Vijay Boyapati's Bullish Case for Bitcoin

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Bitcoin is like gold but with this
magical ability that you can teleport it.
— Vijay Boyapati

Interview location: Skype
Interview date: Tuesday 4th Dec, 2018
Project: Bitcoin :)

Bitcoin is a survivor. In the 10 years of the protocol, Bitcoin has survived the collapse of Mt. Gox, the closing of the Silk Road, the banning of Bitcoin by the Chinese government and relentless attacks from politicians, economists and journalists.

With each attack, the Bitcoin immune system gets stronger, and with each market cycle, the infrastructure grows. In the last two years the network market cap peaked at nearly $300bn, futures have arrived, custody solutions have improved, and Lightning Network is in beta with a rapidly growing capacity.

The potential of the Bitcoin network is enormous, and the Lightning Network offers scale which the base layer has been unable to provide. Together, Bitcoin can be both a global settlement layer for digital gold and a payment network better than the current fiat system.

Vijay Boyapati highlighted the potential with his article The Bullish Case for Bitcoin, making a case for why it is the hardest form of money and the best store of value. In this interview, we discuss the originals of the article, why Bitcoin is so important and why we should be bullish about its future.


TIMESTAMPS

00.02.57: Intro and welcome
00.03.39: Background to The Bullish Case for Bitcoin
00.04.08: Why Bitcoin for Vijay
00.11.24: Part 1: Genesis and the Origins of Money
00.28.20: Part 2: Attributes of a Good Store of Value
00.45.15: Part 3: The Evolution of Money
00.47.15: Part 4: Bitcoin Misconceptions, risks and conclusion
01.18.37: How to stay in touch with Vijay


 

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TRANSCRIPTION

Peter McCormack: Good evening, Vijay. Well, it’s evening here. I always say this to people, but it’s probably a different time for you right now.

Vijay Boyapati: That’s right. It’s noon here in Seattle.

Peter McCormack: Right. Okay. Well, listen. We’ve got a lot to get through. Your article, The Bullish Case of the Bitcoin, I think I’ve read it three times now. I read it twice when I originally saw it because I kind of read it once and I was like one of those things I’ve got to do that again, and obviously I’ve reread it again for this interview. Outside of that, I struggled for a while to find some of your work. It was only then when I went to the … Sorry, Mises Institute work. I saw some of your other writing, but that was kind of your first big crypto article on medium, right?

Vijay Boyapati: That’s right. I hadn’t really written anything about Bitcoin before then. I’d done an interview in 2014 where most of the ideas that I talked about in the article were discussed, but I hadn’t written anything. That’s right.

Peter McCormack: So we’re going to work through that because I think it’s a good topic and there are loads to ask, but before we do, a couple of questions. Okay, first one’s quite a simple one. Why Bitcoin for you?

Vijay Boyapati: Wow. That’s a very deep subject. So, I got interested in Bitcoin in 2011, and as a student of Austrian economics, I immediately understood that it was a monetary phenomenon, and so that I found absolutely fascinating. How does this thing have any value? It just sort of comes out of thin air. And I had been a gold bug for a long time, and actually, I’ll tell you a story that I’ve never told anyone else.

Vijay Boyapati: When I was a kid, my mother got a brain tumour and she was very ill, and my father was very worried about her. And I was born and raised in Australia with my sister, but my father and my mother were born in India, and my dad kind of panicked. The idea that potentially he would have to raise and take care of two pubescent children in Australia without his partner really scared him, and he for a brief time decided he wanted to take us back to India, well go back to India for him. And at the time, there was no easy way of transferring money to India. The banking system was just horrendously bad, ramshackle.

Vijay Boyapati: A bank could have multiple branches, and you couldn’t transfer money between a bank’s own branches. So there was no easy way for him to transfer money to India, so he sold a bunch of his assets in Australia and turned it into gold, and I vividly remember as a child going to India on an aeroplane with my dad carrying bags of gold and the sense of how terrified he was to be carrying his wealth in a bag that anyone at any time could rob him and he would lose all his wealth.

Vijay Boyapati: So when I came across Bitcoin I immediately understood its value proposition and why it was so unique and so special. It was digital gold, except that it was easy to transfer to anyone anywhere on Earth, and in a way, it’s like gold except with this magical ability that you can teleport it. And so I got interested immediately.

Vijay Boyapati: And to tell you another story, the first Bitcoins I ever got in 2011 was due to a bet that I made with a friend of mine.

Peter McCormack: I’ve heard this.

Vijay Boyapati: Yeah. It’s a …

Peter McCormack: So based on December prices, he gave you 100 grand?

Vijay Boyapati: Yeah, he gave me a lot of money. So the story’s kind of interesting. He lost the bet and the bet was for a single silver eagle, which was at the time worth $50, and my friend who had become interested in Bitcoin in 2010 said, “Listen, don’t take the silver coin. I can give it to you if you want but let me give you Bitcoins instead.” And I had no idea what he was talking about. He said, “Look, this is an amazing new technology. It’s a new form of money.” I really trusted in this guy, he’s brilliant and has introduced me to a whole bunch of things. One of the best investors I know. So I said, “Okay, fine. I’ll take it.” He was like, “Well, you have to download this software.” And I’m like, “What the hell is this?” I downloaded the core software and started downloading the blockchain and it took hours and hours, it was a really small laptop that I was doing this on. I was like, “What on earth is going on? Why do I have to download gigabytes and gigabytes of data just to receive this thing.”

Vijay Boyapati: And he sent it to me and he showed me on a very primitive block explorer the Bitcoins that he had sent me. It was just a string of numbers and letters. I was like, “I don’t know what this is. Okay.” So he gave it to me. So, unfortunately, it was five Bitcoins, unfortunately, those Bitcoins were on a laptop that was taken by my ex-girlfriend at a time when they weren’t worth very much, maybe they were worth like $70 so I didn’t think anything of it. During 2017, as the price of Bitcoin was going up I was like, “Oh man, should I contact her? Should I say that laptop has $20 thousand worth of Bitcoin?” Oh, crap, $50 thousand, $100 thousand. And eventually I emailed her and she told me that unfortunately it had been lost in a hotel in Minnesota. Those Bitcoins are dead forever, those five Bitcoins and you can see them on the blockchain. They’ve never moved since they were given to me. That’s how I got into Bitcoin.

Peter McCormack: I had that with a few hundred Litecoin at one point that were worth nothing. I had them in a wallet and I had the password at my old work, just didn’t even think about it, like me and my brother put so little money in to buy them and then last year when they went up to a few hundred I was like, “Oh no.” I was looking everywhere for the password, never found it. I think there was only an estimated around four million Bitcoin have been lost.

Vijay Boyapati: That’s right, yeah. And I think it’s because people in the early days didn’t really appreciate what it was. A lot of people thought of it as a medium of exchange that that was its primary value proposition and so they thought, “Well, I’ll get some and I’ll use it to buy alpaca socks or weed or something online.” But I didn’t really care how much I had because it’s a medium of exchange just like the dollar is. And I didn’t understand it really much more akin to gold except it’s even more scarce than gold. So if this thing does get adopted, it’s going to be worth a lot.

Vijay Boyapati: People didn’t take the security very seriously and so you have people with stories of how they had 10 thousand Bitcoin on their hard drive and they threw their computer away and then they ended up going to the dump and trying to dig up their hard disks so they could get their private keys back. I think that happens much less frequently now because people understand what it is and are much more aware of the importance of securing their keys and handling it kind of like digital gold.

Peter McCormack: Right. So we’re going to unpack your article as four parts. We’re going to do it in four parts.

Vijay Boyapati: It was originally released in four parts.

Peter McCormack: Yeah, it was, yeah. I’m going to keep it in four parts because I think it’s a good way of segmenting up the point. We’re going to start Part One, Genesis and the Origins of Money. So 2008, Satoshi drops a white paper. Tell me what was unique about it. What did it solve?

Vijay Boyapati: It solved the problem in computer science known as the Byzantine Generals’ Problem and this was a problem that a lot of people didn’t think had a solution. He had come up with a system using what he called the blockchain to solve this problem and really the first application of this system was to create a new digital good Bitcoins based on his solution to the Byzantine Generals’ Problem. It was a profoundly important innovation both in economics because it changes our understanding of money and where the money can come out of thin air so to speak, and a profoundly important innovation in computer science as well. In my article, I said he should be the first person to qualify for both a Nobel Prize in economics and the Turing Award, which is the equivalent prize in computer science. I do want to say one point of error in my article is that claim. There is actually one person who did win both, I was not aware of it at the time, but there was one other person.

Peter McCormack: Who was that?

Vijay Boyapati: Herbert Simon, he was an economist and made some amazing contributions to computer science as well.

Peter McCormack: Right, okay. So, do you think Satoshi will eventually, let’s start with one, the Nobel Prize. Do you think that’s something that will happen?

Vijay Boyapati: I think he deserves it, absolutely I think this is the most important innovation to money in a thousand years. I do not think it’ll happen unfortunately because of the Nobel Prize committee … I don’t think they’re going to give it to someone who’s anonymous and in general, I don’t think they’re as friendly to the kind of economics that Bitcoin is built on and so it’s less likely. They’ve only, I think, given one Nobel Prize to someone who could qualify as an Austrian economist so I think it’s very unlikely that’ll happen, sadly.

Peter McCormack: All right. So Bitcoin drops. What are the most important design features of the protocol?

Vijay Boyapati: I think it’s distributed peer to peer nature which makes it very difficult to censor and to stop. And Satoshi wrote early on that he was kind of mimicking the file sharing system BitTorrent and he made a comment that a lot of these file sharing systems, the centralized ones like Napster, had been easy to shut down. But BitTorrent was still going strong and people were transferring files on BitTorrent and so he was mimicking that sort of design and distributed peer to peer network which makes it much harder for a government to say this needs to stop and we’re going to outlaw it and the network shuts down.

Vijay Boyapati: The other thing I think is incredibly important is its monetary policy which is a strictly fixed supply. There will never be more than 21 million Bitcoins. So Bitcoin is the hottest money that has ever existed, not even gold, which we sort of think of as limited in supply is as hot as Bitcoin. More gold is mined every year. If gold was to ever take off in price, it would unlock a lot of supply that we hadn’t even thought of. People would start mining the sea floor and mining asteroids and that sort of thing at a sufficiently high price. With Bitcoin it doesn’t matter how high the price goes, no more than 21 million will ever be created. That’s not something we’ve ever seen. We’ve never seen a monetary good, which is purely deflationary in that way.

Peter McCormack: It’s funny, I was interviewing the Grin guys last week and that went out today and they’re anti-deflationary currency. They don’t believe in it.

Vijay Boyapati: Yeah. Well, this is sort of an ideological point and an economic point. If you believe in the Austrian school of economics then you understand that more money does not mean more wealth. More wealth is more goods and services, more factories, more food that’s what more wealth means. Creating more money, creating more paper tickets doesn’t make more wealth and in fact, it hinders our ability to create wealth because it really affects the price signal. The price signal is one of the most important things in economics which allows entrepreneurs to figure out where demand is, the state of supply, and how to match these things together to create new wealth. I think inflationary monies are incredibly harmful and they’re also associated with government’s ability to spend. Governments love inflationary monies because it allows them to tax the population insidiously.

Vijay Boyapati: Taxation is a direct means of obtaining funding from a population, you have to go into people’s pockets and take the money out and so they’re aware of it and they don’t like it and there’s political backlash whereas with inflation it’s hidden and insidious. I think governments especially love inflationary monies and why they argue for it and why there’s a whole cottage industry of economists who explain why inflation is good for us which I think is absolute nonsense.

Peter McCormack: So inflation is taxation?

Vijay Boyapati: It is, absolutely. And it’s taxation, it’s a really unjust form of taxation which transfers wealth from the population in general to the people who get the inflated money first which is the banking system. And really, do you want to be transferring wealth in an insidious way from farmers and nurses and doctors to bankers? I don’t think so. I think it’s uneconomic and I think it’s morally unjust and it needs to stop.

Peter McCormack: Okay. So Bitcoin is a great investment but we’re not going to give any financial advice. But hypothetically speaking, why would anyone want to buy digital asset? Magic into that money which isn’t backed by any commodity or government. Isn’t that hugely risky?

Vijay Boyapati: It is. It is a huge risk but if you understand Bitcoin as a monetary good, we can understand and think about the attributes that make for good monetary goods. And with Bitcoin excels along those attributes. The attributes that make for good money have been known since the days of Aristotle, fungibility, portability, divisibility, those kinds of attributes. And if you look at Bitcoin along those attributes, it absolutely excels. It’s scarce, scarcity is another one of them, I think, the most important attributes. Bitcoin is more portable, more divisible, it’s more scarce, it’s also censorship resistant. There’s a huge segment of demand from people who want to keep their wealth in a non-sovereign store of value, something that cannot easily be seized. There are people in places like China who have built up wealth over their lifetime who may want to leave China and they don’t have a means of doing it if they use their sovereign money, if they use China’s yuan.

Vijay Boyapati: They will demand something like Bitcoin because it has the attributes which allow people to keep their wealth in something that cannot be seized, is easy to transfer and transport. My view is that the economic case for Bitcoin is that it’s a superior form of money to the types of money that we have available. It’s certainly superior to fiat money and I think it’s also superior to gold. The one advantage gold has over Bitcoin is established history. Gold has been used as a monetary good for five thousand years and so people have some level of trust in it. But I think the historical trust that people have in a monetary good is asymptotic which means that over time Bitcoin will quickly converge to the amount of trust that gold has.

Vijay Boyapati: In the first few years of its existence, there’s very little trust in Bitcoin. People didn’t even know if the cryptography worked correctly. And then there was concern about whether exchanges were easy to hack and so on and so forth. Bitcoin is 10 years old now. I think by the time it’s 20 years old there will be near universal confidence that it will exist forever. In the way that you can imagine that in the late ’90s people didn’t really understand what the internet was and whether it was going to be an important part of our lives. That was when the internet was about 10 years old. You fast forward 10 years after that when the internet was about 20 years old, around 2010, I think there was a widespread belief that the internet was a permanent institution in our world. I think 10 years from now the same will be true of Bitcoin.

Vijay Boyapati: If you think of its value proposition then, it’s something people will believe that it’s going to exist forever. It cannot be debased and it cannot be seized or confiscated. That’s a very powerful set of attributes that I think is going to drive a lot of demand in the next decade.

Peter McCormack: Okay. But if societies converge to a single store of value and Bitcoin becomes globally accepted, globally recognized, is there a significant risk to hold as gold that gold will devalue heavily against Bitcoin and therefore gold could lose its status as a store value?

Vijay Boyapati: Yes, yes, absolutely, that’s a really fantastic point. Bitcoin competes against other monetary goods. The value of monetary goods is gain theoretic. Their value is not tied to some use value. You can’t do anything with the dollar bill, you can’t eat it, and you can’t build anything out of it. One of the points I make in my article is that the value of a monetary good is based on everyone’s appraisal of everyone else’s desire for that good. It’s a really hard concept to think about. But what it means is that you have all of these different monetary goods and they’re competing with each other based on people’s perception of which one’s the best place to store their value.

Vijay Boyapati: If Bitcoin becomes the reserve currency of the world, the things that will be hurt the most of competing monetary goods, things like gold and also government bonds which are also sort of used as a stored value as well. That’s where I think you’ll see interest rates rise, you’ll see the price of gold drop. Honestly, I think you can already see this when you speak with young professionals and kids today and ask them what they think about gold, none of them is interested in gold. None of them has even thought about buying it. But almost all of them have heard about Bitcoin. It’s going to be the asset class of the kids growing up today. It might not be the asset class of central bankers and old fogies who are holding their gold coins under their bed but in the future, it’s going to be the asset class that the people who are young today will desire.

Peter McCormack: Kind of like what YouTube did to TV. I’ve got two children, my daughter’s 8, my son’s nearly 15. His entire media consumption is YouTube and Twitch. And my daughter is pretty much YouTube. The only reason my son watches TV is for sports. I really don’t know what, my daughter’s pretty much just YouTube. They have no interest in traditional TV so I guess it’s the same scenario. And then another point actually, I’ve said this in a couple of previous podcast episodes, and you also you cite John Pfeffer in your article.

Vijay Boyapati: I don’t remember citing John but John’s fantastic.

Peter McCormack: He’s thanked in the end.

Vijay Boyapati: Oh yeah. He read the article for me.

Peter McCormack: I had lunch with him last year and he said this brilliant thing that has always stuck with me and I’ve repeated it a number of times. But he said, “Fast forward 200 years and we’re flying around in our millennia falcons, do you think we’re going to be transferring and carrying lumps of gold with us?” I was just like, “I think you’re right.”

Vijay Boyapati: Yeah. One of the things I think is amazing is that you can see the future in the present if you’re observant enough and if you pay attention like you’re doing to what your kids are doing, you can see what the future will look like. I think the most astute investors could understand this, they could understand that Bitcoin is this new scarce digital good that young people are going to desire in the future. They’re not going to desire gold. That’s hard for me, someone who’s a gold bug and who owns gold, to think of that. When I first bought Bitcoin, I thought of them as an insurance policy against my position in gold and now I think of it the other way around. I think gold is my insurance policy against my position in Bitcoin. If there’s a solar flare or something like that and all the computers on Earth are wiped out and no one knows who has how many Bitcoin, then maybe gold will come back. I think it’s unlikely.

Peter McCormack: So going back to your article, I found it really interesting the part where you talked about how societies as they grew and expanded and traded, crossed borders and crossed seas were different in competing stores of value. And when gold became the first global store of value, it was one of the benefits was the efficiency of trade because it was a globally recognized store of value. Bitcoin takes it one step further with the ease of which you can transfer it globally. So you say to me, “See in the future.” The future’s Ready Player One and you’re in a virtual world with people all over the world and you need to transact, you need something like Bitcoin, right?

Vijay Boyapati: Yeah, absolutely. We live in a digital society and much of the value that is created today is digital. Bitcoin will become, I believe, the unit of account of the digital wealth that’s out there. It already is becoming a sort of unit of account for people who are buying digital assets. People who are trading other cryptic currencies back and forth … Really what people are trying to do is accumulate more Bitcoin. They think of their profits in Bitcoin terms like you have a certain number of BCash, for instance, and you think this is worth .2 Bitcoins and so I can increase my Bitcoin position by 20%. I think it’s already starting to get this unit of account status for certain digital goods and I think that’ll continue into the future.

Peter McCormack: Okay. So moving on to Part Two, The Attributes of a Store Value. I’m going to disagree with you a little bit in here but let’s go through.

Vijay Boyapati: Okay.

Peter McCormack: The attributes of an ideal store of value, it’s durable. It’s portable, it’s fungible, it’s verifiable, it’s scarce, it has an established history, and a sense of shit resistant. Let’s forget about fiat for now because the fiat compared to gold and Bitcoin as a store of value, I think we can agree, is pretty crap but let’s compare with gold. You would say gold is more durable than Bitcoin.

Vijay Boyapati: I can’t remember the rating I gave to gold but I think I said it was-

Peter McCormack: You gave it an A plus.

Vijay Boyapati: A plus, yes. I should bring my chart up but yeah, I think I recall saying that gold was more durable because gold is … The gold that is being mined throughout history all still exists. The gold that was used by the Pharaohs still exist and probably some of it is in gold bars in the Federal Reserve vault. So yes, gold is very, very durable.

Peter McCormack: But Bitcoin is more portable?

Vijay Boyapati: Yes. It’s much more portable than gold so if you return to the story I told you about my dad going to India, he wasn’t taking that much wealth but imagine if you’re trying to transfer $10 million or $20 million worth of gold to India how difficult that would be, physically carrying that. A loan would be very difficult. You can walk across any border on Earth carrying a hundred million dollars of Bitcoin and no one will ever know. That is a very, very powerful thing and I think it’s one of the biggest comparative advantages Bitcoin has over gold.

Peter McCormack: Right, okay. I agree with you on that. I think the irony of that story is there are restrictions now on taking gold out of India.

Vijay Boyapati: This was taking gold into India but yes, there are restrictions. India has all sorts of capital controls and is running all sorts of crazy experiments on their own money. So yeah, don’t go to India with anything valuable. You don’t know if you’re going to be able to keep it.

Peter McCormack: You say gold is more fungible than Bitcoin because you can smelt down the gold, create a new gold bar, and maybe you don’t know the difference. Isn’t that the same as mixing a Bitcoin?

Vijay Boyapati: Yeah, it is. It is. The point I was trying to make was that Bitcoin is fungible at the network layer which means that any Bitcoin can be transferred on the network like any other Bitcoin but it’s not necessarily fungible at the application layer which means that … So the U.S. recently banned certain addresses that they say are associated with Iran which means that if an exchange receives funds from those addresses, they will seize those funds. And this, I think, is one of the weaknesses of Bitcoin is that it doesn’t have very strong privacy technology at the base layer. That makes it less fungible. Of course, you can mix your coins but mixing coins comes with risks and it’s not perfect either. A sophisticated enough analysis of the blockchain might be able to uncover the person who is mixing their coins. It’s not perfect. I think this problem will be solved but it is a drawback of Bitcoin, the Bitcoin protocol.

Peter McCormack: Somebody said to me they think it’s going to be the next Bitcoin war, similar to scaling and that there are some people who do not want fungibility, they want a transparent base chain.

Vijay Boyapati: I think if people try to push it on the base layer, there will be a war but I don’t think that’s going to happen. I think the privacy improvements will happen on the second layer, they’ll happen in the Lightning Network because really the most valuable important thing about the base layer protocol is that it’s immutable. It’s very hard to change. And if it were the case that anyone could change it easily then it would lose its value. We saw this with the scaling debate, the idea that Bitcoin needs bigger block sizes to scale. That’s a really easy software change. That’s changing one line in the code or maybe a few lines of code. But if you’re able to do that you’re proving one thing which is Bitcoin can be changed easily and it might be the case that the people changing in this instance have good intentions but what about some point in the future where governments want to change it and say, “Well, this has become a reserved currency. We need to make it inflationary because we believe that that’s good for everyone.”

Vijay Boyapati: I think immutability is … It’s not one of the attributes I talked about in my list in the article but I think it’s incredibly important and it wasn’t appreciated during the scaling debate by the people who kept saying we need bigger blocks. They didn’t realize that that was the core value proposition.

Peter McCormack: Right, okay. So does Lightning Network offer fungibility in that you can deposit your Bitcoin on the Lightning Network and start trading within the Lightning Network and you can’t make sanctions work?

Vijay Boyapati: It’s not that sanctions don’t work but that I think privacy technology will be easy to build into and on top of the Lightning Network so that you can do transfers behind Tier for instance and that sort of thing. I’m honestly not an expert on the Lightning Network but from what I read and what I understand it will be easy to incorporate privacy technology at that layer then it will be in the base layer. It’s just hard to do anything in the base layer especially if it’s not backwards compatible because if you do that, then you’re going to have some very vocal minority or majority say we don’t want to change the base layer.

Peter McCormack: Okay. I’m going to skip verifiable because it’s kind of a bit boring. Divisible was kind of obvious, we know it goes down to eight decimals so that’s cool. Scarce is great, we understand scarce. You say that’s its most important characteristic, right?

Vijay Boyapati: Yeah, I think that’s where money ultimately gets its value from is its scarcity. Monetary goods, if you look at the history of monetary goods, they’ve all had the same property that they’re relatively scarce. They’re hard to produce. And if it ever becomes a case that it becomes easy to produce a monetary good, then they completely lose their value. One thing people believe is that gold is valuable because it looks good and it’s shiny, it can be used for jewellery. I think that’s completely backwards. I think it’s used for jewellery because it’s valuable and it’s valuable because it’s scarce. And when you flip your mindset that way, you realize why Bitcoin has a value proposition, it’s ultimate scarcity. That’s why it’s worth tens of billions of dollars today.

Peter McCormack: Right. So if Bitcoin does become the primary store of value, destroying the value of gold, people just won’t be wearing gold anymore.

Vijay Boyapati: Yeah, yeah, yeah. I think so. I think that’s a fair thing to believe. You have to realize gold gets a lot of its value from monetary demand. There’s a huge fraction of gold that’s held in bars in vaults, not used as jewellery but held in vaults. It’s federal reserve in China, in Germany, in Switzerland and if those guys dumped their gold the price of gold would crater. It would drop from whatever it is $12 hundred an ounce down to, I think, $50 an ounce. Then it doesn’t really seem like something that … It’s not as ostentatious or ornamental anymore because they’re not worth anything. In India, people wear gold as jewellery because they’re keeping their savings on their body. If gold loses its value, then you’re not keeping savings on your body anymore, you’re keeping useless metal.

Peter McCormack: I’m not sure how you would wear a Bitcoin but … I’ve been to India and I was amazed at how many gold shops like jewellers there were. It was incredible.

Vijay Boyapati: It’s their preferred way of storing wealth because they have a long history of a government which has debased its money.

Peter McCormack: Yeah. Took out the, what was it the 500 rupee note, they just took it out of circulation?

Vijay Boyapati: Yeah, yeah. You don’t even know if the money in your pocket will be worth anything the next day because the government will just say, “We’re banning these notes now. They’re no longer legal because we don’t like how they’re being used.” They don’t have the ability to do that to gold so Indians have loved gold for a long, long time.

Peter McCormack: What do Indians think of Bitcoin?

Vijay Boyapati: I think the government in India has suppressed Bitcoin a lot so it hasn’t been adopted as much as you see in the West, unfortunately. In a lot of ways, the Indian government is really oppressive of its people and their ability to adopt new technology because fundamentally the Indian government doesn’t trust its people. It doesn’t trust them to use new technology. If you want to use a cell phone in India, you have to jump through a lot of hoops to get that to happen.

Peter McCormack: Is there a correlation between how much of a threat Bitcoin is to certain governments monetary policy and how much suppression exists? You understand what I’m trying to say?

Vijay Boyapati: Yeah. I totally see what you’re trying to say and in places like Venezuela, I do think they’re trying to crack down on Bitcoin. There is a really great irony here that the nation that should fiat Bitcoin the most is the United States because it has the reserve currency of the world which is the U.S. dollar and the United States has the most to lose if Bitcoin becomes the reserve currency of the world. It is really ironic that the U.S. is the most open to Bitcoin compared to say Russia or China which they could improve their geo-strategic position a lot if they started accumulating Bitcoins in reserve and hastened its adoption as the world’s reserve currency. They could hurt the U.S. a lot but they’re more worried about its effect on their internal markets so they have largely ignored Bitcoin or have cracked down on it as China has done.

Peter McCormack: So on to the two, I just slightly disagree with you on. So we’re going to established history and I think you’re D for Bitcoin now is pretty harsh and I’ll tell you why. Because I don’t think Bitcoin needs to have as an established history as gold or fiat because technology moves so quickly. I think it’s a C, maybe a C plus now because like you said, if it’s still here in 10 years it’s here for good, therefore it’s halfway there.

Vijay Boyapati: Yeah. I’m a harsh teacher and I give low grades. You’re correct, I think there is a linear effect and if Bitcoin exists for 20 years its existence into the future will be trusted almost as much as gold which has existed for five thousand years. So give it 10 more years and I would give Bitcoin a B plus on established history.

Peter McCormack: Then censorship resistance, you give an A but I think this ties into fungibility, right? Because if you can sanction a coin and exchanges can’t accept it, we’ll have to report it it’s not really censorship resistant, right? Fully?

Vijay Boyapati: That’s true, it is a problem that governments can identify Bitcoins on the blockchains and say, “We do not want you to use those.” But those restrictions are usually within a nation that then apply across other nations. I think there was a lot made of the fact that Bitcoin was anonymous in the early days and that was the reason that people used it to buy illicit substances like drugs but I think that’s actually a mistake. Bitcoin’s not anonymous at all, it’s completely open. It’s kind of a law enforcement wet dream, they can see where everything is going and they can do an analysis and they can track you down years later.

Vijay Boyapati: The reason I think Bitcoin was so popular for trading drugs online was that it was permission less which meant that there was no human intervention deciding which transactions could happen, which ones couldn’t happen. If you use PayPal, for instance, and you try and buy drugs with PayPal they would just stop you, they’ll block your account. There was no equivalent for Bitcoin. There’s no one saying, “You can’t buy heroin online.” I think it’s the permissionlessness which made Bitcoin so popular for illicit trade, not its anonymity.

Peter McCormack: I don’t know if you’ve heard it in any of my interviews you’ve listened to. My Bitcoin story is kind of similar to your one. Yours was about your dad taking gold back because your mom was sick. My mom got sick and we wanted to buy her a certain treatment that you could only buy with Bitcoin.

Vijay Boyapati: Wow.

Peter McCormack: So I had to go onto Coinbase and buy Bitcoin, go onto one of these markets, buy the CBD oil. That was the real aha moment of like I get this now, this is kind of interesting. In summary, if that’s your graded report with your A’s, B’s, and C pluses, the little headmaster summary at the end is fiat is just terrible. Gold is pretty good. Bitcoin is excellent, right?

Vijay Boyapati: That’s right and that’s why Bitcoin will out-compete other monies is because it is superior along most of those attributes, they make for good money.

Peter McCormack: Its biggest problem probably isn’t really established history, durability, and fungibility although the scores are right. I think its, probably, its biggest problem is convincing people that it doesn’t have to be something you can hold in your hand have value. Almost like the movement from CDs to MP3s, there were a lot of people that kept buying CDs, I was one of them. I’ve got like a cupboard full of CDs. I kept buying them because I’m like I’m not buying a digital piece of music. I want the CD with the inlay card. I haven’t bought a CD in three years. I’ve got a cupboard full of them. I probably bought them for two or three years longer than I should, it’s that kind of leap that’s probably its biggest problem.

Vijay Boyapati: Well, you’re ageing yourself, Peter, and me because I had the same mindset. We know that that’s not how kids today think. The process of convincing people, it’s just a matter of time.

Peter McCormack: I turned 40 this year.

Vijay Boyapati: So do I.

Peter McCormack: No, I have.

Vijay Boyapati: I did too, yeah.

Peter McCormack: When were you?

Vijay Boyapati: November.

Peter McCormack: I was October. I’m the old one. October 31.

Vijay Boyapati: We were both born in ’78 then.

Peter McCormack: Yeah, ’78, yeah. Right. Okay. Part Three, The Evolution of Money. So there are four stages and a lot of people will criticize Bitcoin because it’s too volatile. There’s a sensible, great answer for that. Can you walk through the four stages, explain what they are, and then explain where Bitcoin is in those four stages?

Vijay Boyapati: Okay. I think just to set the stage for this I think one of the biggest mistakes that are made by people, in general, is to think that money is a medium of exchange. This is no accident, it’s no accident the economics profession has defined it this way. Money serves other purposes as well, a unit of account and a store of value. The reason that it’s being defined this way, in my opinion, is because governments have constantly tried to destroy money’s role as a store of value and gold’s served both purposes. It served the purpose of a store of value and a medium of exchange. Gold was not rejected by the market. Gold was demonetized by force, it was confiscated by governments around the world and it was demonetized that way. I just wanted to say at this stage that most people think of money as a medium of exchange but really money evolves to become a medium of exchange.

Vijay Boyapati: And the stages of evolution of money, the first is that money starts off as a collectable which is something that is valued just for its peculiarities. Imagine ancient men picking up something, a shiny gold nugget and thinking, “Wow, this is cool,” and just wanting it because it’s cool. The same thing also applies to Bitcoin. The first people who obtained Bitcoin, or for instance the person who sold some pieces for Bitcoin, why do you take they had no market value at the time? He took them because they were cool. So they become a whimsy of the possessor, something that the person values in and of itself.

Vijay Boyapati: The next stage, once there are enough people who value the thing as a collectable, people start perceiving it as a store of value. That is, it’s something that I can trade for on the market because there are other people who value it and think it’s cool. As people start perceiving it as a store of value, they’ll start holding it as a store of value. They’ll think, “This thing seems to hold its value pretty well and it actually increases in value over time so I’m going to get some.” This actually hastens the process of becoming a store of value, it’s a feedback loop. This feedback loop ultimately ends when it’s held by everyone as a store of value. Everyone wants a little bit of it because they recognize it’s a store of value. This is essentially what happened to gold, and on a small scale other monetary goods like beads or seashells, within their societies.

Vijay Boyapati: Once it’s fully adopted, once it’s widely owned within society as a store of value, its purchasing power will stabilize because you don’t have new entrants coming into the market demands it. So for instance, people now have argued that Bitcoin is too volatile. It’s too volatile because the ownership base is so small. There are only a few tens of millions of people. In the early days when there were only a few thousand people if a new person came along and said, “I want to put a million dollars into it,” it’s going to cause a huge spike in the price. The idea that you can go from something that’s worth nothing to being a trillion dollar store of value without seeing volatility is absolutely absurd. There’s no straight path from zero to global store of value without volatility.

Peter McCormack: So, Murad made that point on The Pomp Show and it never crossed my mind that, although it’s kind of obvious, and this is why we have these you talked about kind of factors in hype cycles, is it the gauntlet cycles, right? We get the new entrants and then they leave and then the new entrants tend to come in late on the former lose a bit and we just get this rinse and repeat.

Vijay Boyapati: That’s right. The one last thing I wanted to say about the stages was one stage after medium of exchange, which it becomes a unit of account. A unit of account means that you start seeing prices quoted in terms of that good. So for instance, a loaf of bread is a tenth of an ounce of gold. And when you go to a store in your country for, I’m in the United States, you see prices in terms of U.S. dollars. You don’t see prices of goods in terms of baseball bats or in terms of shoes, you see them in terms of U.S. dollars so that the last stage is a unit of account. As you mentioned, this transition or this evolution through these stages doesn’t happen in a smooth way, it happens as a series of cycles, these hype cycles.

Vijay Boyapati: One of the things I found most fascinating about Bitcoin was that we’ve never seen anything being monetized in real time like we are with Bitcoin. The process of gold being monetized took centuries, millennia. So we get to observe in real time what this looks like and what we see is this fractal pattern where you get this huge boom and then crash and then you get this plateau phase and it keeps happening except it increases in magnitude. If you take the chart of 2016, 2017, 2018 and you superimpose it on the chart of 2012, 2013, 2014 it looks almost identical it’s just bigger. The thing that I thought was most amazing is if you look at the chart of gold from the ’70s to say 2010, it exhibits almost exactly the same pattern. It’s a perfect hype cycle.

Vijay Boyapati: One of the things I speculated was that this is an inherent social dynamic to the process of monetization and one that we’ll keep seeing until Bitcoin is widely adopted. We cannot expect that this is going to be a smooth ride, it’s going to be a series of booms and busts that get bigger and bigger and bigger until eventually, it’s global money.

Peter McCormack: It seems to be two very important hype cycles. One will be real institutionalization of Bitcoin, not just a few interested hedge funds or family offices and rich guys but real institutionalization with Bitcoin traded as a product or is globally on every exchange and then also a nation-state cycle. Do you agree with that? Was there anything I missed?

Vijay Boyapati: Yeah, I agree with that. I think that’ll be the latest stages of Bitcoin’s monetization especially the entrance of nation states. A lot of nation-states ideologically opposed to something like Bitcoin and establishment economists in most countries don’t like it because it’s not something that they can control or inflate and so they lose control of their monetary policy. You’re starting to see the first inklings of the existential threat that Bitcoin poses to central banks around the world. If Bitcoin becomes the reserve currency of the world, they lose control of monetary policy and that’s something I think they will grow more and more concerned about as these hype cycles continue.

Peter McCormack: Do you think the nation states there’s going to be first mover advantage?

Vijay Boyapati: There’s a huge first mover advantage. The person who obtains a store of value first increases their savings as it’s more widely adopted. If you’re the first, you could essentially change your country’s monetary position on Earth from being a Podunk country to being one of the wealthiest countries if you’re the first to add Bitcoins to your reserves. I think that’s actually what’s going to happen. I think some small country’s going to come along and say, “We should just get some Bitcoin. We can print some more of our own money and buy it and we’ll keep them in reserve, if this thing does become,” a billion dollars is really not much even to a very small country, “let’s put a billion dollars into Bitcoin and just sit on it.” Then if it does become the reserve currency of the world, we’ll leapfrog like 50 countries in terms of our national wealth.

Peter McCormack: It’s probably not good to publicly admit it when you’re first doing it, right?

Vijay Boyapati: Oh absolutely, you don’t want to admit it while you’re accumulating. You want to admit it after you finished accumulating.

Peter McCormack: There is every chance governments are accumulating now then.

Vijay Boyapati: Certainly it’s possible. I think it would be a conspiracy that’s hard to keep silent. I think in western countries it’s not happening. I think it’s probably already happened in North Korea. I think they’ve probably got teams of people who are hacking accounts around the world just to accumulate Bitcoin. Another great irony is the U.S. had a fairly large position of Bitcoins and instead of keeping them and adding them to the reserves of their National Treasury, they sold them. They confiscated Russell Albrecht’s Bitcoins, tens of thousands of Bitcoins, and they sold them at some horrendously low price.

Peter McCormack: To Tim Draper right?

Vijay Boyapati: Yeah to Tim Draper. It was kind of akin to the bank of England selling all of its gold at the very bottom of the market in 1999. National governments are not very smart about investments like this so I don’t expect the U.S. government or the British government to be adding Bitcoin to their reserves until the end so they’re going to be at a huge disadvantage.

Peter McCormack: Okay. So we’re going Part Four. You all right for time?

Vijay Boyapati: Yeah, I’m right, yep.

Peter McCormack: Misconceptions, real risks, and then your conclusion. Let’s go through the misconceptions first. Bitcoin is a bubble.

Vijay Boyapati: Yeah, people criticize Bitcoin as being a bubble and they use this term as a pejorative as if it’s a bad thing. My point is that all monetary goods are a bubble. All monetary goods exhibit a premium price over what could be demanded their use value alone. If gold price reflected only its use value, it would probably be $50 or $100 because it’s not really used for anything, maybe gold teeth and a small amount of it is used in electronics. Its premium over its use price is really large, it’s like a thousand dollars. And fiat currency as a premium is even greater than that, it’s like the whole value is this monetary premium because you can’t use fiat money for anything. My response is, yes, Bitcoin is a bubble but all monetary goods are bubbles. That’s a defining characteristic of a monetary good is that it exhibits this bubble-like phenomenon where its price level is much, much higher than you could justify by its use to man alone.

Peter McCormack: Bitcoin’s too volatile so we’ve covered that. Transaction fees are too high. You know what? I have this thing where people when you’re having a discussion say somebody’s into Bitcoin cash and they were complaining about $50 fees back in December and yes they were frustrating but there were times where you’d maybe moving a Bitcoin or two Bitcoin or five Bitcoin. As frustrating as those fees were, you only paid them if you chose to move them. It was working as a perfect market, right?

Vijay Boyapati: Yeah, and you need high transaction fees to secure the network. Ultimately the block rewards that miners get are going to converge to zero. So without transaction fees, the miners have no incentive to mine and secure the network so you need high transaction fees. I think the problem here is that people … They’re confused about what Bitcoin is. This confusion has existed since the beginning, the early days of Bitcoin. The reason there’s confusion is because if you think about it in terms of species of different animals, in the embryonic stage they actually look very similar. If you look at the embryo of a fish and a human in the early stages, they look very similar. So Bitcoin, in its early stages of something that’s a store of value and a payment system, looks quite similar. So Bitcoin kind of looked like a payment system because it was easy to transfer and it looked like the fees were low so a lot of people thought this was a payment system. But it really is a monetary base. It’s the most trusted part of the monetary premium, it’s where you do a large settlement.

Vijay Boyapati: This is that Bitcoin is like the container ship of value transfer, it’s meant for large value transfers where you don’t trust the people you’re dealing with and you want to transfer hundreds of thousands or millions of dollars across borders. If Bitcoin is a container ship of value transfer then something like the Lightning Network is that last mile delivery service. It’s the guy on the bike carrying two parcels to your doorstep. What the BCash people wanted was a container ship that took a single packet of gum to your doorstep and it’s not what Bitcoin is built for, it’s not what it’s good at. I think they’ve run with that vision and it’s failed in the market because it really denies the reality of what Bitcoin was built for.

Peter McCormack: I’m going to call you now. The development of the Lightning Network is a profoundly important technical innovation in Bitcoin’s history and its value will become apparent as it is developed and adopted in the coming years. Lightning Network is essential for Bitcoin, without Lightning Network it’s kind of a huge problem with blocks. It is the whole scaling problem, right?

Vijay Boyapati: Yeah. I don’t think I would quite agree with the way you phrased it. I don’t think it’s a problem for Bitcoin in the sense that if there was no Lightning Network and all that Bitcoin was the settlement layer, if all it was digital gold that would be a huge success case. That’s going to get you to Bitcoin with a price of like 400 thousand per Bitcoin, that is not a failure. But if Bitcoin is to be used as a medium of exchange, you need a low-cost way of transferring small amounts of Bitcoin and that’s not possible without the Lightning Network. So for Bitcoin to become fully fledged global money, for it to sort of getting into a price level of 5 or 10 million per Bitcoin then, yes, I think the Lightning Network’s very important.

Peter McCormack: Okay. Two other misconceptions that currency competition and crypto is a problem.

Vijay Boyapati: Yes. People have said that it’s open source, it’s easy to copy. Why won’t something else just come along that’s better than it and overtake Bitcoin and Bitcoin will die? My primary argument here is that there’s a very strong network effect in place with Bitcoin. It’s the first one and so what attracted the best developers it has the most liquidity in the market and has the most security. The network effect, when it exists for any product or service, is probably the most important feature of that product. Why did Microsoft Windows dominate for so long? It wasn’t the best operating system. It dominated for so long because it had this very strong network effect where most of the applications were on Windows and so if you wanted to buy an operating system you wanted the one which had the most applications and because most people wanted it for that purpose most of the developers developed multiple applications for it. It’s this very strong feedback loop. And I think it applies just as much to Bitcoin as it does say Microsoft Windows or Facebook or products which also have a network effect.

Peter McCormack: The last misconception is that forking is a problem. I think forking is dead, by the way.

Vijay Boyapati: Yeah. I don’t recall exactly what I said about forking. I think-

Peter McCormack: It’s probably along the lines of when you get a naysayer like a Nouriel who will say, you can just fork and create new coins and create a new currency and everyone gets their shares straight away.

Vijay Boyapati: The thing with forking that makes it slightly different to just regular competition like for instance from Litecoin is that you’re copying the entire transaction history. So you’re piggybacking on the ownership distribution of Bitcoin. This means that BCash, when it was created, had all the same owners that Bitcoin did instantly. They could claim they were as widely distributed and owned as Bitcoin and actually that’s part of the reason why forks … A lot of people thought forks were a good way to bootstrap their new altcoin because it would give them a base level of ownership and demand and it actually kind of worked for a while. BCash had a very, very large market cap at one stage, it was like $20 or $30 billion. I think scammers have always wanted to find new ways to make money easily and they’ve tried all of these different methods, there’s like ICOs and Airdrops, and forked coins, but I think eventually people get tapped out and realize these things are a scam and they don’t work anymore.

Vijay Boyapati: The first fork commanded a substantial fraction of Bitcoin’s value when it was created. I think, at one point, BCash had a price of about .3 Bitcoins so 30% of Bitcoin. The next fork that came along was Bitcoin gold and I think at its peak it was about 4% of Bitcoin’s capitalization. Then if you look at the ones that have come after that, there worth essentially zero and so there’s no point of even redeeming them. I think this particular type of scam has fully played out and forks … When I wrote it it was more obvious that they might be a threat to Bitcoin but now it’s completely obvious they’re not a threat at all just by their market prices.

Peter McCormack: So let’s talk about the real risks then. I think your first one is probably the biggest one, it’s the protocol level risk. So the recent CVE bug, whilst Jimmy Song went through the game theory and said exploiting it is difficult but code has bugs and Bitcoin is code and it’s a global system that could eventually hold trillions of dollars in value. So that’s a real risk, right?

Vijay Boyapati: I didn’t think the CVE bug was that big a deal. When I talk about protocol risk, what I’m talking about is the discovery that the cryptography that Bitcoin was built on is flawed in some fundamental way and so can be hacked or someone can discover everyone’s private key instantly. So then Bitcoin loses all of its value. Bugs, I don’t think, are as big of a problem because while Bitcoin is a software protocol and the nodes that run on the network run this software, if a bug is discovered Bitcoin is essentially a consensus of individuals running software and the software helps them come to consensus. If a bug is found and people on the network think it’s serious enough they can also come to consensus to fork the network to remove the bug. A bug is not catastrophic.

Vijay Boyapati: There have been bugs in Bitcoin’s past and they’ve been rectified. It would only be a problem if everyone decided that they needed to continue running with the bug because the bug was considered really important in some way. If it was something like one of the bugs that Satoshi found which let anyone spend anyone else’s Bitcoin, then you very quickly get consensus from everyone on the network like we need to fix this bug. So that’s not a problem, it becomes a software problem again and bugs can be found and fixed quickly.

Peter McCormack: Do you think the hacking of the cryptography or flaws in the cryptography is a significant risk? I’ve not really heard it talked about.

Vijay Boyapati: I think it was a significant risk in the early days of Bitcoin because no one was really sure what Satoshi had done was even possible even Greg Maxwell thought this wasn’t going to work. I think over time we’ve become more confident in the cryptography. But for instance, if quantum computing is developed and becomes cost effective then it may be possible to break some of this cryptography. I’m not an expert on the cryptography itself but this is what I consider an outlier risk, we believe the mathematics is sound but maybe at some point in the future someone discovers some Ethereum which proves that the mathematics are not sound and could catastrophically destroy Bitcoin’s protocol because of that.

Peter McCormack: Risk two and I haven’t considered this again but exchange shutdowns, and again, I’m going to quote you. The critical process of price discovery happens on the most liquid exchanges which were all centralized, a coordinated global shutdown of Bitcoin exchanges quit the process of monetization be halted completely.

Vijay Boyapati: Yeah. It’s the risk that I think is the largest and most ever-present risk and I think it’s actually happened quite a few times in various countries. China shut down all of its exchanges and the U.S. is regulated its exchanges. The liquidity of Bitcoin comes from fiat money. When monetary goods are competing against each other, people’s ability to trade back and forth allows liquidity to flow from, for example, dollars into Bitcoin or gold into Bitcoin. If you shut down that mechanism, it really retards the process of monetization, really slows it down. I don’t know if it would completely kill Bitcoin but it could certainly delay the process of monetization by like decades. If there was a coordinated global shutdown, governments came together at the GA meeting for instance and said, “We need to ban this thing, it’s getting out of control and anyone who owns Bitcoin, that’s illegal. Anyone who trades Bitcoin that’s illegal. Anyone who facilitates a trade that’s illegal,” that would really slow things down. What you’d get is a lot more black market trading on places like local Bitcoins.

Peter McCormack: Yeah, see, I kind of thought we got past that point of any risk with a major government shutting down Bitcoin because it just feels like actually for whatever reason, a lot of western governments have been pro-Bitcoin. But then I start to consider, say if we have more fungibility that actually then becomes a risk again because KYCAML is quite difficult. You’re never going to see Monero on coin base but if Bitcoin becomes, say the base chain became private, would they have to remove Bitcoin?

Vijay Boyapati: Yeah. Regulators don’t fully understand these issues.

Peter McCormack: Thankfully.

Vijay Boyapati: Yeah, to them everything … They have a hammer and everything looks like a nail and so they want to smash everything. An example of that is banning these so-called Iranian addresses. Someone who’s technically proficient will understand that it’s pretty easy to get around that, like you can transfer them to other addresses, you can mix them, you can do a whole bunch of different things. But you’re right, regulators might become afraid that it’s becoming a tool of illicit trade or terrorism, or at least that will be the rationalization they use when they try and shut it down.

Peter McCormack: Okay. We’ve got one risk and then we’re going to do the conclusion. A last risk. You’ve got fungibility as a risk to Bitcoin.

Vijay Boyapati: Maybe risk isn’t the right word, I think it’s the biggest weakness of Bitcoin. And if you look at Bitcoin as a technological development, there were prior attempts at doing digital cash-like David Charm’s, I think it was called eCash, that had a lot more privacy features built in. I think it’s a risk in terms of competition. If it were the case that another digital currency could create strong privacy guarantees, right now Monero cash allows for some level of privacy but there are some big trade-offs that come with that. But if you could do it without the trade-offs, that would be a huge source of demand because the ability to store your funds in a way that is completely private is a very desirable thing.

Vijay Boyapati: You can imagine that there are hundreds of millions of people on Earth who would prefer to keep their savings in something which couldn’t be taxed. Imagine that you could keep all of your savings and not lose whatever 20% of it or 30% of it per year, there’s a huge incentive to do that. So for me, the risk is that some other currency develops it first and in a way that it allows them to overtake Bitcoin. I think it’s unlikely because I think if it is developed, it could be folded into Bitcoin or could be folded into a higher layer protocol like the Lightning Network.

Peter McCormack: Have you taken much of a look at Grin? The number one member implementation.

Vijay Boyapati: I’ve read about Mimblewimble and it seems very, very promising. I have never, hand on my heart, I have never owned a Shitcoin, but Mimblewimble or an implementation of Mimblewimble would be really the first time I would consider even thinking about buying a Shitcoin.

Peter McCormack: So my interview today with, came out to David’s with Michael from Grin, he’s one of the lead developers, and one of the things I said to him is that along my journey I’ve kind of met Bitcoin Maximus who’s yeah, I’m a Bitcoin Maximus but Monero’s kind of cool. I’ve noticed this other thing that’s happening now. It’s like Monero’s kind of cool and Grin looks interesting. Jameson Lopp told me about it in my third ever interview. I think it shares a lot of characteristics of Bitcoin, it’s got a mysterious creator. It has the founding team, like the developers, there’s no founders reward there, they’re all working on a voluntary or they’re raising funds. I think their only challenge is going to be probably their monetary policy because it is so different from Bitcoin. They’ve got a permanent issuance so they’ve got permanent inflation which is a percentage of the issuance decreases over time because it’s static, it’s 60 Grin per hour or 60 Grin per minute, it might be per minute but that’s static forever. So over time that will be a decreasing amount but it’s still inflationary.

Vijay Boyapati: I think what some of these people have really understood is that this is a weakness of Bitcoin, it’s privacy. And what makes it interesting, just as you said, now is that the difference between people working on something like Mimblewimble is that they have ideological conviction. They’re doing this for an ideological reason and it’s very different to the people who are like pumping ICOs or doing forks, they’re doing it just to make some money quickly from someone that they can dump their coins on. And that’s, I think, what makes it interesting when you see someone who’s working on a project because they believe in it so deeply that it could change the world, that it could shift the balance of power on Earth. That’s very attractive and it’s one of the reasons I was attracted to Bitcoin.

Peter McCormack: Let’s get to the conclusion. The article was the bullet case for Bitcoin and then you go 50 years from now, that monetary base will be Bitcoin. So you’re pretty certain?

Vijay Boyapati: One of the things that I try to do in my article was to be dispassionate and provide an economic framework for understanding what Bitcoin was. And really it’s the last sentence where I let my zeal shine through and I hope I can be forgiven for that. I was trying to contain myself the whole time. I think it’s hard for us to think about the way people will think in the future but my point of view is that if Bitcoin exists 10 or 20 years from now as a human institution, and its permanence as a human institution is strongly tied, I think, to its valuation and how people will value it. If people believe it will exist forever into the future, why not get some? Why not get one? If this thing is going to be around when my grandkids are around, there’s only 21 million of them, we still live in this historic period where it’s possible to get one.

Vijay Boyapati: And having one Bitcoin means there are no more than 21 million people on Earth who can have more than you so less than .02% of the world’s population can have more Bitcoin than you. That’s an amazing idea that you can get one of the greatest investments that will ever be for such a cheap price now. It’s like buying Manhattan for a quarter.

Peter McCormack: I think that’s a fantastic way to end. But before we go, lastly thank you. This is brilliant. This is exactly what I thought it would be. Secondly, just let people know how they can follow you, where they can follow you, and who you want to hear from.

Vijay Boyapati: I love hearing from anyone who’s interested in Bitcoin. You can follow me on Twitter. I’m real_vijay@Twitter. I’m on medium but I only have, actually I have two articles on medium, most people don’t know I wrote another article there. It’s about Bitcoin taxes, it’s not quite as sexy. But yeah, Twitter is where you’ll find me. And I, like you, am a father of two young children and I have a day job so I don’t, unfortunately, have enough time to write. I’d love to write articles like this like all the time. And embarrassingly, this article took me six months to write. I started writing it when Bitcoin was two thousand on its way up. I was like I can probably knock this out in two weeks but when you have kids it’s really hard to find spare time. By the time I finished it, the bear market had started. My point is that I write a lot more on Twitter because if I have an idea I can quickly get it out there and it doesn’t need to be that polished. If you want to hear my take on other aspects of Bitcoin, find me on Twitter.

Peter McCormack: You got any other articles bugging you that you want to write? I reckon there must be something there.

Vijay Boyapati: Oh yeah, there is. I’ll spoil the surprise and give you the titles now. You can hold me to account and say, “Where are they? You haven’t written them yet.” The two articles are The Bearish Case for Ethereum and the other article is called The Great Bitcoin Schism. I want to talk about the scaling debate and the importance of the scaling debate and how the question of what Bitcoin is, has really been settled once and for all and how that’s a great thing for Bitcoin.

Peter McCormack: I think The Bearish Case for Ethereum is the nice kind of maximalist contradictory article to The Bullish Case for Bitcoin but I guess that article you could replace the Ethereum with a number of other coins and tokens, right?

Vijay Boyapati: That’s right. Bearish case for most altcoins is pretty obvious but I think The Bearish Case for Ethereum needs to be written because I spent a lot of my career in Silicon Valley and I do not believe Silicon Valley understands Bitcoin. I think there are a lot of people in Silicon Valley who think Ethereum is amazing and it’s going to overtake Bitcoin, even Fred Wilson, the great bench capitalist, at Union Square Ventures actually predicted that that would happen. I think that’s badly mistaken because it misunderstands these monetary goods and it views them from the lens of technology. If you view it from the lens of technology, Ethereum seems amazing. It’s like this really global world computer that you can run any contract on, that sounds great. But when you view it from the lens of monetary theory, Ethereum has a lot of problems. I want to write that article and we’ll see if I ever get to it.

Peter McCormack: It’s been fantastic. Thanks for coming on, really appreciate it. I look forward to doing this again sometime.

Vijay Boyapati: Thanks, Peter, it was awesome.