard to attack because
it's thousands of miles out to sea right
it's just flying these planes in so
that's why
the aircraft carrier today is the
dominant military technology
but i think as we get further into the
21st century that it's going there's if
you go even another layer higher say in
the low earth orbit
you can get into a territory that's even
more often has even more offensive and
defensive optionality and um
is even you know it's just way harder to
attack it's literally in orbit so
um and the book i referred to the next
100 years i think they were called ion
cannons so
the thought was whichever country
came to get these ion cannons into orbit
first
would have a power that's even super
ordinate to what we consider aircraft
errors to be today so the
the space if you want to call it space
it's kind of this earth orbit uh is the
next
frontier for military dominance i think
that'll be really interesting to see
shake out
as we look at the development of history
through this lens and going forward
and sailor you know that he brought up
that book the moon is a harsh mistress
that really brought this point home for
me because
there were these rebels on the moon
right and they were tired of being
tyrannized by earthlings
so they basically took advantage of
their ultimate high ground and just
started throwing rocks at earth right
and because it was at the bottom of that
gravity well
um the earth earthlings were forced to
capitulate eventually and given to their
demands so it just keeps going back to
this principle of holding high ground or
holding the best terrain in any
confrontation
and
like the moon you know digital space
it is the ultimate high ground um
it enables us even as an individual
today with bitcoin
you can safeguard billions of dollars of
capital right which is again a life
force
by either memorizing 12
a 12-word seed phrase
uh you can move it around the world
speed of light permissionlessly at
virtually zero cost um you know talking
about moving
a billion dollars in bitcoin you can
probably do from anywhere from five to
twenty dollars
uh you try to move that same billion
dollars across space in a fiat currency
system
you're going to
spend a lot of time navigating
regulatory
the regulations of both the departing
the regime you're sending from and the
regime you're sending to
you're going to pay a lot of bank fees
you're going to be answering a lot of
questions you're going to be
probably paying a lot of taxes as well
right again
the number one export of empires being
security they sort of they gate check
all these movements of value across
their domain
and so
these rights and abilities that were
reserved for the nation state and era's
past where they could move
say goods and capital
if if they're if they're dominant
militarily they can do so pretty much
without permission right they do what
they want that same capability
is now being delivered to the individual
via software
so it's this radical new world view
that's shaking out where
because we don't need
an empire to
honor
uh at least the private property rights
and money with bitcoin like this
as far as we can see today maybe other
property rights will fall as well in
time
but that is a big
slice out of the pie right we also we
don't need the nation state to honor
property rights and money we can just
that entire function of trust and
security has fallen to distributed
software
and it's hard to even
fathom how big of a game changer that
really is
um
and when i i think about that a little
more it's just that
that these digital high seas they're
weakening
the geographic
constraints to being right all of a
sudden you don't
you're not as beholden to the local
monopolies and systems because you can
now
participate in this this global network
that has you know
many more degrees of freedom and a
a much lower
need for permissions right you don't
need to to check as many boxes and
satisfy as many bureaucrats interact in
the digital domain
um it really is this
much more of a pure free market
environment where kind of the best ideas
when if you're able to serve your
customer
um
by whatever means necessary you can earn
a living my mind goes back to
a story of girls in the middle east that
are actually
prohibited from holding bank accounts
it's illegal for women to have bank
accounts in certain countries
so this
contributes to their disenfranchisement
because they can't even earn a living in
the home right so the women
not only are perceived as second-class
citizens but in many ways are class
citizens because they can't hold a bank
account they can't contribute
um to the livelihood of the home so
they're just forced to stay home and
work and do as they're told while the
men go out and make a living
but with bitcoin
some of these uh some of the women at
least were able to find jobs online
right whether it's copy editing or
um anything you can do informational any
job you can conduct online which is you
know more and more jobs as we become
more advanced and they were able to be
paid and remove rated at bitcoin
so all of a sudden they just
they leap frog this entire restrictive
system that would really prevent them
from even
increasing their own condition in life
they cannot improve their own conditions
because they're trapped in this cage but
all of a sudden bitcoin
uh gave them this exit option to just
go into the world
and earn a living
based on their own skills
and
so that's just one example of how the
geographic constraints are weakened
and i think we'll see many more of those
come out another thing that comes to
mind here is
i've analogized amazon in the past like
they
amazon
came to be a dominant monopoly in the
world because they
essentially out-competed
um
four
digital distribution networks which are
a you know naturally scarce
service for the world you only need
it has a huge network effect right so
there's a there's a big advantage to big
economies of scale and a big advantage
to being bigger in that space
and amazon was able to bootstrap itself
in a way
by leveraging two things by two
um benefits of being digital and not
being a brick and mortar per se
firstly they were able to offer low
prices to their customer
because they could they had lower cost
of fulfillment right they didn't have
brick and mortar stores for a while they
were skirting sales tax so they would
you know distribute from a state that
had load or no sales tax and they were
selling into other states
without being deemed for sales tax so
they're taking advantage of this digital
space
and then
uh two because
in a bookstore you can only fit so many
titles right maybe you can fit i don't
know a quarter million books and a store
but the advantage to being online an
online store is that you have literally
limitless selection right anything
that's available on earth you can sell
on your store so i think that's one of
the reasons
bezos zeroed in on books you know amazon
started out as an online bookstore is
because that is
a product where that advantage
is super favorable right there are
millions of books written right the
selection is just endless um they're not
they're a totally non-fungible thing
right every book is different
and i think bezos started there and used
that as his pressure point
because
he could leverage the you know not only
the sales tax and like brick and mortar
we mentioned earlier but he also
limitless he could leverage the
limitless selection capability of an
internet-based bookstore uh to just
really dethrone a lot of the competition
so he could offer it at lower prices and
he could offer it a wider selection so
super interesting there um
and then he was smart enough to leverage
the advantages of a digital business
model um in a
really pressure point focused way
and
when i i look at
tech and bitcoin through that lens
i see
and sailor alluded to this as well is
that the overall trend is that
distributed software and encryption is
very empowering to the individual
so these things that we used to need
large
entities to satisfy because there are a
lot of fixed costs that you had to incur
to deliver these functions right whether
it was a bookstore or whether it was a
bank custody or gold
all of a sudden we can do these things
via software right at very low fixed
costs it can be replicated at near zero
variable cost so once it's up and
running you can basically do it anywhere
um you know net of the the actual
distribution fee the physical
distribution fees
uh assuming there are some right if it's
software there's basically no
distribution for either that's what like
the apple app store is
and so
it's interesting to see how that
i just want
i'm thinking about this a lot it's like
okay we needed empires and large
entities in the past to provide security
to create this uh intersubjective fabric
of trust in the world so we can
interoperate but now a lot of these
human-based
politicized or politicizable
institutions are now going into trust
minimize software where it's like here
are the rules
you can't bend them or break them um
and bitcoin's just the greatest
expression of that right it's
amazon and things like that still have a
political dimension because they're
they're
they're traditional organizations right
they're essentially owned and controlled
um
but something like bitcoin is just just
a pure instance of that it's just pure
unbendable unbreakable rules that help
you channel energy across time and space
uh and satisfy wants more efficiently so
i think too that and this gets a bit
into the sovereign individual thesis and
we didn't touch on it a lot in the
interview but
as people wake up to this truth right
that we have this
ultimate savings technology in
cyberspace or this
non-state central bank like whatever you
want to call it it's a
it's a medium for permissionlessly
storing your wealth in a way that no one
can compromise and you don't need any
government to even acknowledge it or
honor its uh the property rights you
have in bitcoin it's just we've
converted property rights to information
right owning
is now knowing
and when you couple that
with the increasing incentives to exit
inflationary currency and that the book
again the book the sovereign individual
goes really deep into this but
the numbers are roughly if you for every
ten thousand dollars you can reduce your
annual tax liability assuming you can
compound that capital at an average
return rate of ten percent
you're talking about tens of millions of
dollars over the average
uh
earner's lifetime right this becomes a
10 becomes at least a multi-million
dollar in many cases tens of millions of
dollars decision
of holding your money in an inflationary
fiat versus holding your money in a
non-inflationary bitcoin
so i think as the market wakes up to
this and really starts to do the
calculus i think you're just going to
see this overwhelming demand
for security
from
distributed tech you know especially for
your money as in bitcoin
and it's just going to pull demand out
of
our these anachronistic security models
like the nation state and banks and all
these other um
politicized institutions
and
you know
wow that's just a lot to think about
it's hard to even
fathom where that goes
um
sovereign individual the next
you know they predicted
social media they predicted bitcoin
another thing they predicted was the
actual
digitization of securities so other
property rights being eaten by software
and my general thought there is that
the government's not going to let go of
any of this willingly right it's not
like a government would have ever
acknowledged and accepted bitcoin
bitcoin just grew up in the wild um
somewhat flying under the radar long
enough to establish itself as something
that's
really difficult to take down now you
know where
today i think we're at 350 billion
dollar market cap for bitcoin so it's a
really entrenched monetary network at
this point um and it's exhibited a lot
of anti-fragility
i think as my theory would be that as
bitcoin continues to ascend and
demonetize
inflationary government business models
that some of these functions
that governments have bureaucratized
will just start to fall
to free market competitors right it's
just going to come a point
where government's no longer solvent
enough to keep
uh the one example of light that i heard
from safety is
there's a
uh
train international international a
national train
um agency in lebanon i think it was
right and he made the point that there
hasn't been a rail of of uh there hasn't
been a track of railroad in lebanon for
50 years i might have the country wrong
with the years home but
it's that old saying that there's
nothing more permanent than a temporary
government solution right so we have all
these layers of unnecessary bureaucratic
buildup across the world and all the
countries because
they're not accountable to their p l
right they there's no free market
competition keeping them honest so they
get away with these these asinine
uh models where you know they don't they
have a training committee but no trains
for instance so i think as those
useless or worthless or unaccountable
institutions start to shrivel up and die
because there's no funding for them that
you'll see whatever functions that they
provided or intended to provide
start to fall into the free market and i
think software's just gonna eat that up
so
that
there's a lot to think about and that's
something to keep your eye on but i also
liked how
sailor dove into this diffusion of
technology which is really just another
way of saying the diffusion of ideas
and it follows
the s curve right this is
uh the name of the book escapes me i
think it's the history of scientific
revolutions it's possibly the name
and it talks about the s-curve where
there's a beginning where there's kind
of innovators that adopt it first
and then it hits an inflection point
let's say around 13 and a half percent
market penetration
and the innovation becomes super sort of
being adopted adopted at a super
accelerated rate so the curve just goes
vertical for a while until it hits uh
you know
it's it's suffused and saturated the
market sufficiently where it starts to
level off and you have the laggard sort
of adopting it late
and
when we look at
bitcoin through that lens it's we're
very early on the flat part of the curve
we're very we're
far below thirteen and a half percent uh
total adoption we're probably more in
the range of one to three percent as we
sit here in late 2020
and
you know sailor just makes this great
point that
those curves
are impossible to predict you never know
when it's going to work the idea can
exist
for hundreds of years before it ever
gets commercialized right if we think
back to the native americans that had
the pottery wheel but never figured out
to turn on its side and use it as a
wagon wheel right the idea was there but
no one had harnessed it commercialized
it
and but his point is that once it does
become commercialized
and it hits a certain critical
uh mass
that it's
very clear to see that you can invest in
it now like almost right before it hits
that vertical point
um and reap just just huge gains as the
rest of the world wakes up to
the importance of the innovation the
utility of the innovation
and i thought that was
great and he the other thing
in his book the virtual wave which i
read preparing for this
you know he laid out in 2010 saying
facebook apple amazon netflix google buy
these hold they're going to eat
everything don't diversify
here's why going to network effects and
and all of this this history of
scientific revolutions and paradigm
shifts
he still he saw that right and
he's now
proclaiming bitcoin to be a similar
pattern proliferation like it is it has
reached this critical mass right we're
north of 100 billion in market cap
it's the race has been won almost for
digital money and now it's just a
question of how big
does digital money become relative to
everything else relative to analog money
and
you know if you're
[Music]
if you're keen to believe
the advantages that digital tech has
over analog tech i mean clearly on
bitcoin bull i would say it eats all of
it right it's just
it offers so much more utility to the
users and it's so much more energy
efficient
it's as if you don't adopt it you just
get left behind so there's this
darwinian propulsion to adopt
the hardest money and you know you can't
get any harder than bitcoin right it's
21 million fixing forever
so
and then he brought up two that
these things seem crazy at first like
when
when the wright brothers finally flew
uh had their first maiden voyage and
figured out how to fly
he made the point that anyone you
interviewed up until that time you could
interview the smartest people in the
world they would tell you flat out it's
not possible mankind will never fly it
just can't be done until it's done right
until a tinkerer figures it out in their
garage
um
which points too that that
it's the tinkerers not the theoreticians
that
that bring about breakthrough right it's
not like i feel like some people think
there are geniuses sitting inside of
harvard
writing a bunch of complex formulas that
figure out you know this practical
mechanical innovation in the world and
that's just largely not the case
it's people it's entrepreneurs
putting their skin in the game
failing right failing forward learning
from their mistakes facing the unknown
adapting to the unknown trying new
things
and then also there's a breakthrough
right all of a sudden the the plane
flies the wright brothers are sky bound
so that's what drives humanity forward
is this this relentless impulse to
tinker and play with things not not um
the intellectuals sitting in their
their ivory towers theorizing
um
and he brought up too that you know john
harrison the clock maker no one could
figure out longitude right like it was
easy to calculate latitude but no one
could figure out longitude and how did
they solve it they put
a reward in the paper i think it was a
10 000 pound reward anyone that can
solve this
um how to calculate longitude will give
you a financial reward so what did they
do they went to the free market right
they incentivized the collective
intelligence of humanity as best they
could to the newspaper at the time
and this guy john harrison a clock maker
comes out of the woodwork and figures
out
hey i can solve
this spatial problem which is the
calculation of longitude at c
with a temporal answer he's a clock
maker right so he makes a super precise
clock
which is just kind of out of the blue
like who
if you had been a theoretician you would
have sat there and like tried to figure
out how to calculate space and
observational things but this guy just
took a 180 right he solved a spatial
problem with a temporal solution
and that's the kind of kind of problem
solving you get out of the free market
that you just won't get out of um out of
legislated
uh you know innovation or think tanks or
things like this
and
so the point there i think is
you can't
i like to say you can't push water right
like innovation is something that it
emerges naturally through us our
creative impulse you can't force it
right you can't
yell at your garden to grow faster right
it needs to go through its own natural
process of discovery to to get the best
ideas to the surface
and the only thing we can hope to do
within our socio-economic systems is to
incentivize that right like they gave
they put a reward in the paper for this
um that's what the free market is it's
like just go into the world
you have
liberty to do pretty much anything you
want as long as you don't hurt anyone
kill anyone or steal from anyone right
these are the actual
uh pillars of free market capitalism
and make bets right invest your time
energy and capital onto things you think
on to solving problems you think
the market wants solved and you think
you have a unique way to do it
and by betting against one another
we develop better faster and cheaper
ways of doing things right we
incentivize this this ideation process
that rewards humanity forever in the
form of innovation
and
i'd like to say there that it's it's the
tinkering entrepreneurs
there's nothing more problematic to
problems than tinkering entrepreneurs
right if we want to solve problems we
need to harness our collective ingenuity
and we do that through free market
capitalism and tinkering not through
legislation
and um
you know finally we got into
war um i talked about it as an
accelerant to innovation
my thought there is pretty simple it's
just that
war pushes you into a domain
of high uncertainty right where
everything
the relevance of everything becomes
uh accentuated because you don't know
what's going to happen next you don't
know
um
maybe how much food you need to save or
money or what kind of money or weapons
or where you need to be
everything becomes much more relevant
when you're in unexplored territory so
to speak and that
you know they say necessity is the
mother of invention it's like all of a
sudden
you're pushed by your survival instinct
to
necessarily figure out all your
now uh very relevant surroundings very
quickly so it accelerates
uh the the that s-curve adoption or
accelerates these ideas that may have
been idle for some time all of a sudden
uh there's a big impetus to figure it
out
and that's what that's what's going on
right now in 2020 right we have a war on
cash we have a war on covid
uh everyone's strapped into seclusion
um
a lot of people are out of work you know
inflation is right around the corner
so everyone's been pushed to figure
things out and i love that that sailor
paints that that picture of the war on
kova being an accelerant to
bitcoin and digital technologies more
generally
and then finally
i love this quote that he references
from arthur c clarke that
any sufficiently advanced technology is
indistinguishable from magic like that
all these modern miracles that we take
for granted
they're all generated by free markets
and if you
pull the primitive man
out of the stone age and brought him
here to 2020 he would just be
flabbergasted right like all this stuff
looks like magic this camera this laptop
um so i thought that was super
interesting
and it's that's why
bitcoin is so misunderstood and
considered you know even the joke right
magic internet money um it's disparaged
like that
but what i think it actually is that it
is this radically more innovative
and advanced technology that people are
just trying to get their head around
and ultimately in the long run you know
the great promise of it is to
help us make even more magic in the free
market right to create even more
advanced technologies by eliminating the
barriers to trade again
tinkerers operating
freely
in the open marketplace is where we
discover all the new and useful things
that make life easier and better
and
we've honored that paradigm to some
extent especially in western
civilization but we've erected these
artificial barriers to it
with fiat currency and central banking
and
overly complex tax codes
convoluted laws all these things are
frictions to free trade
so bitcoin by defunding these
inefficient institutions it's it's
eroding these barriers to free trade and
therefore bolstering the innovation uh
generated by free markets so
in that sense i think bitcoin not only
is it magic internet money but it's
going to make
the world much more magical in the long
run so
i hope you guys enjoyed that that was
episode three of michael saylor we've
probably got 10 episodes total so we'll
be back soon with the next one until
then take care
[Music]
you