#32 - Alex Gladstein

24:21That doesn't track with the population growth. It's become completely untethered. So if you look at the debt of developing countries, even though that might be a misnomer, many of them are actually deindustrializing, what you see is a debt trap. And in dollar terms, it just keeps going up and up and up and up. So what I was looking at basically is from a human point of view, there was no escape in the 70s and 80s. Like when Volcker ripped up interest rates to near 20 % and then proceeded to essentially destroy a lot of what was then called the third world debt crisis where maybe 20 million people were killed as a result of the structural adjustment policies in the 80s.

25:00You know, there was no escape if you were in Peru. What were you going to do? What's really interesting today is like at an individual level, you can escape. You can go into Bitcoin like no matter where you are. And, you know, interviewing people in all these different countries and learning that they're starting to turn to this is very inspiring. At the beginning of the book, I have a little saying that says, for the victims of development, they may never get the justice they deserve, but they make it a way out. And I think that that's the exploration of that book. So I want to ask you a question to that because that's interesting.

25:29It's an interesting frame. So to roughly kind of play it back. So let's say the IMF is for, in theory, bailing, and the World Bank is for building. So IMF is for bailouts, in theory, for bailing people out, and the World Bank is for building. So the World Bank is almost like, well, it's debt, but almost kind of like equity investment in the sense of it's supposed to build a dam or something. It's supposed to build a dam, exactly. Then you have more tax revenue, and then you can do things with it, and so on and so forth. And the Marshall Plan, which was at least one of the conceptual precursors to the World Bank, you can argue that it did work or what have you, right?

26:06And because it did rebuild Western Europe and you had the German economic miracle and so on. So do you think these were good institutions that went bad? Yes. OK. I mean, good. I mean, I think even in a Bitcoin standard, you could have these institutions. It's just because the West can create money much more cheaply than other countries, they become predatory. So but that's that's a very useful way of thinking about the reason is like what the U.S. did post World War Two, I think, is still underappreciated in the sense of the relative mercy. So, I mean, because you had to control experiment. The Soviet side was incredibly vengeful, you know, and the Western side was, you know, relatively, you know, like like positive towards especially towards Japan and so on and so forth.

26:49And Germany, many countries that had been conquered were just turned into like basically total slaves like by the, you know, by the Soviets. But so the Western system, like Japan did come back, you know, West Germany did come back. So there was like, you know, South Korea also got built up. Vietnam, you know, well, Vietnam, you can argue they did it more on their own. Right. So there's some version of this. And even actually after the end of the Cold War, Eastern Europe did get rebuilt. Right. Right. And it did. Its economies did improve. That's why I'm poking. One question is shifted. So what you see is in the 60s, it starts to shift.

27:23So I'll give you two examples of projects that are very stereotypical of the World Bank and the IMF since the 60s. On the World Bank side, they would do something like this. They would make a loan to a country, maybe Mauritania, for a bauxite mine. And they would make a loan to build a train infrastructure, the mine itself. And that's about it. Meaning like they would, the local government would get the money to build all this. which, by the way, they would hire companies from the creditor nation. It's called a double loan. So let's say France loans a million francs at the time to the Mauritanian government.

28:03Well, what does the Mauritanian government do? They immediately spend a million francs hiring French companies. So you watch the money go out, and the Mauritanians still owe principal plus interest. It's called the double loan. So this was happening all over the world. So, you know, every loan that would go out, in many cases, you know, 80 % of the money would come right back. to the lending nation or more. So this kind of thing was happening, and that infrastructure wasn't helping the people of that country. It was just helping us get that box out of the ground into our economy, and maybe the local nation would get it cut.

28:34So that became like a stereotypical World Bank loan throughout 70s, 80s, 90s. At the same time, the IMF, who likes to say they aren't political, they don't get involved with politics, I mean, they backed the worst dictators you can imagine. I mean, it's like a laundry list. Mobutu, Portillo, Marcos, Mengistu, the CCP, you know, just think Saddam. So, I mean, you could go 50 dictators wide on a giant mosaic and they backed them all. And, you know, this undermines their argument that they're out there to like bring stability and good to the world. So, you know, that's where I started my journey.

29:12And I was like, why are they bailing out all these crazy dictators? Like, why is Sisi, who's responsible for the biggest massacre basically in the last 10 years of unarmed civilians, why did he get$3 billion bailout? And guess what he does as a condition for taking that money? He imposes a massive currency devaluation and raises taxes on Egyptians and cuts key subsidies. It's just, again, this is what's been happening for the last 70 years. So now they've got something new that they're doing in Egypt, for example. They would deal with the UAE for Ras Al-Hakma. Now the sands are shifting because you have China doing something similar with its own credit and the Gulf countries.

29:50But guess what? They don't print the reserve currency. So it's a very different dynamic. But in any event... But they seem to be doing well, right? Like in the sense of, or rather, somehow... Getting a return on their investment. Yeah, that's right. China, I would say definitely the Middle Eastern countries. Yes. So what's interesting about that is, I think this is part of a broader and interesting phenomenon, which is, in theory, the US and more generally the West has the greatest business model of all time. because it can just, from one standpoint, it can hit a button and literally print a trillion dollars, which is like selling, as I've said before, like a$1 ,000 iPhone to a billion people.

30:28It's very hard to do. It's a trillion in revenue. Forget about it in profit. Right. And forget about how much effort it would take you to get that and how many factories you need to churn out a billion phones and so on. So despite having, or perhaps because of, having the greatest missile of all time, they are out-competed by others because they're very poor at allocating the capital because they the uh energy required to actually go and um build a productive world it's gradually gradually gradually dissipated like all of that printed money could in theory be used to build bridges and and do productive things and so on but in practice because there was an effort that led to the results didn't build the sinews and so on so forth i i i think over the last couple years I think you're onto something.

31:16But generally speaking, going back 50 years, it would be a mistake to think that they're useless or corrupt or inefficient. If you look at the capital flow of the world, it's really amazing, actually. So starting in 1982, capital has been drained from poor countries to the golden billion. And it started small, and now it's several trillion a year. So despite this idea that we help poor countries or we give them aid, it's the opposite. it we're draining tons of capital out and that's that's that colonialism and my hope with bitcoin is like that individuals can escape from that and i just don't see stable coins fixing that um here's a question yeah go ahead you know like during the mortgage crisis there were a bunch of bad loans that were made yeah right and many of them were made on the basis of oh we will help these poor people discriminate against people or what have you and actually turned out to be bad for both parties and for everybody else because a lender would make a loan to somebody who couldn't repay it.

32:14That person would default. Yes. Which would ruin their financial livelihood. But it would also, in bulk, break the bank. And then everybody who was a bystander to that transaction who, let's say, was, you know, I don't know, selling services to that bank was doing so in part on the bank having good financial condition, which was based on these transactions were material. Yeah. So that guy also got wrecked, right? And so it was something where the bad loans were in some sense predatory, but also stupid and self-destructive because they couldn't be paid back. Everybody was trying to consume or earn more than their means in a sense, right?

32:53Like where these people were buying a house that they couldn't afford and the lender was trying to juice their numbers of revenue. Right, but what happened to those? The U.S. government ended up subsidizing the market. Yes, that's right. Which is the same thing it does with all these crazy loans to dictators. You're right. So the US government came and printed$787 billion and bailed out a lot, which was at the time this insane thing. That was like, oh my god, now they just hit a button and do it every day. There's still$6 plus trillion of government and mortgage debt on the balance sheet of the Fed today.

33:20Exactly, from 08. Exactly. And so this side got bailed out and this side really kind of didn't. But the thing about it is, okay, so maybe you can't analyze it in the absence of the backstop. Right. But it was the fourth party, the government came in and diluted everybody down with dollar inflation to bail these guys out. I guess an interesting question is, I guess what I'm getting at is, was that evil or was it stupid? And here's my distinction. Right. The distinction is like I think of good as helping somebody else without concern for oneself. Smart is helping somebody else while also helping oneself.

33:56okay um evil is harming somebody else while helping oneself and stupid is harming somebody else while also harming oneself and are their actions actually evil or are they well there's first of all who's they right so most people who work at the imf and world bank or even whatever the chinese development banks they're not evil they don't they think they're doing good they don't even know the full outcome i would almost argue that these are outcomes of our way of life and our system as opposed to like evil conspiracy plans. I don't think a bunch of people got together and said, oh, let's create debt colonialism.

34:28No, it just was sort of an outcome of what we were doing over time. And that's why we need paradigm shift. Has it worked out for anybody in your view besides Western Europe, Japan, South Korea? Yeah, there's like a couple of examples of a country that takes this kind of debt and is able to pay it back, get out. I mean, India is a good example of one that was kind of tried to stay away and has done... Reasonably well. Whatever, you know, your view of India, like, you know, a lot of the work they did, at least post-1990, you know, has been done without that. Previous to that, there was crazy World Bank launched to India that did insane things, like unspeakable things.

35:04That's a great graph. Suringali coalfields stuff, look that up. It's insane. So that's a great graph to make. What were the other examples that you thought where it worked out well or reasonably well? Well, I mean, I'm saying it didn't work out well. I mean, literally the IMF launched India in the 70s were premised on the sterilization of men. No, no, no. I'm not saying that. I agree. More recently, yes, they've been doing okay. I mean, Korea is a famous one, and there's very little. I mean, most of them have been catastrophic, in my view, in terms of yes, yes, it's true. I want to just steelman the other side of it.

35:34Well, the steelman would be like, okay, well, Indonesia is richer, generally speaking, than it was 40 years ago, which is true. My argument would be it'd be a hell of a lot richer if its currency hadn't been devalued by 99%, which is what has happened. Interesting. It's like, I was just there, the rupiah was worth like, you know, 40 rupiah to a dollar in the 60s. Today, because they've chopped off a bunch of zeros, it's 16 million per dollar. Think about that. So yes, it's true. They've done decently well. But guess what? If all their resources weren't being drained to Japan and to Europe and America in that way, they'd probably be as rich as we are.

36:15you know it's just something I think about a lot and I'm like look now we have a peaceful way for people to get out so what I want to get to two things what am I doing personally and with HRF on this and and what does this mean for America so just very briefly HRF's getting involved because you know we help people under difficult political climates who don't have the same access to court systems and NGOs and media outlets like I do in America and you know what like they're never going to have a good CBDC in those countries it's like maybe in America you could have one but like not not not in togo right um so they need open permissionless open source money that's decentralized that their government can't control um so we promote uh education infrastructure tooling and community building across all of the world for that and we deploy about a million dollars in bitcoin every quarter to do that and we've done more than 300 grants to different organizations and individuals since 2020 and we're going from there it's really exciting and it's amazing to see the impact.

37:14I just visited sites that we've been supporting in Bali and in Chiang Mai and in Bangkok. And it is so cool what people are doing with Bitcoin out here. I mean, from there's a system in Thailand, for example, where like, basically, you can pay any merchant with Bitcoin, like you can just have a moon wallet, like a totally, you know, non-KYC wallet on your phone, and you can have some Bitcoin. And what you do is you scan the code of the merchant. And what's happening is you're sending a lightning payment. And there's a literal person on the back end who's paying the fiat and taking the lightning and it works it's really amazing so there's all these cool systems that are now allowing people to live in bitcoin and like in kenya there's one called tando you live in bitcoin and you can pay any invoice in the country including a cab driver and they get uh and pay immediately so you're seeing people design these really cool ways to get people to get out so that's what we're focusing on is like the pay me in bitcoin element Like, how can we make Bitcoin freedom money around the world?

38:11And then, like, the second part, and we can then react to that, is what I really want to talk about is America. Like, I really think that the dollar system, the fiat system, is not ideal. I think it's done some good things, like dollar hegemonies. Obviously, it's great to have one common language for the world of money, but it's got a lot of downsides, and it's been very predatory. And I really think that a Bitcoin standard would be awesome for America because it would serve a lot of the good things that the dollar does. global network effect for money, et cetera, et cetera. But it would also not be so predatory.

38:43And it would be great for us vis-a-vis our quote-unquote rivals, right? Because at the end of the day, I think that if you have money that provides you free speech, private property, and open capital markets, guess what? That's what America's DNA is. But the Chinese Communist Party, for example, or North Korea or whatever, they're based on confiscation, censorship, and closed capital markets. It's like they're fundamentally incompatible, I would argue, with Bitcoin from that point of view. So I think just to conclude that I think the founders of America would have loved Bitcoin, like Jefferson, Washington.

39:16They didn't even want a central bank. I think it is patriotic to want to improve our money. I think it's patriotic to be critical of the dollar. And I think we should head towards the Bitcoin standard. And I think it would be great for America. And it will be a real struggle for more centralized regimes. because if you live in a country where the people have power over the government you should have nothing to fear from money that's giving power to the people so that's kind of the rest of what i want to lay out interesting so i do agree that like in a sense btc and ccp are at two opposite ends of the spectrum like it's total freedom total control yeah they would pose it probably as total anarchy and total order or something like that right just i always try to at least give you know their yeah they tried to ban mining because it wasn't harmonious on the 100th anniversary of the ccp that's right that's right so the um my one question i have for you is um one of the things i'm most interested in and this is what i work on all the time is bringing the internet into the physical world yes right so the same like ultimately what bitcoin is is voluntarism it's consent right and it's in a sense it's in the deepest sense you know democracy is about the consent of the governed.

40:25Yes. And all of the superstructure of election this and poll that and so on and so forth is just a way of sort of quantifying, measuring and channeling that consent of the governed into something, right? And so the withdrawal of consent is exit, you know, or it can be voice and so on and so forth. And so Bitcoin reflects digital consent. Like, do I consent to be here or not? Do I, you know, like if you disagree with this fiat currency or this policy, you can now exit. Exactly, right? Okay. So bring that consent into the physical world, to me, means voluntary opt-in societies, communities, cities, and perhaps eventually countries, startup societies and potentially network states, right?

41:07And I think we have internet companies, like Netscape was arguably the first modern internet company. We now have an internet currency, Bitcoin. And what I think about a lot are internet communities. For example, Bitcoin Beach in El Salvador, right? Or some of the things you're talking about, like the shops here and there. So I'd like to know your thoughts on that, like, you know, bring this stuff into the physical world. What do you think about that? Yeah, we need more than just Bitcoin. So the Bitcoin communities are really cool. I mean, I've visited a ton of them. They tend to pop up where there's been, you know, a difficult history of fiat currency.

41:37Oh, that's interesting. Yeah, like they tend to be in places where the money doesn't work very well. Or where, you know, like Bitcoin Chiang Mai is a community that's built in many ways because of Burmese refugees who don't have a bank account in Thailand. So they've learned how to use Bitcoin. And when the earthquake happened earlier this year, it was impossible to use the U.S. dollar to help people who were trapped and starving. We were able to run a Bitcoin fundraiser and help people. I mean, so it's just so frustrating. You know, we get again and again, this Bitcoin's useless. I mean, it's the stupidest thing.

42:08I mean, it does things that the dollar just cannot do. So many things. I have a big piece coming out in the Journal of Democracy in about 10 days, 8 ,000 words on a blow by blow of human rights defenders adopting Bitcoin around the world because it's the only thing that will work. So I'm bullish and I'm following that. But ultimately, we need other systems to help Bitcoin achieve its goals. And two, I have two that I'll posit to you, maybe three. One is for sure Nostr, which I understand is like not getting the adoption speed that a lot of people would hope. But it's not. There's a client, Damus, for Noster.

42:44Yeah, there's a lot of great ones. And look, I would argue to you that it's not having a lot of adoption maybe. I mean, I think it's great. There's a couple hundred thousand people on it. Like I have 50 ,000 followers. It's great. There's no algorithm. I choose the algorithm. You know, it's cool. But the reason it's not doing what Farcaster or Blue Sky is doing is because it's not like a VC product. It's an open network and it doesn't have a company. So it's like the early days of Bitcoin. It's hard. It's like hard if you have no one who's willing to give you$50 million or$100 million to do growth, right?

43:13Jack, in theory, well, Jack is kind of, he's doing BitChat now, right? Right, so Jack invested, but invested is the wrong word. He gave a lot of money to open source developers working on Noster. Right. But they're not like coordinated necessarily. They're all just working on the project. But if you have Noster, like for example, like if people look me up on Noster, they can permissionlessly zap me, which is like just instead of reposting my stuff or liking it, they can send me Bitcoin immediately. Boom. And it's so cool to think about this from an activism perspective, from a political perspective.

43:47I mean, it just means that it's just completely different when you can send micro amounts of money to people. I think it's really what the internet was designed to do. But we need something better than Bitcoin and Lightning. I mean, even in Lightning's wildest dreams, it's not going to be what you buy coffee within 20 years in the Bitcoin world. That's where eCash comes in. You know, look, it was great in the 80s. It's an awesome technology that does full private payments that are instant and they can work offline. But it didn't work very well with fiat money as the base. People figured out, though, that it works really well with Bitcoin as the base.

44:16So you have two implementations now. Like Xiaomi and eCash with Bitcoin. Yeah, you have Cashew and Fediment, and they both are awesome. So when I shop now abroad. Just explain that what that is. It's like you deposit some BTC effectively, and then you essentially have into a neobank yeah and then you essentially it's a hub and smoke you get an iou that's fully private that the bank can't selectively censor and doesn't know what's happening um until you go to redeem it and the way they're connected is all these mints basically lightning's like the central nervous system for what's going to happen so you have all these mints and custodians you know so you have exchanges you have e-cash mints so that is potentially scalable because basically you have one on-chain bitcoin transaction yeah you store it up at a bank that's then issuing IOUs that are backed by Bitcoin.

45:00Not IOUs, but they say digital IOUs. They are. I mean, they're credits. Yeah, they're credits. That's right. But basically, you have, let's say, mints, you have exchanges, you have custodians. And the difference is in the modern era, you can actually sum up those digital IOUs and compare them to the proof of reserve, for example. You can cryptographically make it so that people know that they're going to get rugged. Yeah. So the reason that's... Go ahead. Finish your question. And then you also have payment pools. So people are coming out with new stuff for Bitcoin, like Spark that David Marcus is working on.

45:25arc you're going to see a lot more and lightning is the central nervous system it's the clearing layer for all that stuff yep so it's not what i used like i'm i was wrong i thought lightning was going to be like five six years ago i thought lightning was just going to be like what we would buy coffee with you could do it today it works well but not in 20 years because lightning ultimately is tied to on-chain opens and closes of channels this is new stuff okay yeah i've changed my mind i try to be bayesian yeah but what i'm i didn't want to poke you on it that's what i want to see where you're at yeah but i mean i think i'm much more bullish on lightning than And I was because now I figured out what it's going to do.

45:54It's going to be this clearing layer for all the different pools. So let's say you have a cypherpunk mint and then you also have a Coinbase account, which is KYC. But then you also have like an ARK payment pool or a Spark address. Guess what? They all talk to each other instantly by doing a swap over Lightning. That's how it works today. Like so when I went shopping in Bali at the Indonesia Bitcoin conference, I bought a T-shirt. I used e-cash that was on my phone. The merchant didn't get e-cash. They were paid in Lightning. but like it left my phone and it was swapped by a lightning service provider instantly and there's money to be made there so there's all this infrastructure being built and it's just cool that i can go around the world and i can spend fully fully private money and the merchant gets bitcoin we're seeing some cool stuff so that's really interesting and then the last piece would be so if you have bitcoin nostre e-cash bitchat and payment pools and then bitchat okay right well Well, I mean, basically the eCash piece is what's needed for ultimately, I think, like buying coffee.

46:54Like you're not going to be on chain or lightning was my point. Maybe the other stuff pans out, but we'll see. But BitChats is also really interesting because now we can do offline communications that are connected. So, for example, like if we fire up BitChat right here, whoever's in this building basically can be, all of a sudden we can talk to each other and we can trade eCash notes. So the hard thing, BitChat is cool. just to explain it's like it's like a grid of the world network yeah it's a grid of the world i think where if i get it right it's uh i don't know the exact grid size things like 10 kilometers by 10 kilometers or something along those oh no it's way smaller because it mainly uses bluetooth okay so it's like a couple hundred feet fine but then they can daisy chain fine yeah so you have bluetooth bluetooth totally local yes on internet chat the hard part about something like this to me is you need to have a very large critical mass in one location for that to work.

47:53Like it actually has to be like within a building, for example. But normally what happens with any internet app is it signs people up around the world like this, which are all very distributed. So they log onto the app, open it. They don't see anybody to talk to. So they've got a critical mass problem where they need to be launched at a conference or launch at an event or something like that. I'm with you. So three days, and it's still buggy. And Jack Vibe-coded it a month and a half ago. So it's like, and then a friend of mine named Kale Vibe-coded the Android version. Like we are doing this because we have Vibe-coding now.

48:27I'm not being critical. I'm just saying, but I think it's cool. I'm just admitting that they're buggy and it's early. But last week, I think it was Thursday, 50 ,000 people downloaded BitChat in Nepal. And that's interesting. Because it might give like some offline. Yeah, let's say you're in a protest and all of a sudden Internet's gone. I mean, I guess it's useful. The second country, 10 ,000 downloads in Indonesia. That was that day. And then the U.S. was like 7 ,000 downloads, just to give some sense. Yeah. This thing is moving. So it's like, it's very interesting. It's an interesting backup plan.

49:00Yeah. Like it's like a flashlight when the power goes out. But it took me a while to see what Jack was doing here. It's not just a backup plan. It's that it connects via Noster, basically. And when you have internet, all of a sudden you have this global censorship-resistant network. It's an interesting vision. It is. The thing about it, which is funny, it's kind of a merger between the old physical carrier message to somebody and the new. And the new, right? And the last piece I'll say is what's cool is, for example, you fire up BitChat. You can then take your eCash wallet. Let's say I have some money on my eCash wallet.

49:34I can create an offline invoice and paste it into BitChat. And then you can claim it. and we don't have to have any internet for that. And that's really neat. Like you can send money with no internet. That's cool. I mean, and I guess it's not that crazy because just now I had no cell phone service here and I bought something at Starbucks because I just used TapPay. And really all that is, is it's my phone giving a number to the other person. eCash works the same way. Like the payer doesn't need internet in eCash. So you can do some really cool stuff. So my point is there's like a constellation of technologies growing around Bitcoin that are making it very powerful.

50:06Now it doesn't compete right away with like maybe the ease of stable coins for some people. But it's growing, man. It's very exciting to see. And we're doing what we can to push that out because ultimately, you know, I just think, again, having experienced and talked to people who lived through these insane devaluations, I just think that's one of the worst things that happens in the world today. It's actually kind of already happening. The dollar's devalued 50 % against gold. It's like COVID. It's devalued 75 % against Bitcoin since 2023 and it's valued 50 % against gold since I think in the last two years, right?

50:40So that's actually all, I mean, it's happening. One of the weird things is this thing, it's happening in front of us. It's happening in front of our eyes. And yet it's like a train that's accelerating and you just don't perceive it because you're in it, you know? So why don't we, Brett, let's just say. A lot of people, again, Bitcoin's useless. I can't understand why you'd use it, right? So I was interviewing these Cubans in 2020. They were using Bitcoin. They were converting their pesos, which were at the time trading about$30 to$1 into Bitcoin. Okay, so since then Bitcoin's gone from$5 ,000 to$120 ,000.

51:14Okay, amazing. The peso, the Cuban peso has gone from$24 per dollar to more than$400 per dollar. So when people say Bitcoin saved my life, it's real and it's happening all over the world. And I just, it's funny to me that a lot of people we probably know in our social circles would say that's nonsense. And it's true. So some people just kind of have to open their eyes. I just want to check their financial privilege. Amazing. So get your two books. We'll put them on screen. Yeah. Awesome. Thank you. Welcome. And let's work together for freedom. Amazing. Thank you. Thank you for your support for Bitcoin.

51:49Awesome. It's been important. Great. Thank you. Yeah. Ten years together. I know, man. Yeah. It's been a while. Good. Good stuff. Okay. Talk soon. Talk soon. Great.