Today we're interviewing David Veksler, who is

a partner in Vellum Capital and also

creator of the Bitcoin consultancy.

David, how are you?

I am great, thanks, Blair.

Well, you're welcome.

Both Martin and I are interested in this Bitcoin

phenomenon and we thought we'd have you on to

kind of flesh out some of the history of

it and tell us what actually what is cryptocurrency?

Sure.

Please go ahead.

Where can I start?

I think if you remember one thing

about this conversation, it is the why.

Why do we need an alternative to Fiat money?

And the story of money is a long story because

as long as we've had civilization, we have had money.

And of course, there are many kinds of money.

Some places cattle are still uses money.

In some places seashells, in some places it's

been big rocks that are like family heirlooms.

But sometime a few thousand years ago, we

found that gold was a very good money

because it was scarce and shiny and durable.

And so gold has been money for all of human

history and pretty much every human civilization until 1913, which

is when the Federal Reserve Bank was created.

And at that point, pretty much every other government in

the world followed and moved to a Fiat money.

And so before we talk about what Bitcoin is, let's

talk about what the problem with Fiat money is.

Yes, let's do that.

The basic problem is that the reason that Fiat

money was created to replace gold as the global

money was to give governments more power.

So before Fiat money, if you wanted to have a war,

you have to pay the soldiers salary and you have to

pay for the cannons and the ships and so on.

And you have to do that through two ways.

You either raise taxes or you borrowed money.

And then I gave you the gold and you use the

gold to buy whatever you need to run the war.

But with Fiat money to do that, because everybody's using

your money, and all you have to do is print

more money and you can use that money to redirect

the entire economy to the pursuit of the war.

And so that's a big reason why we had

a world war shortly after the central banks moved

up to gold standard 1913, because now they could

redirect the total economic output of the state of

all States to the pursuit of the war.

You could arbitrarily redirect industry

just by printing more money.

And that's exactly what they did and doing more bonds

and use that to reject the entire civilization to war.

And of course, there have been many other

goals that governments have pursued Besides war.

War is just one of the most destructive ones.

But when you have the Great Depression and likewise,

government had major new programs that were paid for

through printing money instead of raising taxes.

And so the ability to have Fiat money

basically allows governments enormous power over society.

That is kind of hidden.

So whereas the taxes, taxes are, you pay

taxes, it's visible, you know, how much of

your wealth is being redirected to the government.

But with money, with Fiat money, through inflation,

governments can, in a hidden way, redirect society

and capital markets to whatever they want.

And they've been doing that.

And one major motivation that politicians have, because the world

is now mostly run by democracies is to make the

economic numbers go up, make the GDP numbers go up.

So when elections are coming up, there's

a strong motivation for politicians to print

more money and lower the interest rates.

They lower the interest rates to create more

investments, to loan money to give to the

people, and that makes them more popular.

The problem is that when you lower the

interest rates, we direct capital to new spending,

but you don't have the corresponding savings.

So I'm sorry for the kind of lesson

here, but it is important to understand that

all human progress depends on savings.

So when you have the caveman fisherman who caught fish

with his bare hands and he wanted to be more

productive, he would have to set aside some fish, catch

some extra fish and not eat it.

You would have to save some fish to

build some fish hooks or build a net.

And so you take the savings and

invest that time in increasing its capital.

And so that's how all savings work.

We set aside some consumption to invest in

increasing our capital for a better future.

And that's how human progress has been happening

for thousands of years until if you have

money, the governments are manipulating the interest rates.

So when you lower the interest rate, you create

a lot more investment, but you actually decrease savings.

So that's what happens is suddenly you

have all these new ventures happening that

are not backed by corresponding savings.

And so all these ventures are malnourishment.

They start failing because they

don't have the corresponding savings.

You don't have the factories and the web developers

and the resources, the oil to funnel the investment.

And so it fails.

And that's how you get business cycles.

So the 20th century and now the 21st century

has been a story of one business cycle after

another because governments are manipulating interest rates, political gain,

and that is made possible by having that money.

And so this person, Satoshi Nakamoto, he was quite explicit

when he created Bitcoin one day in August 2008.

This is the problem he solving.

He said, you cannot trust the central

banks, to be honest with the money.

It's causing all this economic instability.

And I have an idea to fix it.

And I'm going to call it Bitcoin.

So it was very clearly libertarian

who wanted to fix the money.

And he said that Bitcoin is going to

have a hard cap of 21 million.

If you remember one thing about Bitcoin, it's this.

There's only ever going to be 21 million Bitcoin.

And as of two days ago, 90% of all

Bitcoin that will ever exist has already been mined.

The other 10% will be mined by the year 21, 40.

And so it's a scarce asset.

If you take all the gold in the world, it

will not quite fill two Olympic size swimming pools.

It's also scarce because when the price of

gold goes up, you can mine more gold.

But when the price of Bitcoin goes

up, you cannot mine more Bitcoin.

Bitcoin is designed to situate the supply

of Bitcoin is constant, independent of how

much resources is dedicated to Bitcoin mining.

Let me ask you this, and again, I'm a

novice, but I'm not afraid to ask dumb questions.

Let's say in the stock market going to take my dollars

and I'm going to buy a share or 100 shares of

stock in hopes that that stock will increase in value.

So I do that now, since there is a limited

supply of Bitcoin, how is Bitcoin increasing in value?

And it's only that limited supply?

Let's say I had ten bitcoins and I bought them

at $100 each and now they're what, $60,000 each?

Now 50 ish.

So how did that get to be 50 ish?

Think of it as real estate.

If you have a plot of land and some number

of houses, the demand for that land keeps going up.

But there's only some fixed quantity of land.

And so if you have some foresight and you bought

up ten plots of land, demand keeps going up.

And so you can sell it for

more than what you paid for it.

Or with gold, it's a scarce asset.

Demand keeps going up, but the quantity is the same.

Like any scarce asset with a fixed quantity,

the value of each unit will increase. Okay.

I know there seems to be

a plethora of cryptos out there.

Amazon is going to create their own,

I think, and Facebook is the same.

But I know that Bitcoin and Ethereum seem to

be the two best or two leading ones.

Is that correct?

That is correct.

So I will start by saying that

Bitcoin is unique in the space.

It was the first is the only

one with a 13 year track record. Okay.

And what's most important about Bitcoin is this

commitment to a hard cap of 21 million.

So compare that to Ethereum, which

has a completely arbitrary supply schedule.

So the creation of Ethereum

basically changes year to year.

According to the Ethereum leadership team in the community,

Bitcoin has the hardest commitment to fix supply.

And so I think Bitcoin is going to capture the

vast majority, maybe 95% of the value of the space.

But you should know that each asset is

a different business model for Bitcoin is money.

Ethereum is a smart contract platform.

They solve different problems.

Okay, now, you mentioned the term mining a moment ago.

So Bitcoin is it actually a coin or what is it?

Is it a digital asset? What is it? Digital gold?

It's a scarce asset.

And the way that the asset has

been created is through solving hardback problems.

And we call that mining just as an analogy.

But essentially Bitcoin is created by people completing

the miners competing to solve difficult math problems.

And the first person to solve that math

problem gets each new chunk of Bitcoin.

And so the supply of Bitcoin that we have

is basically those miners selling the Bitcoin they mined

by solving those problems to the Bitcoin community.

I noticed lately I've been listening to

some other Bitcoin specific podcasts, and they

use the term Hodel and defy.

I think Hodl means hang on for

dear life or something like that.

Can you describe what that actually means?

I'll start by saying that many people

in the space are novice investors.

They're really being exposed to financial

markets for the first time.

So it's easy to get in trouble

and get emotional and lose your shirt.

And so Huddle is a typo, which was

background to hang on for your life.

But it basically means think long term,

don't try to make short term gains.

It's really just that concept.

So it's like buy and hold.

Buy and hold.

Yes, that's all it is. Okay.

And DeFi.

What is the DeFi? I'm sorry.

So the origin of literally some guy was

drunk and he was typing that I can't

make smart decisions while I'm drunk.

So I'm going to hold on.

And he meant to say hold.

That is the whole thing. I see.

All right, so Bitcoin is money, but

there's many other digital tokens or digital

assets that solve different problems.

And so defy is an attempt to create

an alternative to the traditional financial system.

So now we have this.

What's the word for it?

Becoming a CFI?

Cfi is centralized finance.

In other words, all the financial

stuff that we have before.

Whereas DeFi is decentralized, it

has no official organization.

It has nobody officially behind it.

It has no legal entity.

It is all a network of autonomous smart

contracts that are providing financial services, whether it's

financial markets or autonomous corporations or property deeds.

D Five is decentralized finance, where no person or

station can control the financial entity through lead.

Also term Web three or Web 3.0 or something like that.

So Web three is a clever bit of marketing to

say that this is the feature of the web, but

Web three is simply a set of tools that we

use to interact with the smart contracts on the blockchain.

Okay.

I think the chief aspect of Bitcoin, what has

me interested is that what we've already talked about,

but I don't think we can be emphasized enough.

Is the decentralization of it.

The separation of state and economics, if

you will, because that's what the secular

Foxhole we're chiefly for the separation of

state, religion, state and economic state.

And thought you get the

government as small as possible.

Bitcoin is a separation of the state and money.

Bitcoin has no CEO, it has no leader.

It has no company behind it.

It is a community where anybody can contribute to

it, and all decisions are made by consensus.

What do you think of things like Coinbase

or dozens and dozens of other, I guess,

entry platforms for people to look at?

Are some of them, as you said

earlier, are they scams or offhand?

Let's talk about two different things.

There's the infrastructure, the ecosystem, providing

services to interact with crypto. Okay.

So if you want to buy Bitcoin, you have to buy

it from somebody who ultimately the chain goes to a minor.

But miners don't sell directly to consumers.

So you need some kind of

coordinator to buy Bitcoin from.

And right now, that's mostly centralized entities.

So Coinbase is just a marketplace

where you can think of it.

Miners make the Bitcoin available for sale and

then consumers can go and buy it.

It's perfectly legitimate right now.

We need to have the coordination. Okay.

So how could it be easier as

we are newbies and novices in this?

We talked in the green room, something called

Podcasting 2.0 applications, and how you could stream

parts of Bitcoin called Satoshi's by listening to

a podcast using these new applications.

But at this time, I think it's maybe a

couple of thousand podcasters using this in total, it

could be a 4 million podcast out there, but

probably active podcast or could be an estimate guest

like 500,000 or something like that.

So how do you see that it would be easier to buy and

sell, but at the same time be safe and not be scammed.

And I will come back to

that question also about scam coins.

Well, let me answer one question, which is,

so if you want to get into crypto

and own Bitcoin, this is what you do.

You sign up for a Bitcoin exchange.

I recommend gemini.com.

A Coinbase is another good one.

In different countries, there

are different options available.

I think Coinbase is many

countries, Gemini's in many countries.

So for a fee of 1% or less, you can buy some Bitcoin.

And here's the important part.

You take possession of it.

So when you buy Bitcoin in

exchange, you don't own Bitcoin.

All you own is a claim on Bitcoin.

So when you take possession of it, you would

draw the Bitcoin from an exchange to your wallet.

And what I have is a hardware wallet, which is a

little physical device, and it stores the keys to my Bitcoin.

And that is why I secure it. Okay. Yeah.

My next question would be what is a hot

wallet and a cold wallet and so on? Go ahead.

Hot wallet is basically one that

is connected to the Internet.

So if you have a wallet on your phone or

your computer, those devices are connected to the Internet.

Be stored at an exchange.

Those are hot wallets.

Somebody could potentially hack into that and steal it.

And I work with a lot of people, literally thousands,

that have had their Bitcoin stolen or decrypted stolen.

The cold wallet is not connected to the Internet.

There's a few kinds.

One is a little hardware device.

There's a few vendors making them treasure

ledger, keep key, our old vendors.

And they are devices.

Basically, they only work when they're plugged in and all

they do is they store Bitcoin and sign transactions.

What you should do is, Besides that, write down your

Bitcoin seed words that generate your wallet on a paper.

What I recommend is you get a steel plate,

they can buy them for $40, and you either

etch the seed on the steel plate, or they

have little leather cards that you slide in there.

And so that allows your seat

to be waterproof, fire proof.

Your entire home can burn down.

And that hardened steel is fine.

Oh, wow.

I've never heard of that one. That's interesting.

Now, was your background in finance before

you, I guess, switched over to Bitcoin.

So in 2013, I was living in Shanghai, I lived

in China for five years, and I was asked to

build a Bitcoin exchange just as a technologist.

And so I did.

And that was my introduction to the space.

And that's when I started.

That's when I was sold on the mission.

I've been active and a student

of Austrian economics since 2003.

I was an intern at the Mises Institute in 2004.

And so that was the connection that

told me that Bitcoin is important.

And it took a few years, but ultimately

I decided 2013 to invest in it.

And yeah, I've been active in the space since then.

Finance. It came much later.

Around 2018, I started the hedge fund.

Okay.

And David, you have an interesting mission there regarding

how to say clean up the space in a

way and help people have lost keys and others,

but also all the scams out there.

So one thing is if you go through the list

with legit cryptocurrencies and to learn which to pick.

And now we are told about some safe ones in a way.

But for example, I don't know if we should tell

about names, but I know here in Europe heard about

horror stories or how people have been fooled by that.

They are not really cryptocurrency.

It's more made up and people can lose money off that.

And people continue with this.

Could you tell a bit about this project?

How many entries have you gotten and

could you see some picture of it?

Regarding scams, yes.

So Bitcoin is software and anybody can go

and make a copy of that software.

And many people have there's

now over 20,000 different cryptocurrencies.

Again, it's just as simple as copy paste software.

Change a few parameters, launch your own cryptocurrency

and people see the trillion dollar value of

Bitcoin and they want to make some money.

Not to say that everybody wants to do that.

There are some well meaning projects, but the

vast majority are just get rich quick schemes.

And so that's why I always say, if

you're a beginner, just buy and hold Bitcoin.

Just focus on Bitcoin.

Don't buy anything else.

Don't be lured by stories of 1000

export 100,000 extra returns last year.

Just focus on Bitcoin.

It's the only crypto with a hard

cap, with a twelve year track record.

So each different crypto is a

different proposition, different business model.

They are trying to do different things.

Bitcoin is just pure money.

Many others are trying to do something very different.

And if you want to evaluate it, you have

to look at whether the business model makes sense.

Like there's one token, which is a coin

for dentist offices to pay for dental procedures.

It makes no sense whatsoever why you need

a separate money to pay your dentist.

It's ridiculous.

And there's literally thousands, tens of thousands of

projects that don't make any business sense whatsoever.

There's the gambling ones and there's hot ones and

there's all kinds of projects that make no sense.

So if you're needless space, just buy some

Bitcoin, store it on your wallet, don't invest

it, don't fall for trading schemes. Really.

The scams out there are not nothing new.

As long as they've been money, they've been scams.

And the same advice applies.

Keep your money safe, investorly, if

you can invest it at all. I agree. Thank you for that.

El Salvador has been in the press the

last week or two about apparently the President

or Chancellor of El Salvador has created a

Bitcoin sector or something to that effect.

Or is this whole country going to Bitcoin?

I'm not sure.

Do you know anything about that? Yes.

So 20 years ago, El Salvador admitted they

screwed up their own currency and they dollarized.

They said, we are not responsible

enough to have our own money.

We're just going to use a dollar.

And for 20 years they've been doing that until 2020,

when the President said that we no longer want to

put all our eggs in a dollar basket.

We don't trust the dollar.

And the President Buckley said that we're going

to add a second legal tender to the

dollar and that's going to be Bitcoin.

So now they have two legal

tender, currencies Bitcoin and the dollar.

And they're building a whole ecosystem

because it is legal tender.

You don't pay capital gains tax when you sell it.

There's all kinds of legal implications

of it being legal tender.

And so that's attracting a lot of business to salad

or I have no idea if it will be successful.

It's not exactly a free market economy, it's a

tiny little country in South America, so I have

no idea if it's going to work.

But that is the premise behind it.

Does every person there use Bitcoin, for example,

when they go to the supermarket or whatnot

we had here in the links here that

Blair found article called Crypto and the Global

Financial System on a newsletter talking about how

to practical use cryptocurrency in your daily life.

So the government of El Salvador trying

to make it easy for any business.

Actually, I think they passed a law that

legal tender means you must accept it for

payment of all debts, private and public.

That is the definition of legal tender.

All businesses must accept Bitcoin.

The government is trying to provide the infrastructure.

So it's not exactly a free market

movement because legal tender means the government

is forcing you to accept us money.

I don't support legal tender laws

of any kind, including for Bitcoin.

But regardless, it seems that they have managed to

enable every business to accept Bitcoin as payments and

then convert it to dollars that they choose.

I'm sorry. Go ahead, Martin. Yeah.

You recently wrote a blog post about cryptocurrency

and Bitcoin versus gold and you talked about

the great introduction to economics and history.

Have you seen any examples?

For example, remember, I don't know if that's the

case, but a company like Gold Money or other

have you seen any experiment with that, linking real

money like gold and silver to cryptocurrencies?

So you can already buy a crypto

token which is linked to gold bullionian?

I just heard about a new project which

allows you to take delivery of gold bullion,

basically buying and redeeming crypto tokens.

So that is already possible.

I think if you want to buy gold, buy gold.

You don't need a separate digital token for that.

But if you enter that, that's already an option.

There's someone in the Austrian school who they

dismiss at the Bitcoin and they say there's

staunch gold and silver is what we need.

And they look at Bitcoin as fad.

Obviously, I think you disagree with that.

So I have a podcast coming up where I'm going to

go deep into Austrian theory and talk about why that's wrong.

I mean, I was in nut school.

I bought gold bullion back in 2008.

It was around for a while and I was

accumulating gold, but obviously changed my mind on that.

There's technical reasons why some Austrians are skeptical of

Bitcoin that I won't go into right now. Sure.

But I think it's mostly for traditionalism gold has

a history going back to all of human history.

Bitcoin is very new, and so they dismiss it.

I think if you learn more, understand what it

is, you'll be a lot more open to it.

What are some of the books you've read

or authors that you know that you'd recommend

to our listeners and to us?

If you read one book about Bitcoin, it's

called The Bitcoin Standard by Saifedean Ammous.

The Bitcoin standard.

And it will tell you the why of Bitcoin.

It's not technical at all.

It will tell you why money is bad and

we need to have a sound hard money system.

Ammous just wrote a second book called The Fiat Standard.

So the first one is the Bitcoin Standard

which talks about why we had Bitcoin.

And the second book is The Fiat Standard which

talks about why Fiat money is so bad.

So he's a little how can I put it all

dramatic sometimes my taste, he blames Fiat money for bad

art and that food and war and everything.

But in any case, it's still a great book.

The second book that I like is Bitcoin Hard Money.

You can't with I don't know if you like

to curse on the show, but that is the

title of the book and it's very good.

That's great.

Thanks for tips about that.

And maybe we could talk about that like a new

thing also have been popping up in Twitter feed and

others like about who is the real Satoshi.

And it was recently a guy in Australia and

it was some court case and also what's NTF

because I've seen a very NFC actually.

So the important thing about Satoshi and we don't know if

it's a person or a team, we really have no idea.

It does not matter who it is.

So there are some fraudsters who claim to be Satoshi.

The truth is if Satoshi wanted to come out publicly, he

could do so with certainty because he has the keys to

the first Bitcoin that he might, he might at this point

a few tens of billions of dollars worth of Bitcoin.

He has the keys to the Bitcoin and it'd be

trivial for the founder to prove that he's a Toshi.

But the point of thing is that doesn't matter.

There's no Bitcoin CEO, there's no leader, there's

nobody that has any unique power of Bitcoin.

So Satoshi will very likely never come out

publicly because they would only hurt Bitcoin.

He intentionally was anonymous and it

will stay that way now. Nfts.

So money is plungible.

The word pungeable means interchangeable.

One dollars as good as any other dollar.

One atom of gold is good as any other atom.

Bitcoin is also mainly fungible.

One Bitcoin is the same as any other Bitcoin.

But NFT's are non fungible tokens.

So for example, a property deed is not fungible.

Your house is not interchangeable

with someone else's house.

Your car is unique as well.

And so NFTs are digital assets that are unique.

Currently the NFTs that we have are for art.

This year was an open up project

where I produced NFTs for music royalties.

So when you buy the NFT, you get writes

to the income stream from people listening to music

that was featured by Billboard and Rolling Stone magazine.

That's not the NFT, but mostly today's NFTs are art.

I think it's kind of a fad, but I've

been wrong about a lot of things before.

But they are selling individual

NFTs for 300, 400, $500,000.

So it's definitely very popular right I know that Tom

Brady is probably bringing out his own NFT line up.

If I were an artist I would be selling enough

teas because people have a lot of money to spare

apparently buying them but I'm not an artist.

Well, David I've enjoyed talking to you and I've learned

quite a bit and I appreciate this very much.

Where can we find you on the web so if you

want to get some of the Bitcoin please check my website

the bitcoinconsulting.com I have a newsletter you can follow if you

can hire me to teach you exactly how to buy and

hold Bitcoin if you run into trouble with your Bitcoin and

need some help wallet recovery info and I will help you

out and if you're looking for a managed investment fund in

Bitcoin that's vellum capital very good. Very good.

Thanks, David we've been chatting with

David Vixler of the Bitcoin consultancy.

David, thanks for Manning the foxhole with us

today, Blair Martin it's been a pleasure.