I'm the director of the Libertarian Institute, editorial director of Antiwar.com, author of the book Fool's Aaron, Time to End the War in Afghanistan, and the brand new Enough Already, Time to End the War on Terrorism, and I've recorded more than 5,500 interviews since 2003, almost all on foreign policy, and all available for you at scotthorton.org.
You can sign up for the podcast feed there, and the full interview archive is also available at youtube.com slash scotthorton show.
All right you guys, on the line I've got Peter McCormick, and he's the host of the What Bitcoin Did podcast, which I'm not sure if that's the same show I was on of his before, maybe, but I've been on his show before.
And we're going to talk about El Salvador and all the doings and changes with Bitcoin going on.
Welcome to the show.
How are you doing, Peter?
Doing well, Scott.
Yeah, it was my Bitcoin show you're on.
A lot of the Bitcoiners are trying to introduce me to libertarianism.
So I got you on to talk about libertarianism and the pandemic, and it was a great chat.
So I appreciate that.
I appreciate coming on your show.
I remember that.
I didn't remember that that was the same name of it.
Didn't ring a bell.
But anyway, so that's great.
And yeah, I appreciate that.
In fact, I have a friend that's hooking me up with another important Bitcoin guy to do an interview here in Austin in a couple of weeks from now, I think.
So yeah, there should be a lot of crossover between our communities, that's for sure.
So now, listen, obviously, this is very interesting, and it touches on foreign policy because, of course, America is overlord over all the Latin American countries and everything.
But it seems like a pretty big deal that the government of El Salvador has passed what they call the Bitcoin law, making it legal tender alongside the U.S. dollar, is my understanding.
So can you talk a little bit about how that happened, and why it happened, and what are the ramifications, good and bad so far?
Yeah, I'll do my best.
A lot to unpack.
First time I went down to El Salvador was nearly two years ago.
I was introduced to a very little project by a team called Bitcoin Beach, who were trying to keep kids out of joining gangs and giving them jobs in the local community, lifeguarding, cleaning up rivers, etc.
What they did is they would pay them at Bitcoin at the end of the week, and then they got local shops and restaurants, pupusas, to accept Bitcoin and create a little circular economy.
And then fast forward a year and a half, my friend Jack Mallers, his company Strike, which is like an international Venmo, but it uses the Bitcoin network to be able to send money almost instantaneously and free across borders, went out to the same place to trial and test their technology, and while they were there trying to solve remittance for the people of El Salvador, because a lot of the, something like 15% of the GDP of El Salvador is El Salvadorans in the United States sending money back into the country.
So if you can remove remittance fees, that puts a lot of money back in people's pockets and increases the GDP.
So they went to solve that, and while Jack was there, he got a phone call, or an email I think it was, from someone within the government that said, hey, we want to talk to you.
He called me and said, listen, the government's going to make Bitcoin legal tender.
Do you want to come down and film the project with me?
So I went down with him at the start of, I think it was the start of, I'm trying to remember now, was it the start of May?
I was there with him while some of the negotiations were happening and some of the work to work on the bill was happening.
And then I went back out at the start of June and interviewed the president to discuss it.
Why are they doing it?
I mean, really, the best people to answer that as a government, but for me, I mean, you and I could guess multiple reasons.
They're a dollarized nation, so they are at the whim of the Fed, and for a South American country, it's quite good to have a stable currency because a lot of them historically haven't.
I mean, you look at the situation in Venezuela with hyperinflation, or you look what's happened in Argentina with multiple currency devaluations.
The dollar does give them a stable currency, but it gives them no control.
And when the Fed decides to print money or the U.S. government decides to print money and inflation drives up, none of the stimulus checks which are being sent out across the U.S. are reaching people in El Salvador.
So my guess is they have made Bitcoin legal tender for a couple of reasons, a hedge against the dollar.
But also, I mean, he's a young, interesting president.
He understands social media, understands technology.
He understands where things are going.
By opening up the country, by making Bitcoin legal tender, he's going to drive a lot of investment in the country.
And Bitcoin companies have got a lot of money.
There's a lot of wealth that's been generated in Bitcoin, and you've got people who are going to want to move there and live there.
You've got companies who are going to want to invest in there, and he's opening up the country.
I mean, that's a couple of reasons why I'm sure we could come up with 10 if we sat and thought about it.
Now, so, man, there's a lot to go over there, but let's go over, let's talk about the new president here.
How new is he?
And I read an AP piece where they say, man, this guy is sure is a tyrant, and he doesn't respect the laws and the processes, and he reminds us a lot of Donald Trump.
Yeah, I mean, look, it's an interesting one.
I don't think there's a politician in the world who has universal support.
And as somebody myself who increasingly distrusts the government, but also alongside increasingly distrusts the media, I never really know what to believe.
I met the guy.
I liked him.
I'm going to be honest, I liked him.
But he's the only other president that I've met.
What can you say about him?
Look, he's done some things that people say, you know, lead towards accusation of him being authoritarian.
He fired, I think it was the attorney general he fired, and fired a bunch of judges.
But this is a country with one-term presidencies, and, you know, as I see it, sometimes maybe politics is dirty business.
You sometimes have to, you know, you have to make some strong actions to push a country forward.
And the US will claim, as they have done, that what he's done is unconstitutional within El Salvador.
But the US history of meddling and interference in other countries is well known across South America, Asia, and everywhere, really.
So I don't think they're really the, I don't really think they are the people that we should ultimately trust on this point.
I think we've got to judge the government results.
What will he deliver for the country?
And where will he be in three years?
I think he's got three years to go of his presidency.
If he changes the constitution to serve a second term, then obviously, you know, there will be questions to be asked there, and I think quite serious questions.
But right now he's a president of a country which is poor, which he's trying to grow, and he's trying to leave his legacy.
So yeah, I mean, look, there's other questions.
I think I recently read about a Mexican journalist who was ejected from the country for criticism.
You know, does he seem perfect?
No, he doesn't.
Does any president seem perfect?
No, they don't.
You know, for me, I prefer to stay out of the depth of the politics, because I don't think you can ever come up with a clean answer for any politician.
I'd much rather be focused on, you know, what are the actions I've seen, what are the things he's doing, which I think will be good for the country.
Yeah.
I mean, what do you think, Scott?
Well, I mean, I honestly know very little about him.
I just learned his name this morning and, you know, read a few things, mostly about Bitcoin.
But then there's, you know, this one profile of him and the AP is all I read.
So yeah, I mean, it seems like he's got some strong arm tactics here and there, but I wouldn't know what all to make of it or how much of it is true or exactly how to evaluate it.
But you know, I don't think there are libertarians in power anywhere.
So that's not ever the issue.
How far right or left is he on which issues and to what detriment of innocent people is, you know, always the question.
But you know, which brings up so one thing that I was thinking of, which is good for me that I thought of this before I read anyone else talking about this sort of angle.
But I was thinking of, you know, when they legalize pot, they create this ridiculous regulatory regime in a lot of these states with these crazy taxes and all protectionism for the first few companies that get grandfathered in and the exclusion of competitors and all this weird stuff.
So I wonder if this guy, when he legalizes Bitcoin or makes it legal tender, you know, I wonder if that actually causes process.
There's a way to like legalize it in a way, but without forcing it, because legal tender then means everybody has to accept it, whether they want to or not.
And maybe they don't want to, especially since the whole thing just went up huge in this gigantic peak and then lost half its value back down from 60 to $30,000 again.
It's got a lot of people worried about how do you run an economy on a or how do you how do you kind of, you know, not even kind of, but actually force regular people into taking a currency that as bad as the and as volatile as the U.S. dollar markets can be.
They don't it doesn't go up and down like that, you know.
Yeah, you know, it's a it's a big question a lot of people have asked because it is written into the bill that every economic agent is legally required to accept Bitcoin.
And I put the question to him when I spoke to him, but his answer to me was very clear.
He said, we will be introducing a government wallet.
Yes, you must be you must accept Bitcoin if someone wants to pay in Bitcoin, but you can have that instantly converted into dollars.
You do not have to, as an economic agent, hold Bitcoin at all.
All you have to do is allow people to be able to spend it.
So I think that is a yeah, as a good halfway house.
Now, some people may say, well, why would you force people to accept Bitcoin?
And I think this is what is the smart play, whether or not it's the right place is for other people to question.
But the smart play really is, is, you know, ever since my interview, Scott, with with the president, I must have had 50 to 100 emails from people saying Bitcoin is saying, all right, I'm thinking of going investing.
Sorry, I'm thinking of going to visit.
Where should I go?
Where should I stay, et cetera, et cetera.
And I'm like, I send them all to El Zonte because El Zonte is the place that did this anyway.
Pretty much every shop, restaurant, pupusaria, except Bitcoin, everyone there understands Bitcoin.
It is a it's essentially a micro hyper Bitcoinized world in this town of 3000 people.
It's beautiful and it's sunny and you can go surfing.
So these people are going there and what are they going to do?
They're going to spend some dollars, but they're also going to spend some Bitcoin.
And when they sit and spend their Bitcoin, they leave Bitcoin in that local economy and that Bitcoin gets spent in that local economy.
And so when you meet the people in El Zonte, they've spent the time understand in Bitcoin, they understand the volatility.
You know, my business, Scott, I've made a decision that some people can pay me in Bitcoin.
And what I do is I convert 75 percent of everything that I get paid in Bitcoin into pounds to run my business.
And I keep the other 25 percent in Bitcoin because I don't need to spend it.
And I can write out the volatility and I can use the pounds to run my business.
And then every kind of eight to 12 weeks, I look at my bank balance, whatever is personal, whatever is business that I don't need for the next eight weeks.
That also goes into Bitcoin.
And that's how I manage volatility on a personal and business side.
And that's worked out great for me.
And in El Zonte, they've done the same.
There's people there.
They've learned how much they need to keep in dollar and how much they need to keep in Bitcoin.
So it's a smart move by him because all these people coming in now, there's 50 to 100 people that I've spoken to, plus the hundreds of others, maybe thousands who Bitcoin is who are going to start coming in.
They're going to want to go there because it's a Bitcoin friendly environment.
And, you know, let's be real.
The world is quite hostile to Bitcoin.
It's a Bitcoin friendly environment.
They can go there.
They can spend their Bitcoin.
They have no worries.
It's perfectly safe.
And that is going to leave money in the local economy.
That's going to drive up the GDP.
The other thing that's super smart, which is a side issue to this is is with regards to investment.
They've turned around and said, you can now get a residency, not citizenship, but you can get a residency within the country for three Bitcoin.
So if a thousand people want to get residency, that's going to be another thousand Bitcoin that goes into that local economy.
Bitcoin is volatile in the short term, Scott.
The Bitcoin consistently grows in value over the long term.
Every four years you see the cycles, you see an increase, you see the supply shock.
So what's going to happen is, say, over the next year or so, say 100, just say even just a conservative 100 million of Bitcoin goes into the country and sits within the country.
When Bitcoin goes through its next cycle and it does a 10, 20 X, that's going to turn into a billion to two billion.
So I think he's made a smart move to ensure that Bitcoin goes to the country and stays within the country.
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But now tell me what their national debt is like and whether they need all these bitcoins right now in order to keep the government moving or whether they can afford to hodl.
Well, I mean, we'll be getting into like an area I'm not hugely experienced in.
I couldn't tell you how much debt the government has.
I couldn't tell you how much they have.
And I can't tell you about how they borrow in markets.
That's not an area, Scott.
I'm an expert in.
But but you're saying the plan is they want to hold this stuff rather than spend.
I think the plan is for the country is is is to grow the country and they want to grow the country in a couple of ways.
One is by having a reason for people to invest.
Being the first country to open themselves up to Bitcoin is going to lead to a massive investment.
Like I talked about a bunch of people I know who've emailed me or people who've listened to my show have got in touch who want to invest.
There's also the companies, you know, having met the president.
The first thing a lot of companies have done is said, hey, Pete, can you introduce me?
Which obviously I can't unless it's a serious business.
But a lot of companies are also looking to invest there.
Maybe they will move their headquarters there.
Maybe there's a reason to invest.
So I think first and foremost, it's a way to invest.
But secondly, he believes in Bitcoin as sound money, as hard money.
He he believes in the network.
He believes in what it can bring to people in terms of the freedom to move money and the opportunity to build personal wealth and become self-sovereign like he spent the time and understands Bitcoin.
So I think it's for multiple reasons.
It is it is a tool of freedom.
Yeah, people call him an authoritarian.
He could have launched a sovereign El Salvadorian currency.
And this is a country has got a history of leaders stealing from the country.
I mean, one's dead and two are in prison and one's hiding out in Nicaragua.
This is a guy who's opening the country up to a new financial system that he cannot influence.
He cannot steal from.
He cannot change.
All he can do is make it available for people to use.
So I think it's multiple things that, like I said, I think is to drive investment into the country.
But secondly, I think is to give the people there an opportunity to invest in something which is not the US dollar.
Yeah.
Now, so what's this about custodial wallets?
Because I was talking with Pete and he was saying, well, you're Peter.
He's Pete.
And he was saying that, you know, this apparently is an issue that you don't get your own wallet on your own computer or even one of the little external things.
It's basically, I guess, maybe the same system that you were talking about, where you can exchange them immediately for dollars.
Apparently, you can't just walk away with your bitcoins either.
You have to leave them in their care.
Like a nationalized Coinbase wallet or something?
Yeah.
So there's two types of wallets, custodial and non-custodial wallets.
So a non-custodial wallet means you hold the private keys and you hold the bitcoin.
So if you have a non-custodial wallet, Scott, and I do, and I send you the bitcoin, you have that.
Nobody can steal that from you unless they can steal your private keys.
A custodial wallet means somebody else is managing the bitcoin for you.
And like you say, a good example is the wallet you get with something like Coinbase.
But my belief is that the work they're doing on the government wallet will be interoperable with all other non-custodial wallets.
So whilst you can use the government wallet, you will be able to send the bitcoin out of that custodial wallet into a non-custodial wallet.
And there's a number of reasons why part of the system may, you may want to be custodial because the Lightning Network is where a lot of the payments will be made.
That's like the second layer of bitcoin.
And, you know, the Lightning Network is still in development.
It is still early and it doesn't always have the liquidity to route the payments, especially on larger payments.
So there is a there is a good reason to run a custodial wallet.
But my belief is that their wallet will be interoperable with any other wallet.
So people can remove their bitcoin if they want.
OK.
All right.
OK.
All right.
Now, so I guess the Americans are offended by this, right, since they haven't had their own currency.
They've had the American dollar since the turn of the century, I guess.
Right.
Yes.
Something like 20 years, I think.
I think it's 20 years they've had the US dollar.
And, yeah, of course.
I mean, look, the US is a really interesting place for me as an external person observing in.
It seems to be the freest place in the world with with the Constitution giving you First and Second Amendment rights and also seems to be a place in the world that it seems to exert most influence over the rest of the world.
And yeah, I mean, look, they're not keen on bitcoin, but the US has a problem with itself trying to ban bitcoin because you have your federal system which gives you regulatory arbitrage.
So we've seen states like Texas and Wyoming and Florida opening up to bitcoin as being keen to accept bitcoin as in.
So it's this really strange thing where, like, the US feels like it would be the place that would first naturally ban bitcoin.
But at the same time, it's actually a much easier place to be a bitcoiner than, say, in Europe.
I obviously think the US government or various departments within the US government will be concerned about this.
I think certain international institutions, the World Bank, the IMF, et cetera, will be concerned about this because it's something they can't control.
But that's the beauty of bitcoin.
Nobody can control it.
It has this very beautiful, simple monetary policy where there's 21 million coins and the emission rate changes every four years.
That's it.
That's the entire monetary policy of bitcoin.
And it's worked for 12 years.
And it's beautiful.
You know, I saw where Stefan Kinsella was saying that, listen, when they seized all the gold, they had to pay compensation.
I mean, in paper money, but they had to pay everybody off.
But he says, no, you look at the market cap on this thing.
They can't pay everybody off.
There's no way that they could.
So essentially, if they were going to ban it here, they would have had to already.
And so too late now, sucker.
Yeah.
Well, too much of the business is in the US as well now.
The other thing about, even if they wanted to buy off or enforce, what was it?
Was it Executive Order 6102?
Was that what it was called when they took all the gold?
You're better than me on that one.
I actually used to have it around somewhere.
I would only know that because I'm pretty sure there's a bitcoiner whose account is something like EO 6102 or something.
I think it's in the back of Jekyll Island.
Yeah, yeah, I've got that book downstairs.
Listen, the other difficulty they have is knowing you have bitcoin.
The one advantage of bitcoin is you can hide the bitcoin in your head as long as you can remember your 24 seed words to your 24 seed words, which is the backup of your private key.
You can cross borders with that memorized in your head.
Who knows that?
Who can take that from you?
Nobody.
So that's another difficulty the government have with stealing this.
But I think we're in a different time now, Scott.
I don't see we're in a stage where the US government would be going around trying to pay off or steal all the bitcoin.
I think the only thing they can do is stop buying it.
Yeah.
Um, now.
So what's going on with China lately?
Because I read they're trying to ban something and make their own.
And, you know, their national government trying to make their own.
In fact, I guess I've heard some rumors about them trying to make a Fed coin.
Yeah.
That really makes me feel gross saying it.
That was a physical kind of retching reaction.
Oh, Fed coin.
Yeah.
Well, listen, shiver up my spine, man.
What's the deal with that?
Yeah, well, everything about China scares the crap out of me.
I tell you one little anecdote.
I've twice interviewed people, Westerners out in China about specific stories.
And both times they've come back to me after and said, you know what?
Can you not publish this?
I don't think I want the things I said being public.
China is obviously another state that's trying to exert its influence around the world.
I think it's an even scarier proposition than the US by a significant amount.
If you tie in the social credit score with a CBDC, so your money is tied to the government, a government which exerts massive surveillance on its nation, that exerts massive amounts of censorship.
And as a social credit system, you can see how you can be cut off from the financial system if you are not compliant, if you're not following the exact rules that the government wants in terms of your behavior.
I mean, China has fast become exactly what was talked about by Orwell in 1984, is complete control over the population.
And the next step is the money.
It's a very scary proposition.
And it's going to be even scarier when they start to try and export that currency to other countries.
One of my friends, Balaji, talks about the next big war is currency wars.
The wars between nations being about currencies.
As other countries try to get off the petrodollar, you will have the digital yuan.
You do have Bitcoin.
You do have the dollar.
A currency war could be the next big war.
And so what is it that they're doing about Bitcoin right now?
Because there are some changes, right?
They didn't just outright ban it, did they?
I mean, they seem to have...
The exact rules are never really clear because it seems like they ban it every year.
Because that's if Bitcoin, as we hear about another ban and the price drops, and we always just make the joke, you know, Bitcoin has been banned in China for 145th time.
But the big change they made recently was the outlawing of Bitcoin mining.
So all the Bitcoin miners who...
I think a lot of them were in Xinjiang.
I can't remember.
I think that's the name of the place.
They all switched off their miners at pretty much the same time.
And you can calculate the amount of miners that are operating by the total hash rate.
I can't remember the exact number, but I think it's over 40% of the Bitcoin hash rate, which is the amount of mining that's happening, dropped off the network.
But all that's going to happen is in a distributed network, that mining resource is going to get distributed to other countries that are more friendly.
So China's cutting itself off from Bitcoin.
Can it 100% stop people from owning and spending Bitcoin?
No, that's impossible.
But it can put in laws in place that stop companies operating.
They can put in laws that can stop miners operating.
They're really just cutting themselves off from the Bitcoin network.
Yeah, I saw where...
I don't think it was the Wall Street Journal.
Who was it?
I didn't read the whole thing, OK?
I just saw the headline.
But it was an American kind of...
Maybe it was the Journal or Bloomberg.
You know, one of these kind of financial type, you know, Forbes or something along those lines.
And they were saying, Aha, well, you know, if China wants to ban Bitcoin mining, then that just gives the advantage to us.
And more of these fresh Bitcoins land on our side of the Pacific instead of theirs.
So good.
Well, Bitcoin mining is, again, it's quite an elegant system because it's based on proof of work.
Miners want to find the cheapest cost for electricity and they want to turn that electricity into Bitcoin, which they can sell.
So if 40% of the network comes offline, everybody else who's mining suddenly is able to mine at a much higher profit margin and mine more Bitcoin.
So that's really good for North American miners right now.
They've seen a real bump in the profitability of mining.
But again, this is a perfect free market system.
Other miners will start coming online.
Those North American miners will try and buy more machines so they can increase their hash rate.
So eventually that kind of profit bump they're getting will come down.
And, you know, I know they have a totalitarian state over there and everything, but I mean, look who's talking and all.
But it seems like you could have a black market in hard drives too and just have guys mining Bitcoin anyway.
It's not like the government there is, you know, really all seeing and all, you know, efficient.
So they'll just drive them underground, right?
Yeah, it depends where you're mining, because what was happening is a lot of these miners were co-locating at the hydro dams where basically there was unused power and that unused power can go to waste.
So it was actually a very efficient system to co-locate those miners at the hydro dams because they would pick up the unused power.
Yeah, smart.
And that's what a lot of smart Bitcoiners do.
I mean, this is the opportunity for a number of developing nations.
Paraguay has hydro dams.
They've got geothermal power generation possibilities in El Salvador.
I think in Ethiopia, there's big hydro dams, but not all of this power is used and unused power goes to waste.
So you might as well co-locate miners there who can turn that into what is the most pristine asset in the world, which is Bitcoin.
All right.
Well, and oh, do we skip the part about what the Americans might try to do about this in terms of El Salvador?
You know, making this move, they're going to try to pressure them to change the law back to the way it was, or is there anything else they could do about it?
That's an interesting question.
That's an interesting question because the risk is somehow, now I wouldn't know the details of how they do this, but cutting them off from using the dollar.
Again, I don't know how they would do that.
But there was a rumor coming out last week that the El Salvadorian government is thinking of launching a digital dollar, which to me, you know, makes total sense.
It is something that is very useful, especially in a Bitcoin environment, because you then have that ability to switch between a digital dollar and Bitcoin very easily.
So I'm wondering if that's a part defensive move because they're worried about what the U.S. might do.
I mean, I don't know what the U.S. government would try to do.
I don't know what their reaction to this is, but typically, I would expect the U.S. government to be suspicious of something they can't control.
But in terms of what their arsenal is to prevent this, I don't know.
I mean, is it sanctions?
Is it trade embargoes?
I've got no idea.
It would seem a bit excessive to put in sanctions just for making Bitcoin legal tender, where Bitcoin is an asset, a digital property you are legally allowed to own in the U.S.
Yeah, well, an old boy should drive around with his bubble top up, I guess.
But yeah, I would think that sanctions would be, you know, I mean, they pass sanctions like they're sneezing, you know, they don't care.
Well, the other thing I guess they could do is bribe them not to do it, offer them a massive amount of money in terms of support for the infrastructure and aid for the country to say, look, don't do this and we'll support you.
But again, you know, I asked the question of the president, I said, is there anything that can stop this?
He said, no, we've passed the law now.
This is happening.
So I think it's a bit late for that.
It'd be interesting to see what the U.S. government does because there are other countries looking at this now, Paraguay, Panama, Tonga, all the smaller nations who see the benefits of remittance or the benefits of their people being able to own a currency which isn't controlled by the U.S. government.
So I don't know, Scott, it's going to be wild times.
Yeah.
Okay, hang on just one second.
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All right.
So you mentioned the Lightning Network, which I sort of kind of understand a little bit.
I think my guy, Harley, webmaster for the Institute and for my show site and everything, he's installed that on both sites, donate pages, I'm pretty sure, which makes it, I don't know.
I don't know what the hell it does.
But so anyway, you can talk about that.
But I also just kind of wanted to ask you, like what other big developments are going on in the world of Bitcoins that you think people need to keep their eyeballs on?
Yeah, great question.
So the Lightning Network is a second layer on the Bitcoin network.
So I'm going to only repeat what other people have told to me.
If you want to build payment networks, you have to build them in layers.
You can't process all the transactions on a single layer.
The Bitcoin network is decentralized.
What that means, Scott, is you can run a node, which is a full copy of the Bitcoin blockchain.
And so can I.
And that means that when we send Bitcoin to each other, we can check that that is valid Bitcoin on the network.
But it also does that job of decentralizing.
It means it can spread all around the world.
Anyone can run a node.
But to do that, we have to keep the blocks of transactions small.
We have to keep them small so anyone can spin up a laptop and run a node.
So that's put some limitations on the number of transactions you can do on the base chain.
It's about seven transactions per second.
The way the network has been scaled is with the second layer called the Lightning Network, which is a peer-to-peer network which allows you and I to send each other Satoshis directly or send them via other people.
We can hop through other people.
So if I wanted to send you some Satoshis, but I didn't have a direct connection to you, but say you and I both had a connection to Tom Woods, I could send you Bitcoin via Tom Woods.
That's the easiest way I've explained it to her.
The great thing about the Lightning Network is the three things.
The Bitcoin network can be a bit slow.
It can take up to an hour for a transaction to confirm.
But with the Lightning Network, it's near instant and the fees are near free and it offers much better levels of privacy than the base chain.
So it's just about scaling the network.
And a good example of different use cases.
Say I wanted to advertise on your podcast and you said, you know what, Pete, for a month, it's $10,000 and you can pay me in Bitcoin.
I'm going to send you that on the Bitcoin network and you're not going to mind that's going to take an hour to confirm.
But if I was hanging out with you in El Zonte and we were going to grab a coffee and I wanted to buy us a couple of cups of coffee and it's $5, I would use the Lightning Network because it's a small amount.
It's going to cost a few satoshis for it to get confirmed and the vendor is going to get paid instantly.
So it's just different ways of scaling the network.
All right.
And then, so what else is big on the horizon here?
Well, look, firstly, I will say the El Salvador news is the biggest thing that's happening right now.
This is a thing everybody cares about.
This is a huge project.
We've had companies adopt Bitcoin.
We've had banks adopt Bitcoin.
We've had institutions adopt Bitcoin, but we've got a country adopting Bitcoin.
There's a lot of eyes on seeing how this is done, how the government rolls this out.
So that is the biggest story right now.
But there are other things that happen that are super interesting.
The moving of the miners, the distribution of that network, that is super interesting.
I've got a bigger question for you, though, Scott, which I think I want to ask.
Bitcoin seems perfect for libertarians.
Yeah, I've spoken to you.
I've spoken to Tom Woods.
It seems like a lot of libertarians still haven't really bought into Bitcoin, haven't really spent the time, say, like somebody like I have learning about it.
Yeah, you guys are fearful.
Well, not fearful.
You guys detest government.
You detest the overreach of the state.
And here you have a currency that they can't control.
What is it that stopped you guys going head deep into it?
I just work for non-profits for peanuts, man.
It's my thing.
Yeah, I don't have savings in cash either.
Not much.
In fact, I had to pay for my wife's surgery last fall, so I sold all my Bitcoins for that.
And that would have been a lot at the height of the ball.
It would have been enough to get a house with or something.
But, you know, easy come, easy go.
Health comes first, dude.
And then, yeah, I was doing OK, you know, a few weeks ago, too, until it crashed.
And so now I'm just going to wait for a long time again and hope it'll go back up.
But I just, yeah, I mean, that's the answer is I just don't have a lot of money anyway.
So but if I had a lot of it, then I would have some significant portion of it and Bitcoins and other things like it, you know, for sure.
I'm trying.
I was trying to get in the habit of buying a little bit every once in a while, you know, on a schedule, but.
That's a good way to do it, though.
I'll tell you what.
$50 a month.
Yeah, everybody you ever heard their like sob story or whatever, mine's the best, because I learned about Bitcoin in January of 09.
Soon as I moved to L.A., my I had two new volunteers, one doing my server thing for me and one doing my home computer problem stuff.
And they both were just getting interested in it.
And it was when it was worth 0.00000002 something cents each.
And I could have been a zillionaire.
Yeah, but there's so many rows.
No, I'm just going to talk about this Obama guy's bad.
Just wait till he's president.
He's going to escalate the war in Afghanistan.
Yeah, do you know what, though?
The funny thing is like we I've got one of those stories I screwed up in 2017.
If I hadn't, I would have over like $10 million in Bitcoin and like everyone screwed up.
But like you can still learn, still stack a few more sets, still build up your Bitcoin.
Just a little bit here, a little bit there.
Maybe when I come down to Austin next, we'll hang out and I'll send you a little bit of Bitcoin.
Yeah, there you go, man.
I'll take you out for some barbecue.
I'll tell you what, you know, and the reason I was buying recently was, you know, even while it was going up, was I figured, well, you know what?
I'm always kicking myself for not buying way back when, when it was worth so much less.
But then I should just I'm always so past oriented.
I'm not looking at the future.
Well, in 10 years, it'll either be worth a hell of a lot or nothing, but seems like a pretty good gamble.
You know, and I don't know what it would take.
It would take a hell of a competitor to make it worth nothing, it seems like.
I mean, I don't think it has any valid competition anymore.
The only valid competition it has is government trying to destroy it.
But it doesn't have any valid competition in terms of monetary properties, not even gold anymore.
Because if you forget the tangible benefits of gold, Bitcoin is so much easier to use.
You can teleport it around the world.
It's highly divisible.
It's, you know, you've got these instant transactions now.
But one of the things I would say, and I say to people now because I have friends say to me, like, oh, it's got up too high.
I missed it at $1,000.
I'm like, Bitcoin is a lot safer to buy at $30,000 because the network effect is larger.
You've got more developers, more owners, more companies.
The more the network grows, the safer it becomes to buy, even though the price is a lot higher.
And when people used to talk about Bitcoin reaching a million dollars, like that was when I first discovered it, when I was first using it, about $600.
And I was like, what do you want about?
That's never going to happen.
That's never going to happen.
I see the path of that now.
I understand why they had that thesis because Bitcoin tends to eat other currencies.
If you're in Lebanon right now, do you want the Lebanese pound or do you want Bitcoin?
I mean, even with hyperinflation, you're not really seeing the volatility.
You're only seeing an upside.
So Bitcoin will eat other currencies.
Will it eventually eat the dollar, the pound, the euro?
That's a bigger question, but it certainly can help people in countries like Turkey, Argentina, Lebanon, all these countries with failed currencies that repeatedly fail.
They're the places that need it first.
A wise man once said, every central bank in the world only knows how to do one thing, print money.
That's it.
All of them.
That's all they can do.
That's all they will do.
You can bet on that.
So that sounds like a bet on Bitcoin to me.
Just synonyms, you know.
Well, they've printed a lot this last year, right?
Yeah.
I mean, listen, do you read David Stockman?
No, but let me Google him.
Oh, man, you'll love him.
You'll love him.
He's just like me, only way smarter.
And he knows as much about foreign policy stuff as I do.
But he knows all of this.
I mean, he was a Reagan's budget director way back when.
So he's a brilliant genius when it comes to all this financial what have you.
And he's just and look, he's always terrified, but it seems like it's always for good reason.
And, you know, I retweeted something out from him.
Hang on.
Monetary arsonists at work.
The Fed's balance sheet crossed the $8.2 trillion mark this week, up a staggering $105 billion from, well, last week.
Man, I ain't no, you know, monetary scientist or anything like that, but I know a couple of them and they seem, this guy's got reason to buy Bitcoin, it sounds like.
Well, I mean, what?
2008 financial crisis, global financial crisis.
What was that?
An 800 billion bailout?
I mean, they've been doing trillions in single steps.
During this pandemic.
It's just, you know, like you say, central banks know how to do one thing, print money.
And the effects of this accelerate.
So I only know how to do one thing, which is buy Bitcoin to defend myself.
Yeah, sounds pretty smart.
All right, well, listen, I won't take up any more of your time, but thank you very much for the time that you gave us.
It was great, Peter.
Anytime, anytime, Scott.
Always good to talk to you, man.
All right, you guys, that is Peter McCormick.
And he is on Twitter at Peter McCormick.
No Mac, just MC, Peter McCormick.
And then whatbitcoindid.com for his show, the What Bitcoin Did podcast.
The Scott Horton Show, anti-war radio, can be heard on KPFK 90.7 FM in LA.
APSradio.com, antiwar.com, scotthorton.org and libertarianinstitute.org.
Thank you.
