Alex Gladstein (00:06:55):
And you and I have our own paths to Bitcoin and we appreciate that. But look, there’s signal and there’s noise, and that’s signal. That’s coming from one of the most influential people in the world who could really be doing anything. And he’s basically telling us, “This is the most important thing in my lifetime.” And he’s seen a lot. He’s built world-changing technology. Seriously. People could argue about it, but I can tell you from my perspective, as someone who is in human rights activism, Twitter certainly in my view for the better, in many ways.

Alex Gladstein (00:07:25):
Certainly, it has had some downsides but fundamentally has changed the way that a lot of people interact with each other, communicate, express with each other, connect to each other. And honestly has changed a lot of the way that a lot of people consume information. So for him, who’s also been behind Square and a bunch of other things to say that, I was like, “Wow, this is going to be a lot of fun.”

Alex Gladstein (00:07:46):
And then look, we went through a lot of this stuff about his travels around the world and how they opened his eyes to what I’ve seen through my work and through my networks and through the people that I talk to. And we kind of came to some conclusions around that. And he talked about Jay Z and that was very interesting. And I love this idea that he said that Jay said that, “If we’re going to create money for the world, it has to be developed around the world,” I loved that and that’s why they’re making that fun to get African and Indian developers to get involved. I really love that.

Alex Gladstein (00:08:20):
And then we got to this point where he started to get into why it was Bitcoin and not the other stuff. Because basically said that we are focused on this idea of the internet having a native currency that everybody can transact with every day. And at that point again, things are going really well. And then all of a sudden, this woman comes up to the stage and I knew who it was immediately. I was like, “Oh wow, it’s Laura Loomer.”

Alex Gladstein (00:08:52):
And she’s going off about how Jack’s the king of censorship and I’m human rights activist. How could I, and all this stuff? And meanwhile, there’s no real like security. It’s like-

Preston Pysh (00:09:00):
How do you know her, Alex? Because I was going to ask you about this.

Alex Gladstein (00:09:06):
She’s pretty famous. I don’t know exactly what she got banned from Twitter for, but I know she’s very provocative, said a lot of like anti-Muslim stuff. I don’t like her at all. But the irony is that she’s coming up to attack Jack, which I understand like she got kicked off Twitter, she’s angry. But the irony is, we were right about to get to the fact that like-

Preston Pysh (00:09:32):
Cover that.

Alex Gladstein (00:09:33):
… Bitcoin is for basically the platforms people. Again, people say Bitcoin is the money of enemies. I wouldn’t say I’m her enemy, but I really don’t like her, but hey, she can use the internet, she can use email, she’s going to be able to use Bitcoins. So it’s just kind of funny that like I’m sitting next to the guy who’s probably in a combination of effort and ability and opportunity going to do the most to push us in the direction of censorship resistance systems in the next five years.

Alex Gladstein (00:10:00):
And she just doesn’t grasp that, but I thought it was just kind of this perfect transition into how Bitcoin and lightening, Bitcoin the asset and lightening the network are going to bring us to this world where or already have brought us to this world where we can connect to each other in a way that’s unstoppable.

Preston Pysh (00:10:15):
You know what I loved about the reaction was Jack didn’t even flinch. He was just like, “You know what? Let’s talk about it.” He was like all about this. He’s like, “Hey, let’s stop the conversation. Let’s address her concern here,” because he has Bluesky that he’s working on. And I think he was excited to go down that path, because I think from his vantage point, he’s like, “Oh yeah, I’m already working on that.” So talk to us about what that is.

Alex Gladstein (00:10:44):
Yeah. No, you just can tell he does an enormous amount of meditation. The man is so centered and just unflinching. And after that, he went into it and he said, “Yeah, look,” he says, “I know you aren’t going to believe me. I know you’re saying I’m a liar, but I’m going to prove it to you that we’re going to basically take Twitter and turn it into this kind of public utility.

Alex Gladstein (00:11:05):
And we’re going to decamp to Twitter.inc essentially, and run our own version, but anyone can run their own version on this thing.” I think that’s their vision. They want to kind of turn it into that sort of instance-based model. And we’ll see. I’m not 100% sure that’s going to work, but obviously, I’m really happy that he’s trying to do that. And look, I’m not going to short him. Do you know what I mean? Given what he’s done.

Preston Pysh (00:11:26):
What do you think the concerns are from your vantage point? What are the concerns of being able to do it then?

Alex Gladstein (00:11:32):
No, just purely technical. I don’t know how it’s going to work. We haven’t seen much detail. Again, I’m not going to shorten him on this one. It would be awesome if it works. But everything’s a lot of speculation with kind of decentralized systems beyond Bitcoin. You have to have the incentive structure really down really well. And I’ve used social media that’s like similar like Mastodon is popular with some Bitcoiners, but it just kind of lacks the same feel and you don’t go to it.

Alex Gladstein (00:12:02):
So they’re really going to have to pull off something incredible there. But hey, if anyone can do it, it’s probably him and his team. But from there, we went into thinking about how and talking about basically lightening power apps are already here and we’re using stuff like Sphinx. You guys are on there and you’re just sending unstoppable messages and payments.

Alex Gladstein (00:12:25):
And we’re streaming your shows and we’re tipping creators in this peer-to-peer way and in a way that no government can stop. And those early videos of Andreas Antonopoulos way back when saying, “We’re going to stream money.” Hey, we’re here. It’s pretty exciting. So, I think some of the infrastructure is there for that.

Preston Pysh (00:12:48):
This is neat. So when we were down there, I set up a Sphinx tribe and it was just like messenger, but everyone’s in the group chat and everyone’s doing this over the Lightning Network. And so while we were in Miami, there was 200 plus people all in this chat, people who were synchronizing their plans while they were down there, like, “Hey, this group of five is going to go over to the conference. Hey, we’re going to go to the pool.”

Preston Pysh (00:13:12):
And I’m seeing it all happen on Sphinx, which was all riding on top of the Lightning Network completely decentralized, permissionless-

Alex Gladstein (00:13:21):
Incredible, man.

Preston Pysh (00:13:22):
… kind of crazy.

Alex Gladstein (00:13:26):
And a year ago it just didn’t really exist. So we’re at the cutting edge here. Look, if you’ve been tuned out a Bitcoin for a few years, look, I’m sure you’re a lot of your listeners maybe have it as an asset. But if you’ve been tuned out to like using it, you’re going to be really impressed. And that’s about the time in the presentation where I did something quite risky and I decided to try and send a lightening transaction on stage.

Preston Pysh (00:13:50):
Yeah. Talk about this. This was awesome.

Alex Gladstein (00:13:53):
Well, I was thinking to myself, trust me, the only reason I say it was risky is because the WI-FI was really bad and the service was really bad. So I was just worried that it wasn’t going to work from like a data point of view. It works perfectly. Don’t get me wrong. When I generate a lightning receiver and I try to do a send from my MoonWallet, it works all the time. But backstage, look dude, there were like 5,000 people in that building, plus 5,000 other people roaming around.

Alex Gladstein (00:14:22):
And I tried it a few times backstage and one time it didn’t work. And I’m thinking to myself, “Is the entire lightning community is going to hate me so much if this screws up in front of everybody?” And I went over to the organizers and I said, “Look, I’m going to do this. I need you to like zoom in on my phone. I want people to see what’s going on.” And they said, “Okay.” And we worked it out and I was going to do it right basically before Laura Loomer interrupted. So, I had to wait a while actually.

Alex Gladstein (00:14:50):
But I recollected myself and then pulled out the phone and I just was very excited and I practiced it to do it really fast basically. And just to be like, here, I’m on this strike tip jar page, which anybody can create. And I’m just like up two dollars, going to copy the address, going to paste to my MoonWallet, going to hit send. And I just like teleported a bare asset in front of all these people. I thought that was pretty cool. I’m really happy it works.

Alex Gladstein (00:15:16):
So again, if you’re not using this stuff and again, for now, it’s just sort of fun. You’re having fun. But we’re catching a glimpse of what’s coming and it’s going to change the world.

Preston Pysh (00:15:29):
Were there any answers that he supplied that really kind of shocked you or surprised you, or something that really sticks out in your mind beyond the opening comment there that you read, which is just mind-blowing?

Alex Gladstein (00:15:44):
A couple of things. I’m not surprised, but I’m really impressed that they’re really doubling down on non-custodial use of Bitcoin. Like this is really what we need. People are worried about capture. We saw gold get captured as a monetary system. So it gets centralized and captured. So the big threat to Bitcoin has always been that it’s just going to be sort of … its ultimate utility would be marginalized because it would so much of the infrastructure we captured.

Alex Gladstein (00:16:13):
And yet you have this guy out here coming out with an announcement minutes before we got on stage saying that they’re going to try and build a non-custodial hardware wallet, like open-source working with the privacy-minded, sovereign-minded Bitcoin community. This is impressive, man. So, Square, a company that does a lot of FinTech hardware. They’ve got years of Bitcoin hardware to look at, to compare notes with.

Alex Gladstein (00:16:39):
They’re already in touch I know with people that I highly respect that are making kind of freedom first Bitcoin technology, and this given Jack’s mix of interest in terms of emerging markets and how cash app itself is used by a lot of like kind of under-banked people in the United States, I just think this has massive potential. So that was surprising to me. One of his colleagues came up to me before he arrived and they were like, “You might want to check, buddy.”

Alex Gladstein (00:17:03):
Because I was kind of just in a Zen kind of just thinking about what I was going to say. And they came up to me and they said, “You might want to look at Twitter. He just announced this thing.” And I’m like, “Oh my God, this is like a 16 part thread.” It’s like, that does this really quickly. That’s cool to see. So that was really surprising. Another one was, I brought up CBDC, the Central Bank Digital Currencies, and I brought up some of the things they might do.

Alex Gladstein (00:17:29):
It was interesting for me to hear him say, basically said, “I think all the things you just mentioned in terms of what Central Banks are trying to do are just bumps in the road. We have a much better alternative in Bitcoin.” Again, that’s a very strong statement from a tech CEO. And then he kept saying, “In Bitcoin, we have designs for privacy and freedom. The more that we and especially our governments,” which I thought was interesting, “Can realize that and get in the boat sooner, the better we all are.”

Alex Gladstein (00:17:57):
So he was basically straight up saying that governments should be pursuing Bitcoin and not CBDCs, and that’s cool. Come up. Again, we can criticize him for a lot of things, but he could just easily not be saying these things. So I think it’s really neat. So, that’s surprised me. He threw in a little comment when I asked him about we’re getting the … you have the FID dice. I’m sure maybe some of your listeners know there are FID dice that Nick Carter and his friends created that just to have all the different criticisms that keep rotating about Bitcoin over the years.

Alex Gladstein (00:18:32):
So right now, we’re flipping from environment, we’re flipping back to criminals, we’re going right to ransomware. As we speak, tonight’s blazing hot. And there are people calling for the banning of Bitcoin because criminals are using it. And again, we’ll probably go back to tether next week, but it’s just a rotation. I asked him about it and he basically says, it feels like there’s probably something a little bit deeper when you’re hearing these excuses.

Alex Gladstein (00:18:56):
He says, he thinks it’s about them losing their power. I’m like, again, wow, what a based comment? Like, yes. Of course, it is. We talked about energy and I was not surprised there because I’ve read the Arcs Square Paper. But again, he said, “I think Bitcoin gives people more freedom to convert unused wasted power into something that provides value for billions of people around the world.” Again, cheers to that. But you don’t hear tech CEOs saying that. That’s cool.

Preston Pysh (00:19:25):
I heard you ask him about proof of work versus proof of stake.

Alex Gladstein (00:19:30):
Oh yeah. We talked about that.

Preston Pysh (00:19:32):
Yeah. So I didn’t really hear him get into too much of the nuances of the differences between the two.

Alex Gladstein (00:19:42):
No. I have the quote right here and I think it’s very important because … Look, they’re a Bitcoin-only company and a lot of people ask why. Look, people have made so much money with the theory and all this other stuff. So I asked him and he said, “The conditions that created Bitcoin, everything that went into it from the proof of work model to the development model to no single points of failure, everything about it is why we’re into it.

Alex Gladstein (00:20:03):
There’s nothing else that compares to it. And we have no interest other than making sure that we are building a native currency for the internet and helping in every way that we can. So all the other coins to me don’t factor in at all.” That’s what he said. So, that was interesting. Certainly. I agree, but again, interesting to hear such a mainstream figure say that. I think that’s again, really some signal here amongst all the noise.

Alex Gladstein (00:20:30):
And then just the last thing I’ll just say is that at the end, and I clipped this and I put this up. I can share it with you, but I just love this quote so much. I actually asked him because we’re kind of getting to this area where people are starting to say that Bitcoin is going to be bad for the US, it’s going to like our monetary policy, whatever. So I kind of asked him about whether or not he could say Bitcoin’s good for America.

Alex Gladstein (00:20:53):
And he said, “100%, but I think it benefits the entire world. That’s what makes it incredible is that every single person in the world will benefit and get value from utilizing this. That we finally have a currency that can be traded to any single point on the planet is pretty incredible. And what that enables going forward is mind-blowing and I’m going to do everything in my power to make sure that it happens.” That’s kind of how we ended the interview.

Alex Gladstein (00:21:20):
And at the very end, I said after that just, “Look, things really complicated out there. It’s a tough political environment,” but I basically said that I think the two of us agree that Bitcoin is kind of the way forward. And he said, “100%, it’s the only way out.” And that was a very powerful, I think, way to end the interview. So I just was very impressed and surprised by that as well.

Preston Pysh (00:21:44):
So I want to transition to an article that you recently wrote, Alex because when a guy like Jack Dorsey says, he thinks that it’s the only way “out”, I think what he’s talking about is this PetroDollar system that you went into a lot of detail writing this article, we’ll have a link to it in the show notes. So talk to us about the PetroDollar system, how it kind of came into place and we can kind of go from there. Really kind of start like from your conceptual understanding right at the beginning, and don’t hold back.

Alex Gladstein (00:22:24):
Yeah. So, I think it’s two things. First, the dollar system, which I’ll get into in a second, but also just this global monetary system, which is being pushed more towards surveillance and control whether by corporations or governments, big brother or surveillance capitalism. And I think that’s kind of what he was getting at a little bit there because we had just covered CBDCs.

Alex Gladstein (00:22:47):
And I think that that’s part of it is just that, all the nations of the world, regardless of political leaders, regardless of what they use for money, there’s this like slippery slope towards kind of totalitarian control when you go digital. It’s just very hard to resist that temptation even if you’re a really good person in power. And I think that that’s part of it. The other part is the American dominance of the world financial system.

Alex Gladstein (00:23:17):
And that I think sets us up nicely also to get to the big news of the week. But yeah, so look, the US has been monetarily hegemonic for a long time. After World War One, we just emerged in such better shape than the other nations, especially in Europe. We became the world’s largest creditor nation. Britain began its imperial decline, that put us in a really good position in World War Two. We had a lot of gold.

Alex Gladstein (00:23:47):
We were able to get our way at Bretton Woods in ’44, we were able to basically Vito the British idea of a bank corp, which would be like an internationally managed unit of account. Like it kind of what the SDR is today. And we were able to get everybody to agree to use dollars as a reserve currency, so like dollars around the world, which would be pegged to our currency at a rate of $35 per ounce of gold.

Alex Gladstein (00:24:15):
So we accumulated all the gold and we were the custodian of the system and look, things went pretty well for a while as we climbed out of World War Two. But especially after JFK got assassinated in the late ’60s, the world started to become really concerned about the US monetary system and our ability to hold that peg. So the French especially were very vocal about this. De Gaulle and his ministers, they called the dollar, the exorbitant privilege, and the Britain, I think in ’67 or ’68, they defaulted essentially on their currency.

Alex Gladstein (00:24:51):
And I think France, some of these other countries looked around and said, “Hmm, I’m very concerned that the US is going to do that as well.” And they did, actually. But Nixon was able to sort of hold them over for a little while. But in the summer of ’71, things just had gotten too much, like the Vietnam War and the social spending from Johnson had pushed our basically debt to GDP ratio higher and higher.

Alex Gladstein (00:25:18):
And basically gold versus our outstanding commitments had gotten really extreme, this guns and butter approach was very expensive. And the French actually sent like a battleship to New York City in August of ’71 to get, or at the end of August, early September ’71 to get their gold back, to redeem their goal. Then the British ask for a huge transfer of several billion pounds as well from Fort Knox to New York in preparation for withdrawals.

Alex Gladstein (00:25:49):
So a couple of days later, Nixon went on TV, gave the Nixon shock speech, end of the gold window, and put us into the Fiat world where we’ve been for 50 years. So just the important thing to remember there is that like the rest of the world is basically calling our bluff on being able to hold that peg. And what’s interesting is that already before this, both Keens and this guy named Triffin, economists, realized there was going to be this issue if the US became the reserve currency kind of hegemonically and it’s called the Triffin dilemma.

Alex Gladstein (00:26:30):
And it’s basically this idea that in order to satisfy everybody else’s needs around the world, you have to run like just an increasingly large deficit, and that’s what ended up happening. And it was kind of like fueled and sustained by this thing called the PetroDollar system, which came into play really in ’74. After Nixon closed the gold window, the dollar depreciated by 20% against other national currencies other than major ones, at least.

Alex Gladstein (00:26:59):
So between ’71, when he ended it in September ’71 to summer ’73, we depreciated 20%. So, those concerns were founded by the other countries that we would not be able to hold things together. And that was a very inflationary decade. There was a lot of unrest, there was a lot of inflationary activity, obviously, as you all know, and Kissinger and Nixon had to figure out a solution basically.

Alex Gladstein (00:27:28):
So they hired this guy, I say, hired, because it’s kind of funny because you don’t hire someone in the government, you sort of appoint them. But they literally hired a bond salesman named William Simon from Solomon Brothers. He came into the government, and they upgraded him to the treasury secretary and they basically said, “Dude, you need to sell some bonds. How are we going to finance all this stuff? Let’s sell bonds. We can’t raise taxes,” because Nixon was about to get impeached. He couldn’t do it.

Alex Gladstein (00:27:54):
So we had to get other countries to fund our stuff. It’s as simple as that. And there’s a really good book. Well, yes, it’s very good, but it’s very detailed and technical, but it describes this whole process and it’s called The Hidden Hand of American Gemini by David Spiro. And it’s kind of a niche thing, but you can get it on Amazon. And basically, this guy dedicated his life to writing about this. Because it was so buried after the ’80s.

Alex Gladstein (00:28:17):
People barely wrote about the PetroDollar anymore, but it really set the whole world up for what was to come. And Simon and Kissinger and Nixon basically said, “Look, we got to sell bonds. Who are we going to sell it to?” And they looked around and they looked at the Saudis. And what had happened is that essentially because of the shift in power and oil production from Western companies to sovereign states and it used to be these things called the Seven Sisters.

Alex Gladstein (00:28:46):
So it was like these European and American corporate energy companies that basically colonized, in many ways, these sort of other countries. They lost their power in the ’60s and by the ’70s, OPEC existed. And it was on the rise and Saudi Arabia had just come into its own as like the swing producer for the systems, they were really important. And they decided in ’73 in reaction to both American Agricultural Policy and our involvement in the Yam Kippur War where we supported Israel, basically jacked the price up of oil from like two dollars a barrel to over $10 a barrel. And they set an embargo on the United States.

Alex Gladstein (00:29:24):
So after this happened, that’s when Nixon and Kissinger and Simon were like, “Okay, we got to sell the bonds.” So they actually tried to make peace with the Saudis kind of quietly. It was a bunch of conversations earlier in ’74. By June of ’74, Crown Prince Saud came to D.C. Nixon went to Saudi Arabia, Simon went to Jeddah. And by the end of the year, they have this like pact. Basically, the idea is called PetroDollar recycling, is the idea.

Alex Gladstein (00:29:52):
And again, a PetroDollar is a dollar earned by an energy exporter. And the idea of PetroDollar recycling is that they take that dollar and they invest it back into US treasuries. And that allows us to basically print money to finance our operations. And it allowed us to print money into oil. Whereas the Soviets during the Cold War had to dig it out of the ground or buy it. It was a huge advantage. So with this system, we got that advantage.

Alex Gladstein (00:30:22):
All the Saudis had to do was price their oil in dollars, which made everybody in the world pay them in dollars, create this huge artificial demand for dollars. And they had to recycle some of it back into debt. Okay. They also did this through the Eurodollar system, which was, I wouldn’t say small, but definitely got massive as a result of this and has created all kinds of other interesting effects on the world.

Alex Gladstein (00:30:45):
But essentially in return, they got protection. They got our promise to defend them, which is why they’re still around today. That’s why Trump and Biden won’t go after Crown … they won’t go after MBS even though we know he killed Khashoggi and tortures female political prisoners and is destroying Yemen, we won’t do it. All we’ll do is sell Raytheon stuff to him. We continue to arm him.

Alex Gladstein (00:31:09):
So the deal was, you denominate the oil sales in dollars and you reinvest that, you recycle that back into the treasury so we can keep our guns and butter going. In return, we’ll protect you and we’ll arm you. So as Greenspan said, actually Greenspan at the end of the ’70s was actually in the Ford administration. He was quoted as saying essentially that like the Saudis and OPEC, by ’75, both the Saudi’s and OPEC were all doing this.

Alex Gladstein (00:31:38):
That essentially the OPEC had become non-market purchasers of US treasuries. And we became non-market sellers of weapons. Spiro’s book is all about how this was not a free market outcome. This was very much a political outcome driven by the US government. And it did very well for the US in the fight against the Soviets and for people in our country that are of particular classes, like in defense, technology, services, basically coastal elites.

Alex Gladstein (00:32:13):
But over time, it was really, really bad for people lower and middle classes, really hollowed out over time our export base rust belt stuff, obviously, also very bad for a lot of the developing countries who all of a sudden were saddled with a lot of this like dollars denominated debt, that was really hard for them to pay back. And it forced them to focus on that instead of investing in their own countries.

Alex Gladstein (00:32:35):
So that’s kind of the setup. After we defeated the Soviets, we didn’t change the system. We didn’t have like another Bretton Woods. We just kept it going. And we continued to protect Saudis. Obviously, the first Gulf war was much more clear about that. The second Gulf war though was interesting too. And Lynn Alden has written about this a little bit, and Nick Carter talks about this, but we needed to protect this PetroDollar system.

Alex Gladstein (00:33:02):
And guess what, Saddam was a threat. He started the PetroEuro. October of 2000, he said he was going to sell five percent of the world’s oil in euros. By 2002, through the oil for food program, he was selling five percent of the world’s oil in Euros to France, Germany. And six months later, we went in there and we took him out. And by June of 2003, that new regime was selling oil in dollars again.

Alex Gladstein (00:33:27):
Howard Fineman in Newsweek wrote about this at the time. After we went in there, he said that the big debate afterward in May of 2003, it wasn’t whether to keep looking for the WMDs, which didn’t exist. It was what were we going to price the oil in? And the dollar went out. So, there’s a couple of other reasons I think that that’s interesting because we were at such a hyperpower moment in our history, we’re not anymore. And I think that’s important to note that the PetroDollar system is unraveled.

Alex Gladstein (00:33:54):
I think Luke Roman has done a really good job explaining that. Basically, after the OPEC nations, it became less powerful economically when the price of oil fell in ’82, all through the ’90s. Other countries stepped in and started doing the recycling, like Germany, Japan, eventually China. But in 2003, we could really throw our weight around. We were like the hyperpower. And none of these special explanations for that war made any sense. There was no connection to Al Qaeda.

Alex Gladstein (00:34:22):
It wasn’t about Iraqi freedom or human rights. And it certainly wasn’t about WMDs, there weren’t any, and it wasn’t about countering Iran either. We had faxed it on in the ’80s in that round rock board literally to counter around. So I don’t know, man, it’s really interesting to think about, but I guess the conclusion is that the US and I think some people have put this well, even if economically people want to debate the value of the PetroDollar and the pricing of oil as it relates to the whole global economy.

Alex Gladstein (00:34:56):
And some people say it’s not that important, US policymakers think it’s very important and they’ve acted on that. And I think that’s the important takeaway there. David Graeber says that in his book Debt, which probably most of the people here wouldn’t agree with, but the ending is very good. There are about 20 pages at the end of Debt where he goes into this and talks about why Nixon floated the dollar and all this stuff.

Alex Gladstein (00:35:17):
So, look, here we are today. Nobody’s really buying our treasuries anymore. We’re the biggest buyer of our own treasuries, that system’s kind of collapsing. We’re not even going to sanction the Russian head of Nord Stream. Who’s going to be helping Russia and Europe start to trade energy in their own currencies more and more and more. There’s not a whole lot we can do to China and Russia in that regard.

Alex Gladstein (00:35:43):
And then here we are with Bitcoin. So, look, if it was the ’70s or ’80s, I think you’d see very aggressive action from the US against countries that are trying to change the PetroDollar system, which pins together this huge artificial demand for dollars. And the fact that there’s still 90% of the world’s trade, 60% of the world’s reserve currency held in dollars, 40% of the world’s debt still held in dollars.

Alex Gladstein (00:36:10):
So I think that we would be very aggressive about this back then, but we’re just so overstretched and we just are so thin at home that I don’t think we can do it. And that I guess leads us to the final piece of this conversation, which is what’s happening geopolitically today with Bitcoin. Right?

Preston Pysh (00:36:30):
Yeah. So let’s talk about Jack’s big announcement. Now we’re talking about Jack Mallers, not Jack Dorsey. Lay it on for folks that weren’t there, just to kind of explain Jack’s background. Because I know he’s been down in El Salvador for, I think, a few months now, really kind of making things happen on the ground.

Alex Gladstein (00:36:54):
Sure. Yeah. And just to connect that very long monologue I just went on, the result of that still is that the world is very dependent on the dollar. El Salvador’s dollarized country and there are pros there, but there are also cons. And again, they’re entirely reliant on US monetary policy, they don’t make their own currency, and they are as Jack Mallers said on stage, they are very much recipients of any sort of like monetary expansion that we do.

Alex Gladstein (00:37:29):
They’re recipients of that negative externality in a big, big way, especially because most people in El Salvador are very poor. 70% don’t even have bank accounts. 22% of the whole economy of that country runs on remittances from the US, so a fifth of the economy. So again, we’re in this world where the US really exerts really outsized power and that again has some negative externalities in different places around the world. And I think Jack when he went down there and Jack Mallers probably saw this.

Alex Gladstein (00:38:04):
And he saw how people are struggling and what a tough time for Salvadorans. They have until recently the highest murder rate in the world. It’s really tough to attract foreign investment. There’s not a lot of hope or opportunity. All of a sudden, a couple of years ago, this guy, Michael Peterson, who I met, outstanding gentlemen, began some stuff with him, really cool guy, he and some other people decided to create this thing, Bitcoin Beach.

Alex Gladstein (00:38:31):
And I think even I at first was like pretty skeptical. I was like, okay, this seems kind of like a, I would say gimmick. But I was like, “Hmm, I don’t know if it’s going to work.” I was a little, like, I’m not sure. I was so wrong. So they built this community. They started a circular economy on Bitcoin on these different wallets in this kind of community probably with a lot of ex-pats.

Alex Gladstein (00:38:55):
I spent a lot of time in a place in Mexico called Zipolite, which is probably very similar to [Ozonte 00:38:59]. So I kind of know what it’s probably like. But very international mix. But then it starts to really connect to the local community. And I think Jack Mallers spent time there in those months leading up to when he made that announcement on your show back in January about strike global.

Alex Gladstein (00:39:18):
And obviously, on stage, he said that’s what made him think about making his company in a different way, not focusing on Europe as much as maybe a place like El Salvador. I think he saw what kind of power Bitcoin could have. And I thought that actually Ross Stevens explained this really well in this interview he did recently in a very powerful way, just to think about the fact that all these people, like 22% of the whole economy comes from remittances.

Alex Gladstein (00:39:44):
There’s only a handful of like Western Unions in the whole country. And 70% of people don’t have bank accounts. That means they’re going on a bus for like three hours to go to Western Unions and get their money in cash in a very dangerous place, a lot of murder and theft, they’re risking everything for that. But a lot of people have phones. So all of a sudden, now we have a revolution. It’s very powerful. Now, anyone can just have their sort of bank account on their phone.

Alex Gladstein (00:40:10):
They don’t have to go on that bus. They don’t have to risk themselves. They don’t have to carry cash on them. They can have their like strike bank account basically, which is like a USDT, usually kind of like the nominated to protect against risk. And then the cool part is, they can just withdraw to their non-KYC sovereign savings account in Bitcoin. And apparently, that’s what’s happening.

Alex Gladstein (00:40:32):
So Jack makes that announcement in January off the fumes of living at Bitcoin Beach for a while. And he launches, I think in March down there, and by the end of the month, it’s like the most downloaded app in the country. So, all right. Apparently at some point the president of the country, obviously, he’s like, “What is going on here?” And just briefly, look, I’m a human rights activist that worked for a human rights group. We should not celebrate this guy.

Alex Gladstein (00:41:00):
I think we should be open-minded about what happens. Look, A, bad rulers can do good things. Look at the Magna Carta, you know what I mean? Even they could be forced to doing good things. But also people can change. So we’ll see. But as of now, we should be very skeptical. The guy has like sacked judges, he has … and imagine like Biden doing this today. It’d be like if Biden just went and just got rid of two Supreme court justice because he didn’t like them. So, that’s essentially what happened.

Alex Gladstein (00:41:28):
He also went into the assembly last year with his troops to force them to pass a bill that he wanted. So imagine Biden doing that today to the Congress. So you can start to see this guy that we need to reserve some judgment here, let’s not place any crown on this guy yet. I would not do that. I would be very skeptical about him at least. But the policy man, the action.

Alex Gladstein (00:41:53):
So I’m sitting there in the audience, Jack goes on stage with this big announcement. Everybody’s like, “It’s going to be lame.” And I was like, “I don’t think it’s going to be lame.” And he announces that this … he goes through this whole thing that I just kind of went through about what a rough spot El Salvador is in and how we can make a difference maybe with Bitcoin. And then he plays the video of the president saying they’re going to pass a law making it legal tender, and that they’re adding it to the reserve, and man, the place goes wild.

Alex Gladstein (00:42:24):
I’ll never forget that moment. It was really amazing. And now we’ve just been living in this new world where I just don’t think anybody in Bitcoin was realistically expecting us to go from really no inflation hedge narrative on the main street at all, to Michael Saylor doing his thing, to Elon doing his thing with Tesla, to a nation-state doing it in about a year. That’s just such a blinding pace.

Alex Gladstein (00:42:53):
People like me maybe thought that would take several more halvings to happen. And I was just apparently extremely bearish. So here we are, this guy Bukele, he’s the Michael Saylor of nation-states. Is he just narcissistic and did he just realize that this would make him famous? Because it’s made him really fricking famous. So maybe that’s just it and that’s fine.

Alex Gladstein (00:43:16):
Or does he get it? Does he get like the deeper geopolitical thing here where his country can be this geopolitical first mover? He can attract foreign investment. He can lure people into this country that’s had such a hard time, and he can connect people to banking services and have them own their own money in a way that can’t be debased or remotely confiscated. I don’t know. It may not matter.

Alex Gladstein (00:43:42):
Bitcoin may work in its incentive structure enough so that it’s okay that he’s just narcissistic and just selfish. It’s kind of like he’s taken the genie out of the bottle. And the last thing I’ll just say on that is, the last three days in El Salvador, this is like anybody’s talking about, I was talking to a Salvadoran today and he’s showing me all these articles and all the major newspapers and it’s just like, everybody’s like, “What is Bitcoin? What is our president talking about?”

Alex Gladstein (00:44:09):
It’s what people are talking about in barbershops and taxis on the street, this is not going away. You can’t put this genie back in the bottle. So, that’s the network effects that you’re not really seeing. And this is spreading man. I met some people in Miami. They’re trying to move this to Guatemala and there are other people trying to move it to other countries. And just in the last two hours, even I’ve seen people on Twitter from what, Brazil, other congressmen in El Salvador, Paraguay, they’re all talking about it.

Alex Gladstein (00:44:40):
And I don’t know if they have the power that Bukele has to do it, but the genie’s out of the bottle here. It’s a new era. So it’s really exciting, honestly. And again, don’t celebrate the guy, celebrate the action. It’s going to be so good for El Salvadorians. And it just brings a lot of hope to a country that’s had a lot of darkness.

Preston Pysh (00:45:00):
Now down there, are they pretty much-using Lightning for all their peer-to-peer transactions, Lightning wallets on smartphones?

Alex Gladstein (00:45:08):
Yeah. So I think there’s two things going on here. There’s like the circular economy, Bitcoin Beach and all of the second order effects of that, where people are using like actual Bitcoin wallets and they’re just doing the Bitcoin economy. And then there’s Strike which again, it’s kind of like as Jack calls, it’s like a neobank where the beauty of it obviously is that anyone can just pay directly to someone in El Salvador, like instantly, essentially having our account number or whatever.

Alex Gladstein (00:45:38):
But usually, that’s kept in again, like a stable coin kind of USD denominated amount of money. And again, I think people basically use that as like their checking account, but the real kicker of course is they can just immediately move it into their own patrol of Bitcoin. Lightning is really operating on the back end there. But I do think from what I’ve heard from Michael and other people and talking to Salvadorans, yeah, there’s more merchants who are going to get involved here.

Alex Gladstein (00:46:15):
And I think I was talking with somebody about this. I was someone who really thought that like globally, Gresham’s Law would be really in effect for this whole decade, that bad money would drive out the good and you just want to spend your Fiat and you’d hold your Bitcoin. And then there’s this other [inaudible 00:46:33] that was lurking in the distance, I thought it would be way, way down the road, but Fiat law’s the other way around, the good money drives out the bad.

Alex Gladstein (00:46:41):
And it’s interesting, because he may have really accelerated this in the same way that Saylor accelerated the inflation hedge narrative and an understanding globally of what Bitcoin is this idea that like as a merchant, you can demand Bitcoin or you could be Bitcoin preferred. You already are seeing this pop up in parts of El Salvador, that’s just going to accelerate. So then all of a sudden, then you got to spend your Bitcoin.

Alex Gladstein (00:47:10):
If you’re being offered a discount on it, or if some places only take it, some people start selling their real estate for it, which I know you’ve talked about. All of a sudden that’s in play and now as opposed to in three halvings or something. So I think that this guy did this one announcement, he’s really like moved the needle on that part of Bitcoin becoming unlocked for a lot more people, which is so good for Bitcoin because now we’re going to really want to focus on privacy, non-custodial stuff, wallet infrastructure.

Alex Gladstein (00:47:44):
It’s not just this digital gold asset that’s going to sit in custodian. And I think that it could have been for a while, but this announcement is like a shock to the system that is similar to the Saylor shock. And there’s obviously geopolitical stuff which we can get into. But I think that’s just so interesting that it’s really going to wake people up to Bitcoin as a network.

Preston Pysh (00:48:09):
I was really surprised by how just the price of Bitcoin reacted following the announcement. What are your thoughts on that? Because I think anybody who’s hearing this is saying then why is it down, Alex? That just doesn’t make any sense whatsoever?

Alex Gladstein (00:48:27):
Well, I don’t know, man. You guys are better at this than me. But there is no efficient market going on here. No one knows anything. People thought that having was priced in, obviously not. I just think that the market right now is not paying attention to this stuff. In terms of the volume and you’re looking at the back end and you’re looking at the metrics and the volumes that are happening every day are not people who are like geopolitical analysts.

Alex Gladstein (00:48:54):
They’re not like thinking seven steps ahead. They’re just staring at short-term stuff. And there’s other nonsense now coming in and we don’t even need to put on a tinfoil hat. There’s always nonsense. But now there’s the ransomware stuff and there’s all kinds of crap. “The feds broke Bitcoin.” Like, no, they didn’t, they just took it off somebody’s fricking custodian, or somebody left it on like their phone, put a password on or something like that.

Alex Gladstein (00:49:21):
Milan broke Bitcoin. But now all of a sudden, it’s funny, man. Really aggressively, you get the first nation state to come out and say, “We’re going to make Bitcoin our money.” And then, oh man, the FID goes into complete overdrive meltdown. And again, remember total volume, very dominated by Americans and Europeans still today. Or at least providers based in those countries.

Alex Gladstein (00:49:47):
So I think that just short term, it’s just so much noise, man. And what I really came out of the Bitcoin conference with was just a connection back to the foundational foundation of what we’re here for. Especially through that conversation with Jack and just, I always care about the price because I know that it’s connected with the incentive mechanism of Bitcoin, but I couldn’t care less about the price right now.

Alex Gladstein (00:50:14):
Just cheaper sets for everybody, I guess. Good for the Salvadorians. I don’t know, man, it can move sideways for a long time. But I think you saw the same thing in the summer of ’17. There were like incredible things happening within the battle for the soul of Bitcoin. And it took a while. It took to the end of the year for that to be reflected and really lifted after we were sure that fort war was over.

Alex Gladstein (00:50:39):
So we’ve seen this before where like amazing stuff happens and nothing’s reflected. Again, one more thing, Taproot is about to get activated, basically. It’s about to get locked in. It’s going to be live late November. It’s what, 99% of all the hatchet is signaling. And that’s not priced in. Nobody cares about that. No one even knows what Taproot is outside of I would say that maybe 400 people at Bitcoin 2021 could have told you in a detailed way what Taproot is. It’s not priced in, this isn’t priced in, but I’m telling you, man, this is huge. This is huge.

Preston Pysh (00:51:15):
So, we have a lot of investors that listen to the show. And so, your argument would be, this is just like a company, that their fundamentals just keep getting stronger and stronger, yet maybe the price action just keeps going down for whatever market reasons there would be. And so, your argument is just, stay focused on the fundamentals and the engineering and the building and those kinds of things.

Alex Gladstein (00:51:39):
Yeah. But again, it could be this sort of two steps forward, one step back thing where, okay, Saylor announces his thing, gets really exciting. Elon goes, and then all of a sudden, Saylor has this conference. And then it’s kind of quiet. Like we don’t really know who’s market buying. They don’t really know what companies are involved. It’s not quite as exciting as everybody thought it was. The prices dropped. Okay, it’s wilted.

Alex Gladstein (00:52:02):
It could happen here. Okay. We could have El Salvador and for a while, we could have nobody else. It doesn’t seem like that’s the case right now. It looks like a bunch of other Latin American countries, especially you’re looking at this carefully. It looks like this is triggering a lot of interest from really downtrodden nations. I guess what I wanted to finish with is that there’s the conversation about domestic policy in El Salvador and do we want to be standing in the sky?

Alex Gladstein (00:52:30):
No. But obviously this policy is going to be great for Salvadorian. And so we should share, this is awesome. He’s already talking about working with Blockstream to get satellite internet going so that people can access the Bitcoin network. This is due in 2021. This is stuff we thought was going to happen in the 2030s. This is crazy. We have a head of state talking about how he’s going to get satellite Bitcoin access to his country. What? So, that’s happened.

Alex Gladstein (00:53:00):
And now you got laser eyes in like four countries in Latin America. And again, this is an opportunity for these people. These people can’t make their own monetary policy. They can’t set their own financial destiny. They’re totally tied to ours. In many other countries that aren’t dollarized, there’s situations even worse because their financial destiny is tied to a bunch of people who literally just run the money printing so hot that the country has 30, 40, 50, 500, 3000% inflation.

Alex Gladstein (00:53:30):
If you just look at like countries like Argentina, Venezuela, et cetera, and the region. So, situation goes anywhere from bad to worse in the region. Now people are going to get to own their own money and own it in a way that can’t be debased or remotely confiscated. And it could be just seamlessly networked and connected with anyone that we’re in the world. And there’s just nothing more bullish than that. And I just don’t think it’s priced in.

Alex Gladstein (00:53:54):
People are confused. They don’t understand what’s happening. I don’t think US policy makers really know how to react. The markets obviously don’t know how to react. So this is your signal. People have been talking about this for a decade. When is the first country going to adopt Bitcoin? Well, it just happened. So again, we’re in open-water Bitcoin. We don’t know. No one knows, no one could predict the next step, but how could you not see this as bullish? This is a wild fantasy. It literally just happened. Do you know what I mean?

Preston Pysh (00:54:22):
By declaring it legal tender within the country, a person’s not going to pay capital gains on Bitcoin. They can use it-

Alex Gladstein (00:54:33):
It’s what they’ve said. Yeah.

Preston Pysh (00:54:34):
Yes. Now, what does that mean? What kind of incentives does that create for companies that may be want to move into that jurisdiction?

Alex Gladstein (00:54:46):
Yeah. Look, I think it’s on the ground right now. I think a lot of the people using Bitcoin were already probably not paying taxes or not in the formal economy or whatever. So I don’t think it has like an immediate, immediate practical use case. But for businesses, especially if you do international business, that’s huge. And then all of a sudden, it’s a foreign currency. It’s the currency of El Salvador alongside … their own currency has been kind of fallen into disuse. They have the dollar, they’re going to have Bitcoin now.

Alex Gladstein (00:55:21):
So now all of a sudden you’ve got conversations going on in all these trading houses, like, “What do we do with this?” Okay. All of a sudden it’s a growing currency. What the heck? There’s no rule book here. No one ever saw this coming. They weren’t ready for it. It’s like a Y2K moment that no one saw coming and now it’s like short circuiting a lot of things. So we’ll have to see. But inside the country going to have a huge impact.

Alex Gladstein (00:55:46):
It is so legitimate, meaning, if this passes is like all of a sudden Bitcoin activity just becomes completely normalized. And I just think that it’s more than about the law or about the tech adoption. It’s about the social dynamics of this thing entering into people’s mindsets and conversations. And all of a sudden, there’s going to be such a premium on learning about Bitcoin in a Spanish language, providing good quality education so that people don’t go and do stuff like Tron.

Alex Gladstein (00:56:19):
There’s going to be so many scams moving in there too. So, there’s going to be so much demand for good educators, good product builders. Look, you are already seeing a lot of the big online community go to El Salvador. This guy is going to get so, so many talented people coming into that country to help him rebuild it. And that’s completely regardless of his politics. So, I just, again, would be very excited about this medium to long-term especially.

Alex Gladstein (00:56:49):
And it’s going to have major geopolitical implications, especially in a world where the system, again, which I’ve described is weakening. We don’t have this hyper power America anymore. We don’t have the ability to control everybody else’s money anymore. We are kind of like let’s say on the back nine of our career of being able to just finance the guns and butter by other countries demand for our debt that is really, really declining.

Alex Gladstein (00:57:18):
So it’s kind of time, you can’t stop an idea whose time has come. I think there’s going to be a lot of like, we have to be careful here because there’s going to be a lot of negative things said about this guy, some of which are true and some of which are not. There’s going to be just like whenever there’s good stuff happening in Bitcoin, there’s a lot of like counter kind of noise. That’s just going to really test our sense-making here.

Alex Gladstein (00:57:40):
Because, oh man, this guy already there’s articles about how the IMF isn’t going to like this and there’s going to be a risk premium on the bonds. And there’s going to be complications with this country getting its loan from the IMF and Washington’s not going to be happy. And yeah, there’s going to be really serious consequences for this country that stuck its neck out. So we’ll have to see.

Alex Gladstein (00:58:05):
But you know what, if these other countries follow quickly enough, then there’s not so much we can do. But man, it’s going to be really interesting to watch geopolitically. I just hope people can understand that this is not some stunt. Regardless of what happens in the capital, this thing’s going to have massive, massive implications for the average Salvadorian. And I couldn’t be more excited for them. They deserve it. They’ve been through such a brutal several decades. This is some serious hope that’s coming here. So, let’s stay tuned and let’s keep our eyes open.

Preston Pysh (00:58:37):
Alex, final question for you. Was there any panel or topic or something that you heard during the conference that just kind of really peaked your interest or that you found kind of fascinating?

Alex Gladstein (00:58:50):
I’ve just been very interested in mining lately. I think mining is this really misunderstood thing that is going to totally transform our world and touched on it briefly with Jack. But outside of panels, I got to talk to a lot of miners and got to learn a lot of things. And similar to Taproot, we’ve got this thing that’s really interesting called Stratum V2, which is like basically a way of putting power back in the hands of miners out of the hands of pool operators and making the whole thing a lot more decentralized and censorship resistant.

Alex Gladstein (00:59:19):
And this thing’s going to happen too. And it’s just going to help us move into a situation where kind of, as Jack said, we can start taking advantage of all this like waste that happens around the world and all these stranded resources. I learned from these people just about how man, for example, you could power all the Bitcoin network just on the methane emissions from landfills alone. You could power the Bitcoin network just on pretty much the power of the nuclear plants that the US is decommissioning this year alone.

Alex Gladstein (00:59:54):
You could power the Bitcoin network with one nuke plant that’s in Japan alone. Public conception of Bitcoin is this thing that’s going to destroy the environment. It’s so off base, it’s so wrong. And I think it’s just all about the mining community telling, I don’t know, being a better explainer of what they do and how they work and what they’re doing. And some people are helping with that. But I would say general, it’s just learning more about the really incredible transformative power of mining and what that’s going to do the world. That was a real kind of an eye-opener for me.

Preston Pysh (01:00:34):
All right, Alex, I hit you up last minute to do this. And you were just so accommodating. If people want to learn more about you, they want to learn about your mission that you are doing. Please give them a hand-off and let them know how they can help.

Alex Gladstein (01:00:50):
Yeah. So look, a lot of your listeners, maybe you came to Miami, you felt the vibes, vibes don’t lie. It was really strong. It was a really exciting city right now. I think it embodies a lot of the technical innovation, the freedom we want to feel, the openness. I think a lot of us want to go back. So I’ve got a reason for you to go back. October four and five, my organization, the Human Rights Foundation is organizing the Oslo Freedom Forum.

Alex Gladstein (01:01:12):
Today then, the first day will be a lot of Ted Talks, really inspiring performances, music, art from people fighting for freedom around the world. It’ll blow your mind and really just make you reassess everything. This is an event I like to call a bubble burster because it completely just shatters your bubble about how you think the world works. The second day is very interactive.

Alex Gladstein (01:01:36):
We’re going to have a Bitcoin track where we’re going to have Bitcoiners from all around the world come and mingle with activists who aren’t Bitcoiners yet. These aren’t any coiners. These are pre coiners. And we’re going to have sessions like the political history of Bitcoin. We’re going to talk about multisig, we’re going to talk about Lightning. We’re going to talk about Bitcoin Beach and circular economies.

Alex Gladstein (01:02:00):
We’re just going to try to give as much content into the hands of the human rights community as possible to help them onboard to this. And I’d love for people to be there. I’d love for you all to help support it. You can check it out at oslofreedomforum.com. You have to apply to attend, but write in why you want to come and we’ll send you the registration link.

Alex Gladstein (01:02:19):
Or again, you can support our general mission at hrf.org. I thought it was really cool. Right before Miami, we gave away through the support of generous donors, like people like you, we gave away 200 $10,000 to Bitcoin Debs from all over the world. They were from Nigeria, Korea, and India, as well as guys taken all the great stuff from Parker and Safe and Breedlove and everybody and translating onto Arabic. We gave them a bunch of money and he was very happy and I’m pretty happy too. So we’ll do that too.

Alex Gladstein (01:02:54):
So you can either come to our events and party with us and celebrate freedom and meet cool Bitcoiners, or you can help the development and educational efforts that we need. So thanks for letting me put that out there, Preston.

Preston Pysh (01:03:08):
Absolutely. And love having you on Alex. This is always fun and we’ll have a bunch of this stuff in the show notes. So everyone, thanks for listening. And Alex, thanks for joining us.

Alex Gladstein (01:03:19):
Thank you.

Preston Pysh (01:03:20):
Hey, so thanks for everybody listening to the show. If you enjoyed the conversation, be sure to subscribe to the show on whatever podcast app you’re using. We really appreciate that. And if you have time, leave us a review. So thanks for joining us this week and we’ll catch you next Wednesday.

Outro (01:03:35):
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