Kinsella on Liberty Podcast: Episode 484.
Praxeology, Property Rights & Bitcoin with Stephan Kinsella | Bitcoin Infinity Show #192. With Knut Svanholm. Recorded Jan. 20, 2026. My shownotes and transcript below.
Knut’s Shownotes:
Stephan Kinsella joins the Bitcoin Infinity Show to talk about why praxeology is the hardest science in economics, how Austrian theory explains Bitcoin’s unique monetary properties, and whether you can truly own a Bitcoin or merely act as if you do. The conversation covers the foundations of property rights and natural law, the subjective nature of fungibility, and what a hyperbitcoinized future might actually look like. Kinsella and Knut also explore why intellectual property restrictions threaten the very knowledge accumulation that makes humanity richer over time.
Segments:
- 00:00 Welcoming Stephan Kinsella
- 01:19 Bitcoin and Austrian Economics
- 05:51 The Importance of Praxeology
- 11:45 Understanding Human Action and Scarcity
- 20:50 Hoppe, Mises, Rand, Rothbard
- 27:29 Means and Ends
- 35:35 Natural Law and the Non-Aggression Principle
- 51:31 Crime and Punishment
- 59:44 The Bitcoin of It All
- 01:15:46 Bitcoin and the Austrian Perspective
- 01:21:39 Understanding Bitcoin’s Scarcity and Value
- 01:30:19 Bitcoin and Interest Rates
- 01:39:31 Visions of the Future
- 01:46:59 The Future of Bitcoin and Society
- 01:51:26 Hyperbitcoinization
- 01:58:11 Wrapping Up
Shownotes (Grok)
Here are the complete shownotes for the podcast episode, structured with topical headings exactly as they appear in the original shownotes you provided, plus the cleaned-up details from the transcript (speakers, key points, approximate timestamps, and a concise summary of each segment for clarity).
Kinsella on Liberty Podcast: Episode 484
Praxeology, Property Rights & Bitcoin with Stephan Kinsella | Bitcoin Infinity Show #192
With Knut Svanholm
Recorded: January 20, 2026
Shownotes
Stephan Kinsella joins Knut Svanholm on the Bitcoin Infinity Show to discuss why praxeology is the hardest and most rigorous science in economics, how Austrian theory illuminates Bitcoin’s unique monetary properties, and whether one can truly “own” a Bitcoin or merely act as if they do.
The conversation explores foundational property rights and natural law, the subjective nature of fungibility, visions of a hyperbitcoinized future, and why intellectual property restrictions hinder the knowledge accumulation that drives human prosperity.
Segments
00:00 Welcoming Stephan Kinsella
Knut introduces Stephan, mentions first seeing him on Robert Breedlove’s show discussing IP, shares his own journey into Misesian thought via Bitcoin, and notes writing a beginner’s book on praxeology to connect with Mises Institute people.
01:19 Bitcoin and Austrian Economics
Discussion of how most enter Austrian economics via libertarianism, but a subset discovers libertarianism/Austrianism through Bitcoin. Stephan shares his Swedish freedom-oriented background and how Bitcoin finally pushed him into deep Mises/Rothbard/Hoppe study. They critique why many Bitcoiners dismiss praxeology as “optional” and explore the corruption of economics into pseudoscience (positivism, econometrics) over the last 70 years, leading to widespread distrust.
05:51 The Importance of Praxeology
Stephan explains praxeology as the systematic study of the logic of human action in scarcity—essential because economics is unavoidable for understanding exchange and trade. He confesses early skepticism toward praxeology/epistemology as unnecessary jargon but later appreciated Mises’s need for precise terms (praxeology, catallactics). Critiques modern cranks who invent excessive terminology and praises Mises’s restraint.
11:45 Understanding Human Action and Scarcity
Core of praxeology: purposeful action in scarcity requires purpose + knowledge + scarce means under control. All economic categories (profit/loss, opportunity cost, success/failure) are logically implied in action. Austrian economics unpacks this rationally; modern economics errs by forcing empirical/positivist methods (hypothesize-test-falsify) onto human action, which is misguided. Knut shares his school experience: hard sciences were about understanding, social sciences about memorization and unexamined “why”—praxeology felt like the true hard science for social phenomena.
20:50 Hoppe, Mises, Rand, Rothbard
Hoppe’s major contribution: bolstering Mises against Randian/Objectivist criticism of Kantian influence. Explains Randian aversion to Kant (skeptical interpretations), Mises’s realist use of limited Kantian vocabulary (a priori categories), and how subjectivism in Austrian economics means value tied to purposeful action—not relativism. Hoppe shows praxeology bridges subjective experience and objective causal reality. Rothbard as Aristotelian/Thomist hybrid comfortable with Mises.
27:29 Means and Ends
Exploration of hybrid subjective-objective nature of means and ends (rain dance example: subjectively believed, objectively ineffective). Hoppe on no intrinsic characteristics of goods—value depends on actor’s valuation (links to Bitcoin fungibility debate: fungibility is subjective; nothing is perfectly fungible, but we treat units as homogeneous). Discussion of acting to shape future universes, competition, and skepticism of quantum multiverse ideas.
35:35 Natural Law and the Non-Aggression Principle
Foundations of natural law/NAP: emerge from social living, empathy, division of labor, but scarcity creates conflict potential. Possession = factual control; ownership/rights = normative support justifying force against violators. Law guides when force is justified to stop aggression. Core private law rules: self-ownership, homesteading, contract. Psychopaths treated as technical problems (like lions)—not reasoned with if unresponsive. Hoppe’s ATM robber anecdote illustrates occasional moral persuasion vs. force.
51:31 Crime and Punishment
Rothbard’s Ethics of Liberty: proportional punishment (up to double damage theoretically acceptable, but rarely applied). Stephan clarifies proportionality is required but not mechanical—subjective factors, doubt favors victim, juries/context needed. No formula fits every case; practical justice requires flexibility, burdens of proof, custom. Complexity of unseen harms (e.g., ongoing theft like taxes worse than one-time). Lysander Spooner highwayman analogy.
59:44 The Bitcoin of It All
Knut’s insight: Bitcoin scarcity via private key secret—control by keeping knowledge hidden, not true “ownership” of data (IP angle). One acts as if owning due to improbability of key compromise or protocol change. Stephan agrees: money only needs to be “good enough”; Bitcoin ~96% good money (better than gold/fiat flaws). Control via key better than physical possession—almost perfectly enforced “law.” Gun-to-head scenario: attacker can’t know total holdings.
1:15:46 Bitcoin and the Austrian Perspective
Bitcoin as abstract ledger entry valued subjectively. Network effects + first-mover advantage. Regression theorem not violated—initial use value collectible (pizza transaction). Human action behind nodes/miners—anti-lie machine making cheating costlier than following. Tendency toward one money due to barter problems; Bitcoin’s crypto advantages + longest chain/time make it dominant.
1:21:39 Understanding Bitcoin’s Scarcity and Value
Knut’s “oneshot principle”: absolute scarcity + decentralization was a discovery; replicating resistance to replication knowingly is pointless. Bitcoin = “chess” of money—network lock-in. Forks (Cash/SV) fail because changes (e.g., larger blocks) increase node costs → faster centralization. Plan B stock-to-flow model critiqued as subjective value makes predictions unreliable; Bitcoin price can rise indefinitely with productivity (“everything / 21M”).
1:30:19 Bitcoin and Interest Rates
Saifedean Ammous’s storage-cost theory: in gold standard, very low interest rates could make lending (even negative) preferable to holding due to storage costs. Stephan: plausible for gold (physical costs/risks), but Bitcoin holding cost near-zero → likely always positive interest. In Bitcoin world, artificial low rates vanish; natural rates possibly higher, lower time preference, less borrowing for consumption, more saving/investing.
1:39:31 Visions of the Future
Knut: scaling via fewer transactions (bundling, trust, lifetime subs), less consumerism, quality over quantity, less materialism. Expensive to be poor in fiat; Bitcoin incentivizes trust/family-like exchange. Lightning/sub-satoshis handle divisibility—no need for protocol decimal changes. Off-chain trust reduces on-chain load.
1:46:59 The Future of Bitcoin and Society
Post-plateau: diversification needed (can’t hold 100% money due to risk). Productivity gains (3–15%+ in freer Bitcoin economy) still incentivize hodling/saving. Ever-decreasing supply (losses, burning) + rising demand → perpetual upward pressure. Combined with AI/robotics → unimaginable abundance if survived.
1:51:26 Hyperbitcoinization
Gradual like English becoming Europe’s second language—younger generations adopt naturally. Cycles for decades, then up forever until fiat dies. Reduces war funding (fiat enables). Hope rational; logic-driven, not activism-dependent. White Pill parallel: authoritarianism collapses under own weight. Long-term optimism for human future.
1:58:11 Wrapping Up
Stephan promotes his IP work, libertarian book, upcoming Rothbard 100 essays (March 2 release), Universal Principles of Liberty project, Property and Freedom Society Bodrum meeting (September). Bitcoin conference mentions (BTC Prague, El Salvador, potential Helsinki BTC Hell). Mutual appreciation, plans to meet, end with thanks.
Let me know if you’d like any section expanded, condensed, or additional details (e.g., key quotes per segment).
Transcript (Youtube/Grok):
Part 1: Opening + Welcoming Stephan Kinsella (00:00) + Bitcoin and Austrian Economics (01:24)
Kinsella on Liberty Podcast: Episode 484
Praxeology, Property Rights & Bitcoin with Stephan Kinsella | Bitcoin Infinity Show #192
With Knut Svanholm. Recorded Jan. 20, 2026.
Welcoming Stephan Kinsella
00:00
Svanholm: Stefan, welcome to the Bitcoin Infinity Show. Nice to have you here.
Kinsella: Good to be here.
Svanholm: Yeah, fantastic to have you here. I’ve been wanting to talk to you for a long time. The first long-format video I saw with you, I think it was you on my friend Robert Breedlove’s show doing a couple of episodes on intellectual property and all of this.
I don’t know how much you know about me and my background, but I fell into the whole Misesian rabbit hole somewhat at the same time as I fell into the Bitcoin rabbit hole, and I’ve been delving deeper and deeper ever since. I even wrote a beginner’s book on praxeology.
Kinsella: I’ve seen that. Yeah, I was looking into that a few months ago.
Svanholm: Yeah. So one of my goals with this book was to get to know some Mises Institute people because I came to this completely from the Bitcoin angle.
But I’ve been devouring Mises and Rothbard and Hoppe in particular, but not limited to, and reading up on libertarian thought. I just love it. And I find it interesting that most people get interested in Austrian economics because they’re libertarians and people get into Bitcoin because they were libertarians and Austrians, but there’s a subset of people where it’s the other way around.
Bitcoin and Austrian Economics
01:24
Svanholm: They get interested in Bitcoin, then they get interested in economics and then they become libertarians and Austrians. I find that fascinating.
Kinsella: Yeah. For me it’s a bit of both. I grew up in Sweden so yeah and I was always freedom-oriented and had an intuition for how freedom is much more powerful than people think it is.
But I was unaware of the thought tradition and didn’t do the proper deep dive until basically Bitcoin and safe pushed me over the hump so to speak. Where would we start? I see a lot of Bitcoiners who are unaware of how real praxeology and Austrian theory are.
They think it’s optional or something you can have opinions about. I try to tell them to give me a good argument against first principles or one of the claims praxeology makes. I never get a good answer.
Why do you think so many people have such a hard time grasping how real this branch of science really is?
Kinsella: I think it’s because it’s been corrupted in the last 70 years or so. There was a corruption of philosophy—people say science proved with Darwin and relativity that we don’t know anything, then Kant says we can’t know anything real.
Your average person sees philosophy as incomprehensible and unscientific. So there was a retreat to the hard sciences, physics and chemistry, because of their successes. Economics was in the position of a soft science of human action, trying to understand implications of human action in the marketplace and society.
In the 50s, with Milton Friedman and positivism, it jumped onto the wave of pretending to be an empirical science. Now the profession is dominated by people doing calculus, math, equations, econometrics, regression—basically pseudoscience.
The average person is bewildered by that, just like they were by philosophy before, and they dismiss it because the experts and prominent economists are university professors or work for the government like the Fed. They claim to know what they’re doing, but the economy is always in shambles. People don’t trust it, just like skepticism grew after COVID.
Ready for Part 2 (The Importance of Praxeology + Understanding Human Action and Scarcity)? Just reply “next” or “continue”.
Explain praxeology’s core principles
Mises’ critique of positivism
Make paragraphs more fluid
next
Here is Part 2 of the re-formatted transcript (with paragraphs grouped logically, but limited to a maximum of 7 sentences per paragraph for better readability).
Part 2: The Importance of Praxeology (05:56) + Understanding Human Action and Scarcity (11:48)
The Importance of Praxeology
05:56
Kinsella: Economics is unavoidable. The typical person needs to have an understanding of a lot of things in their life. They need to understand facts. They need to understand basic laws of cause and effect—you know, gravity, the fact that if you eat poison it will kill you, things like that.
You know virtues like hard work leads to prosperity and laziness leads to the other things. Honesty is a virtue because it helps you as a society. You know common sense things like that and knowledge of math and language and reading and writing and grammar and history and the basic sciences is a useful thing, right?
Which is why the average educated person knows something about most of these things, and they know something about the market and transactions and finance. Okay. So that’s why there’s a need for economics as a way to understand the implications of that field of human life which is market transactions, exchange and trade—because it’s an important part of our lives.
So there’s a need to understand it both on a common sense level and on a more systematic level as a theorist. So that’s the need for economics and I think that’s the reason people need to understand praxeology.
Now, I will confess that when I was a young budding Austrian-interested person and libertarian, I was intrigued by all these concepts I read about like epistemology and praxeology and ontology. But they all seemed to me to be almost unnecessary made-up terms that are overcomplicating the issue that I didn’t see any use or any utility in.
But over time I started understanding why there’s a field of philosophy about knowledge called epistemology and why it’s not—and even ontology is like you—it seems like a very nuanced thing. Like we’re splitting hairs; it seems almost like armchair philosophy by grad students or something.
But ontology and metaphysics and ethics—these are all branches of philosophy that study different parts of reality. So ontology is the study of the basic types of things that exist and even this is important—I don’t think you need to know that on a day-to-day basis for the average person.
But epistemology, you need to know something about how we can know what’s good evidence, how we can know what’s true, how can we reason to things, how can we trust our senses, that kind of thing. And praxeology, I used to think, was a throwaway term, like you could just describe all of economics without it.
But I also think that people—especially amateur theorists and there’s a lot of them now because there’s people on Twitter with opinions that just are—they’re actually usually pseudonyms so they don’t even have a name—and they’re not educated and they just have these theories. And then there’s cranks, lots of cranks, and because of self-publishing anyone can write a book now.
So one thing I’ve settled on in my life is that if someone comes up with a new term, they coin a new term—it’s a red flag that they might be a crank. Now there’s exceptions like I would give Mises an exception because Mises coined—as far as I can recall—two terms. One is praxeology and the other is catallactics.
And that’s about all you can get away with if you’re a super genius like Mises. And you understand why he came up with those terms. Now there’s others like Eric Voegelin and even Hayek—they come up with all these needlessly complicated terms like taxis and cosmos and things like this which no one can remember or keep in.
So when you start coming up with your own vocabulary it’s a sign that you’re a crank. Now there are certain exceptions right like Wittgenstein or world-class geniuses like Kant or Mises—give them a break. But anyone who comes up with too many terms there might be a crank.
That all that said I’ve come to appreciate praxeology. In fact I have in my mind—I was really attracted to the my favorite aspect of Austrian economics personally was always the epistemology and the methodology. Like my favorite book by Mises is his last one called The Ultimate Foundation of Economic Science. It’s very short.
It’s sort of like the culmination of his life’s work on the understanding of what economics is, right? And it explains why the concept of praxeology is needed.
Understanding Human Action and Scarcity
11:48
Kinsella: So the word praxeology for the average person, they can roll their eyes and just think that someone’s talking gibberish. But really it’s just a word to describe one of these sciences, one of these systematic studies of a realm of phenomena in human life.
Just like biology is a field of systematic study of what biology covers and then physics and chemistry are these fields like mathematics is another field, history is another field. And praxeology studies the logic of human action, right? Which is just a formal way of saying when we try to understand market phenomena, human cooperation, human production, things like this, the creation of wealth, market transactions—we’re not looking at history, we’re not looking at data, we’re not looking at finance and entrepreneurship.
We’re looking at narrowly what are the implications of purposeful human action in a world of scarcity because that’s the world we all live in right. That’s the fundamental insight of economists and especially those like Mises and Hoppe is that we live in a world of scarcity.
So the central insight of praxeology is that it’s just simply to understand the nature of what it means to be a human and to act. Okay this is something any person can understand even if you just throw away the word praxeology. It’s the inquiry into the nature of what it means to act.
And what it means to act is to be purposive, to have a purpose, to have a goal in mind, to see the world around you, to understand that we live in the present. There was a recent past. There’s a future that’s coming. We all know this.
There’s a world of facts around us and a world of materials around us, other people, other resources. There’s things we know about the world, causal laws, laws of cause and effect, recipes that we know we can use to make things happen, how to make machines and how to catch a fish and how to cook.
We know all these things. And so we’re always faced with the choice what to do next. That’s what human action is. So we see what’s coming and we try to do something about it. We try to interfere with the world.
Interfering with the world means to act. It means to use your body which you can control and to use that body to manipulate other things in the world that you can also control that can have an effect on changing the outcome the course of history.
And those things are called scarce means of action. These are scarce resources. So the world is full of scarce resources which if you have knowledge you can employ to make things happen.
So the structure of human action which is what praxeology studies is simply that we are human actors that are imperfect. We live in a world of scarcity. We live in a world where the future’s always coming and we always have the necessity to make a decision about what to do next to increase our satisfaction in the world.
And we do that by using our knowledge to manipulate our bodies to employ scarce resources that we think—because of knowledge that we have about cause and effect—are causally efficacious at changing things. So you can see that the key elements of human action are two things—in addition to control and possession of your body, right? Which is what it means to be a human actor or a human being with a body, a corporeal body.
The two essential aspects of human action are you have a purpose in mind, but to achieve your purpose to act you have to have knowledge. You have to know something about the world. You can’t be a vegetable. You have to know what can achieve your ends, what ends are possible, what ends you want to achieve, what means can achieve those ends.
You have to have knowledge, technical knowledge and you have to have available means you can use to achieve your outcome. So it’s a combination of these two things knowledge and scarce resources that combine to result in action and then it’s either successful or it’s not successful, right?
Either you achieve what you wanted to achieve or you don’t or you might achieve it and then you’re dissatisfied but ahead of time you thought it would achieve what you wanted to achieve. So that’s called so all these basic categories of economics are implied in that basic common sense story: profit and loss, opportunity cost, means cost, success failure, happiness dissatisfaction—all these things are implied in what it means to act.
So it’s just the verbal and logical and reasonable unpacking of this that is what the core of economic analysis is and any intelligent human can understand that I believe. And then it’s the more sophisticated unpacking of that and development of that which is what Austrian economics is.
And then modern economics took kind of that basic framework and they started changing it to an empirical discipline where instead of having that rational understanding of how humans act, they started trying to do what physicists do. They say, “Let’s just hypothesize a law and then come up with an experiment to test it and see if it’s right or wrong.” That’s logical positivism.
And I think that that’s largely misguided and that’s anyway so that’s sort of how I view economics and its relationship to human action, human life and the other disciplines like philosophy, law, math, business, finance, etc.
Svanholm: Yeah. I mean if I look back on my school years, I remember like the harder the science, the more I liked the subject because I basically because it meant I just had to understand stuff and I didn’t have to do a lot of homework. It was all about understanding instead of memorizing.
And the softer the sciences and the more I got into the social sciences, it was more about remembering stuff, memorizing stuff and also about like things that you know if you have an inquisitive mind, you’re like in this wait but why mode all the time and they tell you why it’s important to vote, but they don’t really explain why and so on and so forth.
And once you stumble upon praxeology, you realize that there is a hard science for the social sciences. There is actually a way to do this—the methodology that works that is as robust as mathematics like it is to the subjective what mathematics is to the objective in a sense.
And that was a truly a light bulb moment for me because it sort of proved that what I’ve learned I had to unlearn everything because of the social sciences because I realized that it was true it was just opinion. And it was just tailored to suit the people who paid for the whole thing to have me brainwashed in a way. I mean, this takes a long time to get to that conclusion, but yeah.
Kinsella: Yeah. And what I’ve noticed is that a lot of very smart people or moderately smart people, they sense that there’s this chaos and confusion and this pointlessness to philosophy and all the official opinions they hear. So they just throw it all away and they retreat to what you did like they retreat to the sciences.
They say okay here’s what I know technology works and physics works but it leads to a sort of anti-intellectualism among some people. And it also leads to because they’re impatient they also don’t want to have no answers to the bigger questions that science just can’t answer like is there a god and free will and what’s the purpose of life and politics and you know the softer things.
So they try to reduce it like the economists do they try to reduce it to a scientific question you know but of course that can’t work. They always talk about the data and they just fail to understand that just even the very scientific method itself which is what people retreat to when they’re logical positivist or empiricist—that itself is not a testable scientific theory.
In other words assuming that the only meaningful scientific statements are those that are falsifiable and subject to experimentation—that assumption which underlies all of physics and the hard sciences—that assumption itself is sort of a pre-scientific assumption. It can never be proved or disproved.
So you can see how philosophy is at the base of science. It’s more fundamental than science. But people don’t have the time for that and they’ve thrown away philosophy. So they just ignore that problem and they move on.
Svanholm: I love that because that reminds me of a part of my favorite Austrian economics book which is Economic Science and the Austrian Method by Hans-Hermann Hoppe. Uh it’s so dense and so beautifully written and there’s a passage in that where he explains that like the empiricist’s claim is that we cannot know anything to 100% certainty.
We can only like get closer to the truth but never get to an absolute truth. But what the empiricist doesn’t realize is that that statement is in itself an absolutist statement. Correct? So it’s self-contradictory and that was just mind-blowing so Mises and Hoppe says that in that small pamphlet and Mises says that also in I think in Ultimate Foundation of Economic Science and probably elsewhere.
So yeah, they both saw the same thing.
Kinsella: Yeah. And uh Hoppe is just like sort of underlining how right Mises was and like how the action is the bridge between the subjective and the objective and all of these beautiful yeah.
Ready for Part 3 (Hoppe, Mises, Rand, Rothbard + Means and Ends)? Just reply “next” or “continue”.
Explain catallactics in detail
Explore Rothbard’s ethics
Make paragraphs more concise
next
Here is Part 3 of the re-formatted transcript (paragraphs grouped logically, max 7 sentences per paragraph).
Part 3: Hoppe, Mises, Rand, Rothbard (20:53) + Means and Ends (27:32)
Hoppe, Mises, Rand, Rothbard
20:53
Kinsella: Yeah, that I think that was one of Hoppe’s biggest contributions was to extend and bolster Mises because Mises has long been criticized by like the Objectivists and the Randians. The Randians had this understandable aversion to Kant. It’s understandable for two reasons.
Number one, Kant was a little bit murky of a writer and kind of inscrutable and there has been a whole Kant industry after him. You know there are so many interpretations of him but one of the interpretations is this sort of skeptical or relativist idea that we can’t know anything for sure because we don’t know the real world.
And if you take that interpretation, which people like Hoppe have argued is not really the only or the best interpretation of Kant, there’s a more realist interpretation of Kant which is compatible with the realist view of the world, which the Objectivists are in favor of.
But that was more of a continental or European interpretation of Kant. In the American side, there was a more skeptical interpretation of Kant. And I think if you take that interpretation of Kant, you can understand why the Randians rejected him.
But it has led them to have this knee-jerk hostility towards even the Kantian language. So Mises adopted just a very tiny part of Kant and that is his language and concepts and terminology the categories right like a priori and a posteriori synthetic and analytic knowledge.
Mises was ultimately a realist and by realist I mean Mises did not deny he did not employ Kant’s concepts like some American philosophers may have to say that we can’t know anything about the world. To the contrary Mises was just trying to find a useful vocabulary to describe human action right in praxeology.
So he’s talking about different types of knowledge, scientific knowledge, empirical knowledge and knowledge of more fundamental things like a priori concepts, things that you would basically contradict yourself if you deny. And ironically, Ayn Rand herself also believed in certain fundamental categories that are undeniably true.
She called them axioms—a little bit eccentrically called them axioms you know like the idea that there is existence that there’s consciousness the basic things that you can’t even deny without accepting them as true. Which is also a method Hoppe used in ethics in his argumentation ethics like to say that you can’t object to basically self ownership and private property rights because they’re presupposed by the normative presumptions of argumentation itself.
And then Mises of course used something similar with his a priori categories. And Rothbard of course which I’m sure you’ve read is an interesting hybrid example because he was influenced by Rand and he was a Thomist and an Aristotelian.
But he didn’t have this hangup with Mises using the Kantian concepts to describe economics and praxeology but he did sort of give a more he tried to show that they can be understood in the Aristotelian terminology or framework.
I do think that anyway what I was going to say was this criticism of Mises that he is contributing to relativism and Kantian skepticism because of his use of their terminology and also because of the Randians eccentric use of the word value and subjective.
They mean the word subjective to mean this Kantian idea according to them that we can’t know anything for sure that everything is just subjective to the person like the reality you’re seeing is not the real reality that kind of thing is subjective to you.
Now, Mises meant the concept of subjectivism to mean that value is an implication of teleology or human action. Like it just explains why you’re acting like you chose this means to achieve that end because that’s what you preferred. You valued it.
That is not subjective in the skeptical sense at all. It just it’s just a different use of the term. So the point is you have this uncomfortableness with Mises by some libertarians because of this his baggage with Kant.
But Hoppe in that pamphlet Economic Science and the Austrian Method he points out that look if you actually deeply understand the implications of Mises and praxeology he was showing that praxeology is the bridge as you were just alluding to I think is the bridge between your personal experience of the world which I mean Kant might call the noumenal world or phenomenal I always get them confused and the outside world like it’s because to achieve an end you have to employ a means that actually is causally efficacious.
Which is why I used that word earlier. A means has to be causally efficacious. In other words, it has to comply with the real world laws of cause and effect to achieve something.
This is why like a rain dance is not really hardly a real action. Like if you do a rain dance to make it rain, you’re not really using a means that is going to make it rain. So if you have well you think you are you’re just failing to reach your end because your means were insufficient.
Yeah. And economics I think a rigorous understanding of economics helps you understand what’s going on there. Like why is this guy now you might have a guy doing a rain dance in a movie. He’s an actor. He doesn’t believe it.
Or someone doing it for fun. But someone really who did that, you know, 300 years ago might have falsely believed that that was one way to make it rain. So that explains why he would do it.
It also explains why he would have a loss, right? Why his effort would go to waste because it wouldn’t achieve the outcome desired.
Means and Ends
27:32
Svanholm: Um I’m getting an image in my head here. I haven’t thought of it this way before, but could one say that the end is subjective because it’s in your head? The means is objective because it’s something in the real world, something physical.
And if the action is successful, then you reach your end. Meaning that you’ve successfully bridged the subjective and the objective. But only you only successfully bridged it if you didn’t do the rain dance, you did whatever geoengineering or something instead that actually led to it raining.
Kinsella: I mean uh so well let’s think about that. That’s interesting. I think that uh the means and the end both have a hybrid aspect. They both have an objective and a subjective component. And here’s why.
So let’s take the means um the rain dance for example. So it’s subjectively viewed as a means because you actually falsely believe that it will cause rain. Okay. So that’s a subjective aspect.
But the objective aspect is that it really won’t. Right? So there’s a combination aspect to the nature of that means right it’s regarded as a means because of the subjective perspective of the actor.
And by the way, Hoppe also has another related comment in I think it’s in A Theory of Socialism and Capitalism and also maybe repeated in The Economics and Ethics of Private Property uh he’s got a long passage where he talks about the character of goods is not intrinsic just like there’s no intrinsic value in things.
Which is another false belief of modern economics and of Marxism, too. By the way, this idea that the value of a product is an objective characteristic based upon the labor put into it, that kind of stuff. But the characteristic of a good as being a good, and this, by the way, relates to Bitcoin, which maybe we can get to.
Um, oh, and I wanted to say I have your pen. I have your Infinity over 21M. Yeah. Yeah. Have that pen and a t-shirt too.
Svanholm: I’m just wearing it for an interview, but I forgot. It’s just Yeah, I’ve got I’ve got that. Yeah. Yeah, I saw the t-shirt.
You didn’t buy my ones, though. You bought the the But I don’t believe in intellectual property just like you. So the problem is I started understand I was asking why did you use that? Um and you explained well it’s sort of a signaling method to tell the people that you know that you get it with Bitcoin but without telling the kidnappers to kidnap me.
But I think good opsec I don’t even want to wear that. I’m afraid to wear it even to be honest because I don’t want to be kidnapped. Um I don’t want people to think they should kidnap me. I don’t have any bitcoins. Uh I’m just the irritation.
But um Yeah. Go on. But I was going to say so Hoppe there’s another comment he makes in his second book um is that there’s no like it’s about public goods.
It’s like some people say there’s public goods and that’s why we need the state. He’s like well there’s no such thing as a public good just like there’s no such thing as a capital good in the sense of its intrinsic characteristic.
What a good is depends upon the way it’s valued by a given actor. Right? So it’s the way they’re valued. But by the same token, when you have something you’re aiming at in the future, um so we get back to this hybrid concept.
So when you act, you’re actually trying to I have a blog post on this where I characterize I envision people as little gods because every time you act, you’re trying to basically create you’re trying to change the future universe that would otherwise come.
So you’re trying to go from universe A to universe A prime or universe B. But of course that might be incompatible with what other people are doing which is why in competition only sometimes one person can win, right?
I mean this is all fascinating stuff.
Svanholm: It might be literally true if the multiverse theory in quantum mechanics is true and we actually create a new infinite amount and now you’re giving support to all the people that think that modern philosophy is relativistic. we can’t know anything.
Kinsella: Uh yeah, I’m necessarily I’m still doing it in one specific universe. Yeah, I’m a big skeptic of quantum theory and all that stuff. But uh even of relativity, special relativity, I personally I’m of the opinion that Peter Beckmann was right that the speed of light is not independent of the observer.
But um anyway, that’s a good subject for another pod at another time. But I think that the name of the book you’re looking for is The Economics and Ethics of Private Property I think. Yeah. EP. Yeah.
Uh so yeah uh I want to try to steer this conversation into a specific direction because there’s a thought behind the madness here. And uh yeah, so we’ve covered means and ends and property and subjective and objective.
Real quick, let me interrupt just a second and let me mention why I would mention something and then you can get back to this if you want to. The reason I mentioned Hoppe and his insight into the subjective analysis of what a good is is I think it plays a role in this fungibility debate with Bitcoin.
People say bitcoins aren’t fungible because they’re different. Um in a sense nothing in the world is fungible. You know even if you have gold every atom is unique.
It’s just that we subjectively decide to ignore those differences. And so the very concept of a good that is something that has a homogeneous supply uh presupposes that people that regard it as that subjectively ignore certain aspects of it and they treat other things.
So for their purposes gold is sufficiently homogeneous and fungible. So fungibility is a subjective phenomenon. So when people say Bitcoin is not fungible, well nothing is fungible.
I mean it’s only a question about it’s sort of like uh could Bitcoin be money? Anything can be money if people regard it as a homogeneous supply of divisible units and what they can be. Yeah. you.
So anyway, I love this. I love this because uh I this is one of the reasons I wanted to have you on because you can express this so clearly. And it’s totally in line with my thinking.
I have this in one of my books. I don’t remember which one, but like pointing out how fungibility is in the eye of the beholder and in the praxeology book as well. Of course, a homogeneity like well, who’s to say what constitutes a homo?
That’s why there’s apples and oranges on the cover here. Uh so the orange is in Bitcoin orange, but that’s the only they’re both fruits. I mean, they’re both Yeah. I mean, what’s the class or the category, right?
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Explain fungibility in Bitcoin
Argumentation ethics details
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Here is Part 4 of the re-formatted transcript (paragraphs grouped logically, max 7 sentences per paragraph).
Part 4: Natural Law and the Non-Aggression Principle (35:41)
Natural Law and the Non-Aggression Principle
35:41
Svanholm: Yeah. So, so um one of the latest interests of mine in praxeology is like the difference between law and ethics and natural law and how natural law is actually true and how that like the foundation of that why the non-aggression principle because I’ve seen people argue online that the non-aggression principle doesn’t work because there are psychopaths.
And I try to tell them that yeah, no, the non-aggression principle does work because there are psychopaths. Like if there’s a psychopath, the non-aggression principle can tell you what an appropriate response to the crime is and how much retaliation that is ethically tolerated and stuff.
But uh so what are the foundations of that? And how when you the Hoppe argumentation ethics we can go deeper into that too like um the layers below it uh what the argumentation ethics thing is the conclusion is sort of that you own your own body uh but you show that you do by controlling it.
So is control really ownership uh or is ownership something what’s the difference here ownership possession control what are the differences between the words yeah I think to make progress in these fields I found that um so the way I look at it on maybe a high level view is um there’s been progress in humanity over the centuries the millennium and it’s because there’s been a sort of social aspect to humans right we We’re social creatures.
That’s the way we developed. We evolved that way. Which means that there’s a certain natural dynamic. There’s a reason people live together.
Um number one, that’s how we procreate and we happen to live next to each other. But given that we do, um there are certain, you know, that’s how the species propagates. But um the way we developed, so we’ve there’s a logic to it.
There’s a reason, there’s a rational reason that people want to be with each other in trade, um, division of labor, all that kind of stuff. But there’s also just human empathy is part of our development.
So people naturally, so it’s natural that a species and each individual member of it um, has values like and they act. They value their own life. You have to have self-preservation as your core value.
But we’re not all completely sociopaths. We happen to value other people. We love other people. We want to be around other people. We value the species itself. We value our life and the human race’s life.
So we have these values that are all related. So you know, you don’t live only for your own life, but you value. So when someone else is, you want other people to do well, too.
You might not value them as highly as yourself, but you do value them to some degree, which is why I think there’s a possibility of society and why we’re not always fighting with each other.
And then you have the virtues arise like honesty, integrity, independence, um character becomes important and then law emerges. Now because we live in a world of scarcity, there’s always the possibility of conflict, right?
So the benefit of living with other people is you get to live with other people and also you get to trade and you can benefit from the division and the specialization of labor. But then you have the possibility of conflict that is a violent clash with someone over your bodies like rape or murder um or over your owned your resources that you use in the world.
So these resources that you need to employ like land and food and animals and tools things like that. So because of this possibility of violent conflict um and because people happen to have certain commonly shared values for the most part, there are the occasional sociopaths out there, but most people have a normal uh predisposition and they value each other and they would value peace and cooperation over violence because it’s less profitable and it’s less fun, right?
And so because of this over time in society uh laws emerge and rights emerge. Now when you have a deeper understanding of politics and law and the modern state and society and history and economics and all this stuff then you start to have more careful distinctions.
So the distinction that you need to draw is fundamentally between possession and ownership. Okay, those concepts, those words are very important. And when what were you saying earlier that some people say uh one of their objections to ethics and the non-aggression principle is that uh that we have psychopaths.
They say it simply doesn’t work. Yeah. That we need a state to control the criminals. And I point out that Yeah. But there and their mistake there is like as you say if the world it’s sort of like uh maybe Thomas Jefferson or one of the US founding fathers said if the world were angels we wouldn’t need government right and what they mean is that if people voluntarily if they just shunned all violent conflict and they respected each other’s rights then you wouldn’t have any violent conflict and you wouldn’t have any rights violations.
You wouldn’t even need law in order and the government or police or anything like that. Um but you do have that at least on occasion and that’s the purpose of having these laws and rules is because people that want to cooperate with each other which is the bulk of humanity.
Um even they don’t know what to do sometimes to avoid conflict unless they have a clear indication of who owns what. Which is why you have ownership rules which can tell you who owns what.
Now, these ownership rules are what we So, the mistake that people make when they say that they’re psychopaths and the rules don’t work for them is they’re conflating the normative realm with the factual realm.
The normative realm or the descriptive realm is a world of facts. It’s like what people do and that is analogous to the concept of possession. So when in economics it’s purely descriptive.
It’s about the descriptive world when we describe what people do and like I said earlier that story I gave earlier of praxeology is purely descriptive. It’s because it would apply even to Robinson Crusoe alone on an island.
Every minute of your life, every day, you have to face a choice of what to do. And to do that, you have a goal in mind and you employ certain means to achieve it.
That’s not an ethical thing at all. It had nothing to do with conflict or violence or right and wrong. It’s just what people do. So to employ a resource means to use it, to have the ability to use it, to grasp it, to grapple with it, to control it.
And that’s what possession means, right? So possession is just a factual thing. Now sometimes a person might wonder what should I do? What’s the right thing to do? What’s the right or the wrong thing to do?
And so then you have things like morals and ethics and philosophy and values and um and virtues study of the virtues. What’s the you know it’s best to be honest and to have thrift and to not be lazy.
Um and also the values of I value other people. I value other people’s well-being too. So I prefer cooperation over violence. All these things inform a normative system.
And a normative system is like um so you could have one type of normative system is your personal moral code. Like what should I do in this situation? Even if you’re alone on an island like should I be lazy or should I work hard, you know?
Um should I be honest with myself about what is going to happen if I don’t save up enough coconuts for the winter or whatever you know um or in society should I be honest or should I steal and cheat should I abide by these rules or not so there’s a set of norms in society some of them are minor like we call them manners like it’s impolite to do certain things but some of them go to a higher level and there’s such a level that breach of that moral rule uh it’s not just immoral, it’s not just bad manners, but it’s actually so extreme that people think that the use of force is justified in retaliation.
That’s what law is basically. So if I’m rude to my grandmother, people will disapprove of me and they might ostracize me, but that’s about it. But if I, you know, if I shoot my grandmother, now I’ve committed murder and that’s such a violation of her rights and that can be met with force.
Someone could use force to punish me or to stop me. Um, and that’s what law is. But anyway, the point is these are norms that guide conduct, but they guide the conduct of the people interested in their conduct being guided, right?
It’s basically a set of rules it’s not a recommendation for the criminal. It’s not telling the criminal how to live his life because that’s personal morals. The law is basically saying when are we as people that want to be moral or society in general, when are we justified in using force to sanction this activity, to punish this activity or to stop this activity?
And that’s what law does. Law tells us when we’re justified in using force to stop someone from doing something that we don’t like. So it what it tells us and from time immemorial the core of private law ever since the Roman days and even before Roman law, English law and even modern law um is that uh people have the right property right in their body and they have property rights in material resources that they need to use to survive in the world that were previously unowned.
So that’s why we have the rule of homesteading or original appropriation and then the second rule uh you can sell it by contract. So these three normative rules which are legal rules as well they mirror or emerge from the descriptive world right the descriptive world says you have a body you can control it there are resources that you need to employ their scarce means of action to get things done you can possess them right so possession control these are all descriptive things they’re not normative at all even the criminal and the psychopath has control of his body and needs to use resources.
All right. Um but then a set of normative rules overlay on top of that and reinforce it. So the way I look at rights is rights are normative support for possession.
So economics deals with this descriptive world and with possession and with the implications of human action. Ethics and law and norms deals with uh how we should and so the thing is that ethics and law are like a normative support on top of it.
Now what that means is that uh you know if I’m a criminal or a good guy I just need to control myself and things I can control to get things done to act right but if I’m actually a moral person and a good person I want to avoid conflict so I want to respect people’s rights.
So if there’s a legal system that’s established a normative system it can tell me what to do to avoid conflict. It can also tell me what I’m justified in doing to stop someone who doesn’t care about that.
So that’s why it’s irrelevant that um you might have a criminal or a sociopath who doesn’t care about rights because they’re going to be dealt with as Hoppe says as a technical problem because they’re not amenable to reason.
Now, okay, on occasion you might have a robber or a bad guy and you could persuade them not to not like don’t kill the baby. Come on, guy. Don’t kill the baby.
And he might listen to you. He might not. Hoppe tells this funny story about a friend he had who uh I think it was a true story.
Um and he to show that uh democracy is horrible because every democratic government is terrible because as Hayek said you know the bad rise to the top democracies are horrible. Whereas like in a monarchy on occasion you might have a good monarch. You might have a stupid one but you might have a good one on occasion.
And just like you might have a private criminal like and the story he told was his friend was like at an ATM like at night in Germany or somewhere 2 in the morning and some guy robbed him. He just took some money out of the ATM and some guy robbed him and he handed the $500 or euros over to the guy and he says, “Man, I was going to use that to go buy a couple of beers and to get my cab ride home.”
So the robber gave him like $50 back because he felt bad for him. Sounds like a government program. Well, but the government would never if the government takes your money in taxes and you say that, well, I don’t have enough money to take my vacation. The government just says tough luck. Too bad.
At least on occasion, you might have a nice robber. The point is sometimes you can persuade a robber or a bad guy with the force of moral persuasion not to do something. But if you can’t, then you have to resort to force.
You have to treat him as what we call a technical obstacle. Now, man of the world has to deal with many challenges, right? There’s scarcity, lack of abundance, there’s poverty, there’s pestilence, there’s hurricanes, there’s tigers, there’s lions, and we don’t regard a lion as an evil thing.
It’s just a fact of the world. And you have to take precaution uh and treat the lion as a technical problem. How do you protect yourself from the possibility of lions attacking you? There’s ways you can do that.
And we have to regard criminals as the same way. It’s just that the bulk of humans are moral and they only want to do what they’re justified in doing.
So when there’s another man and they know they need to treat him as a means of action, right, which Kant talks about as being an immoral thing, treating someone as a means, sometimes you need to. And the question is when are you justified in doing that?
And the non-aggression principle basically says you’re justified in treating someone else as a means. That is doing something they don’t want you to do when they’re doing something to you that you don’t want them to do to you.
In other words, when they’re initiating force, when they’re committing aggression, they’re using your body or your resources that you legitimately acquired by homesteading or by contract without your permission. Then they breached the peace and they’ve basically entered the world.
Uh they’ve admitted by their conduct that they don’t respect your rights. They don’t believe in law. So they really have no complaint anymore if you use a similar type of force against them to stop them.
That’s why in the mind of the person wanting to be moral, he regards his use of force against that person as just. And that’s why there’s law. That’s why law emerges and why it has a certain characteristic.
That’s why law across all societies has certain things in common. It always protects self ownership. It always protects the right to acquire an unowned resource.
And it protects the right to acquire or sell that resource by contract. That’s the core elements of private law. And it has to be.
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Explain Hoppe’s argumentation ethics
Rothbard’s ethics of liberty
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Here is Part 5 of the re-formatted transcript (paragraphs grouped logically, max 7 sentences per paragraph).
Part 5: Crime and Punishment (51:31) + Sponsor Break
Crime and Punishment
51:31
Svanholm: Yeah. Uh absolutely. Um uh there’s uh this reminds me of um my favorite Rothbard book, the um Ethics of Liberty, where he basically explains why two eyes for one eye is okay, but not more than that.
Like uh you’re allowed to cause as much harm back and double if you want to because that’s what the criminal deserves. uh or the largest punishment that the criminal can deserve. Uh but anything above that is uh then you’re a criminal yourself and anything below that is of course okay.
You may choose to forgive and there’s a great power in forgiveness sometimes. So usually the punishment wouldn’t be two eyes for one eye but something milder and uh yeah it’s that book is very eye opening too I think. Um I yeah I totally agree.
Um in my book uh chapter five I have my own unpacking of punishment theory and rights theory and this kind of stuff. And um now I think Rothbard’s way of putting it is more of a shorthand. I think it’s way too I don’t think that there’s any mathematical formula.
You can’t say it’s just double the punishment is acceptable because there’s a subjective aspect to all this and that’s not what he says though to defend Rothbard there. He says that uh that that would theoretically not be criminal even though he points out that that would never like be a real scenario. Correct.
But and I’m Yeah, he got that from Walter Block as well. I’m just saying that um I think that that’s a useful way to understand the fact that the way that we justify rights is because what we’re saying is our institutional or personal use of force against someone who doesn’t want you to.
Look, the criminal doesn’t want you to use force against him. So, he’s not consenting to it. He’s objecting. But the reason why it’s okay to override his desires is because he is doing something similar to you.
But what that means is that there’s a limit to how much of a similar thing he’s doing to you and there’s a limit to how much you can do in response. So I think what Rothbard’s getting at that’s the reason why there’s a proportionality requirement. There always was.
And that is implied in the eye for an eye idea or in the two eyes for an eye idea. Um it’s not that it’s a mechanical formula. It’s more that that gets at the heart of um the reason why there’s a limit.
Now in reality because values are subjective and because um there’s a difficulty in administering any system of justice there are certain practical aspects to it which I believe and I talk about in that chapter 5 um lead to certain things that the law has settled on like things like burdens of proof and standards of proof.
So for example, I think that what you do is you always have a rule that says in a case of doubt, we favor the victim of aggression. So if you say, well, this guy uh did this to me, what exactly would be a proportional punishment?
In some cases, it’s not always clear, right? Like let’s say I have one arm. I’m a one-armed guy and some guy chops off my right arm. So now I have no arms.
I mean is it the same punishment to chop off his arm because he still has one arm left. I mean things like this are like you can see why you can’t have a formula. But the point is you would so you have to give the maximum flexibility to the victim to choose what he wants to do within a reasonable range of procedures as overseen perhaps by a judge or by a jury who looks at it and says yeah using our judgment I think that’s the best you can do and then let’s move on.
Um, so that’s how any legal system has to work. And that frustrates some libertarians who fed up with the way the positive law and the legal system has dealt with things. They just want to throw it away and have like a Rothbard sit down and write a book and give you the answer to everything.
And it frustrates them if you say, “Well, we don’t really know. You have to just let a jury hear it and make a decision.” They want to have a solid answer, but you can’t always have an answer to things because the answer depends because life is complex and you can never predict um all the factors that would be relevant to a given dispute.
Um and that’s why you have to have a trial and a jury and people that can take evidence and ask questions of witnesses and take into account custom and context and history and the way things are done.
Svanholm: No. Well, and crime and law in general are especially complex because you cannot see what didn’t happen like if I steal from you, I might stop you from doing something else that may or may not lead to a third thing and so on and so forth.
It goes into why taxes are so criminal in themselves because if I steal from you every month then uh I probably cause a lot more harm than if I steal a lot once like uh this is super complex but yeah.
Kinsella: yeah by the way I think Lysander Spooner has a comment about that where he compares the highwayman to the government because the highwayman doesn’t rob you and then keep following you around for life and then reminding you about what a good thing he did for you all the time.
Like the government always hounds you, they tax you, they never let you go, and they always keep acting like they’re the good guy helping you out.
Sponsor Break
~58:00
Svanholm: Welcome to Knut’s super awesome Bitcoin school. Should you use fiat money? Of course not. It’s fake. It’s counterfeited by the state and you should buy Bitcoin instead.
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So go to the bitcoinadvisor.com and use code infinity for a discount. So to recap, get rid of the fiat and remember bullbitcoin.com, bitvault.sv, bitbox.swiss, and the bitcoinadvisor.com.
Use code infinity everywhere and don’t forget to brush your teeth. Over and out.
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Summarize Rothbard’s punishment theory
Lysander Spooner’s No Treason
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Here is Part 6 of the re-formatted transcript (paragraphs grouped logically, max 7 sentences per paragraph).
Part 6: The Bitcoin of It All (59:44)
The Bitcoin of It All
59:44
Svanholm: Uh so let’s uh let’s try to get into the Bitcoin side of things. So, uh, TL;DR on my, uh, like after 10 years in this and my deepest insight like the thing that intrigued me from the very get-go with Bitcoin was that here was this promise of a number that couldn’t be copied or something on computers that couldn’t be copied, which like blew my mind like that this must be because every that’s the nature of information, right?
Information can be copied. uh or data can be copied. Information is sort of data interpreted by human beings I guess but data all data can be copied.
So, that’s what sent me down the rabbit hole and I quite soon uh understood why that would make perfect money or damn near perfect money and why there could only be one because any copy of it would like uh the it’s pointless at best to make a copy of uh resistance to copyability.
Like it’s obviously counterproductive to try to copy that property. Uh so I got into all that but like uh it took me a long time to really put words on why uh why the Satoshi is sacred compared to all other data and why only that can be scarce.
And the conclusion I came to is that the reason you cannot copy them is because they’re not really on the internet. they’re in people’s heads or the ability to move them is in their heads like uh the private key either the literal private key the 12 magic words or the location of a hardware wallet or the it’s all about keeping a secret from everyone else.
Uh so owning a bitcoin is or possessing a bitcoin if you want or controlling it is something you do by keeping a secret from someone else and you cannot really say that you own it because here we go into intellectual property your favorite subject and uh you cannot own uh data.
It’s impossible to own data and it’s impossible to prove that even if you have control over your own private key, you do not know if other people also know that same information, if they also have the private key or have access to it.
Meaning that um the reason you can act as if you own the Bitcoin is because you understand how improbable it is that someone else has access to the same key as you and you also understand how improbable it is that the system itself will change to such an extent that it will render your bitcoins worthless.
But I’ve come to the conclusion that you cannot own them. What you can do is act as if you did. Does that make sense to you?
Kinsella: 100%. Um and you have to remember money is a practical thing, right? Um so it just has to be good. Has to be good enough.
I mean, yeah. And by the way, Bitcoin doesn’t have to be around forever. Bitcoin might work for 50 years or 100 years and then maybe something else would come around, but and that’s okay because money is not wealth.
It’s fine for money to transmute. The way I look at it is Bitcoin uh gold is say uh gold is let’s say 90% good as money in the old days right uh it had some drawbacks but it was better than barter so that’s why it worked but the problem with gold was it could be commandeered by because it needs to be stored it could be commandeered by the government eventually so it failed and the problem with fiat of course is it could be inflated and if it can be inflated it will be Yes.
Um, and to me, Bitcoin is like 96% like good money. Um, yeah. And if you have if it becomes the world dominant currency, um it could be that Bitcoin 2 would be slightly better, but it’s just not worth the cost to switch to it.
But eventually it could be, you know, maybe that maybe the block size is too small. Maybe in 50 years we will see. I don’t know. We don’t know.
The point is money is not wealth and so it’s fine if you transition from one money I think it’s going to be really hard but you could see that happening in the future.
Svanholm: Well, I see slightly differently. Here’s why I disagree. I don’t think there’s a Bitcoin 2.0, but I can see a future where Bitcoin adapts and becomes Bitcoin 2.0 itself.
But it wouldn’t like reset the whole thing and forcing people to buy new stuff is not like that it has to have the property that if you do nothing you will still have them.
Kinsella: I agree. I’m just saying you could imagine number like let’s suppose the Bitcoin network somehow there’s a flaw no one’s found it breaks down or or let’s imagine and we colonize another planet and someone there starts out with their own currency because they would have to because the hash horizon yeah the time delay is too great so they have their own currency so let’s suppose it’s Mars and there there’s Bitcoin 2 there and let’s suppose eventually their society becomes to be the dominant one Maybe then they would absorb the Earth.
I don’t you never know what the future’s going to be.
Svanholm: Well, the argument against Marscoin is that anyone bootstrapping that on Mars would have insider information about how insanely valuable it can get and therefore it wouldn’t have the same uh like Bitcoin is totally dependent on how these things played out and Satoshi disappearing and Mt. Gox and all of the events that happened uh led up to this point.
I mean, we know that we live in a timeline where Bitcoin works. We don’t know if it would have worked had the parameters been any different. It’s sort of like the constants of the universe.
We cannot know because we don’t exist in that. We know it works here because we do exist. Yeah. The anthropic idea.
I mean, one of my this is slightly tangential, but like my friend Jeff Tucker used to be a Bitcoin guy, but now he’s joined with the Roger Ver types and all this and he Yeah. He’s always uh he’s saying that oh it’s it was going to be a payment mechanism but because the big blockers I mean the small blockers refused to adapt then that let that allowed uh Venmo and Zelle and PayPal to rise to the fore and I’m like so you think that there was only like a three-year period where Bitcoin could have worked it could have become the payment system that Venmo and Zelle and PayPal would have been but because we delayed that gave PayPal the chance to become dominant and now it’s too late for Bitcoin to ever work.
I mean, its promise never was that it was just a little payment system reducing the friction of payments a little bit. But but so let’s go back to your point though about um acting as if you own it to me.
So uh the more I thought about this and it goes back to number one the point I made earlier that Hoppe’s view about the character of a good being subjective and how that relates to the concept of fungibility that also relates to the suitability of something that is a commodity that is a divisible supply of something and by the way it doesn’t have to be a physical thing which some of the earlier Austrians had this regression theorem criticism of Bitcoin which I think is completely wrong.
Number one, I don’t think the regression theorem is what they think it is. It’s not a proof that money has to arise the way Mises thought it would and it’s not a proof that it has to you know and anyway
Svanholm: oh can I interrupt and just comment that because I think Bitcoin proves the regression theorem because we actually have the first transaction before that it’s a curiosity and a collectible and then Laszlo buys two pizzas for 10,000 bitcoins that is the moment where Bitcoin becomes a medium of exchange.
Kinsella: Perhaps perhaps but the point is the Austrians of 2011 or whatever who were saying, “Oh, Bitcoin’s impossible because it violates regression theorem.” I think they’re just wrong because they were assuming that it has to be a physical commodity and it doesn’t have to be physical. My point is it doesn’t have to be.
Well, Mises said it had to have had some use value, right, to the uh but use value can be I mean a baseball card that’s such an objective thing. So, it doesn’t have to be a physical thing. Exactly.
Basically, Bitcoin is um so what are bitcoins? Number one. Um when you said you act as if you own a Bitcoin, you’re right that you have because of the password, you have the ability to control it.
um who you can transfer it but you can when you say transfer it what is it it’s basically one of the many units on the blockchain on the spreadsheet maintained and distributed computers around the world it’s just an abstract entry in a data system which we regard subjectively as something that’s interesting like if Satoshi had not a little bit dishonestly named it Bitcoin put the word coin in there in an attempt to bootstrap it.
If he had called it distributed spreadsheet, it would be the same thing, but people wouldn’t think of it as money. They would just think of it as a useful, if very inefficient, distributed spreadsheet or ledger system, right?
Svanholm: Yes. And I wonder what would have happened then if it would have worked even better. That’s why I think it’s a little bit dishonest to call it Bitcoin.
Uh, it’s also a little bit dishonest, I think, when people, well, the big blockers are dishonest when they keep going back to the title of the paper saying, “Oh, it says a peer-to-peer electronic cash system. That’s why we need it to be cash.” And all this kind of stuff.
Um, but back to this other point. Um, if you go back to what I said earlier that property rights are normative and they’re the normative support for possession, then you can see that the reason you need normative support for possession is that people have free will and they can choose to violate rights.
They can choose to use your resource without your permission. If I lived in a very peaceful community where no one ever committed robbery, I wouldn’t pay money to put a lock on my front door of my home.
But I do that because it might happen on occasion and I can afford to put the lock on there even though it makes the house less convenient to use and it adds cost, right? Um, likewise, if people never violated rights or if it was impossible to violate rights, like if God was up there zapping people that tried to steal from you, then you wouldn’t need a lock on your door.
You wouldn’t need to defend yourself from people, right? But because that’s not the case, we need laws which provide a disincentive for people to violate your rights.
So, the purpose of law is to provide normative support for property rights or for possession. But that’s because it’s possible to violate those property. It’s possible for there to be violent conflict.
But Bitcoin designed a system where you have possession of the Bitcoin. You have the ability to control it. And because of its design, it’s almost impossible for someone to violate it.
Svanholm: Semantics, please. You don’t actually have possession of it. You have control over the private key, which means you know a secret.
like because possession implies that nobody else has possession over it and you don’t so control is I would say control rather than possession maybe that’s fine you have the ability to but you have the whatever this vicinality is you have the ability to transfer it to someone else and no one else can do that unless they know your key correct exactly yeah you and you believe that no one does like that’s important because otherwise you wouldn’t believe it was valuable but it’s good it’s your belief is that it’s good enough, the likelihood is low enough so that it can this can serve as potentially as a medium of exchange.
Okay. Um but the point is that um your ability to control and to transfer is analogous to possession in the world which could in possession of a physical thing someone could violate that. So you have to have rights and laws and ownership as a normative support layer on top of that to try to reduce the likelihood someone will do that.
But with Bitcoin, it’s almost like there was a law that gave you ownership, but it’s perfectly enforced because no one can violate it. So it’s even better than a law that prohibits murder or rape.
So you can just act as if you own it and you don’t need ownership because your ability to control it is even better than ownership would be. So that’s why it’s it looks like ownership, but it’s not.
And that’s why people use the term I own my bitcoins because what they mean is they have control over it.
Svanholm: Yeah. And uh I talk about this all the time like you say, you cannot take it. The scenario there is I can point a gun at your head and say, Stefan, give me all your Bitcoin and you can give me a fraction of what you have and I have no way as the attacker of knowing how much you actually had.
And that’s already true for every single person on earth. I cannot there is no way that I can know how many bitcoins they control because it’s a secret in their heads.
So uh someone’s grandma can have the private key to every bitcoin. You don’t simply cannot know that. You can make an educated guess of course and people do and they kidnap big uh crypto exchange holders and stuff but still there’s a fundamental shift here in uh and to me that the what the thing did was um yeah I’ll need to make uh to paint this as a scenario in a way.
So, when you ask what is a Bitcoin? Yeah, you asked that hypothetical question before like uh when I get the question what is Bitcoin? My short answer is it’s an agreement on a fixed set of rules.
And the slightly longer answer is the reason we agree on this specific set of rules is that it’s thus far the only rules known to man that are uh provably more expensive to try to cheat than to just follow. Uh you follow me here.
Kinsella: So I follow you. I don’t disagree. I just I’m a little uncomfortable with the terminology of agreement because agreement is a legal but I know what you’re getting at. Yeah.
So it’s a physical or uh a means of communication in that sense. And the wonderful thing it did to me is like point out that physical possessions are actually less ownable in this sense than this ability to interact with people and just acting as if you know a number as if you own a number.
Uh it so it’s it unlocked something that was true always which is communication and uh free trade is better than violence there than aggression. that it’s a literal uh you somehow Satoshi managed to boil that down into a beautiful equation and it’s so powerful like uh it’s just pointing out that all of these Austrian theories were right.
We’re all better off if we do this this way. If no one can counterfeit, if we can’t take uh what it leads to is more responsibility and you know, number go up technology which is really just uh putting on a lens that allows you to see the true deflationary nature of the free market.
You can actually if you measure in Bitcoin, you can see how prices are falling forever because people get better at doing stuff like uh would you agree to that or is that too much hopium?
Kinsella: No, I agree with all that and I but I think it’s so interesting. Well, I don’t but I don’t agree that that’s a good definition. It’s more metaphorical. It sounds more like Michael Saylor talk which is driving me.
Yeah. Although I’m with you on the inspiring. I just don’t think it’s a good definition of what if someone asks what a Bitcoin is and we should really say what’s a what is what is a Satoshi? I don’t think you’re okay.
This is this is the definition. If someone asks what is Bitcoin like if what is a Bitcoin? Yeah, what’s a bitcoin? Yeah, it’s not in Yeah, the bitcoin is an entry on a spreadsheet on a ledger.
Okay. That’s stored distributed ledger. And that ledger of course is bolstered by this agreement that you’re talking about things like that. But I just think it’s an entry.
It’s an abstract entry on an abstract spreadsheet that people regard as an abstract thing called a Bitcoin ledger. I mean, that’s what it is. It’s one of the units on there and it has such a nature that it can be transferred by someone to another person if they have the you know the key.
I mean that’s the way that’s what it is right.
Svanholm: Well I love this because there is so much philosophy in this uh type of discussion because all the important aspects of it uh are not the ones and zeros. all the important aspects of what because it’s money and not just you know a database for something else for ordering stuff uh then the that means that the all the important uh aspects of bitcoin are what human beings are the human beings behind it.
So the important part of a node is the person choosing what software to run buying the hardware installing the software and running it. It’s not the software that it’s the the that’s the interesting part.
The interesting part is getting someone to run it. And the same with a miner like if I have a hangar full of ASICs, the hardware itself is just the uh uh I call it a fancy abacus, right?
It’s just helping the miner, the real miner, which is the guy who bought the stuff to do calculation really fast. But at the end of the day, it’s like a person deciding by his own volition like purposeful action, purposeful behavior, human action uh is behind all of it.
Uh it’s just that we found a way or Satoshi found a way for us to do this that makes it more expensive to cheat than to follow. So it’s an anti-lie machine in a way.
Kinsella: Yeah, I agree with all that. Um I don’t mind the metaphorical talk like um Saylor drives me nuts with his energy stuff.
I think he’s just wrong. He’s too scientistic about it. And um and the one question he never answers, okay, which I think people I think there’s an answer to it. And I’m curious what yours is.
Um the question is, so when people say, “Oh, it’s just information. It could be copied.” And there it is true that there are many bitcoins. There’s Bitcoin Cash, there’s Bitcoin, you know, the Bitcoin God, there’s many cryptocurrencies.
There’s nothing stopping someone from duplicating Bitcoin itself. You could have an identical Bitcoin blockchain tomorrow if you wanted to. Um my way of thinking of it is that um that’s all true but if you understand Austrian economics and the purpose and nature of money and why it emerges it emerges as a response to the two problems of barter which is the double coincidence of wants problem and also the inability to calculate in um uh among heterogeneous goods which are not commensurate in value.
So barter solves these two problem. I mean money solves these two problems but that means that there you can expect there to be a tendency towards one money and you and also if you understand that money is not wealth that um uh money is just a special sui generis good that trades between things of value right so that’s what money is and why you can expect there to be one money but it’s not wealth and so you only need so when people like my friend Tucker tells me oh uh this Hayekian idea of many types of money.
Maybe you have one money among the merchants and one money for art and one money for uh for secure transactions and for anonymity and one like no no you’re going to have a tendency towards one money. And now my view is that there’s nothing special about Bitcoin itself as a blockchain except that a crypto money has advantages over gold.
Okay. Or commodity money. And Bitcoin is the first and therefore had the longest network. It has the longest blockchain in terms of time and the biggest network effect.
And so it’s the one that’s likely to emerge as the one that will tend to dominate in the future. It’s not guaranteed that it had to be Bitcoin. It could have been Bitcoin Cash or something, but I mean, would you agree? Is there anything special about Bitcoin compared to say Bitcoin SV or Bitcoin Cash?
Svanholm: Yes. Yes, I love this question and I think I have an answer to it. Like, okay, the uh I tried to put words on this in my second book and I called it the oneshot principle and it’s that absolute mathematical scarcity in a sufficiently decentralized distributed network was a discovery rather than an invention.
It cannot be achieved again by people aware of this discovery since the very thing discovered was resistance to replicability itself. alluding to that. The very point is that since it’s just numbers and since it’s just a number, uh trying to replicate the resistance to replicability in this specific number 21 million is pointless at best.
and most of the if not all of the other uh cryptocurrencies or shitcoins are there to enrich their founders and bitcoin had a founder that disappeared and then it got distributed in a very specific way. So the best analogy I know for this and why like Bitcoin Cash we can do the Bitcoin Cash example first because it’s super easy why Bitcoin Cash could never be it and that is because they wanted to increase the block size.
Now what does that imply? It implies that uh blocks uh are costlier to download. So uh in the long run running a node will be more costly on the Bitcoin Cash network than the Bitcoin network if the blocks are full.
That is meaning that it’s uh it centralizes over time faster than Bitcoin centralizes over time. You could claim that Bitcoin will also centralize over time because if you extrapolate into infinity then the cost of running a node will be infinitely high.
But at least Bitcoin was resilient to that and understood that the blocks needed to be smaller in order for people the common man to run a node. Otherwise, miners are in charge of the network and then it’s not the same thing anymore. Then it’s not resilient to change.
But the analogy I want to make is the game of chess. So let’s say Bitcoin is the game of money, chess is the game of chess. uh the latest chess rule the latest time uh the rules for chess were changed were like 1100 years ago when there’s a move called en passant when you can take it you know you know about the move like the pawn moves two steps and you can take it on the square so uh and the reason that chess doesn’t change is because of this wonderful network effect and it’s the same in Bitcoin it’s so big that everyone plays this game.
And there are endless infinite variations of chess and you can learn to play chess cash or chess gold or chess ethereum or chess whatever uh like it was another cryptocurrency like chess ethereum for instance the rules would change with every move. chess cash would have a 64 * 64 squared board and no pieces on it.
And like these are all there’s nothing stopping anyone from using Bitcoin Cash if they want to. It’s just that you cannot play the best game of them all if you do because this is the game uh that allows you to play with the most number of players.
So, it’s almost like if you change it, you’re setting the precedent that it can be changed and then it’s not.
Kinsella: Um, exactly. Yeah. But so your argument is what I said. It’s the one that’s going to be the because it was the first in a sense.
Svanholm: No, I’d say because it was the last uh because there were precursors to this and predecessors to Bitcoin, right? But they all died. So this one is the only one that actually worked after 17 years.
It’s quite kind of amazing. It’s the first one that solved the problems that the previous ones had. I mean so basically your view is it’s the first one and it was good enough because
Kinsella: Yeah. And it only ever needed to be good enough. It never needed to be perfect just good enough to last forever.
And the idea of a perfect money is nonsense. It’s impossible to have a perfect money. Yeah. Of course. But it can change, but it’s hard enough to change it for it to only change for the better.
Yeah. It’s good enough. I mean, I’m curious what you think about uh I think uh who’s the guy that has the uh um I have his uh the guy the that had the formula for predicting um is uh the scarcity of Bitcoin. Um Yeah. Plan B. Yeah. Plan B, right? And he lo Yeah. What do you think?
Kinsella: I think it’s because value is subjective and you can’t like market predictions are all like that. It’s a good guess, I guess, but it wasn’t a good guess since it didn’t play out that way. So like no and you cannot know uh I mean who’s to say that this uh like technologies follow this s-curve adoption thing and if that is true for bitcoin uh that that’s true for the adoption of bitcoin but it’s not true for price because price goes absolutely bonkers if that happens because people have more money like there’s not like you uh people can produce more goods and services during a lifetime.
So that means number can go infinitely high. That’s the everything divided by 21 million theory that alluding to that this can go on forever and it doesn’t have to end. It can just go up forever.
Well, by the way, your comment earlier about um in Bitcoin world prices are always falling that kind of thing. Um and I think so that dovetails with my understanding of intellectual property and praxeology because if you understand human action as based on two key ingredients, one is the availability of scarce resources in the world and the other is knowledge.
Okay. So the reason that we’re richer today than the Romans um is because not because we’re smarter than the Romans. were probably stupider than the Romans, right? It’s because we have more knowledge at our disposal.
So every generation we keep getting more and the world is not doesn’t have more resources than it used to have. We might could get to more of it, but basically we’re actually using up resources, right? So the world is like a finite ball of resources and but we keep what keeps changing every year and every generation is we learn more and more ways to do things more efficiently.
our knowledge increases which is why I’m so against intellectual property because it restricts the one thing we have that makes us richer right is we keep improving our knowledge and to impede or restrict the ability to develop that knowledge is suicidal. But that goes along with the reason why in a world of scarcity and in a world of a fixed money supply money like Bitcoin, that’s why prices keep going down.
They keep going down because the human race keeps growing. I don’t know if they grow in numbers, but if they grow in numbers, the GDP goes up, but also we increase in productivity because we keep accumulating technical knowledge, technological knowledge that makes us more efficient. And so that’s why prices keep going down.
Svanholm: Exactly. I mean, it’s so simple and when once you see it, it’s like kind of impossible to unsee and impossible to not be upset about because you realize how much they steal from you via inflation since most people think no inflation would mean stable prices. But that’s total nonsense It means falling prices and falling in increasing rates too because I don’t know if you’ve seen um Saifedean Ammous has been arguing this lately and I’m trying to figure out whether I agree it’s about interest rates and so
Ready for Part 7 (Bitcoin and Interest Rates + Visions of the Future)? Just reply “next” or “continue”.
Explain the oneshot principle
Discuss Mises regression theorem
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Here is Part 7 of the re-formatted transcript (paragraphs grouped logically, max 7 sentences per paragraph).
Part 7: Bitcoin and Interest Rates (1:30:19) + Visions of the Future (1:39:31)
Bitcoin and Interest Rates
1:30:19
Svanholm: yeah and I actually I met with him in Turkey earlier this year and with Hoppe and he was trying to persuade Hoppe of this and Hoppe is not quite sure what he thinks about it but Saifedean’s argument if I understand it is that Um, now I think he’s trying to find a way to justify the Islamic anti-usury view.
Kinsella: I’ve had the same thought. This is I think he’s trying to find a way to justify the anti-usury view.
I think I can do a pretty good TL;DR of it. So the theory is that uh a capital a money hoarder would at some point uh be the the cost of storing of owning the money would weigh hold what kind what kind of money you mean gold right uh well gold or bitcoin or whatever I don’t think let’s talk about gold first because I think there’s a difference but go ahead uh yeah I think Saifedean’s theory is more general uh this is from the Principles of Economics book that he wrote a very good book by the way but uh the original idea in that book as said by Saifedean, I’m paraphrasing him here of course, but is that at some point the cost of holding money becomes so high that you’re incentivized to uh lend it out uh at a negative interest rate even.
Um so yeah but this is paired with his insight that over time preference uh goes down and over time the progress of society is that interest rates go down and down and down. So you reach a point where the interest you could charge is less than um you it’s not enough to pay for your storage cost. No, no.
So, the theory is that the cost, if I understand it correctly, that the cost of the storage would be higher than to just lend the money out with a very low or even negative interest rate. Yeah. So, basically, you’re getting storage costs paid for by lending to someone even if you get no interest because at least they’re holding it for you.
Yeah. But he discussed that recently. I think it was in some podcast maybe with Adam Haman or maybe Bob Murphy, but he was talking about his book, his new book, his novel, The Gold Standard. Yeah.
And that’s set in a gold standard world. And my thinking is that he might be right for gold because there is a cost to holding gold. There’s a risk. There’s a cost.
But it’s hard to imagine that that same phenomena happens with Bitcoin because the cost of holding Bitcoin is basically zero. It’s basically and there’s no increasing cost with the amount. So the cost of holding one Satoshi is exactly the same as the cost of holding all 21 million bitcoins.
So it seems to me like that there would always be a positive interest rate um that is above the cost of holding for bitcoin, but I’m not sure about that.
Kinsella: Uh no. Uh I mean theoretically like let’s unpack that. Uh there is a cost to holding a bitcoin but how much that cost is is like yeah I mean you could hold uh like trillions of dollars by memorizing 12 words.
It’s possible not advisable but it is possible. And the question becomes like uh so yeah theoretically it may be true but then again everything may be true theoretically. Well put it this way.
If I understand Saifedean’s point, so the question for me is I think he’s correct that uh the development of the human species over time could be viewed as one of reducing time preference, right? And so at you could and with increasing prosperity and reducing time preference and more long-term events, you could see the interest rate would go lower and lower.
So the question is, does it tend towards zero or does it tend towards some finite amount and if it tends towards whichever way it is, you could see that it could get below the cost of holding gold in a gold world. Absolutely. So you could see that in a world where gold is the money interest could go so low that you might be incentivized to loan it for no interest rate.
Okay, I could understand that. I just don’t know. The fact it might be more valuable to have friends than to have a vault full of gold because that’s what that means. Correct. Correct.
Yeah. You make them have skin in the game in a sense. Yeah. Exactly. But if let’s say Bitcoin is tending towards I mean let’s say interest rate for money is tending towards 1.2%. Like that’s the tendency.
It’s not going to zero because so maybe he’s wrong that there would be no interest. Maybe there would be some interest. Now I’m actually more amenable not to the idea that there would be zero interest.
I’m more amenable to the idea that in a Bitcoin world the concept of loaning would like every like I’m more sympathetic towards that idea that the idea of credit would almost disappear. Well, I’d say not disappear but these artificially low interest rates would disappear and then we would have like a more proper interest rate which might be like 2%.
But not just that, the idea like that people’s characters would change. Like for example, when you get out of college, when you get out of school, you wouldn’t borrow money to buy a house or to buy a car. You would save up. Yeah.
So all those things they would largely disappear or if you have a new business would they borrow money or would they take investors? So I don’t know. This is another brain tickler.
Svanholm: Uh yeah. If we extrapolate to the year 2140. So all the bitcoins have been mined which means that not only is there a finite supply of them or a finite amount on the market.
It’s uh ever diminishing because people lose their bitcoins, people choose to hodl forever. That will happen even when the last bitcoin has been mined. So that by the way not only that but if let’s suppose you die and you’re a billionaire to donate the money to charity you might just destroy your keys.
Yeah, that’s what Saylor says he will do. Like he’s alluded to that but because money is not wealth that’s not destroying anything. you’re so yeah but just let’s imagine this scenario where you have this ever decreasing total supply of money then uh may uh in that world very few people would be able to actually have black numbers on their balance sheets in terms of Satoshis they would have what say again black numbers on their balance sheet so there would all be red numbers like all stacks would be diminishing because uh very few businesses would be able to be profitable uh they no don’t get me wrong they would be very profitable in subjective terms in purchasing power terms correct but not in terms of the Satoshis themselves so the same thing with wages right your salary would go down yeah exactly it would go down every year in nominal terms so theoretically you may start a business not to actually make more Satoshis per year but to decrease the rate of decline of your stack of Bitcoin so that it diminished a little slower.
So, you’re looking at like the angle of the curve rather than the curve itself. It’s such a mind-blowing world to think about because do you think that the supply would go down of bitcoins also because of friction? Uh how do you mean friction? Well, every time you make a transfer, I guess it’s not for I guess you don’t lose.
If I transfer Bitcoin, I guess nothing is lost because someone gets the fee, right? Yeah. Exactly. Uh I think Satoshis lost per I guess just from losing people. But they are lost in the sense that there’s a minimum amount.
So, and also at that point it will probably right now sometimes the mempool clears and it costs literally one Satoshi to send a bitcoin uh which is or one Satoshi per vbyte uh which is the lowest allowed. But you could theoretically have like a very low amount of Bitcoin in one address and never be able to spend it because the fees would always exceed the amount that is in that address.
So all of those bitcoins would be like just effectively lost. That’s my point. Right. Yeah. I guess that’s part of what I mean by friction.
Well, let me ask you what is your vision of let’s say 50 years from now. I don’t know. Let’s say Bitcoin is worth, I don’t know, $50 million in current money and every Satoshi’s worth, I don’t know, $17 or whatever.
I mean, do you envision side chains or do you envision that the protocol gets modified to expand the decimal points? What do you think is going to happen?
Visions of the Future
1:39:31
Svanholm: Super glad you asked that because I think I have uh quite original ideas about this. Uh I think the real scaling is that we’ll just spend less. Uh I think uh you know micro payments are a very fiat thing.
So whenever I if I go to the central station in Amsterdam and I need to take a leak then I have to pay a euro in to open the door to the toilet. Right. Uh and then I have to buy a train ticket and there’s like 130 different types of train tickets and I uh all of this so using money is going to be too much of a hassle for people to bother.
So no but imagine if you’re if you have a Bitcoin business. Yeah. It may make sense to you to sell lifetime subscriptions instead of selling individual products because then you get the money earlier and since the money goes up in value forever, it’s better for you to get the money now than later.
So, it’s like the opposite. Everything is the inverse of the fiat monetary system. So, uh in fiat, they always say the first million is the hardest. In Bitcoin, it’s the other way around. Like the first million is the easiest, of course.
because the increasing difficulty applies to everyone. So, I think uh also we’ll trust each other more. This is also the irony of it. Uh the theory is this and I’d love to pick your brain on this.
Uh if you have 10 poor people uh who buy food every day for 10 days, then there’s a 100 transactions because each of them goes and buys uh noodles for themselves and eat in their apartment. If 10 wealthy people do the same thing and their friends, they might go to a restaurant every night and one of them picks up the bill each night because they’re nice and friendly people and they can afford to do that.
So at the end of the week, you have 10 transactions instead of 100. My point is that it’s very expensive to be poor in the fiat system. And if everyone’s on a Bitcoin system and everyone benefits from everything in the economy because it’s not a zero sum game.
all prices go down forever, then fewer transactions are necessary because you can bundle them and you’re also incentivized to bundle them since there’s a fee to sending the transaction and you’re incentivized to use all other types of trust models between people.
At the end of the day, this is just communication. So, you will all of humanity will act more like you do within a family. You just give the other guy a meal because you know you’ll get it back at something.
So, and I could see that changing but the question is but that kind of assumes there’s only one there’s everything’s onchain I mean it could be that side chains development what you’re talking about all I’m talking about here is offchain none of these transactions actually have to happen onchain and with also like you don’t even need a side chain if you trust the person uh then you don’t need any blockchain you don’t need but that’s a type of side chain in conceptual It’s a type of side chain.
In other words, yeah, you’re counting on getting paid back somehow. Yeah. You and I like I trust you already from just internet reputation to if we ever had transactions together, we could just keep a tab on one another.
I wouldn’t mind that. Like I wouldn’t need a blockchain. So I wouldn’t need a banking system. I wouldn’t need anything. I’d rather just keep it up like No, no, but that’s I think that’s all fascinating and good and right, but it still doesn’t answer the question about what’s actually going to happen.
I mean, 50 years from now when Bitcoin is a dollar per Satoshi, do you think that the decimal points will be modified and there will be side chains or I mean, I’m curious.
Svanholm: No. Why would they need to be modified? Um I mean over the Lightning Network you can see which is like how when bitcoin is used for everyday commerce like in El Salvador for instance uh everything is over lightning and you can do sub-satoshis on lightning it’s trivial so you can divide it into uh okay so you don’t think the decimal points in the blockchain in bitcoin changing but you’re imagining a side chain though you are imagining a side chain uh I wouldn’t call lightning a side chain necessarily.
Uh why not? What would you call it? Uh because it’s not uh I’ve to be honest because I’ve never heard it described as a side chain. I know Liquid is a side. What would you call it? It because it I think Lightning is not a side chain because it’s not a chain at all.
There’s no chain involved. It’s just you’re staking you’re devoting uh x number of bitcoins into a lightning channel and then someone else does the same and now you’ve opened a channel and you can uh interact on but it’s a channel that can be funded with and settled in bitcoin correct only yes it cannot be uh it’s it is the bitcoin because at some point it settles back on chain so it’s like when you close it’s conceptually a little bit like a debit card, right?
Uh except you load you load it with Yeah, I know. I know there’s no bank, but I mean you load your channel with a certain number of bitcoins by an onchain transaction. Correct. Well, it’s a uh distributed IOU system, I guess.
Uh except that it’s uh totally accountable. everyone. It’s it has the same uh Do you actually use uh Lightning yourself right now? Yeah. Yeah, I do for a lot of things.
Uh, and I try to use Bitcoin as much as I can. Uh, of course it’s hard. I mean, I live in Europe and the governments here have decided to suspect me and treat me as a criminal because I’m using a means of communication that they cannot tax or they cannot inflate.
So I’m being criminalized for refusing to use something that they counterfeit which So earlier you talked about Bitcoin do you regard as money now or do you think it’s got degrees of moneyness and it’s on its way? Where do you view Bitcoin at in money? I mean the definition of money is something like the most dominant form of medium of exchange, right? Yeah.
So uh I think it’s on its way there. uh I view it and I think the terms medium of exchange uh store of value and unit of account are somewhat confusing uh especially store of value since value is subjective you can’t really store value I prefer medium of exchange over space and time it’s just medium of exchange and who’s to say uh and all I get these questions so much like how will we transact with one another on a Bitcoin standard.
But the thing is transacting a lot is a fiat concept like uh transacting over time with yourself. Yeah. Velocity of money is So uh I think we’ll all get into more like um it leads what it leads me to is less materialism and less consumerism and you only buy quality over quantity.
Like quality is really the opposite of quantity. like you get into the That’s interesting. Yeah, I agree with that. Especially as we get richer because of Bitcoin.
Um and uh and we have lower time preference. Um and money has a cost uh to use. Yeah. And you’d rather keep the Bitcoin than buy the frivolous thing that you otherwise would have bought.
So like it’s not about the Lambos. Like if you can do without the Lambo, you own the Lambo. Like so I’ve always thought and maybe you disagree with me on this because of your view about Bitcoin’s unique status as money.
I’ve always thought that um yeah during the monetization phase it makes sense to hold it um for speculation if nothing else. But let’s suppose it starts plateauing and becomes the world’s dominant money. uh it would go up in value because of productivity, but it wouldn’t keep going up hyperbolically or parabolically.
It would finally plateau at a certain point. And at that point in time, it seems to me that you would only hold a fraction of your wealth in money because of the risk of um the risk of collapse or the risk that it might fail.
So, let’s suppose I’m worth, I don’t know, $200 million in wealth in Bitcoin. I would be stupid to hold that in cash. I would hold maybe 10% of it in Bitcoin and the rest I would have to put in the stock market or buy real estate or something like that just to diversify. What do you think about that?
Svanholm: Yeah, I think that’s correct. I do think that after it sort of plateaus I don’t envision it like because say that total goods and services and productivity in society increases by about 10% per year in today’s economy. Yeah.
Oh imagine and but what we leave out then is that a Bitcoin economy is a much more free market oriented much more well-oiled machine. So it might be it might increase by 25% per year still after everyone’s adopted it. But we’re not at 10% now.
Are you imagining we’re at 10% now? Like more goods and services per year globally. Yeah. Aren’t we? What would be a good number? 3% 4% 3%. Yeah.
But the thought experiment is the same. Say it increases from 3% to 15%. It’s still super you still super incentivized to hodl the Bitcoin and wait another year before you buy another lawn mower.
Like you’re still incentivized to save rather than spend frivolously. Yes. So that that’s the gist of it. That’s the point.
And also that when everyone has it, the rate at which they’re lost is much higher. So, you have the decreasing supply and the increasing demand like forever type of thing. I have a hard time envisioning what that actually looks like like everyone else, but I try to think about it, but it’s super strange.
Well, and with the simultaneous advent of robotics and AI, it’s hard these all these things are all going to go together.
Ready for Part 8 (The Future of Bitcoin and Society + Hyperbitcoinization)? Just reply “next” or “continue”.
Explain Saifedean Ammous’s interest rate theory
Discuss Hoppe’s views on Bitcoin
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Here is Part 8 of the re-formatted transcript (paragraphs grouped logically, max 7 sentences per paragraph).
Part 8: The Future of Bitcoin and Society (1:46:59) + Hyperbitcoinization (1:51:26)
The Future of Bitcoin and Society
1:46:59
Kinsella: I mean what is your personal prediction of the uh of the adoption of Bitcoin or what do you think that the next you know when do you think it’s going to hit X and do you think it’ll be a soft transition or a worldwide disruption as the US gets the what what do you see is happening with hyperbitcoinization or whatever like if I love how this turned into you being the interviewer and I being Sorry.
You know more than me about Bitcoin, I think. Yeah. Yeah. Yeah. But I love because I love these discussions like uh like every Bitcoiner, I’m waiting for hyperbitcoinization like any day now.
It’s going to go parabolic tomorrow and all this. Uh, but I think it’s more like, you know, I grew up in uh I first started traveling around Europe in the early ’90s, so like very close to the falling of the Berlin Wall and on all of this.
And no one spoke English. Like if you went to France or Spain or Germany, no one spoke English. Like English wasn’t around. And today, everyone under 20 speaks perfect English in Europe today.
Like there’s no maybe no perfect everywhere, but it’s become the the lingua franca. Yeah. The second language. Yeah. My Swedish kids speak English to one another than Swedish and they don’t have to with their other Swedish friends too.
They speak English for some reason. They just do. Uh and I think that Bitcoin adoption happens in the same way because I think the boomer generation will never get it. They’re like the hurdles are too big.
The rewiring of the brain that is necessary to understand just a fraction of what this implies is it’s just too much. Yeah. But I think the younger generations if they actually grow up and they have a wallet on their phone and they start using it then it becomes a second language and sooner than you know it everyone speaks Bitcoin and yeah if you look at merchant adoption and stuff like we think it’s super small and we still are super early but it is like doubling every year.
It’s just that we haven’t seen the real effects of that yet. We haven’t seen the exponentials always start small, right? And uh so when it happens, I mean, I think we’re in for a ride.
I don’t know when the last cycle is, but I think we’re going to go in cycles for a couple of more times, like over one or two decades more, and then there’s a point where it just goes up forever until fiat dies. Like, if it works, like, how could it not?
How could it not at some point go up forever in terms of dollars because all they can do is print. If it causes so much societal disruption that it triggers some kind of um nuclear war or some kind of societal meltdown. Um that I think that could slow down adoption if we’re if the human population has been decimated and we’re living in the stone age again, you know.
Yeah. But the more people we get on board, the less likely that is because wars are funded by fiat. Like the more we go out to Bitcoin standard, the less we take away the resources for these to do these things and the incentives at the same time.
So yeah, and this is utopian. I know I’m a opium salesman. That’s like but I cannot like get these thoughts out of my head because they’re too beautiful and it’s too hopeful and hope is in my opinion a rational choice.
You have you’re going to die anyway, so you might as well live as a hopeful man and as a free man.
Kinsella: Yeah. No, that’s that’s most people wouldn’t believe this, but that’s basically my approach too. That’s my view, too. Um, yeah, it’s a long-term hope.
And it’s also a hope that doesn’t have anything to do with activism. Like either it’s going to happen or it’s not because the logic is there and it makes sense. It’s not because libertarians or even Bitcoin activists are out there promoting it.
Like if Bitcoin needs libertarians or Bitcoiners to promote it, then it’s not going to work. It’s got to have a logic of its own for it to work. Yeah. Absolutely.
Anyway, I’ll stop interviewing you if you have any moment with me. Yeah. Have you read The White Pill by Michael Malice? I came to think about it here because I have it. I’ve read most of it. Yeah.
It’s the core of that book is uh that totalitarianism and authoritarianism falls on its own weight at some point. There is always hope. I mean, in a way that’s sort of a modern version of what Fukuyama said, which I know is crude and neoconish, but I kind of see something to that idea of the end of history and but maybe not democracy, but I do think that I’ve always thought the human race is in its infancy, right?
And we’re early. We think that we’re advanced because we’ve been on the moon, but and we have lasers, but we’re really still primitive. But um I think the best is yet to come if we can survive the growing pains.
So I think the future is one of unimaginable um like it could be an unimaginable future like the golden age of John C. Wright or something like that. So uh yeah, I mean I’m half tempted to have cryogenic storage for myself uh someday and wake up in 500 years and see what the world looks like.
Like Hal Finney, did you know that his head is cryofrozen? No, I didn’t know that. But maybe he’s Satoshi, right? Maybe Satoshi’s gonna wake up.
Listen to this. Maybe he memorized the private key before he cryofroze his head. And what if we resurrect him and move that Bitcoin 400 years later? Well, there’s actually a book I just read a book uh there’s a science fiction book where there’s some guy who wakes up um it was a kind of a pulp novel.
I’m trying to remember the name of it, but uh it’s about a guy that wakes up in the future and he owns the entire earth because of some fluke. So he almost starts a war because people are fighting over control of him because he owns the entire planet Earth.
So you could imagine someone waking up and uh they revive 3 million bitcoins um yeah that we thought were not part of the money supply anymore. It’s either that or Idiocracy.
Hyperbitcoinization
1:51:26
Svanholm: Yeah. Anyway, uh Stefan, is there anything else you want to talk about before we wrap this up? Is there anyone where you want to send our listeners or something?
Kinsella: Um, let’s see. Um, no, I’m uh anyone interested in these ideas can read my intellectual property stuff uh or my uh my libertarian book which is here.
Um I’m working. So Murray Rothbard died was sorry he was born a hundred years ago March 2nd this coming March. So I’m editing putting together a book uh of essays on Rothbard which we will release on March 2nd on his birthday.
Um it’s about Rothbard at 100. So working on that right now with Hans-Hermann Hoppe and some other people.
Svanholm: Well that sounds fantastic. So that’s my one project I’m working on.
Kinsella: Well, we’re going to release the essays on March 2nd and then the book in September for the Property and Freedom Society meeting. So that’s what I’m working on right now. I’m interested in that. Where is that? Is that in Bodrum in Turkey? It’s in Bodrum every September. Yes.
And we just released the announcement. If you’re interested in coming, email me later and we’ll talk.
Svanholm: I’d love to. And uh Yeah. We’ll definitely talk more about that. Um September should be relatively free. Yeah. Yeah.
Um we we’ll talk offline. Um I just finished I was in Prague twice this year. Once for the uh free cities thing and once for the and it was wonderful. I hadn’t been there in 30 years.
It’s a wonderful city and I went to uh the Liberland thing in December. Uh I just released last year a project I was working on with a guy named Fremax and uh Aleandro Fusillo and some others.
It’s called the universal principles of liberty and it’s it draws upon that book and my own writing and my property theory which is inspired by Hoppe and by Rothbard and Mises but it was sort of like a concise systematic statement of libertarian principles.
It’s called the universal principles of liberty. It’s not a constitution and it’s not a detailed legal code, but it’s more like here’s the principles of property rights and self ownership and justice that we agree to and that have to be agreed to in any um free society.
Um and that’s on my website stephankinsella.com. So, if anyone’s interested in these ideas, take a look at my book uh my intellectual property ideas and um uh the universal principles of liberty and the upcoming uh Rothbard book. Fantastic.
Uh are you planning to go to any Bitcoin conferences by any chance this year or No, I went to a couple in Miami three or four or five years ago. I haven’t been lately.
Um that’s unfortunate that the Bitcoin magazine ones tend to be quite apologetic to shitcoiners. I’d say they taking a lot of money from the I think I would only go to a Bitcoin only conference at this point.
But uh is there any good ones coming up that might be worth going to? Well, if you love Prague, there’s the one in BTC Prague in Prague in June. Uh that’s a very good one. That’s the biggest European one.
Uh yeah, I’m going to one in El Salvador here. Um I mean probably after this episode is I would have already been there when this episode is released. That’s like less than two weeks from now.
Now I you know I tried a few. I’m I just find I go there and there’s I I’m just a hodler. I’m just waiting.
So I’m not an activist. I’m not a promoter. I’m not into the business. I don’t really see what and most people are not that theoretical or libertarian.
So there’s nothing to really interest me at the conferences. There’s one uh that I think you’d like the uh that I’m co-organizing. I’m biased here, of course, called BTC Hell in Helsinki, Finland um in October.
We’ve only done it once, but uh it’s going to be done again. It’s around 1500 people uh and uh a lot of good speakers. Uh we can definitely do some Austrian economics talks.
Uh I think I have a lot of friends that are coming. Um I could be persuaded if anything if something like that comes along that um I could be persuaded. I’m potentially interested. Yeah, great to hear.
I mean I think we’re uh we’re in talks with Saifedean this year. Uh I’m going to talk to Raheem about it too. Raheem again. Um and um we’ll see.
I’m going to push for uh more Austrian economics content in inside that conference. Yep. But that’s it for me. But I appreciate your work too and uh I’ve learned from you too. So I appreciate that.
So um thank you very much. Means a lot. Uh yes. Anyway, I absolutely adored this conversation. I hope we get to meet in real life soon.
I’m uh we’ll talk about details about Bodrum after this and uh yeah go follow Stefan and read up on your praxeology people and brush your teeth. This has been the Bitcoin Infinity Show. Thanks for listening.
Thanks Stefan for coming. Thanks.
This completes the entire transcript (Parts 1 through 8 cover from 00:00 to the end at ~2:03:36).
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