The Bitcoin Matrix Podcast #1 - Pierre Rochard: Accumulating Bitcoin, Libertarianism & Anarcho-Capitalism

YouTube link to the episode: https://youtu.be/4KE1metoxbg

Cedric Youngelman: Thank you for joining us, Pierre, I really appreciate it. It’s nice to meet you in person over the phone. Most Bitcoiners know who you are, but for people who are new to this space, can you tell us a little about yourself, specifically your role at Kraken and what you do, a little bit about what Kraken does, and then we’ll jump into your new website pierrerochard.com

Pierre Rochard: Yeah sure thing, thanks for having me on. So if we wanna go through my whole biography, I really think it starts in 2005, which is probably long before Bitcoin was written. And I got interested in Libertarianism through Wikipedia. I’ve learned most of the things I know through Wikipedia probably, not through school. So I went down that rabbit hole and became a gold bug, and I was into silver.

Cedric Youngelman: What brought you to be a gold bug in 2005 though? I know it starts there, but what is turning you on about gold and hard money at whatever age you are?

Pierre Rochard: Oh yeah, for sure. So I was a junior in high school, and I was reading about Libertarianism I came across this Austrian economics website called mises.org. And I subscribed to their newsletter [01:41] and so I would get this in my inbox, and one of the topics they would talk about is the business cycle. And the business cycle is a macroeconomic phenomenon that the Austrian school has done research on long before the global financial crisis in 2008. There was a lot of research done on what causes instability in the financial system and really the conclusion I came to from reading the material they were putting out was that it’s a combination of fractional reserve banking and central banking that causes the business cycle to happen. And the only solution to that is to take the power of the printing press out of the hands of the government, out of the hands of central authorities. And the closest, the least-worst solution, in my mind, was 100% reserve banking with gold. And that’s kind of where I was at probably around 2006. And even before I learned about Bitcoin, or before it existed, I did theorize about, hypothetically, one could have a money with an absolutely fixed supply. [02:51] And that that would actually be better than gold, because people produce gold every day. But I wasn’t a computer scientist or anything. So in college I majored in Accounting, I started my career at Deloitte doing audits of mortgage-backed securities and asset-backed securities and all that stuff. Crazy fiat finance stuff. In any case, I learned about Bitcoin twice: the first time I heard about it was on Slashdot, so I was already, even in high school, when I was learning about Libertarianism, I was also learning about open source software, and learning how to install Linux on my computer, listening to Richard Stallman lectures about how free software is great for users.

Cedric Youngelman: What were you trying to do with all this knowledge? Your desire to learn about Libertarianism at such a young age, hard money?

Pierre Rochard: Oh I was just a weird teenager. I was just a weird teenager, man. I mean, I still am weird, but back then I was like, commuting to high school listening to what we would today call podcasts. Back then it was downloading MP3 lectures and putting ’em on my iPod. Long before an iPhone — I had a flip phone back then. So yeah I was just a weird kid, I was living in France at that point. I had a few friends but it was pretty much just me on the Internet trying to figure out what’s going on in the world. The other thing is that, from moving between France and the US, I think that I became kind of political in the sense that I saw how people could have radically different views of what makes the economy run. Because Americans and French people just have fundamentally different views on that. You know, we can get into it or not.

Cedric Youngelman [04:45]: I read a really good book about that called Conflict of Visions and really, one is looking at things of You gotta control Man and Man’s desires and incentives, and the other one is Create the good incentives and let Man do what they wanna do. It was a little bit about what that book dug into.

Pierre Rochard: Yeah. And in 5th grade I was really fortunate to have a great teacher [05:07] who, if I recall correctly, for an entire year we watched Ken Burns documentaries about the Revolutionary War and that period in America, and it kind of had a very deep effect on my view in the sense that I intuitively just agreed with what project these people were on. Now today I have a more nuanced view of the American Revolution, but back then I was like, Man, yeah, freedom fighting, overthrowing tyranny, what a great thing to do!

Cedric Youngelman [05:45]: What is your nuanced view now?

Pierre Rochard: Oh, well, so I’ve read some things where—one of the accusations of the American Revolution is that it’s actually more of like a coup d’état, where you had special interest groups in, you know, what we would call the United States today, in the colonies, who essentially wanted to seize power from King George. And that they wanted to create an aristocratic ruling class that could directly tax the people in the United States, and also issue bonds and benefit the commercial interests of financiers and people like Alexander Hamilton that we make musicals about being heroes today, but that there was kind of an underlying profit motive to the whole operation. And also that they aggressively used fake news in order to give the colonists the impression that there were Deep State conspiracies in London afoot. And that the king was made out to be — it’s kind of like if Alex Jones took over the mainstream media, right? And he started putting in place this mind virus of, Hey, guess what? King George is going to take all of our liberties away, and every single thing he does is a frog boiling in the pot. Whereas, the historians look at what conversations are going on in Parliament and in King George’s cabinet, and it’s just a completely different story. That, in reality, they were just trying to figure out how to balance the finances of this empire, and keep enemies at bay, and kind of just keep everyone happy. It’s not like they were out to get anyone. It’s like, if you went to Afghanistan today, the Afghanis probably have misconceptions about why the United States is there, and what their true intent is, right? [07:46] They probably think that, like, They’re here to steal our minerals, they’re here to steal our resources, they’re here to grow drugs. And maybe some of that is going on, but fundamentally the political motive is, We got attacked on 9/11, and then we can — we don’t have to go into CIA blowback in Saudia Arabia and all that. So that’s my more nuanced view. But again, I have no way of verifying this, right? I can’t run an American Revolutionary War full node and download the history of it and verify it.

Cedric Youngelman [08:17]: You don’t have a secured history truth machine.

Pierre Rochard: No, yeah so it’s all — I don’t know who’s right or wrong. And I just gotta take it at face value.

Cedric Youngelman: So back to those two moments with Bitcoin. The a-ha moments I’m assuming. For you, maybe it was like, someone in old times who was looking at different rocks and finally came across gold. They knew they were looking for it, so it seems like it was a bit of the case for you. Can you tell us about those two times?

Pierre Rochard: Yeah, so the first time was on Slashdot and Slashdot was kind of like what the Y Combinator News was back in the day, of like, tech-geek information, and it was right up my alley because I was into Linux and open source and whatnot, and computers — I built my own PC and whatnot. So I saw a post that was about the Silk Road, and about Bitcoin mining. It was a combo post. And I thought it was interesting because I was interested in money, but I didn’t dig into it because I automatically assumed that the unit, the monetary unit, was not scarce. And so it was like, Oh okay, well if there’s Bitcoin mining and you can just create more, and then you can go spend it to buy drugs? Okay, that’s not super interesting to me, right?

Cedric Youngelman: I still get the same blowback today at barbecues.

Pierre Rochard: Yeah! And then when I found out about it again in the end of 2012, my first reaction — well, so, I found out about the 21 million Bitcoin. And I was like, Oh! Okay, this is like the perfect monetary policy, that’s really interesting. But ultimately there’s —

Cedric Youngelman: But how did you, on Slashdot, you found out about the 21 million as well? Or that was the second time?

Pierre Rochard: No, no, no. The second time I was debating in college, I was part of the Mises Circle with Michael Goldstein and Daniel Krawisz, and we were talking about 100% reserve banking, fractional reserve banking, and debating it, and yeah it just came up in that context. I think its price was also going up, and so there was like a little bit of buzz among these uh, nerdy Libertarians. And so my reaction though was that cryptography is always vulnerable. That you can always break cryptography. That was my view, I didn’t know any better. [10:46] And Daniel Krawisz was like, No!—and he had a Masters in Physics and was getting his Masters in Software or something, so he was my authority figure on this particular topic, I disagree with him on a lot today — No! That there is such a thing as hard cryptography. And so that’s what persuaded me.

Cedric Youngelman [11:20]: So you’re learning about Bitcoin, you have your two moments you come across it, it seems like as a group, I mean, I kind of consider you and Goldstein the McCartney and Lennon of Bitcoin at this point.

Pierre Rochard: The Stalin and Lenin!

Cedric Youngelman: Ah, there you go! Fair enough. But at what point — I mean you guys all as a group move over to the Nakamoto circle. And then are you guys buying Bitcoin? Are you mining Bitcoin now? Are you just, like, geeked out about what it could do for the world? Does buying it even matter at this point? And are you on Silk Road? Are you on Mt. Gox? What’s going on?

Pierre Rochard: So yeah, Daniel and Bitstein had been on Mt. Gox. I went on Mt. Gox—I might have created an account, but when I realized that I had to wire money to Japan? I was a broke college student. I was like, I can’t wire $100 to Japan — that’s insane!

Cedric Youngelman: Drop it off at a CVS. They were doing, like drop-checks at CVSs I think back then.

Pierre Rochard: Yeah. So I didn’t even dig into it further than that. I was just like, Okay, I’ll just have to figure out some other way to get it. And eventually BitInstant came around and I was able to buy some through BitInstant using a Wallmart red phone. But the mining—you know, the first time around that I heard about Bitcoin, I actually did download Bitcoin and try mining. I didn’t realize that I had to go into the command line and do a command to start mining. I thought it would be in the GUI, and when I didn’t see the button, I kind of just closed it. I was like, whatever. I didn’t go Google how to mine.

Cedric Youngelman [13:02]: Back then were you spending or trading your Bitcoin? Or losing it? Or just holding it?

Pierre Rochard: No, no. So — broke college student, so buying tiny amounts from BitInstant. Eventually Coinbase came around, and I remember, during the Cyprus thing, the price went on this price mania to $270 at the beginning of 2013. And, at that point I was euphoric. First of all, I owned very little Bitcoin. But, I knew ideologically that this was succeeding, that it was gaining traction, and that maybe this would actually cause a financial crisis. I thought that there might be a currency crisis brewing, because Bitcoin was going from $20 to $270. And for me it was like, Okay, this is like a 10x in three months.

Cedric Youngelman: Right, right. Are you telling your family about it? Your friends? No-coiners?

Pierre Rochard: I remember, yeah, telling my parents, This is the future of money. And, you know, they had heard me say crazy stuff before, because I was a crazy Libertarian. And they were like, Oh, okay. Alright.

Cedric Youngelman: And how has their views changed on it since then? Or people around you? Are they more interested? Do they still think you’re out in left-field? Where do they stand?

Pierre Rochard [14:24]: Yeah so at the time I actually did send my dad some Bitcoin because—he’s in semiconductors, and so, he knows C++. So when he read the white paper, it did make sense to him, and he was interested in it. But I mostly focused on the Internet. Because to me, rather than trying to evangelize door to door—and we talked about it, I remember having a conversation with Michael Goldstein. We were like, We’ve gotta go to all the merchants in town! And we gotta tell them about Bitcoin! Because, when they hear about Bitcoin—that there’s no fees — they’re gonna instantly adopt Bitcoin, and we’re gonna have hyperbitcoinization in Austin, Texas, because of us! Us two! And, you know, that’s probably a lot of people’s first intuitions when they enter this space of like, Ah! Well! This is gonna be easy—this thing sells itself! But, I quickly realized that the people who are going to be most interested at the margin in Bitcoin, are just going to be random people on the Internet who, like me, stumbled onto it. Like I didn’t have someone come tell me about it and hand me a pamphlet.

Cedric Youngelman [15:39]: Sure. But you did have like-minded people around you way back in the day, which is rare.

Pierre Rochard: Yeah. For sure. And that’s kind of the advantage of being in Austin: Austin’s thing is Keep Austin weird. It’s always had, like — Alex Jones lives here! All the crazy people live here! And now Joe Rogan moved here, although he’s getting less crazy, because of Spotify.

Cedric Youngelman: Yeah, I agree.

Pierre Rochard: But there’s something in the water, it’s probably bad fluoride or something that causes Austin people to be interested in conspiracy theories and things like that. So that’s a huge advantage. But the Internet is like that too.

Cedric Youngelman [16:15]: Yeah. It seems like Libertarianism is a big part of your path to Bitcoin and hard money, and a big part of your life. With the recent news with Dr. Ron Paul—was he influential in your life?

Pierre Rochard: Oh hugely, yeah.

Cedric Youngelman: Because that’s a blind spot for me, coming from where I am. Maybe you could talk a little bit about how he was influential for you?

Pierre Rochard: Yeah, absolutely. By the time I had heard Ron Paul’s name, I was already pretty well steeped in Austrian economics. I was already an anarcho-capitalist, so, basically—

Cedric Youngelman: Can you talk a little bit about that? What does that mean to you, or the world?

Pierre Rochard: The central concept is that, if we take the proposition that nobody should commit acts of violence or aggression against other people — if we just take that to its logical extreme, then there really shouldn’t be a state that has a monopoly on aggression, because we’ve ruled out the possibility, or the legitimacy, of ever there being aggression that is not in self-defense. So that just excludes the possibility of a state. And so I do take that proposition seriously. Now the secondary question is, Ok, How would that be enforceable? How would we prevent the state from committing acts of aggression? Because, ultimately, whoever is strongest is gonna be able to assert and defend their rights. And, if we look at human history there was a turning point when we had firearms. That’s when we actually were able to have rights that were enforceable by the citizenry against the warrior class in society. Because now, even a female who is very weak, or a male who is very weak — I don’t wanna be sexist, is able to own a firearm and level the playing field with someone who wields a broadsword, or has a giant axe. And that was kind of a huge deal in human development. And so that technology leveled the playing field. And now, obviously, there are people trying to undo that because what happens when you have broad ownership of firearms is that, there’s negative externalities of crime, but there’s also positive externalities of — there’s going to be limits to state power, and you can’t just go full totalitarian, communist Chinese surveillance state. Conceivably — I don’t know, we’ll see. We can argue about the NSA or whatever. [19:03] So there’s that technology, and so from that insight of — the less it costs for individuals to defend themselves from aggression, then the less aggression there’s going to be. And so I think it actually goes even further into — now, in the Digital Age, where cameras are a big part of that, so phones that have cameras on them. I think phones with cameras on them are going to reduce the amount of violence inflicted by, for example, police officers, right? So Rodney King — Rodney King happened way worse, lots more times before there was video, before the invention of video, and before the costs of video came down low enough that you could have a helicopter with video. And so there’s so many parts to this, right? And it’s kind of the same thing actually during the Civil Rights movement. When video came out of white police officers using dogs against black protesters, and using hoses against peaceful black protesters, this actually shocked the nation, right? That, Wait, hold on, these people are just marching in the street, why are you attacking them unprovoked? That’s completely unacceptable. They have first amendment rights, you can’t just attack people like this. And if it was white people on the receiving end of it, it would just not stand, right? So I do think that technology has a huge influence on our ability to assert rights, both in terms of kinetic — shooting a bullet, but also in terms of psychological warfare and mass media and the ability to publicize abuse and whatnot. Now, okay, so let’s take it to cryptography and Bitcoin. Well, so we can apply this concept to gold as well. Alright, I’m going on a wild tangent here because we’re talking about anarcho-capitalism, but basically the idea is that I think that the technological progress is going to allow us to reach an anarcho-capitalist society, where we no longer actually need the state to enforce property rights, because we’ll have autonomous robots that will physically remove you from the property if you invade someone’s home.

Cedric Youngelman: What kind of time-frame are you thinking there?

Pierre Rochard [21:15]: Oh, probably like the next 50 years.

Cedric Youngelman: 50 years, yeah. One of my dark fears is around emergent intelligence, and the abilities of that, and I wonder if—and I love Bitcoin to death — but, one of my dark fears is that maybe Bitcoin is a form of emergent intelligence that will one day be able to hire the AI-driven creatures that will one day domesticate us. Because it is its own life form.

Pierre Rochard: Yeah, that’s where sovereignty is so important. That’s where it’s really important that it be your software, you’re running the node software, and then, we can think about all the contingencies around that, like having a Blockstream satellite dish to increase your censorship resistance.

Cedric Youngelman: Sure — meshnets, things of that sort.

Pierre Rochard [21:58]: Yeah. And I do think that right now we’re very reliant on ISPs, and now—again, technology, right? Elon Musk is setting up a network of low-earth orbit satellites that are going to allow us to have high-speed Internet through a satellite network, which is going to increase the censorship-resistance of the Internet, and give everyone in the world access to Bitcoin.

Cedric Youngelman: Yeah, that sounds awesome. Right now I’d like to jump into—like, if you could lay out your case for the Bitcoin investment thesis? I know you’re an expert on the investment case for Bitcoin. Maybe a little bit — guide it for a pre-coiner or a new-coiner? And right off the bat, I love your Tweet about, Bitcoin is savings technology. I think it’s brilliant! One of the things I run into there though is, unfortunately, most people don’t have a lot of savings. [22:53] And what “savings” they do have is maybe in their 401(k), so it’s not really liquid or tappable. It’s not true savings — it’s an investment. And it’s hard to turn someone on, you know, when you talk about maybe DCA or $10 a week. I tell people, Buy two Starbucks worth a week. That being said, if you could walk through your investment case, that would be great.

Pierre Rochard [23:15]: Basically, I’ll explain why I’m bullish on Bitcoin, and then I’ll explain how to approach it from a personal finance perspective. So I think that Bitcoin is going through this process of going from having zero value to having all of the monetary value in the world. So then we can think about Where is the monetary value currently? And Why is that monetary value going to transfer to Bitcoin? So where it is currently is primarily in US dollars, and US dollar-denominated government debt (treasuries). After gold, the US dollar was able to become the world reserve currency. And so, today, the entire international monetary system and international financial system is centered around the dollar. Everything from: having contracts be dollar-denominated, to, the most liquid equities and derivatives exchanges are all in the US and in dollar and all of that. Basically, the reason you end up with a world reserve currency — and before, it was gold in various forms — is that the whole point of a money is that people don’t have to barter. And so you have one singular asset that is the most liquid asset that people are going to use for what economists call indirect exchange. Where, it’s not so much that I’m trading with you because I need what you have, it’s: I’m trading with you because I need money that I’m going to then go spend somewhere else with someone who has what I need. So indirect exchange—in the free market process — one good is going to reach the top of the liquidity stack. So it’s gonna have to have certain properties. I would argue that the most important property that it would have is that it’d have some form of verifiable scarcity. So why is that? Well, with a medium of exchange, you don’t really want an abundant amount of it, otherwise it’s not going to hold any value because people are just going to create more of it. [25:41] Whereas, with a commodity, you kind of want an infinite amount of it — ideally, we would have an infinite amount of oil, right? We don’t want scarce oil, right? In fact, we’re concerned about peak oil. We’re concerned about scarce oil, it’s a problem for civilization. We can talk about global warming, but that’s a different conversation. Whereas, with a money, we would be concerned about too much money being created and inflation, whereas with too little money being created — now we can debate this, because Keynesians think that that’s a problem — of deflation, of prices going down. In any case, if we go back to gold versus the dollar and verifiable scarcity, the dollar combined two technologies which allowed it to have better verifiable scarcity than gold. The first one was paper money that actually could not be counterfeited, or where the cost of counterfeiting that paper money was greater than the actual value of the money itself. The cost of making a perfect replica of a $100 bill is greater than a hundred dollars. [26:53] And that cost includes the risk of getting caught and being put in prison! So there’s definitely—the ability to have rule of law, and to have nobody be above the law, enforces the US dollar’s verifiable scarcity. The other part of the equation was the emergence of an institutional technology called independent central banking. Before independent central banking, you had central banks that were either fully controlled by the commercial system — by banks — or they were fully controlled by the sovereign — by the government, or by the prince, or by the Roman emperor — we can go that far back. But you didn’t have an independent central bank in the Roman Empire or anything like that, and so they would get themselves in trouble where they would start out with having a gold coin, and then they would start diluting it, and what they would do is they monopolized mints — they nationalized the mints, because the mints provide the verification technology in gold. It’s way too expensive to take gold nuggets and to verify that they’re pure gold, right? You have to standardize the gold using a minting technology — and mints used to be private, where it was like a brand like Kellogg’s or whatever — but governments took it over because they understood strategically, if you want to pay for the war machine, it’s nice to have access to a mint. [28:32] And it’s nice to be able to dilute things out and to pay your troops with diluted coin and all this. In any case, that verification technology was easily co-opted. Now, let’s contrast all these with Bitcoin. With Bitcoin, you run your software on your computer that does this verification. So, you don’t have to trust a mint, you don’t have to trust a government, and you don’t have to trust an independent central bank, and you don’t have to trust a counterfeit bill detector. All you have to trust is the developers — and you don’t even really have to trust them either, because it’s open-source. So if you have the software development chops, you can go and audit the code yourself and look things over, or, write the code yourself, right? People have done that, they’ve written their own implementation of a Bitcoin node. So you don’t even really have to trust anyone, at the end of the day. Some people say you have to trust Intel, because we’re all running this on Intel processors. [29:25] We can go down that rabbit hole if you want.

Cedric Youngelman: Fair enough. What do you think about, like, when there are threats? People will say, Can the government ban or co-opt Bitcoin? What do you think about that? I don’t believe in that. And obviously Bitcoin is agnostic. But, you know, as a US citizen who owns KYC’d Bitcoin — it’s a small concern.

Pierre Rochard: Yeah it really comes down to the cost of seizing the Bitcoin, or of banning the Bitcoin. So, to seize it — one of the interesting things is that, if you ever look at the different between a bank account and Bitcoin, it’s that the government can very easily seize a bank account. And the reason they can do that is because our constitutional protections around due process and arbitrary search and seizure have been undermined over the past decades by efforts from progressives and from the IRS and from law enforcement and from prosecutors, to undermine our rights. And so now, a bank account no longer has the constitutional protections that your home safe has. So if you keep gold or if you keep $100 bills in your safe, in your house, it has more legal protections to it than if you keep your dollars in a bank account with a third party. And that should not be the case, right? There’s no reason for that to be the case, other than the Supreme Court being corrupted, frankly, by fiat law. In any case — because it’s not like the Constitution has been amended, right? There’s no constitutional amendment that says, The government now has a right to seize your bank account. It really is just that — they see it as, Well, in order to collect taxes, we have to do this! And the Constitution says that we’re supposed to collect taxes, so we’re gonna have to do this. [31:47] Now, they know that they cannot extend that logic to your house. So if they want to seize cash that’s in a safe, they have to go get a warrant and be able to prove things out that they have probably cause and all of this. They can’t just do civil asset forfeiture and barge into your house like they do with the drug war — we could talk about that. So all this to say that the cost of seizing Bitcoin — so let’s say they could, right? That they are able to do that, like they do with drugs. So they can barge into anyone’s house, and, without respecting due process or private property, they can assault people, they can kill dogs, they can accidentally shoot your wife, they can kill people, light houses on fire — they do this regularly as part of the war on drugs, with zero accountability, because they have sovereign immunity. [32:51] So these agents of the government are completely unaccountable and irresponsible in their day to day actions, committing gross negligence left and right, destroying property, and so you could argue, Well, okay, this is already going on for drugs, so it could happen for Bitcoin — that’s entirely valid. So that’s why I think the Second Amendment is so important. Ultimately, the only person who could defend your private property is yourself, because the people assaulting you might be agents of the state, or they might be criminals who present themselves as agents of the state. You have no way of verifying that, when someone assaults you and says that they’re police, how are you gonna know that they actually are police? And this happens all the time where criminals will literally wear police badges and impersonate police, and that’s why they have to make police impersonation illegal in the first place, right? Because criminals do this. Now the problem is that, criminals are already criminals. They don’t care about adding on a few charges of police impersonation — they’re already assaulting you, they might already be about to murder you, so they don’t really care about getting another charge on their rap sheet. So it’s kind of a ridiculous situation. [34:03] And we saw this play out with Breonna Taylor — I don’t know if you read about this story?

Cedric Youngelman: A little bit, yeah.

Pierre Rochard: Yeah, so they’re searching for drugs, okay? So already it’s like, Why? Why are you guys doing that? There’s no reason to be doing that. The number one drug dealer in the US is Big Pharma. They’re the ones who are pushing opiates onto people, and then the tax-payers are paying for all of these opiates, so it’s pretty crazy that the government thinks it has any kind of moral high ground on this topic. But anyways, they’re searching for drugs, I guess, maybe they’re anti-competition, right? They’re trying to prevent competition with Big Pharma. And, you know, these are white police officers. To them, they’re kind of in a foreign country when they go and attack drug dealers, and attack their families. [34:57] They’re an occupying force, and that’s why you see them wear military fatigues. They get into tactical gear, they get inside of armored personnel carriers, with 50-caliber sniper rifles, like — they’re in Iraq as far as they’re concerned. A lot of them are Iraq vets, and they might have PTSD or otherwise unresolved psychological problems, and also they have all these legal protections that we talked about so they can do no wrong. So they go to people’s houses, they do these things called no-knock warrants. So I mentioned the dangers of someone saying that they’re police, but they don’t even have to say they’re police. So they’re just, like, busting people’s doors down and not announcing themselves, not serving a warrant, not getting on the loudspeaker and saying, Hey! Come out with your hands up! We’ve got your house surrounded — we think you’re a criminal! That’s like what a normal police would do—You’re under arrest! Sorry we have to do this! But instead, they blow down people’s front doors, and then they got shot at — obviously, they’re gonna get shot at, because you have heavily armed civilians who are interested in protecting their families from violent criminals. And there’s a violent criminal blowing down their door, so I don’t understand why they don’t expect to shot? [36:34] If you’re busting down someone’s door, your primary expectation should be that they’re gonna shoot at you immediately, and they have every right to! Of course they do! You haven’t even announced yourselves. And then they start shooting back, and they kill your girlfriend, and that’s what happened with Breonna Taylor. And then the prosecutor, he filed charges against the police officers for the bullets that missed Breonna Taylor, because the bullets went into other homes, and they said that was reckless. Anyway, maybe this is more about Libertarianism than about Bitcoin.

Cedric Youngelman [37:18]: Which is great. I kind of want to circle to the Austrian perspective around price as a signal in the marketplace, and the value that it communicates, and how it’s a language unto itself. If you could maybe elaborate on that, and maybe using the stock market as an example, especially with what’s going on today?

Pierre Rochard [37:38]: Yeah. In mainstream economics, Hayek is kind of known for this, but it precedes Hayek and it transcends Hayek, which is Price as decentralized information. It’s basically the output of the process between supply and demand, and there’s two levels to it. And people who know about trading know this. There’s the order book, where it’s kind of the prices at which people are willing to buy and sell goods. And so everyone’s walking around with an order book in their head—for basically every single service and good under the sun, right? Where people are gonna say, Yeah, I would pay $5 for a ticket to the moon, if that was offered. I wouldn’t pay $5 million—I mean I can’t afford $5 million for anything, so that’s out of reach. And so there’s no clearing price. On the other hand, you go to the supermarket and toothpaste might be $3, and you’re like, Okay, well I’d be willing to pay $10 for toothpaste, but if they’re gonna sell it to me for $3, that’s fine too, I won’t argue with them. And then — you have a deal! Now the value of the toothpaste you’re buying is greater than its price. And so that’s why you’re gonna go buy it. And that’s a market buy. If you know about order books, you know the difference between limit orders — which is the price you’re willing to pay — and the market order — where it’s just the price you’re gonna pay right now, and you’re gonna put down some cash for it. And then the producers of goods also have limit order books, where the toothpaste manufacturer knows that, Okay, in order to manufacture this toothpaste, we’re gonna have to put $2 of cost into it, and then we also want to have some profit margins, so let’s put it at $3 or whatever. Although really, actually, that’s not how they should set prices. How they should set prices is: What is the market willing to bear? How high of a price can we charge people before they start complaining and going to our competitors? [39:51] And so that’s kind of how the market actually functions in some cases. In other cases, it’s more of like a cost-plus type situation, and it really depends on how defensible of a market position do they have? How strong is their brand? Because if they’ve got a weak brand, then they can’t charge a premium. Apple can charge 50% profit margins, because, at what price-point do you decide, I’m not gonna buy an iPhone, I’m gonna buy an Android instead? Apparently it’s like a thousand dollars! Because that’s where the current price of a good iPhone is, you know? Now, obviously you can get a used iPhone for a lot less, and so maybe that’s the way to look at the market: Apple is competing old Apple — so the secondary market. And that’s the case in the stocks as well. So the stock market is like the secondary market for equity. [40:43] So it’s people buying and selling old, used stocks. And then there’s the primary market of IPOs. We’ve seen some IPOs recently of businesses raising capital because — now, okay, so what happens when the government intervenes in these markets? What happens when the government decides that the price of stocks is too low, so we as the government are gonna start buying stocks? Not only that, but they’re also just gonna start printing money to buy stocks. They’re not gonna take the money from any other part of the system. They actually are taking money from a different part of the system: what they’re doing is they’re diluting out people who hold USD. People who hold money — cash, USD, in any form, and including people who hold government treasuries, because government treasuries are actually the same thing as cash at this point, because governments have already said that they’re gonna buy all their treasuries, by creating new dollars. So the Federal Reserve — and you’ll see Jerome Powell, who’s the current chairman, or Neel Kashkari also has a video of him saying this, where they say, We’ll buy an infinite number of bonds in order to stabilize the economy. We’ll create an infinite amount of cash in order to provide liquidity to the system so that it continues to function. And that’s why interest rates are going to zero, because a 0% interest bond is cash, right? It’s just the same way of saying it’s cash, you’re just giving it a different name, because the whole thing about cash is that it’s 0%. It just sits there. Whereas, a loan — you earn interest on a loan. If you’re lending the money and taking on risk, there’s no reason why you would ever lend out cash, if you’re taking on risk. But if you’re lending cash to the government, you’re not actually taking on any risk, and they’re making this very clear to everyone, and so thus, it’s 0%. And it’s risk-free, right? They say, Hey, the risk-free interest rate is whatever treasury yields are. So, alright, let’s take ’em at their word and that’s 0%. [43:04] Anyway, when the government is spending money, usually it’s deficit spending, I think it’s like 30 — any additional incremental spending is gonna be deficit spending, right? Nobody’s raising taxes at this point, and they’re also cutting taxes, cutting payroll taxes, deferring taxes, and we can talk about the Coronavirus stuff. But in any case, every time the government is spending, or is buying bonds with the Federal Reserve, they are diluting out USD holders, and they are stealing wealth from people who hold USD. Now, you could say that it’s not really theft, because people who hold US dollars are being given ample forewarning that, like, Hey look, you’re gonna have 2% inflation, you’re gonna get diluted out — this is their explicit mandate. Which is fair, but when you think about who holds cash the most as a percentage of their balance sheet, it’s actually the people who are living from paycheck to paycheck, because they don’t have the means to hold any other asset, which goes back to our earlier conversation about, well savings technology, that’s all fine and well, but what about people who are living who are living from paycheck to paycheck? Their problem right now, is that they get their first paycheck, and so they’ve got, let’s say, $1000 in the bank. And they’re gonna spend it down over the course of a month, until their next paycheck, and so they’re gonna get another $1000. Living paycheck to paycheck is another way of saying living off of cash. Not having the ability to accumulate capital which would allow you to invest in stocks, which are not getting diluted out, right? In fact, they are where the dilution is going. They are where “Money printer go BRRR” — that shows itself in the stocks going up, and that’s why —

Cedric Youngelman: That’s where the inflation is going. It’s a melt-up.

Pierre Rochard [45:09]: Yeah it’s a melt-up, and that’s why you’ve got Davy Day Trader Portnoy saying stocks are gonna go up! And he’s right! Now the problem is that people who are living paycheck to paycheck, they don’t live from Apple share to Apple share, right? Where, for the month that they’re holding that cash and drawing against it, it’s going up in value because it’s Apple shares, right? No, quite the opposite — their purchasing power is going down, and so they’re not even treading water. They’re drowning! And the government is drowning them, because the government is making it such that the cash that they’re holding between paycheck periods is constantly losing value relative to both consumer goods that they’re spending money on, but also capital goods and real estate that they’re also spending money on indirectly through rents. So rents are going up, people can’t even get ahead, they’ve gotta get a second job, they’ve gotta get a third job, and the government has turned the working class into an increasing inequality of, Okay, we’re gonna print money to enrich people who have the ability to accumulate assets, who own stocks and real estate — we’re gonna make them rich, and we’re gonna make everyone else poor. And that’s the government’s explicit policy right now. Same thing with the paycheck protection program. Instead of printing money and giving it to people, we’re gonna print money and give it to the biggest business owners, and then they can give it to the people or not — we don’t care. So it’s kind of this kleptocracy that’s built up, and it’s not Republican or Democrat, either. Every administration has this same policy, it’s all just about the marketing of Who do they pay lip-service to? Do they press the fear button on the sheep, or do they press the reward of Hey, we’re gonna give you free money, Vote For Me! Or, Hey, be afraid of everyone outside of your community, Vote For Me! So it’s really manipulative.

Cedric Youngelman [47:27]: So when hyperbitcoinization? And I kind of think we’re going through it now, I don’t think we can feel it or see it. But I think we don’t have the market depth to be truly taking off, and I don’t think we can really touch that until $1 trillion, say $50k a Bitcoin, and I’m not really looking to talk about price. But, quickly from $1 trillion to $2 trillion, we gain parity with the US dollar in physical cash, or somewhere close to that, and then I think that things will just accelerate beyond. Where do you see things playing out over the next 5 years in Bitcoin, and that phrase hyperbitcoinization?

Pierre Rochard: There’s two modes of thought that I’m bi-polar between: (1) One is that the past is an excellent teacher of what the future will look like. And so the next 5 years are gonna look a lot like the past 5 years — another bull market, another hype mania, another all-time high, another wave of alt coins, and it’s just gonna be another cycle. The (2) other way to think about it is that this is the final cycle. And that fiat is going to collapse and that this is going to be gradually and then suddenly a complete change in the monetary system within the next 5 years, because the government has undermined their own monetary unit. To me, hyperbitcoinization is every bull market, right? Where we go parabolic. To me that’s just like a step in the hyperbitcoinization process. And then we need to take a breather between those.

Cedric Youngelman: Do you think that there will be as much a breather at the end of this cycle?

Pierre Rochard [49:45]: Well the argument for why there’s a breather is because there’s so much Bitcoin being created by miners and being dumped onto the market. So if the last halving has made it such that there’s not really room for a breather because there’s not that supply effect, of supply increasing, then this cycle is going to be fundamentally different — the price is gonna be $200,000 — you’re gonna have people who are gonna be like, Alright, time to take gains — time to sell here! But what if it only goes down 10% to $180,000? And then there’s just more people buying? And then it goes up to like $400,000?

Cedric Youngelman: They lose Bitcoin — they lose their position.

Pierre Rochard [50:41]: Right. And so it’s like, by what metric are we trying to decide where the all-time high is gonna be, and why would I stop and take gains at any point? Because suddenly the expectation becomes, Hey look! The dollar is not long for this world — why would I want to hold dollar-denominated assets? Maybe I would want to rotate into some equities? Maybe I think stocks are cheap relative to Bitcoin, and I do a little bit of re-balancing at the margin, and maybe that’s the angle? Or, there are companies generating Bitcoin cash flows, and who are using Bitcoin as their treasury reserve asset, and so now I’m starting to think, Alright, well, it’s not really selling Bitcoin if I buy some equity that generates Bitcoin cash flow. I gotta calculate relative yield, and then I’ve gotta do the Warren Buffett value-investing analysis of, Is this security fundamentally undervalued? Today, you’d have to be a complete idiot to be a value investor. Why would you wanna think that fundamental value matters at all? The Federal Reserve is bidding up everything. There’s no such thing as fundamental value anymore. All you’re doing is playing a game of greater fool, of, Hey look! Stocks only go up! You don’t need to look at P/E ratios. That’s old school. But I think that with Bitcoin, it’s gonna make that popular again, because now it’s no longer like, Okay, I need to dump my inflationary cash that’s getting diluted straight into the stock market, otherwise I’m gonna lose purchasing power, right? And that the stock market has become a store of value, and people use the stock market for savings, and they’re like, Well, I gotta put my money somewhere — I gotta put my money to work. And with Bitcoin it’s like, No! I can actually just hold cash, and I can be like a poker player. I can wait for the next hand. It’s not like the blinds are increasing, right? With Bitcoin, the blinds are negative. Your Bitcoin purchasing power is gonna be increasing long term, because it is a fixed amount, because it is scarce, and the supply of stocks and the supply of consumer goods is gonna increase, so your purchasing power is gonna increase, and so you can wait until you get investment opportunities that are really interesting to you. And so in the real estate world, they talk about location, location, location. Alright, well, that doesn’t apply when you’re under a fiat system. Under a fiat system you’ve gotta put your money to work as quickly as possible, so you’ve gotta buy whatever real estate properties are on the market whenever you’re looking, right? You can’t just sit on a bunch of cash and wait for a decade until somebody buys a piece of land that you’ve got your eye on. You’ve gotta be working some angle in that 10 years. With Bitcoin you can actually just sit on Bitcoin for 10 years, and when it’s up for grabs, you pounce on it and you pay whatever price.

Cedric Youngelman [53:48]: That’s great. I really see what you’re saying there. Before we let you go, because we’ve been monopolizing your time, I’d like to talk a little bit about your website. You seem to have impeccable timing as usual, you just launched pierrerochard.com. I read the articles, I have to admit some of them were a little above my head, specifically the auditing the Bitcoin supply. I didn’t know there was a 2,310,000 satoshi difference from the 21 million. I go around telling people about the 21 million. I didn’t really follow what you were saying about the unspendables if you could talk a bit about that. As well as talking a little bit about, miners can mistakenly issue less than a full block reward, probably due to their proprietary software. Maybe talk about that article, and then we’ll get into the Bitcoin development one as well.

Pierre Rochard [54:31]: Yeah, for sure. So I still have time here. I think that I did not address the personal finance question of accumulating Bitcoin, because to me, Bitcoin is a savings technology. Part of it is, Yes, you can use it for long term savings as I was describing, but also that it incentivizes long term savings. So, just as a new technology might incentivize behavior that is kind of underutilized today—of putting money aside for a rainy day — people, I think, have been incentivized to live a life of consumerism. Have you ever watched the TV show “Marie Kondo”?

Cedric Youngelman: Yes! I’ve read it and Marie Kondo’d the house for a bit.

Pierre Rochard: So, you can walk around your house and be like, I have so much junk in here! I have so much stuff I can just throw away right now! And that’s consumerism, right? Obviously, Marie Kondo isn’t just for millionaires. There’s people living paycheck to paycheck who have a thousand nutcrackers in their garage, because they’re hoarding nutcrackers.

Cedric Youngelman: And they were cheap and they were easy to buy.

Pierre Rochard [55:56]: Yeah! And it’s like, $10, Made in China, and you do $10 here, $10 there, and before you know it you’ve got $1000 worth of nutcrackers collecting dust.

Cedric Youngelman: Right. And that’s really where I try to go with, Bitcoin is a savings technology—$10 a week and before you know it you’ve got $1000 of Bitcoin, $1000 in satoshis and not nutcrackers.

Pierre Rochard: Exactly!

Cedric Youngelman: I feel it really teaches people to live for their future self. And that’s what I’ve been trying to espouse, like, Living for your future self, and making a trade with only your future self, not with the others, and not with your past self. You know, Bitcoin teaches you about savings and it teaches you those first principles, whether you have a lot of savings or not. It teaches you a path forward, I think. And financial freedom as well.

Pierre Rochard [56:48]: Yeah. When the government doesn’t let people hoard money, then their hoarding gets directed in other places.

Cedric Youngelman: But those hoarders feel good, and their assets go up, and no one sees the slow drift.

Pierre Rochard: In the worst case scenario, you’ve got the TV show Hoarders. These people have real psychological problems. But even completely normal, middle-class people, you go into their house and you’re like, Uh, you’re bordering on hoarding here — you’ve got a lot of useless stuff laying around. So that’s where I think Bitcoin is savings technology, and then it leads to funny memes on Twitter, and I’m like, Get rid of your chairs! It’s the same concept of, I look around my house and I’m like, Why do I have 30 chairs in my house? And you’re shopping on Amazon, and it’s like, Okay, well, $60 for a chair, okay!

Cedric Youngelman [57:54]: Do you think Bitcoin got you to think that way, to look around and say, Oh, how can I get more Bitcoin?

Pierre Rochard: Well, my Amazon account is connected to my credit card, and it all just happens in the background and I don’t really consciously think about it. And when I look at that price of dollars, I think that, if I got a browser plug-in, that translated everything into satoshis, that I would immediately be like, Whoa! Whoa! Whoa! I can’t afford this! This is too expensive! Because I’ll be doing online shopping and I’m like, Okay I wanna get this electronic thing. Oh — that’s $5,000? I can’t afford that. So psychologically, I think that people talk about the unit bias — there’s also the inflationary bias of, Well, I should just spend my money because it’s just gonna be worthless. And Keynesians wanna incentivize this, right? They say, We want inflation so that we push people into consuming. So that they don’t hoard money. To force the money to circulate and to stimulate the economy. And I call this the high-velocity trash economy.

Cedric Youngelman [59:07]: I got it from The Bitcoin Standard, reading a little bit about Keynes and how he was just living it up day to day, and no real regard for the future. And that’s great when you’re printing the money and you’re really close to it. And in college, or in a lot of finance, accounting, and economics classes at least here in the states, you don’t hear about Austrian economics. Keynes is just put on a pedestal and it’s just the way things are, and it’s great! And it’s working for everybody.

Pierre Rochard: And I feel like what Marie Kondo shows is that, if we have fewer things that are of higher quality, then we’re happier. And I think that’s just fundamentally true. Okay, I don’t think that the government should incentivize that, but I don’t think they should disincentivize it, either.

Cedric Youngelman: Yeah. Well money’s a language, and it teaches to spend our money, at least. It’s built into the code of the money.

Pierre Rochard: So we can go to the auditing now, because I don’t want to beat a dead horse either, so: go sell your chairs, everyone! Go buy some Bitcoin instead!

Cedric Youngelman: So auditing Bitcoin’s supply. You said less than 21 million Bitcoin that are ever gonna be, I think I saw that. As well as these unspendables, and you know, the miners can issue less than full block rewards, which, I’m assuming leads to the shortage of Bitcoin that we’re talking about.

Pierre Rochard [1:00:30]: Yeah, exactly. I talked about how, one of the nice things about Bitcoin is that it has this provable, verifiable scarcity. And it’s easy to say, right? It could just be marketing—of me saying that. But, if you really want to know for sure that that’s the case, you know — I majored in accounting in college, I’ve taken audit courses, I know about financial auditing, and so if someone tells me, This asset is scarce and you can verify it yourself, I’m like, Oh! Well, I have the perfect toolkit for doing that, because I’m a former auditor, that’s what auditors do, they verify ledger balances. And the blockchain is a ledger. It’s digital ledger technology. So let’s dig in to this ledger — I know how to do this. So basically, you gotta start with, Alright, how are Bitcoin created? Because with any ledger, you gotta have that beginning ledger entry.

Cedric Youngelman: The genesis block.

Pierre Rochard: Yes. So you start at zero with the Bitcoin ledger. And then you’ve got the genesis block, so that’s 50 Bitcoin. Guess what? The Bitcoin code won’t actually let anyone spend those 50 Bitcoin, so we’ve already eliminated 50 Bitcoin from the total spendable supply of Bitcoin. Why is that the case? Because the genesis block is actually hard-coded into Bitcoin. Why is that the case? Because you need a way to bootstrap the truth machine, right? What are you gonna has as the previous valid block if you don’t have a first block? So it’s kind of this chick and egg problem. And Satoshi just solved it by hard-coding it and then saying, Hey look, to be fair—no pre-mine, nobody can spend this, it’s just going to be hard-coded in there. Unlike other blockchains, where they’ll hard-code in a beginning amount, but it goes to them, right?

Cedric Youngelman: I mean, that whole notion is incredibly forward-looking. Satoshi is never collecting or using or spending these coins, which is incredibly democratic or fair in a lot of ways. And at this point, I don’t know if Satoshi knows that alt coins are inevitable—probably does, but it just seems incredibly patient and it’s an incredible feat, I think. And kind of giving an incredible legend to the story.

Pierre Rochard [01:02:57]: Yeah, and I feel like we don’t give him enough credit for his ethics. And if we contrast it with what has gone on since Satoshi, Satoshi was an incredibly ethical founder, as far as cryptocurrency systems go. And he made this 50 Bitcoin provably unspendable, and then everything after that he mined it, he used the Bitcoin algorithm, the SHA-256 squared like anyone else would. The next 50 Bitcoin that were actually mined by Satoshi — he mined at a loss, because they were worth nothing at the time. And he consumed electricity to produce them. So Bitcoin were created at a loss from the beginning. And so anyone who says, Oh, well Satoshi got this unfair amount, it’s like — Dude, he got nothing, he got zero dollars, or he got zero amount of value, however you want to put it. He didn’t get any value for free, he actually lost value when he was mining Bitcoin. But you know what? He believed in the project. And so that’s why he mined it, and he made is open source and he released it to the public and he immediately got as many people mining as he could. And ultimately, he couldn’t force other people to adopt Bitcoin. What he could do was explain Bitcoin’s value proposition as he saw it, provide the source code, provide his thought process behind it, and then just hope that people join in and start mining. Anyway, back to the auditing: the way that that 50 Bitcoin is calculated of, Alright, every 10 minutes we’re gonna create new Bitcoin, and that’s how we’re gonna distribute it, and it’s gonna go to the miner, who provides the proof-of-work. I’ll skip over proof-of-work, because if we talk about Bitcoin mining, it’s gonna take the rest of the afternoon.

Cedric Youngelman: But if you could touch on maybe the difficulty adjustment, because I think it’s fascinating, it’s part of what makes the whole process perfect.

Pierre Rochard: Let’s say the value of Bitcoin is going up, but the number of Bitcoin being created stays the same, of 50 Bitcoin every 10 minutes, then that’s gonna attract more miners, because now the revenue that the miners are getting has increased, so now there’s just gonna be more competition to get a slice of that revenue. Because, more cost can be applied rationally — we can create more mining hardware, we can actually even use electricity that’s more expensive per kilowatt-hour, and that actually causes blocks to get produced more quickly, and so then, you have a block coming out every 9 minutes, instead of every 10 minutes, which is what we were expecting. And then every 8 minutes. Okay, so what’s the problem here? Well, if that had been the case for Satoshi, he could have instantly mined all 21 million Bitcoin on Day Zero. Because there’s nothing fixing the clock. What Satoshi added—which was genius — was that every two weeks divided by 10 minutes, every X blocks —

Cedric Youngelman [01:06:20]: When you say added, do you mean in the source code, or after the fact?

Pierre Rochard: Oh, in the source code, before he released it, yeah. It’s amazing — I wonder how much testing he did on his own test-net, to figure out, tuning the parameters. Versus, just him blinding being like, I don’t know, this might work? And then just throwing it out there.

Cedric Youngelman: There’s just too much perfection in it to be blind.

Pierre Rochard: There’s a lot that worked on Day Zero. Now, there were bugs. He fixed bugs as he went.

Cedric Youngelman: Talking about that — when do you think Bitcoin layer one is finished?

Pierre Rochard [01:06:55]: I don’t think that it ever will be finished, fixed — fixed, too. There’s bugs in layer one that will never get fixed. Or bugs in layer one that I don’t think today will ever get fixed but someone in the future will find a way to fix them.

Cedric Youngelman: What do you think is the odds on a catastrophic bug in the system? Obviously we could move to a new — you could move the UTXO set and do different things, but that would cause quite a ruckus I would think, and cause quite a nose-dive. What do you think the chances of that are?

Pierre Rochard: Yeah, so the worst kind of bug would be if somebody finds a way to create more Bitcoin, and those Bitcoins circulate before we realize what’s going on.

Cedric Youngelman: But what do you think are the odds of something like that? I don’t want to put you on the spot.

Pierre Rochard: Well, I don’t want to pat myself on the back, because there’s no way to know how this will go going forward, but the auditing that I’ve put together helps reduce the risk, because — and I’m working on creating a real-time thing, where it tweets out, every block, Okay, everything’s hunky-dory, and we would have a real-time alarm of, Hey, there’s more Bitcoin than we expect. And that this would presumably allow us to roll things back or fix them before an extensive amount of damage is done. Now there are other ways of doing this. So one other way of doing this is having different Bitcoin implementations. So the idea being that the inflation bug hopefully is not the same inflation bug in every implementation, and one of the implementations actually does things correctly. But it could conceivably be the case that the same inflation bug shows up in two different implementations. But, at this point I think that’s very, very, very, very low risk. Which is way I’m so confident. To me, it’s lower risk than the risk of a gold asteroid being brought into low-earth orbit and exploited and causing the gold price to crash.

Cedric Youngelman: Right on. That’s great. That builds a lot of confidence as well. It’s the most powerful computer in the world, most secure network.

Pierre Rochard: Yeah there’s different ways of looking at it. From a mining perspective, it is the most powerful supercomputer, right? But is it really a computer? Because it doesn’t have the flexibility that we would expect from a computer. So you can’t use the Bitcoin network for a gene analysis, DNA analysis, which is what you would use a supercomputer for. You can’t use it for modeling climate change. That’s what you would use a supercomputer for. And then, in terms of it being resistant to attack from others, there’s the mining part, but there’s also the decentralized network of Bitcoin nodes. And so, to the extent that Bitcoin’s blockchain is replicated, and it’s consensus rules are being verified by a lot of different people, not just miners, then it is more secure than it otherwise would be.

Cedric Youngelman: Talking about nodes. So let’s say you’re running your node, you have your wallet connected to your node, you receive your satoshis. What are you doing with your node on an ongoing basis when you’re not using your coins? Are you just running consensus testing? How often do you do that? How engaged with the node are you when you’re not using your coins?

Pierre Rochard: One of the theoretical guarantees and, in practice, has been a guarantee so far, is that you can use your node to verify that you have received Bitcoin, and then you can go offline. And you can go offline until you’re wanting to receive more Bitcoin and verify that you’re receiving Bitcoin, or that you want to spend your Bitcoin, and that you want to verify that you’re actually able to do that.

Cedric Youngelman: So when I go on to Clark Moody dashboard and I think it says something like 10,000 nodes on the network, those nodes are being turned on and off and it’s 10,000 at any given moment, but there might be more nodes that exist.

Pierre Rochard: Right, so some nodes might be permanently online because that’s how they were configured. Others, it’s like, Okay, well, when my laptop is closed, it’s not in sync with the network. When I opened it back up, it catches back up.

Cedric Youngelman: What do you say to someone—a pre-coiner and they’re like, I just bought Bitcoin. I went on Coinbase. How much are you gonna encourage this person to run their node, to CoinJoin their coins, things of this nature. Or are you gonna skip over that with someone who’s kind of new to it?

Pierre Rochard: Well I would ask them first of all, why did they buy Bitcoin? What are they trying to achieve? What was the problem they were trying to solve when they bought Bitcoin? If the probably they were trying to solve is that they just want to have dollar gains — they think Bitcoin’s gonna go up in the next few months, then they should just leave it on Coinbase.

Cedric Youngelman: Or they just want savings technology.

Pierre Rochard [01:12:36]: Well, so let’s say they want longterm savings, right? They want to hold Bitcoin for like 10 years. Then I would say, Well, okay, how do you feel about leaving your coins on Coinbase for 10 years?

Cedric Youngelman: But for a lot of people they feel very comfortable leaving their coins on bankofamerica.com.

Pierre Rochard: Then good, then they should leave it on Coinbase. If they’re like, well, I feel comfortable about that. And then I ask them, What do you think about holding your own keys? And they’re like, Well, I’d be really uncomfortable doing that. Alright, well that’s kind of the end of the conversation. You’re done. If they’re like, I don’t know, I don’t trust Coinbase, what are my options? Alright, well then we can have that conversation, because we’ve got lots of options.

Cedric Youngelman: So when you’re talking to someone like this, maybe they come up to you and they say, I’m not really familiar with Bitcoin, but I’m hearing a lot about it and I really want to dig in. Where do you turn them to? Is there a particular article or one podcast or one video?

Pierre Rochard: This podcast!

Cedric Youngelman: Sure! Fair enough.

Pierre Rochard: I think that understanding Bitcoin’s value proposition gets people excited and so there’s Vijay Boyapati’s piece, kind of showing what are Bitcoin’s advantages over gold.

Cedric Youngelman: But I can’t get that many people to dig into it. I mean it’s a 45-minute article, a lot of people, they’ll skim the headlines, it just doesn’t bring them in.

Pierre Rochard: Then I just tell people, Yeah, go on CashApp and buy some. I know that its value is gonna go up, and then they’re gonna want to buy more. And then they’re gonna buy more, and then they’re gonna want to understand it. At some point — or not! That’s fine too. They might get stuck somewhere, but, the idea being that, I did not understand Bitcoin until long after I had held some for a while. I didn’t dig into, Okay, how does the UTXO set work, how do Bitcoin inputs and outputs work? I just knew addresses and wallets, for a very long time. And that’s fine! There’s no reason to really dig into it, unless you’re like, Okay, this system, not only is it valuable to me because I have Bitcoin, but it’s also valuable to me because I think that it’s the future. And that the sooner I learn this, the sooner I can start benefitting from it and living in the future. So it’s like, Okay, the Internet has just come out, and let’s say you’re a software developer. Do you want to learn web development now, or do you want to wait? Frankly, I would argue that, if I look back on when I first heard about software development, it was MySQL. MySQL was the database. And so, I could’ve learned SQL back then, but I was reading WIRED magazine and I was like, Oh, software development is gonna be obsolete because it’s all gonna get outsourced to India. And so I was like, Okay, I don’t need to learn SQL. Fast-forward 20 years, literally 20 years, everyone’s still using SQL. If I had learned SQL that would’ve been an excellent job skill to have from the Day Zero of having a job! It’s a great skill to have! So I think that there’s technologies that are Lindy, that are going to be around for a long time, that are going to be hugely valuable and powerful, and you might as well just learn them now, because you’re gonna have to learn them at some point, and the longer you put it off, the less you’re gonna benefit from it over your lifetime.

Cedric Youngelman [01:16:27]: What do you think you’d be doing if Bitcoin didn’t exist?

Pierre Rochard: Oh man, I’d be like trying to audit gold supply.

Cedric Youngelman: Some sort of auditor?

Pierre Rochard: Yeah. I’d maybe be working for VanEck with Gabor on some new Gold ETF.

Cedric Youngelman: You’re obviously multi-faceted — engineering, coding, math, accounting, economics — where do you get inspiration from these days outside of Bitcoin? And I don’t think anything is outside of Bitcoin, but you know what I mean. Is it books? Is it other Bitcoiners that inspire you? Is it podcasts outside of Bitcoin? Or is it all Bitcoin all day?

Pierre Rochard: It’s a lot of yard work, landscaping, gardening, wood-chipping, chainsawing.

Cedric Youngelman: Doing stuff.

Pierre Rochard: Yeah, and that’s where I do a lot of thinking.

Cedric Youngelman: Are you just trying to run the numbers on everything? The plants, the grass—

Pierre Rochard: Well, it’s like, if you’re in front of the computer, if you’re on your phone or in front of a screen all day, I don’t see much room for creativity. I get in front of my phone or my computer screen to do stuff that I thought about when I was working with my hands, and working with my legs. Using my spatial awareness. Because I think that a lot of the problems people have, especially with Coronavirus now, it’s that they’re locked indoors. They’re sheltering in place. I’m like, No! Get out! Get some Vitamin D, it’s good for you! Because otherwise, you become, like, a yield farmer. If you can’t do real farming, if you can’t plant your own tomato plants outside, you start spinning out of control into ponzi schemes, and you lose track of reality.

Cedric Youngelman: Right! That’s awesome. This has been great, I’ve really appreciated your time and this conversation. Before we let you go, can you tell everyone where they could find you?

Pierre Rochard: So https://www.pierrerochard.com/. I should get a simpler name. I’ve suggested to my wife that I change my name to Peter Richard. That way, my English-speaking audience—yeah. Anyway. Twitter: @pierre_rochard

Cedric Youngelman: Yeah your Twitter account is fire. It’s great. It’s clear and consise, and you’re just pounding them out all day. And they just seem to come from—really — first principles. You’re probably my favorite person on Twitter right now. That’s why I was so excited to talk to you. So I appreciate it.

Pierre Rochard: Thank you. Yeah when I said that I’m doing some manual labor and thinking, a lot of my thinking isn’t about trying to make things more complex. It’s about trying to make things simpler. How do I simplify this concept? Whereas other people are like, How do I make it more complicated? It’s like, No! Let’s try to distill it down to its essence, because that is what people are gonna understand. People aren’t gonna understand some complex explanation.

Cedric Youngelman: Yeah. Do you have people in your life that are on your wavelength?

Pierre Rochard: My wife! Yeah! I married her. And she’s on Twitter as well, @MorgenRochard. She’s a financial planner, and she’s all about keeping it simple, and that’s how we try to live.

Cedric Youngelman: Yeah. It’s the only thing more scarce than Bitcoin: a spouse that you’re in love with. Your partner.

Pierre Rochard: Absolutely. It was kind of eugenics, because we were put together by an algorithm. OKCupid was like, Hey! You guys are like 90% overlapped in your personality types, you’re both super-weird people, you’re gonna get along great! And sure enough, we have. Now I’ve got a son, but I don’t know if I agree with my son yet.

Cedric Youngelman: Congratulations. Is he old enough to teach Bitcoin too?

Pierre Rochard: So it was funny—the other day, he started yelling at me, We need more fiat! And I was like, No! We need more Bitcoin! And he was arguing with me, he was like, No! We need more fiat! He doesn’t know what he’s talking about, right? He’s 2 years old. He was just repeating words that he hears. But it was really funny, because my wife was cracking up.

Cedric Youngelman: That’s awesome. Well I appreciate it man. This has been great.

Pierre Rochard: Yeah! Thanks for having me on.

Cedric Youngelman: Thank you so much.