What is Sound Money - Fight Night

Welcome everyone to POV Crypto, the only podcast that both Bitcoiners and Ethereum's listen to. I'm David Hoffman, here with Mbidian Christian. Christian, how you doing? Doing good. Did you know that today is a Satoshi's 46th birthday? How do we know what is birthday is? He listed on Bitcoin.org a birthday and it was it wasn't the date of Act 6102 where gold was confiscated or had to

be turned in but it was it wasn't the exact same date of like the Act but it was 42 years ago on this day which is the day of the Act. Yes. Yeah happy 42nd birthday Satoshi and the 88th anniversary of the 6102 Act which banned people people from owning gold. Yeah it was it was you had to go turn in your gold and all gold

that was held in like private. Faulting was converted at a set rate. Yeah well dude Roosevelt right there. It's crazy who is celebrated in school you know but that's what stuff that he did. Right yeah and like he's still pretty he's very celebrated by the left right like a whole green new deal as a celebration of Roosevelt isn't it? Yep interesting interesting. It shows why big

coiners are nervous about the left. Yeah I yeah the makes sense everyone's everyone well everyone should be nervous about both sides like both the right and the left are just weird right now and not not on the money. Very not on the money. I think we're in there. Big truth big truth. Alright what are we going to talk about first? Well wait tell me about your

bullish sentiment because it's always good to talk bullishness and this was your post from bankless. Today is is Monday April 5th by the way you all be listening to this a couple days later. Yeah so I wrote this piece to every Monday market Monday is the time to talk about the market in bankless so I wrote this piece title crypto is about to melt faces and

I just ran through the list of things that are bullish right so last week we had the visa announcement that is using a theorem to settle U SEC Goldman Sachs is scrambling to enable Bitcoin offerings to its customers in attempt to like match Morgan Stanley's Bitcoin fund so now Goldman Sachs has got to got to do something it's also a we have a historically high quarter

for venture funding into crypto the Kim Chi premium is back so on Bittum or Bitthama or whatever the Bitcoin is valued 16% higher than the US dollar markets in two weeks coin coin bases token or not token equity will be listed on the NASDAQ and let's see what's up Bitcoin ETF gotta be soon gotta be around the corner gotta be a couple months. Yeah mention in

a desperate move to to get the premium of G.P.T.C. back at least up to nav Barry is now offering to move G.P.T.C. into an ETF as well as lower management fees so pretty much what's happening is now with all of this competition against G.P.T.C.'s great scale trust the great scale the great scale shares are trading under the value of the actual collateral that they represent and

that is bad for a lot of the market. like block by like big traders you know people that you know are in that trade people that are holding the shares and now they're down 16% on the underlying value so Barry is trying to fix that and he's now submitting what is like the sixth or seventh you know ETF proposal and this one is to convert G.P.T.C.

into G.P.T.C. as an ETF. Right which makes sense and we we had a Hester Pierce or excuse me purse on bankless podcast last week and she was like I don't know why we haven't approved an ETF like we should have like the market's ready for it and so you know SEC commissioner saying that the market's ready for an ETF and there's plenty of viable ETFs like

ready to be stamped and approved it's gotta be soon that's gonna pump the market the other remaining bullish things I had are are the the we have EIP 1559 in July and then we also have the the merge being proposed to come in 20 at the end of 2021 which there seems to be all the Ethereum quarter-in-cortive alipair is like yeah we could do that that

would be an okay thing to do which means that we can take in 2021. Okay so yeah walk me through this so in July EIP 1559 which changes the incentive structure and the fee structure of Ethereum happens there's scheduled to happen and then at the end of the year there's gonna be proof of stake takeover is that what you're saying? That's what's being that's what is

being proposed and tossed around among the Ethereum quarter-dives. All right how confident do you feel on both of those timelines? I think that the lot when it's definitely aggressive. The ladder one's a little aggressive. The July EIP 1559 hard fork is happening that is happening in July. What are the chances of some big issue related to that? I'm not qualified to answer that question. I don't

know. Okay. So yeah so so that that's happening in July and then if all the quarter-dives approve the acceleration of the merge then in theory that could happen by the end of 2021. I don't know what the dependencies are of the merge. I don't know if it's just like we'll just agree to do it and then we'll do it. I'm assuming it's more complicated than that.

What's do it? Like you have to be a little bit more explicit here. There's some dumb you know big pointers listening to this. Right so what this means is that the beacon chain which is the proof of stake chain that's alive and it's got the high heartbeat the skeleton of eth 2 of Ethereum 2 we will use that to secure Ethereum 1 and that what that

means is Ethereum 1 is just being like can initialized into the beacon chain. And so the beacon chain is now validating the transactions on Ethereum 1 instead of the proof of work system. And so this is this is what we call the merge where we shed proof of work and replace the security with proof of stake. So what's the deal with Ethereum issuance right now? Is

it being issued on both chains simultaneously? And what happens when there's this this merge? The the new issuance on the beacon chain becomes fungible with the current ether on the current chain. And then the new issuance coming out of proof of stake turns into the only issuance and we stop issuing ether to pay for proof of work. So this is a hundred percent like buy buy

proof of work we're turning this off by the end of the year potentially if potentially if this process then it's going to be a good idea to go through and then get executed. Yes. No more work by the end of the year. So let's talk about let's talk about the current state. So right now ether is is ethers being issued on both the proof of works

chain and the proof of stake chain and but that's not fungible right like those right there technically they're yeah they're in separate you can't even you can't even move the ether on the beacon chain. So it's really just beacon chain ether that just exists and it's waiting for the ethereum one chain to get merged and then for stake to be unlocked. Do you know what the

inflation rate is right now? The total inflation rate of both systems. Yeah. Yeah something yeah it's something like 4.7% let me go to eithub. Is there so on eithub there's a metric that shows both combined or it just shows both separate. There is a there shows a projection of both combined during this one like time period. There's a link into the chat. When you find it.

Yeah when I find it the ethub site is not necessarily easiest to navigate. Hey if it's a if it's a sad project it's going to be just like a bunch of links. Yeah well no they did it they did a pretty good job filling this out but they just never really took it to the finish line. Okay here it is. The bull market came too fast.

Okay right so there's this there the orange line is the issue and that's the jagged unpredictable line that big corners like to point out for the ethereum's monetary policy except they'll always forget that it goes down all the fucking time and then there's this one little blip that goes up a tiny little tiny little amount where we are issuing an extra little share of the percentage

of total supply and so right now we are like 3.6 like yeah like 4.7% and then then it just drops off the cliff and goes down to very very little. So when this ships and this is projecting it shipping in January. So this is assuming the that time one but when the ships it will theoretically drop down to a very low amount. But I mean this

isn't more than that being issued by the beacon chain right now. 3.7 million eth with earning 8% and so 3.7 million times 0.08. How do I do math? Is it going to take me a second to do this? 0.08. So 300,000 ether is a year is being issued to secure the beacon chain which represents points to 2.5% that doesn't make any sense. I mean I shouldn't

think it's math. Yeah so yeah whatever. The interesting thing here though is like okay yeah it's going down but it's pretty clearly not going down. It doesn't look like Bitcoin. Bitcoin is step bottom it's like a it's program it's a programmatic monetary policy where like this is you know you can see the difficulty bombs like these like read just men saw this like tinkering and it'll

all be in the rear view mirror. I mean we'll see. Part of this is like kind of something I want to talk about is like what are the properties of money right? Because you know you're pushing this ultrasound money meme you're trying to get memeers to meme it and make ultrasound money swag but like what is like what are the properties of sound money right? I

mean I think at least the way that Bitcoiners define it which is like slightly different how I guess you're using the terminology is like predictability. So there isn't really like you look at this chart right now on e-thub we should just like share it for the video listeners but we're not. Okay. It's pretty clearly you know not a very predictable chart. Yes however if you're what

Ethereum has traded is short term unpredictability for long term predictability while Bitcoin has traded for short term predictability but it doesn't have long term predictability. So that nice elegant curve of Bitcoin monetary policy that's great until what's the what's the Turkey fallacy. This chart that chart. Whoops that's that's perhaps the Bitcoin like monetary policy like where because you've traded away because you can predict it in

a short term you forgot about being able to predict it in the long term. So how is Ethereum how is Ethereum predictable in the long term because there's been very many cases where Ethereum is continued to act unpredictable into the future so where's any precedent. They are actually predictable in the long term. I really don't think that Turkey fallacy makes any sense for Bitcoin. Can you

explain a scenario where the Turkey fallacy works because the Turkey fallacy like Turkey's getting fat it's happy all these things but little doesn't know that in a Turkey factory is going to get shot but Bitcoin's not in a Turkey factory. Bitcoin is taking over the world. Bitcoin is the like turning into the ultimate asset. So like that's not quite the situation where like it's it's hostage

it's blindfolded it's like thinks it's happily moving along like Ethereum will talk about like the block the block reward is going to you know be Bitcoin's undoing but there isn't really any precedent to show that. Right because there isn't any precedent because we've never seen Bitcoin tested without block rewards because all the block rewards happen at the very start. Right and so all the theorems like

chaos. Developers and tinkering and all of that stuff that Bitcoiners are pointing at. We took care of that in the early lifespan of Ethereum where Bitcoiners have kicked it down the road and they're going to have to deal with it later because of the nature of the unsustainability of security through fees. How have you asked that Ethereum has gone through Bitcoiners Bitcoin is going to have

to go through at the end after it's already become integrated into the world's financial system. I mean I think that all like that is unsustain shaded claims about how Bitcoin's going to play out but beyond that. Can you can you about like what Bitcoin is secured by fees if it's never been secured by fees before that is also unsubstantiated. I mean the trend of fees is

going exponentially up in terms of buying power as well as overall percentage of the block reward. Yeah and it's it's again it's not about buying power for non Bitcoin things it's about it's the it's relationship with itself. Yeah both both are going up and that's a definition that you defined and Ethereum to find without any pointing to how there's any precedent for that being relevant. Okay

we can't show we can't show you precedent because it's about the future. Oh the same conversation. Yeah so it's about a model that you made about these things being important because proof of stake makes it better. It's it's all you said what Princeton put together about the okay my ability of a public blockchain with that is just secured by fees and then we know what came

out of that research paper. Yeah IP 1559 is the what came out of that so like hey like here's a way to to get route around this problem use this mechanism instead and Ethereum is like oh okay that's good we'll do that okay then we can have sustainability. But Bitcoiners are just like no we'll just generate a narrative and the narrative will work. It's not generic

and narrative. It's a little more extreme. No proof of work is extremely useful. We know this. The a proof of work network that issues of money that is highly liquid is extremely useful. That's not narrative that's reality. It's the narrative is about how it works in the future. How it works is not how it's extremely useful. No it's going to continue to be useful. Show me

something that shows that a proof of work network that enables energy producers to access energy demand from anywhere on earth is not extremely useful in the future. This is a you're already complete or completing subjects. That's a different issue. No energy. No it's not worth blah blah blah. That's different. No no no. No. It's absolutely part of the conversation because you're asking how is how is

Bitcoin sustainable. Bitcoin opens up profitability opportunities that were not available before it and proof of stake is not even playing for that game. Proof of stake is not playing for the energy demand or energy buyer of last resort game. They're trying to get out of that game. So like what's going to get in the way of Bitcoin like that game is not going to stop being

useful. Just Bitcoin having a massive footprint on the real world in terms of proof of work doesn't isn't necessarily a net add to the system. In fact, I would say it's a net negative. Well, I would disagree. I think this is incredibly needed. The system needs an energy buyer of last resort. I heard got this comment. The after Vitalik did his brain dump in the R

Ethereum subreddit after our last podcast. There was a comment in there. That was something along the lines of like proof of work is like when Netflix was mailing out DVDs because internet bandwidth wasn't good enough. So we had to do this like hybrid digital hybrid analog system where they just mailed DVDs. That's what proof of work is to me. Like it's this hybrid like stepping stone

from like the old world into the new world. But what about if we were just in the new world. And that's what proof of stake is is just digital only and the proof of stake network can exist on the internet without any footprint in the real world at all, which in my mind is a that's completely incorrect. There's a huge footprint. All of Ethereum to do

anything. It takes computers that provide compute to the network. It is a physical network. Okay. But the computer's already exist. We already have I already have my my staking computer. It's a lot of my log Mac laptop right here. Okay. Now you you created the people create demand for the staking computers. You know there's going to be specialized staking computers. Those staking computers are going to

be in regions across the world that most likely have an expensive internet or high inexpensive energy costs because maybe those energy costs are competing against civilization. Maybe they're in an urban environment. So the physical network is the energy cost of running a computer. Look, look, these these staking computers. Maybe some of them will be on laptops. A lot of them are going to be on specialty

servers. Okay. And those specialty servers costs electricity. Those are going to be on the internet. So we're going to be able to see what's going to happen. So this stuff is not negligible for an entire global network that you're claiming to be decentralized. So if you're taking network. So you can assume electricity. Zero electricity. Yeah. Basically an undetectable amount of electricity. No, that's completely false. How

many? Where does the computation come from? Yeah. Where? Yeah. Where does a computation come from? Yeah. It's only one computer at a time. That's the benefit of proof of sake is you have one computer during the computation. And then you have like three more checking that one person's work rather than a bajillion computers all over the planet. Just running through Sudoku puzzles. How about the regions

where those computers are located? See the reality is you haven't even thought about these things. You're just. It doesn't proof of. I don't think there's no energy. It doesn't take up any energy. That's the whole point. No. That is a complete misnomer. You're saying that the consensus is secured not by electricity. The consensus is secured by stake is digital. But guess what? The network. There is

a physical network run by computers. So it takes up energy. The internet takes up energy. Yes. Yeah. Of course. Yeah. It's marginal. Yeah. So it's. It's. Undetectable. And Bitcoin is useful too. Because people. Needs. Energy is only useful because Bitcoin has value. When you say that, that Bitcoin's energy consumption. Well, it's because it's selling BTC. So it's only useful in the sense that BTC has value.

Yeah. Well, guess what? Now people who had energy that either was a negative as they had to flare it out or something or they couldn't actually leverage an asset because there was no economic way to do it. Have an economic way to do it by taking whatever Bitcoin will scrap at them. Whether it's a small fee or whether it's a massive block award, like right now.

It does is a byproduct of the Bitcoin network, not a feature. No, that's a great. It's a great byproduct. Sure. We can argue. We can argue. It's very, very real. And it's extremely real. So your model. considered this is nullity. Yeah. But we can't go back and do design, because they're Hip Hits in the Bitcoin. Because they're actually not going to be digital comedy, right? 33X's

projections. So I mean, if that doesn't show that he doesn't know what the fuck he's talking about regarding. So he was asked by 3x. That's not that. That's not an order of Mac. He talked to one minor and then 3x's projections. He was that even doing the beginning. No, he didn't even do research. Talk to one guy and he got that close and he was doing

napkin math and he was that close. So you had to do is 3x it. That's not that's not far off at all. Okay, Vitalik already $5 billion to $15 billion. That's not good. So no, I'm saying that his admission after just a little bit of pushback from me shows how little he actually knew about it. All it took was a little bit of pushback from not

a minor and he and he already was taking his position back. Okay, like let's take some like critical thinking here. Okay, this guy's supposed to be designing your entire system. We had last time. It's about the message. It's about the meaning behind how he was able to get to that number so quickly and easily. And then all of it's on. He was only like 3x away.

And okay, like now. Now $15 billion. Bitcoin is still only secured by $15 billion. Why does that matter? Why does that matter at all? So no, no, what you're what you're you're taking it incorrectly. He did no research. I pushed on him. He did a little bit more research. Took a couple more things into account and 3x his number. Okay, what you're not understanding is not

that I research why he's confident in his what he's saying without doing any research is because it's plain obvious what he's saying. He doesn't need to do research because it's fucking obvious. So it was kind of hilarious. You're back and forth with Alex Gladstein last week. What he asked you to show him an example of a proof of stake system that's actually equitable. Yeah, it's a

theory of proof of stake. That's what it is. So it doesn't exist yet. Yes, you're correct. I mean, every time I ask you for evidence, you say it's this thing in our model for the future. Yes, because humans are good at making models about the future. I'm pretty sure if you went back and you listened to the Fed records, which are public from back before 2008

and then after 2008, they talked about their models a lot. And then they talked about how the model is correct. This is not the Fed. No, it's people making models. It's genius is making models. In fact, very highly accredited geniuses that went to Princeton and Harvard. Okay, I guess all models are destroyed, I guess. And like we have no models to go off. All models are

already hardly wrong. All models are inherently wrong. At least they exist. So we can use them for predictive things. You use them to try to help understand reality. Sure. They're only useful for their ability to help you better understand reality. Sure. They're predictive because they can help you understand reality. Therefore, hopefully help you predict, right? And we've modeled that Bitcoin securities on sustainability. We've predicted this.

People, people that predict this. Same people that predict the Fed. That would get the Fed. No, literally not the same people, different people. Crypto economic researchers who care about these things and are qualified to make such statements. At the end of Bitcoin's life cycle, Bitcoin goes from producing like one block every 10 minutes to all of a sudden it's a, it's a doggy dog world of

miners who won't produce blocks unless there's minor extractable value in those blocks. So they're going to turn off their miners and wait for a valuable transaction to be broadcasted to the network. And then they're going to turn on their miners so they can race to mind that transaction. And so Bitcoin blocks are going to go between one second and one month. That's what that is the

long term model that is predicted for Bitcoin or maybe even longer than one month. There won't be any mind blocks being mined unless there is actual transaction fees to pay for the network. And it's not about transaction fees above zero. It's about transaction fees in relation to the previous history of transaction fees. The volume weighted average of the last two weeks of transaction fees. And so

it doesn't matter like what the buying power is of BTC or whatever. It's about the recent history of minor revenue and what is theoretically coming down the pipeline for future minor revenue. And all of that throws Bitcoin into a complete state of chaos because the game theory. Can I ask you a question? So you guys talk about game theory, but then you never describe the actual

scenario. So in this scenario, what is Bitcoin's current state? Like what is role in the global financial system? I don't know. But it's been pumping probably. Okay. So if Bitcoin is really important in the current financial system, do you like to think that there's going to be no transactions on the Bitcoin base layer? No, they're really. Okay. So the scenario is Bitcoin is expensive and important

because people are storing their value in it. There are transactions on the base layer. Okay. Keep telling me more about the scenario where it's not about. It's not about whether or not there are transactions. It's about the volatility in transactions. Okay. So do you study the Bitcoin mempool? No. Do you know what the mempool is? Yes. Yeah. So it's the backlog of pending transactions. So the

mempool, I mean, it does clear, but it hasn't cleared really right now. So maybe that trend changes. But if you think about it, the mempool is kind of that is your, that is a signaling mechanism of future demand. Right. I'm not saying that there's one five five nine. I mean, like, so like, right now, I mean, at least there's a lot of signaling that there's consistent

long term demand week week over week. The mempool really doesn't clear. That's not what I'm saying. Right. So I mean, but I'm trying to understand like, yeah, so your failure model is not based on how this thing actually works. Right. Because like, I mean, I'm trying to understand. Like, so you're saying failure is going to be clear the whole time, even though Bitcoin is. No, it's

not about the presence of transaction. If you transaction fees, that's what I'm saying. Yeah. So what you're saying is like, there's going to know, you're going to wait for a big giant mempool to build up before anyone takes any, before anyone minds a block and miners are going to just hold the network hostage to that. But I mean, that means all the miners have to collude

because all like the way the game theory works is that any miner can mind a block. Right. That's why blocks come in 10 minutes because all the miners are competing to mind the blocks. Yes. So you're saying that things are changing now to a situation where actually holding the network hostage and colluding to not mind blocks into the block of sufficient value. Well, they have to

collude because like, how do they, how do they, how do they communicate what's an acceptable block for you? The game theory is about how, because miners always will add more mining hash power up to the value of what they are receiving as revenue, there's always going to be ultimately at maturity, unless Bitcoin just keeps on pumping forever. And even at that point, it doesn't really matter.

There's always going to be a ultimately a balance between a surplus and a deficit. So miners, what do you mean a deficit? Because I don't understand a scenario. Why are these miners coming offline? Like what's their benefit? They're not at an unlikely viable. But a lot of these miners are placed in areas where they're already using fuel that is not being used anywhere else. Can we

just do this with Justin Drake on? I mean, I'd be happy to have them on to, you know, dismantle his arguments with my just silly questions. I think it's, I'm not even an expert. And I can like, I can break down these, these silly like models. I think you think that I don't bring them on. You are actually doing that. Bring him on. I don't think

you're doing the thing that you are thinking you're doing. Okay. What else do we talk about? Let's, okay. Let's, I want to talk about ultrasound money because again, I really think that like the role of money is dependability. Predictability, predictability. Like why should I believe that Ethereum is going to have a predictable monetary policy? And like when, when, when do you think I should believe that?

I think you would more believe that after, how long do you want to have a lindia effect behind Ethereum's monetary policy? Only you can answer that question. But I can't wait. If you wait 10 years, ETHER price is going to be really high. Okay. But here's the, like here, here's my pushback. Like you look at that. It's not like from it sound money perspective. It's, it's

about like it truly is about like dependability of the monetary policy. Like you need to depend on it. Like that chart, although it is down, it is, like it shows tinkering, right? So right now that definition is not really met. So at what, this is like, when do you think the definition is going to be met? And then at what point do you think like it

has like, okay, this is like a proof, like, I can trust this because like you're saying, trust it before it happened. It's going to be fine. Like I'm saying, I can't, I'm saying, trust it before it happens. I'm just saying that that's the alpha is that ether is ultra sound money. And if you want to buy it before the rest of the world realizes it's ultra

sound money, you can buy it today. That's the narrative. It's already checked the box on a culture, a sound money culture with which Bitcoiners checked that box in 2017 with the defeat of Bitcoin cash in my mind. Ethereum people check that box. I think in 2020 when we started to really just hit the hammer on the value of ether being a sound money. And so the

theory is the same thing. Yes, it is. Yes, it is. It's not the same thing. Bitcoin cash versus the like some people rolling around the narrative is not the same thing. Bitcoin cash is a real, it was a real standup against, you know, corporate interests that we're trying to change the network. Continuing on, there are the sound money. And the culture of Bitcoin won out in

2017 because of the small, small blocks emphasize the store value. Ethereum and mainly the people like me, Eric Connor, Anthony DC, anti pro Ryan, like we've been hitting hitting the ether is sound is a money drum all throughout the bear market into 2020. And at some point, I would say sometime in 2020 that started to really just catch on probably with the ethos money mean. And

then that embedded. And now the Ethereum core devs mainly just in Drake and now Vitalik are saying that the community wants ether to be money. Therefore, it will be money. And that is the first, the first box that you need to check as a money is that the people believe it to be so. Now the way that it becomes money into ultrasound money is with EIP

1559 and proof is take. And at that point, so each ether becomes ultrasound money. Perhaps at the end of this year. And then after that, it's just Lindy. So hop on, find the right path in Ethereum timeline where you want to hop on board and pick your pick your point, but the longer you wait, the more likely the more on the higher ether price is going

to be. So 2021, maybe 2022. And then just number go up straight up from there. Yeah, that's the plan. That's the plan. And then you know, I think that's the plan. Man, I wonder what happens to plans when they meet reality. I think we will find out. Have you never executed on a plan before? I mean, I have. Right. So there's always a lot of curve

balls. Sure. And they can be dealt with like these miners who thought that they could get in the way of the transition to proof of stake and then folded because they realize they had no power. That was a curve ball and ended up going away. And that sounds like a lot of things. So they could get out and go away different curve balls, and Bitcoin's curve

balls. It's just like your theory. And there is such a different threat model. And it's not even comparable. That's why when you say a theory of it's ultrasound money, it's like hilarious. So I do even know what makes Bitcoin sound. Yeah. You're talking about the lack of tinkering. Is that where you're referencing? I mean, like, even like the lack of the lack of like bullying between

parties. Like the this quote is the truth versus like, we are going to implement our control over the network, because we are the community. Like, yeah, you the UASF was a lot of like Bitcoin full node operator. Say, like, you know, we decided, but ultimately, like, you could have not gone along with them and still been part of the network, so been part of consensus. Like,

there's a lot of companies that, we're just going to run with the old Bitcoin for a long time. I think like blockchain.com put in segway like last week, almost, almost four and a half years later. So like, that's the difference in my mind. Yeah, that's, and this is to me, this is the only miners. As to whether or not these systems are protected by people or

are they protected by math. And as always, the debate we've had, I think these systems are protected by people. Yeah. Well, I mean, I think that there's a little physical network. Sure. That exists by people. Yeah. Well, individual actors are contributing to the network. It's like, where do you want to zoom in? You know, do you want to, do you want to see the whole picture?

Do you want to be just like a small guy picking around? Like picking at, like, oh, it's a person who's managing this node and a part of the network. Like, we get argue about that. Network like that, that's in census. Homemade sometimes telecommunications is hard to coordinate those people. And a decentralized fashion. And that's what big pointers don't see about Ethereum. They don't see emergent coordination.

They see top-down centralized decision making and they don't wait any of the community guidance or community demand for the direction of the protocol. And that's their folly. That's their mistake. I mean, I think it's just about framing. Like really what's happening is there is a power mechanism that people that you either deem is true. Or not true rally behind. And I spoke and they exercised that

power mechanism in a way that no one complains about. So that's what you're saying. Like big pointers can frame that as like. It's centralized. There's clearly an area for the protocol to be changed and like coordinated around. And then what you would argue is like, no, this is consensus of urging. Right. So it's really all about framing. Right. And what you're saying. So it's really clear

anticipation about the morality and future, you know, attack scenarios of the network are going to be. Yeah, sure. I mean, big pointers would frame it as like there's a centralization point where people can be. That what people that that where there's clear control of what defines Ethereum and the definition of Ethereum has shown to change whether people complain about or not. So as soon as the

Ethereum community gets what it wants, it's going to centralization aspect of Ethereum is going to be in is slowly eliminated from then on out because it's got what it wants. The Ethereum community allows for there to be centralization as a tool to achieve its desired goals, which is ultrasound money. Which is something that was decided upon last summer. Yeah. Well, no, it was named last summer.

It was decided upon earlier than that. It just didn't have a name. Okay. And so I saw you put out tweet about why Ethereum is ultrasound money because it's depreciate. It's, you know, it's the declining supply as well as alter secure as well as it's actually it creates cash flow, right? I sure. I think do you know what we are referring to your like the BTC

is not. Oh, yeah. Yeah. That was actually that was actually I straight straight up stole that tweet from Lucas who works at Bankless as a joke. But yeah, I do stand by that tweet. Yes. All right. Break it down because I didn't do justice clearly. Okay. I said. Hold on. BTC is a fixed supply non-productive store of value. ETH is a deflationary productive store of value.

One is sound money. The other is ultrasound money. So what does it being a productive asset make it money? Why is that? I don't know. I just again, I just stole it from Lucas. It was mostly a joke. I wouldn't necessarily say the productive aspect of ether is necessarily the part that makes it sound. It does make it extra scarce as capital and as collateral and

defy. Well, the idea there is that there's a there's like a risk free rate associated with Ethereum because of seeking. Yeah. And that is a baseline of demand. Yeah. I wouldn't I wouldn't I wouldn't see that emerging Bitcoin anyways. I wouldn't necessarily part make that a part of the ultrasound money thesis. The ultrasound money thesis is that the deflation is a reduction of supply. So it's

strictly deflation. It has nothing else to do with like the aspect of the properties of Ethereum. The trip point asset. Yeah. No. That's that's all the triple point asset. The ultrasound money is I believe I would I need to think about that a little bit more, but I'm pretty sure it's just a deflation. I mean, I would just push back and say that when big pointers

say sound money, they don't mean the same thing that you're being when you say that. Yeah, you're talking about a single. It's not it's not it's just not even it's like big pointers would say the fixed supply is ideal because it's known. And at least a known supply would be better than like a unknown. Theoretically deflationary supply. Well, sorry. And the reason I say theoretically is

because you would you would admit that it under ideal conditions. And using Game Theory Ethereum has a deflationary supply. But there are conditions where it doesn't right there are conditions where it can be inflationary right. Right. Yeah, because the priority is to secure Ethereum not to produce sound money. What I would say is the fallacy. That Bitcoin is not secure. Sure. The work is not secure.

Sure. The fallacy of the fallacy. Second fallacies here, baby. It's fallacies all the way down. So the Gresham's law is that people that people flee from bad money into good money. Or they they flee from money that is depreciating versus another money. Right. So specifically Gresham's law is in the face of. legal tender laws. So I mean, it's questionable whether Gresham actually was referring to generally

speaking in the market or. Okay. So here's David's law. Yeah. David's law. People flee from money that is losing value into monies that are gaining in value. Just in relative to each other. And so if Bitcoin is holding flat, yet Ether is depreciating, the flow will go from Bitcoin to Ether over the long term. I mean, we'll do that anyway. It's for other reasons. I mean,

so you're saying holistically with the deflation, but just because it's deflating doesn't. So can you can you tell me more? Why? So deflation plus other things make a store of value. Because I'm still trying. Like I. From my understanding, I just cannot agree with Ether is even more sound money than Bitcoin. Right. So it convinced me of that. Please. All of these fees that people are

like disgruntlingly paying goes into the value of Ether holders who aren't paying those fees. Right. And so the, how many how many millions of dollars is being paid for Ether fees as of this moment. Let me find out crypto fees. Info. Thanks David. Me. How? 2018. Million dollars today is is is paid in Ether fees and under EIP one five five nine that 18 million dollars

gets deleted from the supply, which means that that gets in the same in the same in the same way that Bitcoiners are like, well, when we issue coin, we're actually just borrowing money from the rest of the supply. This is doing the same thing in reverse. It's literally all the opposite of issuance instead of inflation. It's deflation. And so the value of all these fees that

are generated going. It's can some metaphor. It's consuming the ether when you train. It's not. Yes. So what what if people stopped transactions on chain. What if? Yeah. That would that would make Ether inflationary. I mean, because you're, you're saying that people are going to stop transacting on chain with Bitcoin or at least it's not going to be enough to incentivize miners to mine. I'm just

kind of curious if a weird sensitive like that happens with that. Have I said. The Bitcoin blockchain will have transactions being paid to it throughout its life. So explain to me how it's sound money. You're saying something? Yeah. So you're saying that the fees are going to burn. It's going to deflate the supply. Right. But I would argue that a big part of something being money

is liquidity through distribution. Sure. And right. Got that too. Yeah. But this not only this destroys distribution. Because it sucks up. It sucks up fee. It sucks up supply. It's a destroyed distribution. It doesn't change it at all. I mean, proof of stake itself ends like ends a distribution mechanism that proof of work is. Now, yeah, that is it does not. It's not a distribution mechanism.

That's right. But it stops like how many billions of dollars. It stops what Bitcoin seven day average of five billion five million dollars. Excuse me. Of fees. It stops that sell pressure on the secondary market. And so it just delete that sell pressure. And so no, it's not a distribution mechanism. It's a security mechanism. And that security mechanism makes it go up in value. And then

people buy it because they realize this and then ether gets distributed. Because people bought it because it's also sound money. Yeah. I mean, maybe ether is distributed enough. I don't know. I mean, it's like all of these things exist in the wake of Bitcoin. So you're saying that, okay, the ether supply going down is going to be enough to take over Bitcoin's liquidity advantage, because that's

part of the formula of something like taking the place of like the global reserve currency. Maybe there could be other things that could compete as like, let's just call it a sound money. But ultimately your eye is on like ether is going to be the denominator, right? Ether is going to be the best money of the world. And everyone is going to is going to flock

to it eventually because it has the best properties, right? So I mean, at what like, can you talk to me about like at what point does ether actually overtake Bitcoin's kind of like global liquidity? Because I think that one of the big bottlenecks to that is the fact that, you know, you like, ether's advantage is on its own chain, right? So like, ether's chain itself actually

has to scale. Whereas like Bitcoin, it only has to scale to on chain transactions. And as long as it can continue to multiply, and decentralize further, and ensure that the ledger is sound, like that's all the scaling that actually needs to happen on the Bitcoin network. So it's, it's a slightly different by orders of magnitudes, you know, network scaling kind of challenge. Well, any vehicle that

Bitcoin has to scale Ethereum also has that same exact vehicle. But that's not where Ethereum's advantage is. Ethereum's advantage is strictly. So it's strictly on chain. Yeah. But like, but just because Bitcoin has has the centralized institution scale model doesn't mean that Ethereum doesn't also have that. You have a Bitcoin is already dominant there. Why would someone use a theorem if they're not going to tap

into Ethereum's benefits? Because Ethereum does have the benefits regardless of whether you transact on chain or not. I mean, in terms of the decreasing supply. So that's the one. But it's other benefits. So I think that's the market place. Right. Yeah. To some degree, yeah. And that's where like the roll up the roll of rollups comes in where like all of the the very strong demand

to transact on L1 where the fees are super high. That can just be made by different rollup providers doing the whole like shipping container analogy. Like ultimately at the end of the day in 30, 50, 100 years Ethereum, the L1, no one might touch that directly. The only people that might touch it are rolling up the rollup providers who are transacting on L1 on behalf of

their users. So what if that, what if that creates inflation? No, why would it create inflation? Because there's no fee. There's no fee pressure. No, no, people. Well, if there are, if there are cheap, they use the main chain. Why? If all the infrastructure is upchain, right? Like you're talking about, like you're talking about these disaster scenarios for Bitcoin, but like don't these disaster scenarios kind

of exist on Ethereum? No, because of VIP 1559 is the mitigator of Bitcoin's disaster scenarios and proof of it and common issuance. Kind of. I mean, so it doesn't guarantee that there's going to be low inflation or no deflation or deflation. It doesn't guarantee that it just all does is that it's a mechanism based on what's happening. Yes. And that mechanism has the optionality of going

inflationary. Yes. If there is, if there's no demand for Ethereum, then yes, Ether inflates. Just like if there's no demand for any economy, the currency inflates. Well, issuance creates input, issuance creates never mind. Never mind. I feel like we're going back and forth here. I mean, we should wrap it up. I got it over now. Yeah. Yeah. I got it somewhere somewhere to go. Yeah. Yeah.

All right. Say hi to the person for me. Yeah. Where do people find you? You got y'all can follow me at Wow, I just said y'all trustless state, both on Twitter and on bankless Christian. Y'all's great man. What are you talking about? You guys don't need at CK underscore snarks and at Bitcoin magazine and at the Bitcoin 2021 conference with pretty much everyone else in the

crypto and Bitcoin community. So my ME June 3rd, fourth and fifth go to B dot TCE for slash conference. Get your ticket ASAP. And maybe maybe David and Ryan will be there. But at least I am going to be there. Ryan will not be there. I might be there. You should go. Tell Ryan that he shouldn't be scared. Ryan doesn't even go to Ethereum conferences. He's

not going to a Bitcoin conference. All right. All right. Well, I take back the invite, Ryan. Peace. So you believe. Yeah. Yeah. Yeah. Cool. Yeah. Yup. So here, Rub around you, Rub around you, Rub around, we slide. Rub around you, Rub around you, Rub around, we slide.