Alex Gladstein is the Chief Strategy Officer at the Human Rights Foundation and the Oslo Freedom Forum. Please support this podcast by checking out our sponsors:
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EPISODE LINKS:
Alex's Twitter: https://twitter.com/gladstein
The Little Bitcoin Book: https://littlebitcoinbook.com/
Human Rights Foundation: https://hrf.org/

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OUTLINE:
0:00 - Introduction
1:34 - Universal human rights
15:34 - Authoritarianism
25:44 - AIs impact on civil liberties
37:07 - Edward Snowden and government surveillance
40:46 - Money
44:59 - Bitcoin
1:00:46 - Government response to Bitcoin
1:11:17 - The blockchain
1:16:40 - Can Bitcoin fail?
1:19:31 - Bitcoin scams
1:23:16 - Patriotism
1:25:39 - Human Rights Foundation
1:30:13 - Conflict with China
1:33:03 - Corporate accountability
1:48:25 - Garry Kasparov and the HRF
1:53:34 - Journalism, conversations, and truth
2:00:48 - Alex's book recommendations
2:08:54 - Attacks on Bitcoin
2:10:34 - The future of humanity
2:14:55 - Advice for young people
2:26:12 - Meaning of life

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We're building on this idea of like a Euro dollar maybe, like a dollar that is minted outside of the control of the US Federal Reserve, right?

So stable coins are kind of like Euro dollars, just minted by private actors in a way, right?

We have our own full store value, medium of exchange, union of account eventually.

And the Bitcoin world will be denominated in different terms.

And I think everything else will be tied to it.

It does feel currently like Bitcoin is like, like pirates or something like that.

And there's still like the central banks that are like the main navies of the, of the different nations.

It's just, if you talk about scale, So there's going to be a moment, if Bitcoin continues to grow in its impact, when governments are going to seriously contend with, you know, what do we do with this?

Is Bitcoin, Is the cryptocurrency world in general going to be able to withstand the serious legal pushback from countries, from nations, especially authoritarian nations?

More than 12 years since Satoshi Nakamoto created Bitcoin.

I wrote a long essay for Quillette on this, like, like, why haven't governments been able to stop Bitcoin?

And my thesis is essentially that there's been like this mix of different kind of technical, social, and economic and political incentives and disincentives that make it very difficult.

And I think to me that the best way to think about it is that Bitcoin is like a Trojan horse.

So just to actually tell that story just a little bit because I think it's important to understand the classical mythology tale.

Of the actual Trojan horse, yeah, which was told in the Aeneid actually by Virgil, right?

And the idea was the Greeks had been like trying to take the city of Troy for like a decade at these like impregnable walls and they couldn't do it.

And Ulysses and the rest of the Greek army were like, we don't know what to do.

So Minerva, the god of strategy and war, you know, kind of like they get this idea from her I guess to actually try to use subterfuge and trickery to take over the city.

So the idea is to, and this was sort of hatched by Ulysses, right, to put this horse together that would kind of be like a gift.

So the idea was the Greeks just like pretended to leave, right?

They left behind 1 soldier and this horse.

And the Trojans looked at it and they were like, what's going on here?

And they brought in the soldier and the soldier's like, look, they left, they're so sorry for all of the desecration and blood spill.

You know, it's like this, you know, trophy for you guys.

And there were actually people inside Troy, Cassandra, a prophet, as well as Laocoine, who was like a priest who said, no, no, no, this is obviously a trick.

But they were like dispatched and ignored because the horse was like, it was just like so badass.

So the Trojans were like, I'm bringing it in the city.

In the middle of the night, of course, what you realize is the horse was packed with Greek soldiers and they come out and they let the army in, which was like hiding behind an island.

So this idea that like something could be so attractive that you really can't say no, even if you know what's inside of it, is it played in Bitcoin.

So like, Bitcoin has this number go up technology, right?

It is what we call it in sort of shorthand, NGO, NGU, right?

But what people don't realize is that NGU is like the Trojan horse.

Inside the Trojan horse is FGU, freedom go up technology.

So dictators and rogue regimes and corporations are gonna buy, mine, tax, accumulate this thing because it's the best performing financial asset in the world.

What they don't realize or they're going to have to ignore is that they're also aiding and abetting this freedom technology which allows individuals to be sovereign and eventually erodes their power.

There's no question that rogue regimes and bad actors have already used and will continue to use Bitcoin.

The thing is when you think about a North Korea or a Venezuela, and that government instructs some of its bureaucrats and cronies and officials to start stealing Bitcoin or accumulating it or whatever for short-term gain to get around sanctions and use it to buy dollars or something like that, right?

All those people who the regime has instructed to like figure this thing out and use it, they're all gonna realize, oh my God, this is money the government doesn't control.

And it's gonna spread like a virus, okay?

So this is like the idea of the Trojan horse allegory.

I think it's so important and powerful with Bitcoin.

All the people talking about Bitcoin today on TV, they don't care about freedom or privacy.

But what they don't realize is what's concealed within.

So the people talking about Bitcoin on TV are maybe investor types.

I mean, you just had today, this morning on CNBC, the leader of, the Republican leader of the House of Representatives, a congressman, saying like we need to be pro-Bitcoin as a country.

And the other day Peter Thiel had a very interesting comment where he was basically like let's not fall behind China in this race.

So you have influential people in our government, like sort of posturing for this like, you know, Bitcoin race that's gonna happen in the next 10 years.

Countries are gonna compete to stack Bitcoin.

So you believe the thing that's shiny and sexy like the Trojan horse, the number go up?

And to define that a little further, meaning it does seem like the more people get excited and start using Bitcoin, the more its value grows, so it's just a good.

And then the reason you're excited about it, especially is that FG.

Freedom go up, which is it ultimately gives power to the individuals to just so decentralize

Yeah, I mean like when Tesla stacks Bitcoin, they're just doing that as self-interest.

They think it's gonna be a good inflation hedge, fine.

But what they maybe don't care about, don't realize, or they don't need to care.

I mean, Bitcoin's power is it like co-ops people into promoting a freedom tool, even if they don't care about or even if they hate freedom, it doesn't matter.

So when Tesla stacks Bitcoin and the price goes up and more interest goes up and more people around the world are like, wow, Bitcoin, then more people get involved.

Again, more adoption, more price, more developers, better user interface, more privacy tools, more mining, more network security.

It's just this like positive feedback loop that continues to grow.

And it will grow intensely in the next decade as we go through the adoption cycle.

And the reason why I'm so excited about this is the human rights world, again, to get back to our previous conversation, is very hard to find people who have the empathy or the altruism to actually make a difference abroad in places like China or Saudi Arabia or North Korea.

People are very quick to just like, they'll just quickly toss off the pretty words that they care about human rights as soon as profits come into play.

So there's no alignment of incentives, right?

The reason why Bitcoin is so powerful is that it aligns the incentives.

All of a sudden, they can be as greedy as they want.

They are being forced to promote a freedom tool.

This I've never seen before and it makes me, it gives me a lot of like excitement, it's very refreshing because we've been laboring in the human rights space and you have to like raise money and it's all like nonprofit work and you're like begging for people to make a difference for you.

Here you have this like incredible asset which people will accumulate out of self-preservation, self-interest and greed, and yet it will strengthen the power of the individual.

That is what we need to fight, big brother.

That's what we need to fight, like what I'm scared is happening in China.

This growing authoritarian state, which is powered by big data analysis, this is our way to fight back.

And it runs on this like really interesting engine, again, that like takes advantage of our base nature as humans.

I know that It sounds terrible for me to say this, but I mean, ultimately, we are self-interested.

And it is hard to get people to care about others living a thousand miles away.

You know, we are kind of localized in our empathy.

Speaking as someone who works to help people who live in like a hundred different countries, it's very difficult to get Americans to care about what's happening in Belarus or in Kashmir.

They're going to definitely care about Bitcoin because they want to see their net worth go up.

They want to do better for their family, et cetera, they're going to get into this thing and it's really going to make that powerful tool for everyone else who's using it.

So this interplay dynamic is fascinating to me.

Yeah, I have to, I'm somebody who doesn't like the corrupting effects of greed, but it is also human nature.

You have to acknowledge it and then maybe use it for your advantage.

Like exchanges today are adopting something called lightning network, which is a way to scale Bitcoin on a second layer.

Much like we had gold bars, which we scaled with paper money.

And then we had Visa credit cards, which were a way of scaling the paper notes.

Bitcoin scales through Lightning Network.

It's a private, instant, globally, final settlement network.

The exchanges aren't adopting Lightning for its privacy benefits.

Like Lightning operates off the chain, meaning surveillance companies can't see, they can't do chain analysis on Lightning because it's on an onion routed second layer, kind of that works kind of like the Tor project.

They're doing it because it reduces fees.

So again, we have this really interesting alignment of incentives where like the freedom tech is being promoted by people who don't, I don't, it doesn't matter what their incentives are.

I could care less if they were altruistic or not.

And I think this is, and you're going to maybe see this even in the future.

There's more things coming in Bitcoin down the pike.

Lightning was enabled by an upgrade called SegWit, right, which took place a few years ago, which was the culmination of the block size conflict.

There's another thing coming up called cross-input signature aggregation, which may, if it takes effect in the next few years, It may compel exchanges to collaboratively spend all their Bitcoin together in a way that really protects our privacy and fights surveillance, but they're not gonna do it for moral reasons.

They're gonna do it because it's gonna save them money and improve their bottom line.

Can you speak to that kind of collaborative so that you can have multiple parties in a single transaction kind of thing?

But right now it's more expensive to coin join in Bitcoin.

You have to pay a premium for your privacy.

This would flip that on its head and would basically say if you have 1 transaction, Hey, pile them all in, have as many parties as you want.

The more parties you get in, the cheaper it's going to be per party.

And that's not possible in Bitcoin today, but it might be in the future.

But again, the beauty in Bitcoin are these ways that it just aligns human incentives and it aligns our most base desires and needs and realities with like freedom and privacy.

And that's why I think it's so interesting.

So something that like somebody like Eric Weinstein actually spoke to this, the, you know, the idea of blockchain in general.

From a 10,000 foot view, the blockchain is a centralized place to keep the record of everything that ever happened.

From a privacy perspective, from a control perspective, even though it's managed, especially, you know, given the low frequency of transactions for Bitcoin, you can add like, you can have a lot of, you know, small computers across the globe contain the entirety set of transactions, you know, all of those kinds of features.

Does that concern you that there's 1 place where everything is made public in terms of everything that ever happened?

Number 1, the Bitcoin blockchain is ultimately a settlement layer.

It's kind of like something like Fedwire in the United States.

It's a way for like institutions to settle with each other.

That's what I think it's going to be like in 20, 30 years from now.

The average person's never gonna touch the Bitcoin blockchain probably.

They're gonna use things like Lightning, or unfortunately they may use Bitcoin banks, but they'll either use custodians or they'll use second layer non-custodial solutions to interact.

The main chain's gonna get very expensive.

It's gonna be hundreds and hundreds and hundreds of dollars or even more if the dollar starts to weaken to make a transaction on the main chain.

And that will be reserved for like very large transactions or transactions that need final, final settlement, et cetera, et cetera.

And it's very important that that ledger, that settlement layer, be kept by thousands of people around the world.

The Bitcoin blockchain is not centralized.

It is run by people like me who run a node at home.

You run it and that way you can be sovereign over all of your usage, right?

And you can run it on a Raspberry Pi with less than 150 bucks of equipment.

And that's so important because again, there is no Amazon web service vulnerability here.

We're like, the government could just turn off, you know, a big important website or a news source.

Well, they can't turn off Bitcoin because it doesn't live on AWS, it lives with us.

And I think that that's very, very powerful.

And then you can have something like a lightning network where you can escape some of the constraints of the blockchain, depending on your needs of the privacy and all those kinds of things.

Everything's an engineering trade-off, but yeah, you can trade off some of the assurances of the base layer to go into lightning, for example, and there you can get more speed and more privacy.

And the things that Bitcoin lacks, speed and privacy, for example, you can get on these second layers.

So there's all kinds of cool engineering things that people are coming up with.

But I also would just say, anyone who says the blockchain, like that's a red flag for that person, doesn't really know what they're talking about.

Like Satoshi didn't use the blockchain in the white paper.

Blockchain was a marketing term that people came up with later to try and do this thing That was kind of like, it peaked in 2015 and it continues to be an issue today of it's blockchain not Bitcoin.

And that was like a very corporate kind of social attack on Bitcoin to say we could take this like ledger part of this radical thing that's for criminals and all these bad people.

But we could take 1 part of it out and we could bring it over here and we could make it safe for everybody.

The real McCoy's Bitcoin, I mean Satoshi referred to it as the time chain.

I mean really what they're talking about is just these like blocks that are connected chronologically of transactions.

The exciting part of Bitcoin is the proof of work, you know, where the transaction processing is done by mining and by energy and by real world expenditures instead of like, you know, some central ledger.

And you know, when you remove the blockchain from Bitcoin, it's not very, to me, it's just not that interesting.

I don't know, to me, blockchain, time chain, whatever, as it philosophically is a pretty beautiful idea.

I mean, it's pretty simple, but nevertheless, it's beautiful from a big database person.

It's an interesting way to store information that especially that's totally publicly accessible.

I know that to Bitcoin proof of work is the fundamental idea.

But to cryptocurrency and digital money in general, and to money, the blockchain is a really interesting idea to me.

The way I think about it is it's kind of, you know, physics.

And I like that there's a place that you can rely on that's very difficult to mess with.

Every other blockchain is easy to mess with.

And Ethereum is about to leave proof of work.

So It's about to go to proof of stake, which is literally the existing system where a small group of people get to decide the monetary policy.

Yeah, reputation has a lot of value there and that you could be, it could be manipulated.

I may sound brutal, but I'm coming at it from a political science perspective.

For me, it's all about freedom versus dictatorship.

And that's why I find it so compelling that regardless of how much power or might or how many armies you have, you can't change the rules of Bitcoin.

If you're wrong about Bitcoin, what would that look like?

What kind of thing that in 10, 20 years that you're not wrong.

It doesn't pan out, but other things that actually make you feel good about all the hard work you've done do pan out.

Well, as we've talked about, my career started in human rights and in promoting individual freedom and fighting authoritarianism.

That fight will continue on, no matter what happens with Bitcoin.

I think it would be a massive failure and a tragedy if this project, like, didn't work.

If the Bitcoin project didn't work, we would, it would, honestly, it's 1 of the only things that gives me hope.

Because it is an effective way to push back against creeping centralized control.

If for whatever reason, and I can't really see, 1 of the reasons I'm so into it is I can't really see how it's not going to work.

Again, I think the Trojan horse allegory is too powerful.

These big centralized actors are going to be too greedy and they're going to want some as opposed to banning it.

It's way easier for them to buy it than to ban it.

But if whatever reason it failed, I would have very little hope left because really, I mean, the Chinese model of like centralizing all of your data and controlling it, I mean, ultimately is a very, very powerful sort of like arch force.

And I would be concerned that that would be all of our sort of destiny.

I do have to sort of push back at a style of communication and you're not doing it today.

You're being exceptionally eloquent in arguing these ideas.

But me, especially just from studying history and being very skeptical from growing up in the Soviet Union I'm very skeptical and cautious when I see a community of people being very sure of an idea.

And there's a huge amount of certainty around Bitcoin.

Part of it is an important feature because it's number go up.

Number go up is a really important part of the mechanism to make sure that it grows in impact, network effects, because I mean, it's really important to get excited about idea for a take hold, that's the way human nature works and so on.

But I also get even something that you mentioned that others may not, if you mentioned blockchain, you're sensitive to the attacks that have been mounted where the word blockchain has been used.

I mean, like, and people in the humanitarian sector have been fooled into thinking that some centralized blockchain project is gonna help some refugee.

There's a, yeah, there's a huge, it makes me sad that there's a huge number of scams.

There's been recently, I guess with the growing platform or something, there's been a bunch of fake Lex Friedman accounts.

But not only do they do stupid stuff, but they've been messaging people.

And people write to me and they're saying like, I think it gets people.

And it makes me think like, people are gullible, or not gullible, but like, they're just like I am, which is they're like hopeful about the world.

They're almost like naive about the evil that's out there.

what goes wrong with Bitcoin and I've seen it.

People fall for these like, I mean like in these different countries I'm trying to like talk to different people about Bitcoin and like the amount of like MLM schemes, pyramid schemes, Ponzi schemes, There are just so many of them.

But like in Zimbabwe, I was talking to this guy who is a reporter who studies the FX, like the foreign currency exchange markets.

He's just saying 1 of the main reasons people don't want to get into Bitcoin is because they've been scammed so hard by all these other things.

So I would say that that's 1 way it could go wrong is that people just continue to be afraid of it because of things that are like that in the past.

Well, it's not just the volatility, it's just the, you know, yeah, having like a- Yeah, if you think

And in some sense, if I were to speak to the Bitcoin Maximus community, is to maybe ease up on the certainty because that gives me the signal that it's a scam, to be honest.

So whenever there's a lot of people being cultishly excited about something, I start being very skeptical.

It's like, you know, I used to like Green Day before they became really popular.

And then the moment they became really popular, I'm like, I don't know.

So I'm very skeptical about evangelists of an idea because I think Bitcoin on its own is just a powerful idea that stands.

But I also understand that in a world of a lot of competing ideas where there's a lot of scams and a lot of money to be made through those scams, that you have to be innovative in the kind of mechanisms you use to break through the scam, the ocean of scams.

I took this personality test and I'm a 99 skepticism.

So I was first, sadly, because I was first introduced to Bitcoin in 2013.

And it took me 4 years to actually get into it, to go down the rat pole.

I didn't really start to grasp it and start getting excited about it until 2017.

So I was regrettably very, very skeptical for a long time.

And I just thought it was like, whatever.

So I appreciate that and you should be skeptical.

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Alex Gladstein: Bitcoin, Authoritarianism, and Human Rights | Lex Fridman Podcast #231