The Highest Cost Information

Every passage, on the record.

1. 00:53Claim

   If I know Bitcoin is going to have as large an impact as I think it's going to have, the question is how can I position myself for the greatest amount of benefit, and how can I incentivize myself to gain as much knowledge as I can about the other areas Bitcoin will impact, so I can see further into the future.

2. 01:44Quote

   Am I able to articulate it to a five year old? That becomes a challenge. That means I don't really understand it. That means I have to go a little bit deeper.

3. 02:47Claim · condensed

   Bitcoin won't require this from other people, it will just be taken for granted the way money is taken for granted by the vast majority of people, because that's the whole point of the extended order: specialization is the point, and if you had a bunch of dorks like me, nothing else gets done.

4. 02:47Analogy · condensed

   It's like Neo from the Matrix, I'm sitting there downloading into my brain at three x speed all the information I deem necessary to understand why this thing is going to win, but if everyone did that, nothing else would get done.

5. 03:19Claim

   We can't have an extended order like that, because life would then limit its ability to transform or generate information, and information, the physical embodiment of order, is the whole point of this podcast.

6. 03:19Reference

   Consuming every single piece of written word and then spoken word that I can on information theory was Cesar Hidalgo's book, why information grows.

7. 03:56Claim

   This is the yin and the yang, order versus disorder, the pushing back of the second law of thermodynamics, which is life trying to swim upstream against entropy, and it does that through information.

8. 04:40Quote

   I mean, that's good enough to trick most people at a dinner party. But am I a fucking space cadet? Yeah.

9. 05:12Claim

   To understand information you have to understand the other elements of physics, energy and matter; once you get those down, it's all starting to make sense, one thing building on top of another.

10. 06:17Quote

    Space boy, Jason Lowery was right. Bitcoin is a tool that generates the most costly information ever. And spoiler alert, that's important.

11. 06:17Reference

    Space boy, Jason Lowery was right. It's a goddamn, Bitcoin is a tool that generates the most costly information ever. In fact, it's the only tool that has ever done this.

12. 06:49Analogy

    It's a little bit like a shovel. A shovel is a tool that digs a hole. Now is the hole generally the end goal? No, the hole is a prerequisite for something else, some other order that you are bringing about, and the costliest information that has ever been produced is what Bitcoin outputs.

13. 07:29Claim · condensed

    That hole that Bitcoin is digging just so happens to be really good at money, because as we've moved through the various stages of information, it used to be hard, and before that impossible, to move and access information the way we can now.

14. 08:34Analogy

    If you had a shovel that dug a hole before you needed holes, because you were worried about a woolly mammoth chasing your family, a hole is not very useful; this only becomes valuable once information generation becomes so friction free it requires such little energy.

15. 09:08Claim

    As an extended order we have to keep track of who is generating information, who is creating physical order, because that is how we exchange things and become more productive; we want to specialize because specialization leads to more information generation, and information generation is good because it's the opposite of disorder.

16. 09:43Claim · condensed

    In a world where it becomes incredibly low cost to generate information that would tamper with the ledger of who has generated information, a system more costly than any tool we've come up with becomes incredibly valuable; we've never had a tool that goes backwards, turning the world into the least efficient computer it can be.

17. 10:18Quote

    The whole allows us to build, in the words of Michael Saylor, from this foundation of solid bedrock.

18. 10:18Reference

    The whole allows us to build, in the words of Michael Saylor, from this foundation of solid bedrock, and information generation will only increase because of the tool itself.

19. 10:51Claim · condensed

    We would have hit a point where information generation is so near zero cost, quicker and easier with less friction each time, that it starts to infiltrate the system for keeping track of who is generating information, and then the whole thing goes pear shaped; outside in the fiat normie world, this is what it looks like right now.

20. 11:27Claim · condensed

    The kryptonite to near zero cost information tampering is a tool that is itself the most costly information generator in the world, one where changing or transforming its output would be the most costly thing to do; that would be good money.

21. 11:58Quote

    Why do we want a good money? Because that means we can then exchange more. And why do we want to exchange more? Because that allows us to specialize. And why is specialization good? Because it allows us to generate more information. And why is information generation good? Because it allows us to push back entropy. And the whole thing works like a goddamn charm.

22. 12:38Reference

    I had to go back to the source code, right, start with Claude Shannon, the master's thesis about digital logic.

23. 13:46Claim

    If I've identified this as one of those instances, I should probably just follow the playbook that was written before; I know now that if I wanted to know any more about it, it would take a thousand hours to get ten percent deeper, and that isn't actually useful to me.

24. 14:19Claim

    Information is what we're doing here, it's what life is doing, it's ultimately why we will end up freezing and there's no slowing it down; it explains why time feels to pass quicker as more information is generated at every entropic change.

25. 14:57Claim

    There are a number of examples of novel information that unlocked exponential phase changes in information generation: language, the alphabet and the written word, the printing press, the telegraph.

26. 15:30Analogy

    There was a language people spoke over water using drums, you're like that's not possible, and you read about it and go, it is possible; every step along the way we are basically dependent on solids, which slow down entropy.

27. 16:09Reference

    This goes in line with what Michael Saylor has said in the past, that if you build a nightclub on the bedrock of New York City, everything is vibrating at a different frequency, the bedrock, the building, the businesses, the people inside the nightclub.

28. 16:09Analogy

    If you build a nightclub on the bedrock of New York City, everything is vibrating at a different frequency, it's getting shorter and shorter and shorter, and that's the same thing that's happening with language.

29. 16:41Claim

    Once you have language, you are creating information, which is physical order, by manipulating molecules, sending sound waves into the air, and there is decay on that sound wave; if you're not close enough to hear it, it's gone forever.

30. 17:15Claim · condensed

    With the alphabet, for the first time you can take the physical order that was in your mind and use the written form of language to make it into a solid that lasts significantly longer and resists entropy longer than the spoken word, and then you can slow down and examine the information itself.

31. 17:48Claim · condensed

    The telegraph meant we could send information back and forth quicker than we could physically move, which meant we were no longer constrained by the physical world around us to communicate.

32. 18:56Claim · condensed

    The key takeaway from that book was that nobody had any idea what had just been released; even respected people who thought they could see the future got it all wrong, and a whole bunch of terrible ideas followed.

33. 19:27Quote

    Back the information, not the individual iteration.

34. 19:27Claim · condensed

    Even if you had been right on identifying just how impactful the telegraph's information phase change was going to be, if you bet on one of the specific uses, 99.9 percent of them failed and you would have lost all of your energy; you would have been right directionally and still lost everything, so the lesson is you back the information, not the individual iteration.

35. 20:28Quote

    It's not rocket science. The lesson from history is that 99.99, 99.99 percent of people are always wrong. They're always wrong. They got no fucking clue what they're talking about.

36. 20:28Prediction · condensed

    Once you understand the direction, you can just make bets on things that make information generation easier, and if you could do that you're winning, up until the point where it gets too easy and money is actually information, so if we can pump out information super easy we have to find something to anchor what has become digital back to the physical world.

37. 21:03Idea

    We can't go any lower down the stack, it's turtles all the way down until we get to the bottom turtle, which is the physical world, the Newtonian laws of the universe; anything we can link toward that world has to use energy, and we know that energy can't be faked.

38. 21:03Analogy

    It's turtles all the way down until we get to the bottom turtle, which is the physical world, the laws of the universe.

39. 21:40Quote

    Bitcoin is a tool that generates the most costly information possible. And that's important.

40. 22:14Claim

    Information used to be extremely energy intensive to generate, that's no longer the case; life has found a way to generate information, the physical embodiment of order, more efficiently, but if all information becomes friction free to generate, physical order runs into a serious issue.

41. 22:48Claim

    The value of costly information only becomes apparent when it is used to solve a problem; the extended order is better off with money, and you wouldn't use a tool if you weren't better off for it, otherwise the alternative would outcompete money in the information generation game.

42. 23:53Claim

    Gold was the best money for a long period because it was the information that was most difficult to generate; there's only one way to generate gold, you have to find it and dig it up, there's no shortcut, so those are sunk costs, and energy can't be faked.

43. 24:25Claim · condensed

    If information generation approaches near zero cost, the system of money can be tampered with, and that limits efficiency by incentivizing taking rather than transforming; what prevents that is a form of information that is costly to generate.

44. 24:58Quote

    The hole it digs is the world's costliest information. The hole just so happens to be good for being money.

45. 24:58Claim

    Money is good for coordinating life more efficiently, more efficient coordination means more exchange with less friction and leakage, and that means more information is generated as energy efficiency increases; information is order, life is fighting disorder, the yin pushing back the yang, at least locally.

46. 25:28Claim

    The overall system, the second law of thermodynamics, is still in play, but at this stage we could give a shit about the rest of the system; we are focused on our miniscule corner of information generation continuing to swim against the current.

47. 26:01Claim · condensed

    As information increases, so too does entropy, until ultimately we have information overload, the same way a computer crashes once you hit the limit of information it can compute.

48. 26:01Analogy

    Same as your computer crashes because you fucking hit the limit of information that we can compute.

49. 26:36Quote

    When you own Bitcoin, you own a piece of the output of the machine that generates the most costly information possible in a world where information is becoming cheaper and cheaper. You are buying a piece of a shovel.

50. 27:11Prediction

    As information grows even more, at an even faster rate than it has been, the information that is the most costly, and therefore incredibly costly relative to everything else, will be unfathomably valuable.

51. 27:50Claim

    Information went digital, and when it did it became low cost; Bitcoin anchors information to the physical world again, where it is bound by the laws of classical physics, but Bitcoin doesn't make the money, Bitcoin makes the information that just so happens to be the hole.

52. 28:26Quote

    I did hundreds of hours of information theory to realize that Space Boy had already written it up and had nailed it: we've built a machine that's inefficient on purpose, and that purpose is to create information that's costly, because in a world of near zero cost information, to coordinate the extended order to fight back against entropy and continue generating order, it requires this tool.

53. 28:26Open question · condensed

    He doesn't yet know if this thesis actually plays out, only that this is what you are buying when you buy Bitcoin.

54. 30:00Prediction

    This is going to go on forever because the information has near zero decay; hundreds of years from now you'll dig up this talk, me flapping my gums, except I realized every other case where information made a phase change from harder to easier, the winning formula has been to bet on the information every single time, not the individual use case.

55. 30:33Quote · condensed

    Should we back writing? Yeah, fuck yeah, let's back language. What about the printing press? What about the telegraph? What about the telephone? What about the internet?