Closing the Loop

Every passage, on the record.

1. 01:09Idea

   Bitcoin basically takes all of the energy reserves that the extended order will ever have under its control and places it inside of a container that is comprised of 21 million units. Now, it gets even smaller, 2.1 quadrillion to be exact, but the big idea that is Bitcoin is that you have one container that has the ability to scale up or down based on how much energy is flowing in or out of the system.

2. 01:49Claim

   This is what hadn't been discovered until Bitcoin, that it was even possible to do this on any scale, let alone a scale as large as all of the energy reserves that will ever be generated and transformed into an accessible version of energy for the extended order.

3. 02:35Claim

   This comes back to specialization. Why are people incentivized to exchange in the extended order? It's because they're ultimately better off because they're allowed to specialize. The more they're allowed to specialize, the more energy reserves they're going to come back with as their efficiency increases through knowledge and know how.

4. 03:23Claim

   There really is this separation between the inside world of Bitcoin and the outside world of Bitcoin and the ability for the inside world of Bitcoin to continually expand based on the inputs of future energy reserves that makes the system so unique and will be so beneficial to the extended order.

5. 04:28Analogy

   Let's start by looking at containers themselves. In nature, the obvious example that epitomizes how powerful containers can be for life and therefore for information generation is the human body. Humans are basically sacks of water. If you didn't have the sack, the water wouldn't be contained and all of the specialization that happens inside of that sack to allow life to emerge, it simply wouldn't be possible. It would be some messy soup of equilibrium.

6. 05:06Claim

   That's exactly what life is fighting against. Life is disequilibrium. It is the operation of an energy state that is in disequilibrium that allows life to emerge in the first place. If we had this soup of atoms and molecules, it limits the potential defenses and the communication of information between two specialized systems.

7. 06:21Analogy

   You can think of water as both a solvent and a delivery mechanism for all the things that are happening inside of the body, all of the transformations that are taking place, all of the energy that is going from one state to another. All of those subsystems inside of the body contained within this perimeter would not be possible for it not for the existence of that outer shell.

8. 07:41Idea

   If we can think of the human body as this sack of water carrying the water that is necessary for all of these specialized processes to take place, in the Bitcoin body, you can think of it as the Bitcoin body as a whole is necessary for energy to continue to move unencumbered through the extended order.

9. 08:50Claim

   If you're a single cell, you have a limited amount of energy at your disposal. You're going to have to allocate a significant amount of that to defense because you are entirely responsible for that defense. If the defense threat is worth 100 units, you have to spend all 100 of that yourself, which means if you're on a budget of 200 energy units per day, that only leaves you 100.

10. 10:08Analogy

    If you can split defense between 20 individuals who come together and decide that they are going to pool their resources, that allows more energy for other activities. Like the three musketeers, when you go back to back and you're fighting a group and you're surrounded, if you're with three people, you only have to concern yourself with 120 degrees of attack landscape. The other two individuals can be responsible for the 240 other degrees.

11. 11:24Claim

    The more units involved, the less energy is going to have to go to unique defense systems for individuals. As you unlock specialization, you can voluntarily exchange with others who are also transforming energy in a way that is going to save you energy in the long run, though in order for that trade to happen, you have to have trust that the energy that you allocate towards the system is going to be reciprocated.

12. 12:11Claim

    Trust is really the limiting factor in any network. It's where the majority of the friction is built up. If you think about individual units that are now inside of a closed system separate from the others, you can start to see how incentive alignment happens where trust is removed because survival is dependent on the actions of others.

13. 12:42Claim

    Trust is built up through the alignment of incentives for the entire entity to continue to survive. So not only are you able to specialize more, you have lower defense costs and higher defense probabilities because the total number of energy units that can go to defense increases as numbers grow.

14. 13:12Claim

    Information travel becomes cheaper and cheaper because you are removing friction. The trust builds up inside of the network because of the incentive alignment that is there, and that means that you don't have to allocate energy to that trusting process or the building up of that trusting process because being inside of the same body means that you're on team, whatever that body might be participating in.

15. 13:42Quote

    The meme of everything divided by 21 million is not only accurate, but I think it shows you, once you uncover the reality behind what that means, just how powerful Bitcoin is going to be for the extended order.

16. 14:13Analogy

    Anytime you're building a perimeter or a wall around anything, you generally will have to grow from the outside, which means, if you're thinking about a castle and you're thinking about expanding the walls of that castle, you have to expose elements of the population to danger, to the outside world. You can't expand the castle walls without venturing outside of those walls.

17. 15:17Claim

    The enclosure that is Bitcoin, the container that is Bitcoin, grows from the inside out, which means as you put energy into the system, you are never exposed to the outside world. The number of units claiming ownership over that system is limited to 21 million, but that doesn't mean that the amount of energy contained inside of the system is limited.

18. 15:49Claim

    No one is exposed to more danger as more energy is added to the system. That's important because that is the war that is going to take place between the legacy systems and the Bitcoin systems: if you have to expose yourself to danger in order to grow the system, that's going to put you at a severe disadvantage versus a system that does not.

19. 16:24Claim

    If you have a body that is separate from the outside world, you can use it as a measurement tool. All you have to do is look at the size of the fixed element, the fixed measuring tool, which is the 21 million, versus everything else that is happening outside of that.

20. 16:58Analogy

    If you don't have something constant to measure it against, you don't know what you're measuring. You don't know if you're measuring the movement of bubble A or bubble B. You don't know if something's growing or if the measurement tool is shrinking. But having a separate body allows you to do that because you know inside of that body cannot be affected by the outside.

21. 18:10Claim

    It is physically a system that needs to be manipulated if you're going to in any way change the system: you're going to have to get access to all of those zeros and ones and be able to manipulate them at the same time so that they can continue to operate under the rules governed by the software. The decentralization of the system, the spreading out of where the wall is being constructed, this increases the robustness of the system.

22. 18:50Claim

    This perimeter doesn't exist all in the same physical location, which makes it even harder to manipulate. You don't know where these things are operating from. All you know is that they're operating and you can tell that they're operating because the system continues to run.

23. 19:22Claim

    The 21 million hard cap not only does it not allow for dilution of the energy, but it also makes possible for the very first time a home for all energy inside the system. Bitcoin is and will be where you go to get access to energy in the future.

24. 19:22Analogy

    Just like a well for water, Bitcoin is that for energy. If you need water every day and you have to source it in a different location every morning, that's going to cause inefficiencies, friction in the system. Wouldn't it be better if it was just in one particular spot that everybody knew inside of the town, where you go when you have a need for water? I think in the future, Bitcoin becomes the well for energy. It's where everyone will go because it's more efficient.

25. 20:59Analogy

    Without predators, it has been shown, at least in theory, to be that multicellular entities would have had a hard time evolving. It requires predation for these systems to evolve. If you carry that over into the Bitcoin world, without the fiat overlords diluting the savings power of the masses, the economic balance of Bitcoin probably wouldn't have been identified at least in the time that it was, to the speed at which it has been identified at this point in the extended order of history.

26. 21:51Reference

    There was a research paper put out a couple of years ago about why single cell organisms banded together. And in part, it was down to predation. It was more difficult for predators to consume or to overtake multi single cell organisms that had come together to form groups.

27. 22:24Claim

    As that happens, they are able to then specialize, they're able to reproduce more, which grows more. Without that outside stimulus, without that outside input of danger in the first place, these things would take longer to happen if they ever did happen.

28. 23:03Quote

    There's certainly an argument to be said there that the fiat overlords are the ones that allowed for this discovery to take place.

29. 23:03Claim

    You can operate, you can use Bitcoin and you can gain all of the advantages that I've just talked about to myself for 20 minutes, you can do all that just by accessing the system, just by using Bitcoin, without ever needing to know why they exist in the first place.

30. 23:35Prediction

    As we approach this happening next year, is the good thing to do to increase your position size now so that you can take chips off of the table after the bull run.

31. 24:09Claim

    That certainly identifies a fiat sort of minded approach to the system itself, thinking that you can exit into something that is as good as the Bitcoin system, rather than recognizing that it's going up forever, or rather the fiat system is failing forever in response to the body that is Bitcoin being not developed, but rather discovered.

32. 24:46Analogy

    It's almost like if you had, back in the day, Napster or something like that, if you were the individual who was seeding that particular song or that media to everyone else to be able to copy down onto their own systems, well, then you should have some sort of reward for your contribution.

33. 24:46Reference

    It's almost like if you had, back in the day, Napster or something like that, if you were the individual who was seeding that particular song or that media to everyone else.

34. 25:20Idea

    With a lot of ones and a lot of zeros, that's exactly what the Bitcoin system allows for, to be able to track and to benefit those who plug energy into the system and choose to defer consumption. As the bubble grows larger your fixed portion remains the same, but the true size of the portion increases, and that's exactly what the system is doing.

35. 26:15Quote

    There is no taking profits. There is no exiting the system. The magic happens as soon as you enter the system.

36. 26:15Claim

    It's every day as you hodl, every day you are deferring consumption. You are allowing that energy to be multiplied by individuals in the space, not just a select group of individuals, but because it's open source, because anyone can access the network and join it, there are no restrictions.

37. 26:48Claim

    You are basically sharing that energy with the entire extended order. Anyone who has an idea, who has a system for doing something more efficiently, can not only use the energy that you've made available, but then bring it back into the system and make the whole pie larger.