Bitcoin & Property Rights

Every passage, on the record.

1. 00:01Claim

   One of the most important elements to understanding why Bitcoin is going to be so impactful for the future economy, and the economy as it stands now, is understanding how by the assurance of property rights being unable to be violated, Bitcoin allows for the emergence of the most efficient energy allocation system ever conceived.

2. 01:36Prediction

   The more you know about these things, the further it will develop conviction when it comes to the Bitcoin thesis overall, which is that Bitcoin is going to win. And it's just a matter of outcompeting the legacy system.

3. 01:36Reference

   The most recognizable figure when it comes to property is John Locke, and he's got a theory on property that really starts in the state of nature: no government, no laws.

4. 02:14Reference

   Compared to what is, to quote Thomas Sowell, that economic framework that you need to wrap your mind around when we're analyzing any of these ideas.

5. 02:14Claim

   Property really is, according to John Locke, the individual is the foundation of property rights. Each individual has property in his own person... Everyone has exclusive ownership right to themselves and no others.

6. 02:48Analogy

   It's very hard for someone else to force you to move your left hand without physically touching it. You can't really abdicate that ability or give it over to someone else.

7. 03:20Reference

   I think the first time I heard about this, or at least I heard the way that it was phrased, was from Robert Breedlove when he was talking about life, liberty and property.

8. 03:20Claim

   His definition is, when one mixes their labor with something from nature, that action then grants them ownership of whatever they produce.

9. 03:56Claim

   Liberty is your present freedom, your ability to transform energy in the now. If you don't have liberty, you're essentially a slave; you are forced to do something that you yourself do not want to do.

10. 04:27Quote

    If I can violate your property rights, I'm essentially saying that I have a higher claim on your life than you do.

11. 06:44Analogy

    Imagine an apple tree inside a forest. The apple is not yours until you direct the energy required to pick the apple and put it in your bag. You can't just claim it as your apple because you've seen it.

12. 06:44Reference

    John Locke also referred to this initial action as the first gathering, the action of taking something out of the state of nature that makes it an owned good, that original action.

13. 07:15Claim

    You can't have stumbled onto somebody else's land who had already gone through the first gathering on that land, planted the apple tree, and then you stumble upon there and say, well, I see the apple there, I am just going to take the apple. It simply doesn't work like that.

14. 07:51Claim

    That apple was always there. That apple, the potential for that apple, was always there. It was provided by the system, the system being nature, the system being the physical universe. All that was needed for property rights to come into existence was the direct action of a participant directing energy to transform that potential energy of the apple into actual energy.

15. 08:33Analogy

    Bitcoin, the initial launch of Bitcoin, like the birth of Bitcoin, mimics nature, mimics the birth of the universe, of energy. Because when Bitcoin was created, all 21 million coins came into being at that time.

16. 09:05Reference

    As soon as that famous quote from Satoshi, which is as of version 0.1, whatever the quote is, 0.1, you basically set the laws in place for Bitcoin forever.

17. 09:05Claim

    If you want to change it, if you want to change anything about Bitcoin, it's no longer Bitcoin. You have to get everyone else in the shared system to go along with whatever change you propose.

18. 09:38Claim

    The only way to gain ownership over a certain number of Bitcoin is to direct energy via proof of work mining. The coins are there and they can be claimed by anyone, just as in nature.

19. 10:44Quote

    If you put enough energy in, those Bitcoin are now your property.

20. 11:18Reference

    There were issues, and one of them was about the limit of ownership argument. This was originally conceived by Locke: nature limits how much one can claim, and the limit is that which one can use without letting the goods be destroyed or spoiled.

21. 11:53Claim

    If you go out in the morning before everybody wakes up and collect all 100 apples from the one tree in the community, that ownership is not valid, that is not a just way to deal with the resources nature provides, because it's a rivalrous good and things do go to waste, so you have to ask, is it right to take more fruit than you can eat before they go bad.

22. 11:53Reference

    We talked about that on the last episode.

23. 12:30Claim

    Even in John's time, he sort of understood that one of the important aspects of money is that it fixed this physical limitation. Without a store, a representation of stored energy, you will run into this problem, and monetary exchange allows us to work more than just to satisfy our own needs because we can specialize.

24. 13:36Claim

    Why has money been so useful in human flourishing, in our ability to transform the world around us as we see fit? It's because we all agree to it all of the time. And why do we agree? Because we are all better off because of it.

25. 13:36Claim

    Bitcoin can be hoarded without harm to anyone, because to get Bitcoin, you had to provide the energy to the system, and the act of providing that energy to the system benefits all the users.

26. 14:10Quote

    It is the most charitable act, which when incentives align to make what is good for the individual good for the whole. This is when amazing things can be done.

27. 14:44Analogy

    Let's say that you were going to mine Bitcoin. Well, you paid for the energy, let's say you paid with dollars. What are dollars? They're just representative of energy. And in return, you get the energy that you're going to use to mine the Bitcoin. You mine the Bitcoin and now you are the property owner of that Bitcoin.

28. 15:17Claim

    The system is rewarding the new owner of those specific coins by granting them property rights over those UTXOs in exchange for the energy that they plugged into the system.

29. 15:52Claim

    Anyone holding any amount of Bitcoin doesn't limit anyone else from using Bitcoin, because it can be divided up, because it is essentially infinitely divisible in soft forks, it being digital means it can be made more and more and more divisible. It's not limited by the physical laws of the universe, like something like gold, like something like our fruit example.

30. 16:23Quote

    One Bitcoin could do everything that 21 million can. It's not the total number of Bitcoin that makes a difference. It's how the system itself operates and then what that represents.

31. 16:53Quote

    No one can fuck with the record. Everybody knows it's true.

32. 17:24Prediction

    It's not guaranteed, but I should get access to more energy in the future. And the longer that I delay consumption, the more I'm allowing other people to use that energy, the higher the likelihood that that is going to be the case.

33. 17:56Claim

    The more participants in the Bitcoin market, the more liquid that is going to become, the more opportunity affords to everyone inside of the market to get the best possible price. That is why the most liquid markets are sought after, because you can liquidate into them without some crazy run affecting the overall supply or the overall price.

34. 18:30Claim

    At the time that they originally shared that energy, they were the lowest price seller. And who was on the other side of that trade? But the person most sure that they could return more reserves to the system, because they were the highest bidder for that energy.

35. 19:08Prediction

    It's a very high stakes game when you go to the Bitcoin market and you say, I'm going to get rid of Bitcoin. You're up against every other person that has access to that market, which now is still quite small, but in the future it's going to encompass all of mankind.

36. 19:08Quote

    The market naturally distills energy allocation to these willing to take on the most downside risk to acquire it.

37. 19:41Claim

    The seller of Bitcoin now have the most skin in the game to return with more energy, or they will never have access to the same amount of claims on future reserves.

38. 21:25Claim

    In the world of monetary property, this is called inflation. Increasing the total supply of the money if you are the issuer is essentially stealing your property, stealing your past endeavors, the energy that you worked so hard, that you put in so much effort to transform.

39. 22:03Claim

    If you're saying that someone should be able to take your property without your consent, then you are saying that someone has a claim over your liberty. There can be a monarch or a higher power that has decreed a fiat ruler has power, or there's the someone who has done it by force, a dictator scenario, or you are a slave to someone because of the threat of physical violence.

40. 23:10Claim

    Volunteering to share your property is completely different than having someone violate your property.

41. 23:46Quote

    The central authority has the answers. They have the people who have studied this.

42. 24:21Claim

    You needed to have gotten the property justly in the first place. If you get the Bitcoin by making kidnapped children pedal bikes 20 hours a day to create the electricity to mine the Bitcoin, then this is a very different situation versus doing so fairly and voluntarily inside of a free market.

43. 24:52Claim

    You holding Bitcoin doesn't actually stop anyone in the first place from acquiring it, so they just want part of your claim, part of your past energy, and they are going to be more accurate at making sure that energy finds its best means rather than trusting your allocation skills, even though your allocation skills were what transformed the energy into reserves in the first place.

44. 26:04Claim

    It really comes down to the tragedy of the commons applied to energy. If one person doesn't have to do anything to get access to energy, they will do it, and limited resources like energy pit self interest against common good. If you give someone that power, all of the incentives align to basically guarantee that they're going to abuse it.

45. 26:39Quote

    What really flips this model inside of Bitcoin is this statement that what is good for all of us is good for each of us.

46. 27:44Quote

    Trust eventually will break. Humans cannot be relied upon.

47. 27:44Claim

    What Bitcoin allows for, which is the big shift, is that you can prevent that from happening altogether by making the rules unbreakable, by not making it allowed in the system. The system is set up from the beginning not to allow for someone or something, some entity, to be able to take your property without your consent.

48. 28:51Quote

    People who store their property like this become customers rather than subjects.

49. 28:51Claim

    The return on violence, the return on coercion goes to zero, or at least for all of our purposes here, goes to zero. It becomes incredibly expensive to do those things, with very limited upside and an enormous amount of downside.

50. 29:26Claim

    This ability to do this is essentially free for the vast majority of the users, this control. Yes, it is paid through Bitcoin mining and through the transaction fees that will happen at the base layer, but there are no ongoing holding costs. There's no rot, there's no decay.

51. 29:56Claim

    The system forces energy allocation to the most efficient option. If the system demands that the people who generated, who transformed the energy in the first place, are the only ones who can choose where that energy flows to next, well that by default is the most efficient allocation of the energy, because those people have the most skin in the game.

52. 30:31Quote

    The impact of this shift is at least at this stage, almost impossible to comprehend.

53. 31:07Analogy

    Our current system is so far removed from these constraints that it is almost akin to sort of the discovery of another dimension. It's very difficult to make your mind see past this wall of coercion.

54. 31:37Quote

    By ensuring property rights cannot be violated, Bitcoin allows for the emergence of the most efficient energy allocation system ever known.

55. 31:37Claim

    Freedom is the foundation for improving everyone's quality of life. And that is what access to property rights allows for.