KOL401 | Sazmining Twitter Space: Bitcoin & Property Rights

by Stephan Kinsella on January 16, 2023

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Kinsella on Liberty Podcast, Episode 401.

I appeared on a Twitter Spaces discussion Jan. 12, 2023 for Sazmining, for the topic “Bitcoin & Property Rights,” with Kent Halliburton and Logan Chipkin. A variety of questions were fielded. A synopsis and transcript are here, and re-pixeled below.

Synopsis:

Lawyer and libertarian theorist Stephan Kinsella joins Logan Chipkin and Kent Halliburton to discuss Bitcoin from a property rights perspective. If Bitcoin is not physical, how can anyone own it, if at all?

Transcript:

Kent Halliburton (00:06:31):

Sure. Uh, thank you Logan, for the opportunity. You’re gonna have to do a little intro for yourself as well. You do an excellent job hosting these spaces, but I operate as the president and COO here at Sats Mining, which means I, uh, manage all the internal affairs. Uh, my first career was in solar, rooftop solar. And, uh, very excited for this conversation to learn from you, Stephan. Um, definitely libertarianism has, uh, has gotten to be in my crosshairs, uh, the further I’ve gone down my, uh, my Bitcoin journey here. But, um, yeah, been, I think you are the first, uh, first Austro libertarian, uh, that I’ve spoken to, and, uh, came to learn a lot from you.

Stephan Kinsella (00:07:16):

Well, glad to, uh, meet you and, uh, prepare to have your mind blown.

Logan Chipkin (00:07:21):

. Uh, yes. So I’ll, a few words about me. So I’ve been a, I’m a longtime writer, been writing about all sorts of stuff, journalism, physics, economics for years. And now I’m happy to be working with Sats Mining to really create a lot of our content around Bitcoin, Bitcoin mining and energy. Um, so that’s a little bit about me. Uh, Stephan, before we start, do you wanna, uh, tell us a little bit about yourself and your background?

Stephan Kinsella (00:07:46):

Well, I live in Houston, Texas. I am from Louisiana originally. I’m a, I’m an attorney, a retired attorney. I’m a patent attorney, uh, but also have long time been a libertarian speaker, writer and thinker. Uh, uh, mostly influenced by the Austrian economics and anarchist, uh, you know, camp of Rothbard and Mises and these guys. So that’s my take. I’m a, I’m a, I’m a, I’m a huge Bitcoin, um, uh, hopeful advocate. I don’t know what you want to call it, . So, yeah, that’s, that’s my take. Plus I was an electrical engineer in, in, in college, so, uh, yeah, I’m, I’m interested in technology and, uh, those related matters too.

Logan Chipkin (00:08:31):

Perfect. Yeah, I’m just to let the audience know, FYI, I’m also essentially an Austro libertarian. I tend to not use that word, uh, in other contexts ’cause people probably don’t often know what that is. But since Stephan’s here, I figured why not break open the champagne bottles. Um, so it’s nice to be amongst my people as it were. Not that Bitcoiners aren’t, but anyway. So before we get into, so today we’re gonna talk about Bitcoin and kind, kind of how Bitcoin relates to property rights, uh, and we’ll see why that’s relevant soon. But Stephan, before we get into that, what is Austro libertarianism and what is the Austro libertarian view of property rights?

Stephan Kinsella (00:09:07):

Yeah, that’s interesting. So, and, and I’m, I’m assuming we have sort of a generic audience who probably doesn’t know all this stuff. So, um, yeah, so basically, um, economics is just a study of wealth, how wealth is created in society, right? And so there is a free market economics and socialist economics and things like that. And there’s a sub-school called Austrian Economics, which is a special type of approach to economics, pioneered by Carl Menger and Ludwig von Mises and Friedrich Hayek and Murray Rothbard and these guys. And, um, from, probably, from most of your audience’s point of view, the, the fundamental thing to think about, uh, what’s unique about Austrian economics is it’s, it’s focused on the individual look. So every individual is the actor and it’s hyper free market. Like we need free market property rights for people to, um, trade with each other and to establish money prices and have an efficient economy.

(00:10:10):

So it’s, it’s kind of pro-capitalist. And then libertarianism is more the political side, which is basically an extreme or more principled or more OCD version of the idea that, which most, most Americans, the idea that most Americans believe in, which is that, um, we should have civil liberties, like personal liberties, like right to free speech, right to freedom of religion, freedom of conscience, but we should also have economic liberties, which means the right to trade, the right to profit, the right to own your property. Um, and so that is what I would call soft libertarianism and hard libertarianism would be the way we view it, which is like no exceptions, like we just like want, we apply the principles so strongly that we think the, the whole state is illegitimate in democracy and the whole, the whole deal. But basically in the meantime, we want there to be a minimal version of the state. So like, the state should only stop crime and protect your property rights, but that’s, that’s all they should do. So taxes should be very low, that kind of thing. And so if you combine, so Austro-libertarianism is a label that we give to people that have combined sort of this Austrian view of free-market economics with this sort of radical, uh, skepticism of, of state or government power with libertarianism. So that’s sort of our perspective on these issues.

Logan Chipkin (00:11:43):

Got it. Got it. And so when you say right to free speech and civil liberties and right to profits, aren’t these not precise from an Austrian perspective? Because strictly speaking, they’re not property rights?

Stephan Kinsella (00:11:56):

Correct. Yeah, no, that’s actually, that’s actually correct. So, so, uh, yeah, if you wanna dive into the details and the weeds, um, uh, these things are the consequences of a more baseline level of rights. So if you basically have a system and a society where people want to get along with each other and they want to respect each other’s rights, and they want to live and let live, I mean, there’s, there’s a whole movement, by the way, called Live and Let Live, which I’m part of, Mark Victor from Arizona, sort of this, um, the idea is that like most people believe, roughly speaking, in the Live and Let Live idea, like you should live and let other people live, which means you, you have your own stuff and they have their own stuff and you trade with each other and you cooperate and you negotiate.

(00:12:44):

And we, we tend to, uh, you know, oppose the, uh, the, uh, the use of force to take each other’s stuff, right? So, but the, but the bottom line is the fundamental right is the right to integrity, the physical integrity of your body, which is expressed by what we call the non-aggression principle. Which means that, you know, you shouldn’t hit people and kill people, and you shouldn’t use their body without their permission. You shouldn’t rape them or kill them or murder them or rob them or whatever, right? Because it’s their body, not, it’s not your body. So whenever you say something like, you oppose crime in, in a, in a, in a fundamental sense, you’re, you’re, you’re in effect recognizing property rights in their body. ‘Cause you’re saying that, well, only one person can have control of this body. I mean, look, most people nowadays would not, uh, argue for slavery, chattel slavery like we had in the US, uh, um, in, in previous decades.

(00:13:47):

Okay? But if you’re opposed to that, that means that’s because you’re saying that, well, you shouldn’t be able to own someone else’s body. So in other words, everyone owns their own body. Now, people get uncomfortable sometimes with that way of looking at it because then they’re afraid we’re, we’re going on the other side too much, this capitalism commodification commercialization side where, oh, everything’s a, uh, everything is a commodity. It’s like, yeah, well, I think that’s complete BS because if you say you’re against slavery, all you’re saying is every person owns their own body and you can’t attack them or use their body without their permission. And there’s nothing more libertarian than that. And the people that get concerned about this, oh, commodification of your body, it’s like, I mean, let’s, let’s tackle one issue at a time, right? Like, let’s first stop slavery and then we can worry about people using their bodies to sell themselves, uh, in labor contracts that you don’t like, that you think are exploitative, but let’s at least free them from the bonds of actually being attacked and assaulted by other people.

Logan Chipkin (00:15:01):

Okay? Now, is it possible for people to own ideas and abstractions from this perspective, if we’re talking about owning physical bodies and basically universalizing that for all scarce resources? Okay, how can someone own an idea or an abstraction, if at all?

Stephan Kinsella (00:15:16):

That’s, that’s a good question. And so the way, the best way to answer it, uh, given a general audience who is not familiar with all. So let me just, uh, let me just, uh, try to explain a few broad concepts. Okay? So, um, ownership is a property concept. It’s a legal concept. It means you have a property right recognized by the legal system to control a given scarce resource in the world. Okay? So that’s what, that’s what ownership means. Um, now then we, so, so, so the typical things everyone recognizes ’cause they’re intuitive, they’re common sense, they’re traditional, you know, you can own animals, you can own a car, you can own land, you can own some iron ore you found from the ground, you can own some, some, some stone you mine from the, from a mountain. These are physical things and you can also own your body.

(00:16:14):

But all that, all that ownership means is you have the exclusive right to determine who can use the thing, right? So if I own my body, if someone wants to kiss it, or take my cells for a, for a medical trial, they have to get my permission. So that means I can say no or I can say yes. So ownership ultimately means the right to say no, the right to exclude people from using something. So how do you get this right? Right? So the right in your body comes because in our view, the natural, the natural idea that, you know, you’re the natural owner of your body because you are the body, because you can directly control your body. Most people wouldn’t disagree with that. But then when we have other things in the world, like things that are lying around in the unowned wilderness that we have to take as resources and use to manipulate things in life to get what we want, we need to control these things and possess them.

(00:17:16):

And then if we possess these things and we want to use them, there’s a chance someone else might want to take it from us by force. Because the nature of these things is, we call them a scarce resource or rivalrous resource, is that only one person can use them. And so if I’m using this, you know, this, this fishing net to catch fish, and my neighbor’s dog takes it from me, I can’t use the fishing net anymore to catch fish. Okay? So there arises in society this need for property rules that says, okay, well who owns these other things that were previously unowned resources? And the answer is the private law solution of the West, um, the Roman law and just classical antiquity, um, the common law, the Roman law, the idea that the first person to take something out of the unowned state in the wilderness is the owner or whoever he transfers it to by contract.

(00:18:16):

So you have two, pretty three, three simple principles for your human body. Everyone is the self-owner. Like, so we’re against slavery. That’s all that really means. And number two, for other things, the first person to start using it when no one else owned it, or the person you transfer it to by contract is the owner. So you have self-ownership, original appropriation, some people call it homesteading or contractual transfer. Like that’s the, basically the, the way you decide who can own things. Okay? So when, when the question is can you own information? So the question, a legal system, so a legal system emerges because there’s a need in society for people to rely upon their fellow neighbors to help support themselves in having their rights respected. Because no one can ever defend all their rights by themselves. Like, the only way you can have society is to have society.

(00:19:16):

And society means there’s other people that respect you and have the same values and that kind of thing. So you have to appeal to their commonly shared values, right? So, but the, but the point, the, the point is the purpose of these property rights is to have support in your neighbors. They’re going to recognize your transfers of property to and from yourself, right? And, and if there’s an occasional malfeasor or bad guy, then they will be dealt with as they have to be dealt with. But by and large, you’re, you’re trying to appeal to the other people, right? And so the, so the, so the point is when you have to appeal to other people, you have to appeal to commonly shared values, which is that we all would, most of us would prefer to get along with each other without conflict and without, um, um, without violence.

Logan Chipkin (00:20:18):

So would you say, does Bitcoin count as information or would you say it’s a physically scarce good, or is it a digitally scarce good? And that’s how we, right, because you’re able to exclude people from it. So is that all we need to say?

Stephan Kinsella (00:20:33):

Property? No. So, so yeah. So you steered me back onto where I was . Yeah. So here’s the thing about Bitcoin. So what happens is people, not everyone’s a theorist, and so they don’t always use the technically precise language. And so they will intermix categories of things. So for example, they’ll call money property or they’ll say, oh, this is my property. But what they’re, what they’re talking about is their wealth, right? Or their ability to control something. So there’s a sliding between realms of language between the, the normative realms. Normative means when we describe things like it’s right or wrong, right? Or rights. And then, and then in the economic sense of like, like if you say, oh, I have this many cattle, or I have, um, this goodwill in my business because it was, it has a value. Like there’s a monetary value. So people tend to conflate them with each other ’cause they relate to each other in real life.

(00:21:33):

Because if I have secure property rights in my home and in my factory and whatever, then I can sell it or use it to make deals or contracts. And that translates into monetary things. So people, they tend to lose sight of the, of, of the connection between these things. Uh, uh, and so what this means is that, um, in a simplistic sense, and let’s get back to the origin of money for just for a second to make this explanation clear. So humans, every human is an animal, right? And lives as a life form on the earth. And theoretically could live by themselves on an island. This is the, the hypothetical of Robinson Crusoe alone on an island, right? And so you could analyze what he’s doing economically, but it would be very boring and simple. But basically everything he does is, is like an exchange or an action, or has opportunity costs.

(00:22:29):

Like he, he, uh, he, he takes time one day to build a net so he can catch more fish the next day. So you could explain all that in primitive economic terms, but there’s no other people around. So the explanation is, is limited and boring and not that useful for the modern world. When you have other people enter the situation, you have the possibility of exchange and trade and the division and specialization of labor. So then you have what’s called barter. So people start doing that. That’s one of the things they do to, and everyone is richer because of this, because they can trade with each other. So they’re not only alone on an island, right? But the problem is that, um, uh, the economic problem we call the double coincidence of wants, which means that, you know, if I have a fish and I want a shoe, I’ve gotta find a guy that’s selling a shoe that happens to want a fish to make the trade.

(00:23:27):

So barter is very impractical. So inevitably a third medium of a third thing, uh, the medium of exchange arises, like money is something everyone trades into and out of is like, it’s like a clearinghouse kind of thing, right? So it allows people to trade more unimpeded. So this is why money emerges, right? Okay. So people start thinking of money as wealth because you can use money to get wealth. Like if I have gold or dollars or whatever money the money is, I can buy bread or a house, which is wealth, but the money itself is not wealth, right? Okay, so here’s the question. Um, so, so people confuse these categories of property and ownership and, and, and wealth because they all relate to each other. But if you want to be clear about it, um, um, information is a second, and this is where we have to get a little bit into what Mises is, and who’s a famous Austrian economist calls praxeology.

(00:24:40):

Praxeology is a word he came up with, which means, uh, the science of the logic of human action, right? Which means the implications of human action. So you analyze what it is that humans do, and we try to figure out the consequences, which is what the Austrians think is the, is the core basis of, of economics, right? Is analyzing the implications of human action, right? And, and so if you understand human action, and we all understand that on an intuitive basis, and we all actually do it, what do we do as humans? Every one of us is an individual subjective actor. We have our own goals, we have our own view of the future. We think things are coming, we could be wrong or right, but we have a vision of what is coming in the future. And when we imagine, oh, this is what’s coming tomorrow and I don’t like it, it gives me dissatisfaction, right?

(00:25:40):

It makes me uneasy as Mises calls it. So I’m thinking, well, can I take an action to change the course of events? This is what all human action is about. It’s like we always are always imagining the next 10 minutes or five minutes or the next year or whatever, and we’re thinking if we don’t do anything, X is gonna happen, but I would prefer Y to happen. Can I make Y happen instead? Maybe I can, maybe I can grab a means, a scarce means of action, some efficacious resource in the world that I can use to intervene in the course of events to change the future, basically, right? Um, and so, um, and, and so every human action, I’m getting to my point, okay? Every human action is the employment of a scarce means or resource, some physical material thing that we can use to, to change what happens.

(00:26:35):

But it’s always guided by knowledge, always guided by knowledge, because you have to have a brain and a mind and a consciousness that knows something about the future world and something about the current world, something about the laws of cause and effect. And you, you, you attempt to employ these scarce resources to divert the course of events, okay? So the point here to recognize is this, the ingredients. Every successful action, there are two ingredients. Number one is that the, there’s a human actor who had the availability of a means and preferably in a property rights society. It’s, it’s, uh, these means are not just possessed, but they’re protected by the law. And number two, you have to have knowledge, okay? So the knowledge is what guides your action. Now, I’m getting back to your IP question, your intellectual property patent law. And by the way, I’m a patent lawyer.

(00:27:34):

I’ve been a patent lawyer since 1993 or four. And so well familiar with how this, how this field works. But in my view, the law cannot give practical, uh, I’m sorry, the law cannot give property rights in ideas. And the reason is not because I oppose it for the reasons I could. I gave it in my articles. Like, it’s not a normative thing. It’s not like, it’s not like saying, um, um, um, the government can’t outlaw abortion. Like actually the government can outlaw abortion. I mean, you might agree or disagree with that, but you can’t say that it’s impossible for the state to make abortion illegal, but it is actually impossible for the state to, uh, set up a system of ownership of ideas. And the reason is because ideas are the things that guide your action, they’re not the tangible material resources that you use to get your action done.

(00:28:42):

So whenever the state sets up a pretend idea ownership system like patent law or copyright law, it’s always a disguised and confusing thing that confuses everyone because they’re not experts. But it pretends to be ownership of ideas. But it’s not really, because what it’s really ultimately is ownership of tangible resources because so, so if you have a patent or a copyright and you sue in a government court to enforce it, in the end what you get is an order from the court backed by physical force of the government courts against some, I call them a victim, right? And, and, and it tells them, you can’t use your factory to make this product, or you have to transfer a million dollars of your, of your bank account to disguise damages. So it’s, it’s, the end result is always about, um, um, about ownable tangible material resources.

(00:29:44):

And so when you have a law that says, oh, I own this, then it’s just a disguised and confused form of, uh, uh, of stealing people’s actual property. So in my view, what happens is in the, in the Bitcoin cases, you have people that are business-minded and economic-minded, and they’re using the concept of control, which is what we would call in the law possession, which is this thing from ownership. Uh, because they don’t really care about legal ownership. They care about what you can do in real life, right? So in Bitcoin, I have a key and that allows me, I, I’m the only one who can access this, these satoshis, right? In, in, in, in, in the blockchain, I’m the only one who can enter a sequence of information that can transfer control of this, of this space to someone else, right?

(00:30:42):

That’s practically the thing. And that is similar to what the legal right of ownership gives you for physical things. So people call it ownership, but it’s not really ownership, it just means possession or control. So we have to, so, so in my view, just like you can’t own ideas or information, um, no one can own Bitcoin. And there’s another reason why you can’t own Bitcoin. And that is because, um, the Bitcoin system is designed to be pseudonymous in the sense of to transfer Bitcoins or satoshis within the system, you only have to meet certain criteria. Like you have to give the right keys. That’s it. You don’t have to verify a legal thing, right? Um, so, um, so if I go onto Twitter or Facebook and I impersonate someone, I may be violating their, their, their, their user terms, right? They’re, they’re user terms. I may be violating a contract. Um, but with Bitcoin, there is no such thing. Like it’s, there is no, there is no rule that says you can’t steal someone’s Bitcoin. So if you could somehow guess someone’s key or, you know, uh, then it’s, and then you transfer those coins, that is actually not like a contract violation.

(00:32:11):

I’ll pause here ’cause I’ve been going on for a while.

Kent Halliburton (00:32:16):

Uh, Stephan, so I’m, I’m sort of wrestling with your, your description here and, and trying to understand if, if, how do you classify Bitcoin then if it is not an idea, but also it’s not property?

Stephan Kinsella (00:32:35):

How do you classify it? Um, I think that, well, so first of all, I would classify Bitcoin as potentially money, if it ever could become money. I don’t think it’s money yet because it’s not, it doesn’t have a wide enough network effect money, but money has an economic definition. But we, we have lots of things, lots of phenomena and reality that we understand and apprehend and comprehend and, and describe that are not always just physical things, right? Um, so like for example, you could, you could distinguish your mind from your brain. I mean, they’re different things. The concept of mind is different than the concept of brain, just like the concept of person is different than the concept of body, right? They’re just different things. So I think, I think my personal view is Bitcoin is simply, um, uh, a distributed ledger system, right? ,

(00:33:26):

Which is extremely inefficient and it needs to be inefficient for, for the, for the blockchain to work. But it’s just, it’s a distributed, uh, uh, uh, ledger system and people can use it if they want to, um, to store value, right? So they, they can basically assign subjective value to it and they seem to have done so, but not completely, ’cause it’s not money yet. So I would say Bitcoin is just a ledger system. And to be honest, the word coin and the word Bitcoin, which is what Satoshi or whoever came up with, is a little bit, uh, a little bit disingenuous ’cause it’s, it’s trying to bootstrap, it’s trying to make it become a money by calling it a coin. But you could have just called it, uh, a ledger system. So it’s, it’s just a, it’s just a database basically. And people can use databases for whatever they want to use ’em for. It’s just like the Austrians point out that, for example, um, if you have a, a good, um, there is no inherent public or private goods distinction between them or consumer capital goods distinction. Um, like if I have a hammer, the hammer is not necessarily a consumer good or a capital good. It depends upon the subjective perspective of whoever the owner is, right? So there are no intrinsic characteristics in these things. So I would say that Bitcoin, uh, could be used as money and I hope it will . So that’s my take. Sorry.

Kent Halliburton (00:35:10):

No, it’s, it’s, it’s interesting. I’m not trying to, to challenge you at all. Just learn, uh, how you, how you’re seeing the world here. And you know, I guess clearly you’re a big Bitcoin proponent, uh, as we are here. I’m building a business around it, but I am curious if you’ve come across any Austro-libertarians or libertarians in general that, um, for whatever reason are, are not into Bitcoin, and yeah. How, how they would come to that conclusion based on, uh, libertarian values?

Stephan Kinsella (00:35:44):

No, that’s a good question. Um, yeah, I may seem, um, I may seem like a little bit of a naysayer to you guys, but I’m, I’m not really, I ’cause, but, but for my point of view, like, yeah, uh, the guys that I came up with and the guys that I admire and respect in the community, um, they have been a lot more, I dunno if the word is skeptical, skeptical of Bitcoin, I, I think it’s maybe more that they’re older and they just don’t get it. Um, there are some, there have been some, some Austrian complaints saying that, um, there have been some arguments by Austrians saying that Bitcoin is impossible. Okay? And they, and I think it’s ridiculous. I don’t agree with them. And their, their argument is something based upon, um, um, um, what’s called the regression theorem.

(00:36:43):

And this is Mises and Carl Menger’s kind of historical explanation of how money could have emerged. Because there’s this problem of the, um, of the, uh, um, infinite, infinite sort of regress. Like, well, if money’s value today rests reciprocally on money’s value yesterday, then go back in time. How did it ever get a value? And, and Mises’ answer was, well, because at one point in time there was a barter society and there was no money. And so everything had a real value based upon how they actually traded. And then, then people started noticing, oh, we can start using one of these things as a commodity for indirect exchange, right? And then money emerged. So his, in my view, my view always has been that Mises was trying to break this infinite regress by just pointing out the way that it probably happened or the way that it could have happened.

(00:37:44):

But other people interpret that infinite, uh, uh, I’m sorry, other people interpret Mises’ regression theorem as, as a, as a proof that money can only emerge from a barter commodity with a real value. And, and, and they interpret that to mean that Bitcoin is, is, is not possible because Bitcoin wasn’t a commodity with a useful value already. Right now I think they’re wrong, but there are some Austrians. So, so I think that’s part, so part of the reason is the, part of the reason for the, the sort of disheartening lack of endorsement of Bitcoin by Austrians, um, because we’re the natural ones who should be endorsing it. I think part of it is because of this obsession with this misinterpretation of the Mises regression theorem. And part of it is because honestly, a lot of the older theorists are just, they’re just, they just don’t get Bitcoin at all.

(00:38:40):

I mean, like the, the one I respect the most is my mentor Hoppe. And to his credit, he hasn’t actually come out criticizing Bitcoin, but he hasn’t like enthusiastically adopted it either. He just told me. He, he told me personally, he just doesn’t get it. You know, he was like, I don’t know what, whatever. So, so, so I, I think that they’re having trouble imagining the reality of this. And I think part of the reason is because they’re economists and to fully understand this new phenomenon, you need to have sort of a synthesis of at least three things, technology and economics and law, right? And now I’m an electrical engineer and I’m a lawyer and I’m an Austrian economist. So I’m trying to like use what I know about these three things to make it make sense. The thing is Bitcoin proponents think that it’s a criticism when people like me say, you can’t own Bitcoin. It’s not a criticism, it’s just an accurate analysis of the way we need to look at this new phenomenon.

Logan Chipkin (00:39:47):

Yeah. I’ve heard, um, yeah, when I first came across the apparent conflict between the regression theorem and Bitcoin, I was pretty fascinated. I was like, oh, how do we square this circle? Um, Stephan, you’re probably familiar, but some people argue that actually Bitcoin did have value as a consumer good because people bought it as like a collectible. I don’t know if you are familiar with that argument.

Stephan Kinsella (00:40:08):

No, I, I am. And I, I agree. That’s, that’s another, that’s another, um, that’s another problem with, with, with that criticism of Bitcoin. Yeah. Yeah. I think, I think it did have a, it does, but it doesn’t have a value like gold. I think it is distinct from, say, gold did have a pre-monetary barter value of ornamentation or even scientific or whatever, um, Bitcoin, yeah, you could say it has a value as a collector’s thing or as a way to achieve liberty, but that’s sort of like blending it into its function. Um, but to me it doesn’t matter. The point, if it has, it has enough value to get going, which it seems, it seems to have done right. It went from, from zero to, so 64,000 right? Dollars. Um, it’s, it’s at a certain point, it doesn’t matter what the basis of, but I think, by the way, Bob Murphy has a good podcast on this about, um, about this regression theorem, uh, criticism of Bitcoin. I, I don’t remember the episode number, but anyway, I’ll pause. ¹

Kent Halliburton (00:41:14):

You know, the, uh, the person that I’ve heard talk about this, that gave a, uh, an answer or a solution to this regression, there was actually Dominic Frisby, and he, uh, he identified that that, uh, people, and I don’t know if this is accurate, but I like it, um, that gold was, people were attracted to it by its natural beauty, and there is something naturally beautiful about Bitcoin, but it’s a mathematical beauty. Um, and that’s how he was, how he was squaring this circle.

Stephan Kinsella (00:41:48):

Oh, that’s, that’s, that’s interesting. Yeah, I can see that. Sure. I have no, no objection to that.

Logan Chipkin (00:41:56):

Yeah, that’s, I haven’t heard that either, Kent, but yeah, I could totally see that that’s, uh, perfectly plausible. Uh, especially those early cypherpunks, you know, they were all about that. Um, so Stephan, I wonder, I don’t know how much you follow, um, kind of like governments around the world and how they’re responding to Bitcoin, but from a libertarian perspective, how do you feel about places like El Salvador making Bitcoin legal tender? You know, it’s almost like using fiat means towards libertarian ends.

Stephan Kinsella (00:42:25):

Uh, I’m waiting and watching, you know, I don’t really, I, I’m not sure. I, I don’t, I’m not going to hurl bombs at it. Um, I mean, as a libertarian you could say that, um, all legal tender law is wrong. ² You shouldn’t force people to accept a means of payment. Um, I don’t, and I don’t think that’s how Bitcoin will, will ever become, um, the main medium of, of exchange. Um, I think it will happen because people will abandon the fiat standards, um, whether these local little governments can help it. I mean, I do think that the, the one thing I’ve seen, which I haven’t seen much analysis on, is I, I think that, um, my understanding is that, uh, like in the, in, in the Western countries, like say the US, we treat, um, um, certain foreign currencies as, as legal tender in their own countries, and thus not subject to the same kind of crazy, um, sales tax and capital gains tax stuff if they’re considered to be an actual legal tender currency of another country.

(00:43:39):

And so if some significant country could somehow get Bitcoin treated as their actual legal tender and recognized by the US, then that would have a cascading effect, and, and if, if, if that resulted in meaning that you could hold Bitcoin in the US and trade it without having, um, capital gains tax, um, then I think that could have a, a big effect. But I’m not aware of anyone who studied this, because everyone seems to be totally confused on all the stuff. Um, so because they just talk, they talk outta their asses about it. They kind of, they hear something and they say something. I think there’s something there. There’s something potential, there’s a reason the Treasury Department or whoever it is that controls this, hasn’t, hasn’t like changed the regulations to recognize it. Maybe we need to get, you know, some, um, uh, what’s, what’s the thing that all, all the, um, not the Grayscale one, but the, um, uh, the Grayscale Bitcoin Trust that’s in trouble now.

(00:44:48):

They’re trying to convert to a, uh, um, not an IRA, but you know, where it is, like you said, like it was a vehicle where people can use to get into Bitcoin. Now, of course, I’m in favor of having, uh, you have your own Bitcoin on your own wallet, but I do think that having a second avenue for people to have access to it is, is, is one way people can start fleeing to it, to flee to it. You need to be able to do it. Right now, they’re afraid of it because they hear about FTX.

Logan Chipkin (00:45:21):

Yeah, I agree. And actually something I’ve been thinking about recently is, and you know, of course not your keys, not your coins and all that, but I could easily see even after humanity is on a Bitcoin standard, uh, financial derivative instruments, uh, still being traded in the market, and you know, kind of like from an Austrian perspective, it’s just price discovery. And if people think they can, uh, trade second-layer assets in order to outpace the purchasing power of Bitcoin, I don’t see why that wouldn’t exist in the future.

Stephan Kinsella (00:45:52):

Oh, yeah, I was thinking more about ETFs. Yeah, I, I’m, I’m actually really skeptical of all these, uh, all these derivatives. I, I think that it, I mean, my view about Bitcoin is that it, it could solve a couple of problems. Well, never mind, it could solve wealth problems because if it ever becomes money, it’s gonna go up in value a lot. So the people that are lucky enough to invest in it now, they might make a lot of money, but that’s a one-time sort of thing. ‘Cause mm-hmm. , the way I envision it is it becomes hyperized in, I dunno, 10, 20, 30 years, whenever, and, and then it plateaus and then everything is fine. Uh, unless we kill ourselves with a nuclear war that follows, right? But the second problem, you know, and then it just basically means that the government is starved of this ability to do deficit financing of its wars and things like that. The government now has to actually live on its taxes, . So to me, that’s the big advantage how, how we get there. I’ve heard lots of people speculate about this hyperbitcoinization process and this transfer process, transition process, it seems to be happening slower than they predicted, put it that way, right? All these optimist guys, 2, 3, 4 years ago, I don’t think they would’ve predicted we’re at 17,000 right now and just stagnating. So it, it may be a more complicated and difficult process than, um, the optimists hope.

Logan Chipkin (00:47:20):

Yeah, maybe, um, I personally, like, I don’t even really pay attention to the price too much unless it’s like geopolitically interesting or, or whatever. But, um, yeah, I think it’s a bad idea to try to predict when exactly hyperbitcoinization will occur. I think in kind of like what I mentioned with El Salvador, you know, you’re just seeing more and more people adopt it, and that’s exactly what we need. And I was, as a friend of mine said to me recently, you know, once there’s some simple app that basically serves as a money translator, kind of like, uh, if a Chinese person and an Englishman were talking and they just had a translator, if you just had some sort of app that converted fiat to Bitcoin and vice versa immediately without people having to think, at that point, it’s presumably game over. Especially if we have Lightning Network or something.

Stephan Kinsella (00:48:04):

Well, yeah. So I, I, I, I, I agree that it would be an advantage to have, um, um, uh, basically a, a frictionless costless translation service like you’re talking about, and a Lightning, you know, something like that probably will do that. I mean, if we, if you’re not in a rush, I mean, give it five years and who knows mm-hmm. . Um, but I don’t know if that solves the problem. So, the way I look at it is this: money solves a problem of barter, okay, it overcomes the, the double coincidence of wants, and it, and it enables rational economic calculation by giving you numbers. You can, you can use to compare heterogeneous units, um, and then the state fucks up money by co-opting it and, and centralizing it and inflating it and, and censoring it and all that kind of stuff. So money solves a problem and the state ruins the utility of money. ³

(00:49:04):

So then the question is, Bitcoin is the promise of restoring money back to its original function. But the problem is, it has, it has to basically replace money. And, and so like, so I, I, I, Bitcoiners hate when I say this, but fiat money works fine for purchasing. I can go down to Starbucks, I can go to the grocery store, I can buy a car. Fiat money works fine because it still solves the original problem of barter. The main problem is the government controls it, they censor it and they can inflate it. So it’s not a good store of value anymore. Okay? So what’s that mean? I just don’t store as much of my value, my wealth in money anymore. Okay? That’s what people do in these societies where there’s inflation. They just don’t hold their money, their value. They don’t hold a significant chunk of their wealth in money, but that’s what they do.

(00:50:01):

So it still doesn’t show why they would switch from dollars to Bitcoin because it doesn’t give them any advantage unless they start holding it as an asset for future appreciation, right? And expecting it to somehow take over, but seems like a chicken and egg thing to me. So this is my dilemma with Bitcoin right now, and I’m not blaming anyone in the space. I mean, there’s no one’s fault, it’s the fault of the state and it’s the difficulty of getting out of the state system. But I don’t think we should be unrealistic and just like be Pollyanna about it and say, oh, Bitcoin is inevitable. I don’t think it’s inevitable at all. . I wish it was inevitable. . Well,

Logan Chipkin (00:50:45):

Certainly the solution to any problem is not inevitable. I agree with you there. Um, let me just take a moment to reset and um, ’cause we’ll open it to questions or comments from the audience as well. Just to, just to remind everyone, uh, this is the Sats Mining Twitter space. We host these every week. Uh, Sats Mining makes, uh, clean Bitcoin mining accessible to retail customers all around the world. Our next facility is actually being energized this month. So check out our website, www.satsmining.com and buy your rigs before, uh, we run out of, uh, space. Uh, and with that, if anyone has a question or comment, uh, feel free. If not, um, I have something. Um, so Stephan, do you think, uh, let’s assume Bitcoin continues to, if not completely take over, let’s just say become a significant, um, economic force. Do you think that has any impact on people’s, um, political views? For example, as you well know, there are millions of people in America alone who literally think a stateless money is impossible in principle. And so to have, uh, such a counterexample, I wonder if it would shake them of their ideas.

Stephan Kinsella (00:51:55):

No, I actually think it, yeah, of course it could. Uh, I mean, you even have people like Peter Schiff and you know, you have, you have our people who are skeptical, and I think if they saw it actually worked, they would go, oh, maybe something’s different. Um, so, and, and the example I always give is, um, look, I used to be a libertarian who thought that the reason, the reason we have statism and, you know, rights violations and lack of prosperity is because too many people are too stupid and they, they just haven’t learned their basic economics. And so the solution is you just go out and propagandize and educate everyone. So, okay, so I have a job and I’m, I’m gonna give 2% of my salary to Cato, and they’re gonna pass out pamphlets and whatever, but that’s just such a pipe dream.

(00:52:56):

But, but the, but the, but the mentality is that the way to solve problems in society is to change people’s mentality by propagandizing them. And of course that’s ridiculous, right? But you can change people’s views, um, by reality. So for example, the fall of the Soviet Union in 1991, um, was a big teaching moment in history. Now, it didn’t teach everyone everything, and they all still wanna cling to their, well, we can do socialism a better way, but it did, it was a big stinging rebuke to everyone, and they did learn something. And now the whole world sort of knows you just can’t totally centrally plan the economy if you want prosperity. I think everyone sort of knows that, and they wouldn’t have known that in 1982 or 1973. So, and that’s because the Soviet Union hadn’t collapsed yet. And so, so my hope is that something like that is true for Bitcoin and that, that if Bitcoin actually starts getting success, even though all the people doubted it, look, it’s just like Uber or whatever, like people never would’ve imagined Uber, Netflix, these kinds of business models.

(00:54:14):

But when they start working, you go, okay, well it works. So yes, I do think that if Bitcoin, uh, goes to the next level, let’s say let’s, let’s say it hits 200, 300, $400,000 in the next couple years, and more and more people flee to it and Lightning gets more advanced and people start using it, um, I could see that as like an eye-opening moment for, for people in society in general, and the people that were, were, were opposing it for, for decades will look like fools. So I guess that’s, that’s, that’s kind of my perspective on it. If you have a question?

Speaker 4 (00:54:55):

Well, no, just a couple of comments. First of all, I think Stephan undersells the, the invention of Bitcoin, uh, Bitcoin, because it’s not just a database, I think it’s an open ledger and, uh, shared book. This is such a huge innovation in the realm of, uh, accounting and, and money. Because for the first time in human history, the book and the money where you, where you, you know, the, the money that is accounted for in the books, uh, are one and the same. That bars basically and knows a series of, of, of, you know, about corporate and, and government and even banking practices that are behind lots of, of, uh, you know, social ills in the 20th century. And, and before now even, and the second thing is I want to speak to the, the, the legal, the legal situation in, in El Salvador, the, the, how do you call it in, in English, the, um, legal tender, um, legal tender. Of course it’s, it’s forceful, but they also have legal tender or they are forced to use the US dollar. So as long as you already have legal tender, you might as well have more options, right? So I just wanted to add those two bits and of course I agree on all the rest with Stephan whose work I have always admired.

Stephan Kinsella (00:56:20):

And I love yours too.

Logan Chipkin (00:56:27):

Uh, does anyone else have any questions or comments? We only have about 10 minutes left with Stephan. Okay. Um, I have another question. So you were saying how Hoppe is not that into it. I’m actually kind of surprised. Um, is Bitcoin never spoken about at let’s say, um, Mises Institute or Hoppe’s uh, society?

Stephan Kinsella (00:56:53):

Well, that’s, that’s actually an interesting question. Uh, so I think the reason Hans-Hermann Hoppe is not that interested in it is, uh, he’s basically retired. So he, he’s, he’s done what he’s done and, and he, I, I, like I said, I don’t think he quite gets it, although I will say that he, uh, I’m not gonna give any details away, but, um, he consented. I, I’m involved with his Property and Freedom Society and, and, and we had some Bitcoin donations years ago. He consented to me, uh, holding them. Let’s put it that way, . So number two, um, um, uh, I think at, at the PFS maybe 5, 6, 7 years ago, PFS means Property and Freedom Society in Turkey at this Hoppe group. Um, there was a guy named Roman Susi. I dunno if you know of him, I dunno if he’s disappeared or not.

(00:57:43):

He’s a Ukrainian now, but, uh, Roman was a big Bitcoin guy and Roman was there. Roman’s been there many times. He’s a former US military guy, but he’s become a libertarian. Anyway, Roman, uh, wanted to give a talk on Bitcoin. Now, I will say that Hans did, Hoppe did not want PFS to become a Bitcoin hotbed. Like he, he didn’t want it to become about that, which I totally appreciate, but so he allowed there to be, um, um, sort of an informal, uh, presentation about it. And a couple years later I actually gave a talk about Bitcoin and property, the kind of stuff we’re talking about today. So I actually gave a presentation there. So he is not hostile to it, it’s just he’s not, he doesn’t promote it and see it as the, as the world’s leading, uh, the salvation of the world.

(00:58:36):

But, but he, but he, but to his credit, he doesn’t argue against it. Now, uh, a better thing might be like, what about my friend Guido Hülsmann, who’s closer to my age? He’s younger, you know, he’s, he doesn’t have as many excuses, like, I don’t know, technology. Guido has always also been skeptical about Bitcoin, but he has never come out full-throated saying it’s impossible either. So I respect that restraint. Um, I do think that it’s a new phenomenon in society. It’s a new type of money if it, if it becomes money. And I think that, um, um, people that have the humility to, to say, well, maybe we have to pause here and see how we can integrate this understanding of this new phenomenon into economic theory. And of course, this is why I’m a, I’m a big, a big fan of Saifedean Ammous and who’s my good buddy? And, um, and actually, oh, so Hans Letz. Yeah, Saifedean Ammous spoke about Bitcoin also at, uh, PFS about two, about two years ago. So there’s been some stuff there now at Mises. I don’t know, I think they accept Bitcoin donations. Um, .

Logan Chipkin (00:59:43):

They

Stephan Kinsella (00:59:43):

Must, yeah. I don’t think they’re openly hostile to it, but they’re not like running to the ramparts to, to, to, to, to champion it. Sure. Not just yet.

Logan Chipkin (00:59:55):

Um, yeah, that’s very interesting. Now I saw Saifedean Ammous’s talk, I think it was at Hans’s event about time preference, which obviously Hoppe would, uh, appreciate. Uh, correct. Yeah. And I, I don’t know if a lot of people know this, so surely most people who are into Bitcoin probably have heard of Saifedean Ammous. I don’t know if a lot of people know. He’s very strongly influenced by Hans-Hermann Hoppe. In fact, the two of you, to be honest, Stephan, I think of as kind of the two Hoppean princes, if you like, you from the IP angle and him from the money angle.

Stephan Kinsella (01:00:24):

Mm-hmm.

Logan Chipkin (01:00:25):

Um, yeah, I don’t, I don’t know if, uh, other people have kind of made that connection. Uh, but anyway, uh, another question, uh, kind of related to the, the notion that Bitcoin could affect people’s political views. So even right now there are a lot of, not a lot, but there are a good amount of socialists who are actually into Bitcoin. Do you think that they would eventually face cognitive dissonance, or do you think even on a Bitcoin standard we’ll have socialists or people who admire central planning or that sort of thing?

Stephan Kinsella (01:00:56):

Uh, I was actually not aware of that. I, I was not aware of there are socialists who are into Bitcoin, but if they are, yeah, they either have to be soft socialists or they have to be dissidents, or they have to have cognitive dissonance in the sense of yeah, they’re, they’re gonna, they’re gonna face the choice at a certain point. Like if, if, because if Bitcoin actually works, then the only way to understand it is I think the Austrian, the Austrian and free market, um, way of viewing the role of money. Like, so money is a, is a sui generis or, or, or, or, or a naturally, uh, uh, unique type of good, which means that it is useful because it helps solve this problem I mentioned before, the barter problem and the calculation problem. But it’s not, it’s itself a type of wealth.

(01:01:44):

So it’s unlike other goods, because if you have other goods, consumer goods and capital goods, consumer goods are things we can consume directly for, for satisfaction. And capital goods are things we can use intermediately to produce them. Um, by and large, the nature of these goods is that the more you have, the wealthier you are, because if you have more food or more houses, or more cars or more fuel or more land, you know, or more tractors or capital goods, then you’re wealthier because you, you have more ability to command things in the world and to, to achieve your daily wants. So the nature of a good normally is that it’s a good, is a supply of a, of a, of a fungible or homogeneous commodity, which means that every unit is replaceable with the next, but the next one is worth more.

(01:02:38):

I mean, not worth more, but it’s, it’s worth something. So if you have like, you know, a hundred tons of fish, another ton of fish is worth, is valuable, it’s worth less than the last ton of fish ’cause of the marginal, um, view of, of utility. But it’s still worth more. So, so that’s the nature of goods is that the more you have, the better off you are until you have so much that it becomes a waste and then it becomes a bad, and it’s like pollution or, or trash or whatever. But money, unlike these things, once you have a fixed supply of money or a supply of money that works, adding another unit to the supply of money doesn’t, um, doesn’t add to the stock of wealth in society. So for example, if you double the number of cars or vacuum cleaners or washing machines or houses in the US tomorrow, you would increase the supply of wealth, be like some magical space alien made us wealthier.

(01:03:38):

But if you, if you doubled the, the amount of gold, if gold was money, you wouldn’t quite do that because we still wouldn’t be able to, you know, everyone has twice as much gold as they did the night before, but you still can’t buy another hamburger for a cheaper price because you have an increased wealth. So I, I, my personal view is that this, this, this economic distinction between, um, the sui generis nature of money, um, and wealth is important to keep in mind, which means that Bitcoin has the promise of being the perfect money because, you know, ultimately in a hundred years it won’t be inflated at all anymore. It’ll just be a fixed money supply. So we’ll have a continually decreasing, um, well, a continually increasing supply of the, the value of money will go up over every year. So we’ll be richer every year just by holding money. I think it will change human character, it will change, uh, human society, it will change everything. So this is why I’m a proponent, I’m just trying to be a realistic proponent.

Logan Chipkin (01:04:52):

Very well said. And I think that’s a great note to end on. Uh, so I just wanna say, uh, Stephan, thank you very much for joining, uh, Kent, thank you. Thanks to the audience for listening. Uh, hopefully you learned something about property rights, Austrian economics, things that, uh, I’m personally very passionate about. And join us next week, we’ll have Ashton from the Crypto Coin Show. So that’ll be a fun one. And with that, I hope everyone has a great Thursday, great Friday and a great rest of your weekend. Thanks everyone. Thanks Stephan. Thank you Stephan.

Stephan Kinsella (01:05:19):

Thank you.

Logan Chipkin (01:05:20):

Bye.