Clay Finck (03:07):

You have a very special place in the Bitcoin community as you work for the Human Rights Foundation. To open up our conversation, I’d like to ask you, as someone who has been with the Human Rights Foundation since 2007, what led you to becoming just so passionate about Bitcoin.

Alex Gladstein (03:25):

Well, I had a career of about 10 years in the human rights space working with dissidents and freedom fighters from around the world from the front lines. People who’d escaped North Korea, people working under Putin’s Russia, women fighting for their rights in Saudi Arabia, people fighting against the Castros in Cuba. When I say fighting, I mean in a struggle sense. Not using violence but rather using just different kinds of tactics to try and push these governments towards a structure that would protect them more. And it’s tricky, it’s difficult to push for reform inside authoritarian societies. That was the work I was doing for years is trying to figure out how we could help these people be more effective.

Alex Gladstein (04:01):

And in 2013, I kind of caught the first little glimmer of what would be coming in the future. I don’t know if you’ve seen Bike Club, but you know how they start to splice the character in before you see him. Yeah. So that’s kind of what happened with me. We got a splice in 2013 when we did a fundraiser in Bitcoin for the Ukrainian democracy movement actually, which was kind of coming full circle now. But we worked with our chairman, Garry Kasparov, the chess great, to raise a bunch of Bitcoin for activists in Ukraine who would later go on to be part of the Maidan Square movement and force out Yanukovych.

Alex Gladstein (04:33):

Obviously it was sort of a shortlived victory because of the Russian incursion in Eastern Ukraine later, but the whole point was we got a glimpse of what Bitcoin could do. We got a glimpse of what money that couldn’t be controlled by governments or corporations could do. And then the movie kind of kept going. I kind of kept looking at the fundamental struggle for human rights without really an eye towards finance or monetary policy probably until about 2017. Like late 2016, I started to think a little bit more about it. And early 2017, I was convinced that it mattered.

Alex Gladstein (05:03):

Of course, Bitcoin coming back to $1,000 after its long bear market was certainly part of that decision making, just seeing that it was like alive was helpful in like buy-in, basically getting other people to agree. But we hosted a Bitcoin panel in May of 2017 at the Oslo Freedom Forum in Norway. During the conference, Bitcoin’s price went $2,000 and it started to get really real. It was like, wow. So at that point I was like, I got to dig in more, and I spent that full year just going down the rabbit hole.

Alex Gladstein (05:29):

But ever since I’ve just really been able to see how critical money and monetary policy and currency are to the human rights struggle, just the logistics of finance and the way that dictators and governments restrict the movement of people that are critical of them. It’s just sort of a thing that’s not really talked about a lot. Whether it’s freezing bank accounts or preventing activists from organizing, cutting them out of the economic system, this is just sort of common practice for dictators worldwide. So all of a sudden we had this tool that allows us to go around that. Yeah, I thought that was really neat.

Clay Finck (06:01):

It seems like Bitcoin can sometimes be the somewhat daunting subject because a lot of people just aren’t immersed into the financial world, like many of our listeners or many of the guests I have on the show and the other guests on The Investor’s Podcast Network. So I’m curious, from the perspective of the Human Rights Foundation, what are the biggest problems Bitcoin is solving?

Alex Gladstein (06:27):

Yeah. We have this phrase called Bitcoin fixes this in the community, which is a little tongue in cheek but it’s also literally real. Like there’s a long list of fixes by Bitcoin, just straight up fixes. A frozen bank account would obviously be one of them. Not having ID, not having sufficient ID to open a bank account would be another. So just in the context of what’s happening right now in Ukraine, I’ll just give some examples. So you’ve got a million refugees as of yesterday according to the UN, I mean, who knows what the actual numbers are, but let’s just say they’re very high. A million Ukrainians have fled Ukraine into Europe, into other countries.

Alex Gladstein (06:58):

They did so in a matter of days or hours. They went on trains, they went on cars, they went by foot. They didn’t have a lot of time to plan. Like if you go back and look at social media the week before the invasion, there was this sense that Russia might do something, people were debating it. A lot of people were like, oh, it’s fake news or whatever. And even the Russian government was saying it was fake news. They were like, “Haha.” But even people there in Kiev in Ukraine were like carrying on life as normal. It was like this weird calm before the storm moment.

Alex Gladstein (07:28):

They probably weren’t necessarily getting ready for an invasion. Did not seem to be the case. So they probably weren’t trying to get their house in order financially. And then it just like happened really quickly, like it just was insane how fast the invasion started to happen. So it’s not like you have time to make an appointment to go to your banker and deal with whatever or talk to your broker. No, it’s just like you’re trying to get out of there.

Alex Gladstein (07:50):

So if you’re talking about somebody who maybe had some stocks and who had a retirement plan and maybe had a house, it’s like none of that stuff’s coming with you if you’re one of these million refugees, like you got to leave the house behind and your financial assets are all frozen or they’re collapsing in this Ukrainian economy that’s like tanking. So that’s the way the world worked previous to Bitcoin. Like you couldn’t take your stuff with you on demand. You just didn’t have it. It was somebody else’s liability in that sense, or it was something physical that couldn’t be moved.

Alex Gladstein (08:17):

But that’s not the reality we live in. The reality we live in is that Ukrainians are the fifth largest in terms of per capita usage, the fifth most prominent Bitcoin users in the world. Again, per capita, and hundreds of thousands of Ukrainians do own Bitcoin, do use Bitcoin, do use cryptocurrencies. I mean, a lot of them obviously were able to bring some of that with them. You get over to Poland and the fiat system doesn’t work for you. You don’t have a Polish bank account. You don’t have a Polish driver’s license. You’re a refugee. It could take a long time for you to acclimate, and all your stuff’s behind you. But once you get to Poland, you have the Bitcoin on you, you could spend it easily at an ATM or through a peer-to-peer marketplace and you have your money. So this is like a really clear example of why it matters.

Clay Finck (08:59):

You mentioned Ukraine. What’s the reason that Bitcoin was so popular in Ukraine specifically?

Alex Gladstein (09:05):

Yeah. So there’s a couple reasons. Number one, it’s a country that’s had some pretty serious currency devaluations. For example, the Ukrainian currency, the Hryvnia, it lost 40% of its value, almost 50% of its value between 2008 and 2009. And it lost another 50% of its value between 2013 and 2015 against the dollar. So it didn’t bounce back from those things. So you have a population that’s like aware of currency collapse. We’re talking major, major, major inflation. And I’m just describing the last 15 years. I mean, older generations lived through like crazy kinds of hyperinflationary stuff under the Soviet era.

Alex Gladstein (09:47):

So you have, number one, a population that’s familiar with currency collapse and financial repression. Financial repression referring to times when real inflation is above interest rates, things like that. So they’re like aware of the fact that the financial system doesn’t work sometimes. Second, they’re like just very connected, like Ukrainians, it’s a huge IT hub. Eastern Europe, generally speaking, people are extremely connected, knowledgeable about computers and mobile infrastructure and just are very connected. High rates of social media use, all these different things.

Alex Gladstein (10:14):

So I think these two factors combine to make Ukraine one of the world’s hotspots for Bitcoin. And look, it’s inarguably making a difference right now, inarguably. You could say the same thing for Russians who are stuck behind Mr. Putin’s walls and are being subject to the horrors that he’s unleashing on them. I mean, they aren’t the same horrors, but they’re bad, really, really bad. I mean, Ukrainians are bearing the brunt of the violence, but Russians are going to see their entire economy collapse. They just saw the entire liquidation of their independent media in the last few days. There’s new fines for even questioning the war effort. It’s becoming a totalitarian police state basically. Whereas before it was still a dictatorship, but there were like some openings left. Those have just all been totally shut in the last few days.

Alex Gladstein (10:55):

Any sort of financial connection to the outside world is gone, whether it be a decision by Mr Putin or a sanction from the West. I mean, you have no access to dollars, you’re just stuck. Except you have Bitcoin, so you still preserve that way of interacting with the world around you that way. And you can still save in that way and have something that’s a bare asset, which gives it a value beyond its price. It gives it this sort of collateral value that is beyond its current market value. The fact that if you kind of deeply understand Bitcoin, you know it’s going to be around for a while. You don’t know exactly how much it’s going to be worth, but you know it’s going to be worth something in the future, probably more than it is today. And that just gives it tremendous kind of practical value beyond it’s immediate monetary value.

Alex Gladstein (11:32):

Because what else do these people have? I mean, everything else that’s digital is frozen or is going to get wrecked and the local currencies are going to inflate dramatically. There’s a shortage of dollars. I mean, gold can’t be emailed. Everything else has like major issues. So it’s like driving a lot of people towards Bitcoin and things like Tether.

Clay Finck (11:50):

How easy is it for these people to purchase Bitcoin today? Since there are issues in these countries with the banking systems, does that make it a lot harder for them to access Bitcoin?

Alex Gladstein (12:01):

There’s a couple things at work here. Again, Russia and Ukraine were both pretty high per capita usage Bitcoin countries to begin with. So that suggests there’s a lot of infrastructure there. It’s all about in relation to what? Like if you’ve just arrived in Poland and you have no way to receive money from me, like dollars or euros, it’s impossible. You have nothing to receive it in. I can’t just like teleport you some bank notes. What I can do is I can talk on the phone with you and show you how to download a Bitcoin wallet. And within a matter of seconds you can download, for example, the Muun wallet, M-U-U-N wallet, and it’s open source and free and doesn’t require ID. You make a little four digit pin and then you give me your QR or your address, just a string of numbers and letters, and I can send you a dollar, $10, $100, $500 immediately and instantly over the lightning network with like basically no fee.

Alex Gladstein (12:46):

So, okay, you now have this value on your phone in a matter of minutes. Now, you can just go to an ATM in Eastern Europe, a Bitcoin ATM, and you can exchange the Bitcoin for euros. You could also use a peer-to-peer marketplace, the telegram group. There’s many, many ways to sell your Bitcoin into the currency that you need. It may be different and new, but it’s definitely easier than trying to set up a bank account in Romania if you’re Ukrainian. It’s all about context. It’s definitely easier to figure out how to use a Bitcoin app and send money to your family in America or vice versa, or especially have your family in America or Europe send you stuff than it is to try something else, which there may not even be any other options. The good news is Bitcoin’s UX has improved a lot over the last five years and now the wallets are beautiful and they work well. So that’s a good thing.

Clay Finck (13:34):

What do you think are the biggest barriers just getting into Bitcoin? Is it the education side of it, is it the UX or are there any other barriers?

Alex Gladstein (13:45):

There’s tons of barriers. I mean, Bitcoin’s weird. It’s different. It’s strange. Like it’s unlike anything else you’ve ever seen before. It doesn’t make any sense. So it takes time to comprehend that. It behaves in a way that can be off-putting to people, meaning it’s volatile and doesn’t appear to be backed by anything. It’s tied into this broader cryptocurrency market with all these scams and it’s got a mysterious creator. People just don’t know, they just don’t know. They’re just not sure. They’ve heard that it’s bad for the environment and that criminals use it and it’s volatile and complicated. Most people just, they turn down their nose at it or they would laugh at it or dismiss it.

Alex Gladstein (14:22):

I mean, that is kind of where it is for most people. Only about 2% of humans have used this thing. I mean, 2 or maybe 3% now. I mean, most people don’t know about it, don’t care about it, dismiss it. They don’t understand its incredible value for humanity. It’s not clear yet. And that’s because it’s weird and new and different.

Clay Finck (14:39):

Speaking of critics, I wanted to read a quote from one of your articles. I quote, “The critics cited above are all wealthy citizens of advanced economies where they benefit from liberal democracy, property rights, free speech, a functioning legal system, and relatively stable currencies like the dollar and pound. In reality, only 13% of our world’s population is born into a stable currency like the dollar and pound. The other 87% are born into autocracy and considerably less trustworthy currencies. 4.3 billion people live under authoritarianism and 1.2 billion live under double and triple digit inflation.” Now, why do you believe that so many people in developed nations just seem to ignore this reality?

Alex Gladstein (15:26):

Well, it’s financial privilege. I have a book coming out in the next few weeks called Check Your Financial Privilege based on the idea explored in that article. Again, as you read out and as people should know by now, you’re listening and you probably are one of the lucky few in the world who are in the small minority who enjoy this incredible financial privilege where you’ve never had to think about a bank run or your currency collapsing or your payment on Venmo not going through and getting frozen. Maybe here or there you’ve had issues, but generally speaking, your financial system works really well. Your stock market has done very well in the last few decades. It’s easy for you to use things, like easy to open a credit card and get credit.

Alex Gladstein (16:02):

Generally speaking, things go pretty well for people in America and in Europe and Japan and Australia and Canada and New Zealand, usually speaking, usually. Because of that, they have a hard time understanding like what it’s like for people who live in what would be maybe like the other 89% of the population which lacks either liberal democracy that respects private property and free speech or that lacks reserve currency, like a relatively stable currency, a currency that’s good enough that other central banks are going to actually save in it or diversify into.

Alex Gladstein (16:33):

So the reality is the average person in the world today, their native currency is terrible and collapses a lot like the Ukrainian currency or the Argentine Beso or whatever, or they live under some sort of authoritarian regime like China or Russia where they don’t have the rights that we would enjoy in the United States, the property rights that protect you against the state. And that financial privilege clouds people’s ability to understand the impact Bitcoin’s having on the world today.

Clay Finck (16:59):

You mentioned a couple of the countries that are currently experiencing extreme debasement or even hyperinflation. What are some of the things that the Human Rights Foundation is doing to help people realize that they have other options other than holding their collapsing currency?

Alex Gladstein (17:16):

Yeah. I mean, I think the interesting part is that pre Bitcoin, options were somewhat limited. I mean, what it drove the world towards was more of a dollar focused world because there was so much currency mismanagement worldwide that dollars just became more and more and more important. And even now, today, right now as we speak, you’re seeing the dollar versus the other currencies get stronger. That’s going to continue until the dollar is no longer the reserve currency. But I would say that like one of the side effects is that you see things like dollarization in some of these countries like Venezuela, Cuba in the ’90s, Ecuador and even obviously El Salvador. Whether it was organic or imposed, you’ve seen entire countries decide to use a dollar. And they’ve sacrificed obviously monetary policy to do so.

Alex Gladstein (17:53):

So you’ve had nation states and individuals kind of adopt to the dollar worldwide. Like dollars were so, so important in Russia. The average people would save in dollars there, not in Rubles. So I think that one consequence of this world was dollar dominance. But that’s caused some distortions in the world, that’s caused some glitches in the matrix. We had this kind of outsized demand for US debt and dollars that has allowed the United States governments to do some interesting things, to put it mildly, and really just to kind of overexpand and overstretch in many ways and to structure the economy in kind of an uneven way. This has basically resulted in like an ability to have like easy monetary policy over the years.

Alex Gladstein (18:32):

We’ve had more demand for our debt than would otherwise occur if we weren’t the reserve currency. So we’re able to be really overstretched and indebted and have World War II level eras of debt to GDP ratio and yet still have low interest rates. Now, that’s no accident. There’s intervention from the government there. We have epic amounts of quantitative easing that has bought almost $9 trillion as of today of treasuries and mortgage backed securities and other things to kind of like pump up the value of these markets, pump up the value of the bond market, pump up the value of real estate market, et cetera, et cetera.

Alex Gladstein (19:05):

So without the Fed, these things would obviously be not as pumped up and the yields on them would be higher and then the cost to borrow would be higher. So the US government has used this, I would say abused, this position of dollar privilege to do things that I think are kind of undemocratic in some areas, including some of these wars in the Middle East. I don’t know, it’s just kind of an interesting topic, but we’re starting to see a crossroads here where like this is going to be eventually unsustainable. I mean, the US government’s been buying $4.7 million of assets per minute since March 2020. $4.7 million of assets per minute.

Alex Gladstein (19:37):

We talk a lot about the Fed as having psychological effects, and certainly there’s that, like this knowledge that the Fed will bail out the repo market or the corporate credit market and the bond market. There’s that knowledge that changes human behavior, but also just the straight up mechanism, just relentless buying, just relentless buying. So these things change the bond market and they’ve removed this check on government power.

Alex Gladstein (19:57):

American politicians haven’t had to be as constrained. We can run up $30 trillion in debt and still be the reserve currency because of this activity. But it has real costs on our country. I mean, if you just look at things like inequality, deriving from asset inflation, you look at some of the ways that debt financing causes severe economic imbalances and over time crashes, I’m not sure if this model we have is sustainable. And what’s really clear is from the last few days and weeks, we’re seeing the collective realization of other governments, starting last year with Afghanistan and now continuing with Russia, realizing that like if their savings is like in the form of inside money, they don’t have it. It’s not theirs.

Alex Gladstein (20:35):

And then we have Russia which was sitting on like a half trillion dollars of American securities, or dollar denominated securities. And it’s like, okay, those aren’t theirs either. So those got frozen or could be frozen. And now people are thinking about this idea of outside money again, which I think Russia was planning this invasion. Kind of their plan was to have this gold position and then to work a little more with China and India and stuff like that. It’s not going to work out. It’s going to be catastrophic. The Russian economy’s going to shrink by probably double digits this year leading to just massive suffering.

Alex Gladstein (21:04):

But I think that it’s going to start causing states to think more carefully about this. Like think about the incentive it has. Like China has a trillion dollars of American debt. That’s like where a lot of its savings are. So now it knows if it looks at what happened with Russia, that if it invades Taiwan, its savings is going to get frozen. So now if it wants to achieve its foreign policy objectives, it’s going to have to build something else. I think this is kind of this dilemma that the US government faces at the moment of let’s say its peak of its powers, or maybe it peaked maybe 10 years ago. But like at the height of dollar hegemony, if you use the power you have to punish, you’re spending down your power. Like if we cut off this country, then that country’s no longer under our influence.

Alex Gladstein (21:44):

You’ve almost seen a huge shift in that just almost physically. You can just feel it, like the Russians and Chinese are just going to build a different system and then that’ll make the dollar weaker technically because the dollar will have no influence there. So big, big, big historic macro geopolitical stuff happening. I think it’d be bizarre to ignore Bitcoin. Like if these governments around the world, they’re realizing they want outside money, to save in outside money and to accumulate it, I mean, what are the other options besides gold, which is honestly you can’t email it, it’s not programmable, like it’s in the ground. There’s just so many problems with gold.

Alex Gladstein (22:19):

Bitcoin just seems like way better in a lot of different ways. It seems inevitable that these governments are going to start adopting it in this way. And from a human rights lens, I think that’s really amazing because out of total self-interest, these governments, which maybe don’t care about human rights at all or even anti-human rights, they’re going to be adopting this thing, strengthening it, mining, securing the network, making the value of it go up, increasing interest from populations around the world. Like it’s this weird positive feedback loop thing. So even if these anti democratic governments choose to use it, they have no choice in a way but to help support freedom because they’re reinforcing Bitcoin and the Bitcoin network and the sort of network effect that it has.

Alex Gladstein (23:01):

It’s going to be a really interesting decade ahead to watch what happens here with central banks and what do they do with their balance sheets in their quest maybe now to diversify away from inside money. And then what do dictators do, because they have this dilemma where they don’t like Bitcoin, like Xi Jinping banned Bitcoin mining before the 100th anniversary of the CCP because he was worried about it because he doesn’t control it. Putin did not have Bitcoin in his plan here, which it’s almost crazy to think about. But he couldn’t because he’s afraid of it because activists and dissidents and stuff use it and he can’t control it. For him to go in there and pump up Bitcoin would’ve been not great for him. I mean, if you’ve got more Bitcoin adoption in Russia, it means that the government has less control over the people.

Alex Gladstein (23:41):

So I think there’s a lot of dilemmas coming up here, but I think what’s super clear is that Bitcoin’s going to be super valuable in the coming decade, both from a price perspective versus dollars or goods and services, but also just from like a practical perspective, just as something that fulfills a role that nothing else fills. And I think you’ll see that spread increase in knowledge between Bitcoin and the other cryptocurrencies which have their own use cases, of course, like Tether being one of them. But they’re not the same.

Alex Gladstein (24:06):

Bitcoin is actually this true outside money that not only can’t be frozen or seized, but also can’t be diluted or devalued. That’s like really the key part. All these other cryptocurrencies can and will be, due to human nature, be manipulated. Like the second most decentralized cryptocurrency is Ethereum. Ethereum’s rules will change. They are changing on a pretty constant basis. They change the amount of money that’s printed in the system. They go up, they go down, doesn’t matter. They change. They’re going to change the consensus mechanism to proof-of-stake, which is more like a consortium of shareholders model. It’s not censorship resistance.

Alex Gladstein (24:37):

So I think you’re going to start seeing certainly a continued explosion of crypto assets in different kinds, in different ways, but you’re going to also see Bitcoin really establish itself as super unique and there’s not going to be nation states. I don’t think having like NFTs on their balance sheet, that’s unlikely. They’re going to go after the hardest money. So I think that’s kind of where we stand here. It’s pretty incredible times actually.

Clay Finck (24:59):

Yeah. You kind of beat the drum on this idea of Bitcoin being the Trojan horse. You wrote a brilliant article about this where you believe Bitcoin is this freedom technology where it empowers the people, yet those currently in power call at the institutions and the governments due to Bitcoin’s price appreciation. It seems as something that may be appealing due to things like currency devaluation, due to the freezing of accounts from other nations, things like that. So even though it may not be in their best interest in a way to adopt Bitcoin, they’re almost incentivized to.

Alex Gladstein (25:38):

Yeah. I mean, that’s I guess what I’m getting at here is that they’re going to face this conundrum about where do we save our national earnings and savings? What’s our strategic reserve going to be? There’s going to be quite clearly now globally, even for neutral countries like India, like an interest in making sure that part of that is in outside money. Maybe that’ll cause an interest in gold. But I think eventually people will figure out that Bitcoin’s better than gold, like in almost every way. And then you’re going to see something crazy happen. I don’t know whether that takes place like in a slow motion thing over five years or whether it takes place in 72 hours. I have no idea.

Alex Gladstein (26:13):

But it’s not like there’s a huge amount of Bitcoin for sale to begin with. There’s been times over the last couple years where the amount external for sale is like not very much. Obviously these are moments where the prices tend to go up. And more will come onto the market as the price goes up, but there are going to be people who don’t really want to sell necessarily and there’s going to be a lot of people who want to buy. And I just, it’s hard for me to believe that people could think anything different about this particular asset over the coming decade.

Alex Gladstein (26:41):

No one knows exactly what’s going to happen, but it seems pretty clear to me that it’ll be worth a lot more in 2030 than it is today in any measure, be it gold, oil, dollars, the S&P 500, I don’t know, world hegemony, 10 year bond, I don’t know. Like pick your thing, it seems like Bitcoin will be more valuable than any of those things on a relative basis moving forward. I mean, that’s kind of where we are today and I think it’s just so cool that anybody can access this thing that’s going to change the world. Like anybody can own a piece of it. It’s very easy. It’s very approachable. It’s just like this money for the internet that is like open to everybody and it’s like this neutral thing that can’t take sides and can’t be canceled. It is open for everybody, open for business.

Clay Finck (27:22):

You talked about this dollarization of some countries due to they’re not able to run their own currency so they just adopt the dollar. And then they’re at the whims of whatever the US government does with the dollar. For example, the US government was giving out the stimulus checks to everyone. You have the citizens in El Salvador that aren’t getting those checks but they’re seeing the value of their dollars being worth less and less over the time. So they’re kind of a victim under this dollar-based system. Have you been active in El Salvador yourself? Have you been working over there or could you talk about the impact that Bitcoin has had in El Salvador?

Alex Gladstein (28:03):

Yeah. I mean, look, as you say, it’s already a dollarized country, so the government doesn’t really have that much discretion when it comes to monetary policy. And yeah, when there is monetary inflation, the Salvadorians don’t get stimulus checks. This is clear. So it was a trade off that they made, not the people but the government made. 20 years ago, they decided to sacrifice monetary discretion for a strong currency. One can debate about whether that was the right move and has downsides in as much as they can’t devalue their currency to help an export sector that’s like failing or less competitive. But it has big, big upsides, mainly for the banking sector. I mean, the banks did very well after this transition.

Alex Gladstein (28:41):

I don’t know socially. It was very unpopular for a long time, for many years actually there. But it is what it is and that’s where we are today. I think that it’s great to see a country where there’s an alternative legal tender. People have fiat legal tender, but they also have Bitcoin. I think that should be the case for everybody in the whole world. I think everybody should be able to use Bitcoin as legal tender, use it anywhere, pay their debts back with it, et cetera, et cetera. And I think Bitcoin will move in that direction over time, slowly but surely.

Alex Gladstein (29:09):

Let’s just put it this way. It’s a strange thing, but it sounds insane that this message board idea could become the world reserve currency. It sounds like lunacy, but if you’re to run a thought experiment and just pause and just ask yourself, well, what’d it look like if that happened? Like how would that happen? You start to think through it. Well, it would start with a small community people and maybe it would trade for a while without a monetary value and they would experiment on it. And then one day like maybe somebody would trade someone else something for it. Maybe it would be pizza even. Maybe it would accumulate a monetary value and then maybe it would be eventually worth a dollar.

Alex Gladstein (29:43):

And then maybe the market cap of the whole thing would eventually be worth a million dollars. And then maybe it would get used for some niche activity and then maybe its value would get to a billion dollars. The whole thing would be worth a billion dollars. And maybe there would be these dramatic events that would cause its value to go up and down and that would sort of discourage the public from looking at it very closely. But over time, maybe it would spawn competitors and grow a big industry. And then maybe it would even become a trillion dollars one day, and maybe a nation state would actually add it as legal tender and maybe corporate boards would add it into their treasury.

Alex Gladstein (30:14):

This is exactly what it would look like if this were to happen. You’re watching it happen folks, like this is happening, this is happening. So it’s like, what next? Okay, a nation during war is going to crowdfund in it because the fiat system doesn’t work. And then what next is you’re going to see a major country eventually add it to their balance sheet at the central bank. I mean, it’s inevitability. I don’t know whether it’s six days, six months, six years, doesn’t matter, it’s going to happen. You’re just going to see more and more and more.

Alex Gladstein (30:37):

I mean, we saw a city in the heart of Europe, Lugano in Switzerland, claim that they’re going to essentially use it as legal tender there. I think it’s going to be something that’s driven by self-interest, like Bukele in El Salvador was self-interest. I think he thought he would get famous and draw interest in his country if he did this. That was definitely the case. He’s now the most famous leader in that country. So there’s a lot of interesting sort of mechanisms at work here. I don’t think we need to praise the leaders who do this.

Alex Gladstein (31:01):

At the end of the day, I think all governments will adopt Bitcoin in one way or another, including all the bad ones. So there’s no reason you need to cheer the ones who adopt it. I mean, it’s Bitcoin just doing its magic thing. So yeah, was it good that the Salvadorian government did this? I think so. I think it was a good decision. I think it’s going to improve things over the next decade for the Salvadorian people that they were kind of early, very early in this. That’ll be very helpful if they commit themselves to learning about it.

Alex Gladstein (31:23):

But ultimately there’s a lot of downside risk. I mean, in terms of this politician. We’re talking erosion of democratic institutions and going after his critics and stuff that you don’t like to see. But there’s going to be a lot of these paradoxes over the coming years of dictators considering whether or not they should adopt Bitcoin. I mean, the US government, current a paradox is the US government is trying to potentially shut off a whole nation from the financial system. That’s just going to have incalculably bad results for the Russian people. They didn’t choose to fight this war, Putin did. A lot of those soldiers don’t want to be there and they’re getting punished for his behavior.

Alex Gladstein (31:59):

I think one of the paradoxes is the US government should be thinking about trying to help people and inadvertently they’re hurting people through some of these sanctions. I think the smart sanctions are good, but like turning off Apple Pay for the whole country of Russia just makes no sense. And maybe that has to do more with the banking failures than the actual kind of following sanctions. But either way, this closing off of the Russian economy is terrible for the world. It’s just such a disaster.

Alex Gladstein (32:21):

I mean, I think Russia and Ukraine constitute something like 40% of the world wheat. I mean, there’s going to be starvation all across the Middle East, Africa. Obviously we saw a freaking gun battle last night at Europe’s largest nuclear power plant. This is getting insane. These are strategically important countries that have a lot of resources and a lot of oil. I mean, some people say that Putin kind of made up drama around this nuke plant so that maybe Europe thinks twice about nuclear power and has to keep buying their oil from him. I mean, maybe that’s true.

Alex Gladstein (32:51):

I know that it’s not like a majority of the world’s resources energy wise, but Russia is a major player. They can exert influence in that way in big way, especially if they can team up with the Saudis who seem to be openly flaunting the Americans at this point. I mean, the Saudi government’s the worst. So I hope that my government doesn’t have to support them anymore. We’ve been forced to due to the Petrodollar agreement, but that might be on its way out.

Clay Finck (33:13):

Back to the legal tender aspect, you mentioned the city in Switzerland potentially making that move, and El Salvador already has. To me, the obvious incentive to adopt Bitcoin is the price appreciation or just to be used as something to protect against currency debasement. I’m curious why they are even looking into the legal tender piece when a lot of people might not really have trouble performing transactions in their local currency.

Alex Gladstein (33:39):

Well, the reason why legal tender is huge, well, number one, it means that you don’t have to pay capital gains taxes on it. It’s treated like a currency. So you can use it freely without worrying about, oh, is it more expensive or less expensive than when I’ve got it? Like you’re just not worrying about that anymore. Second of all, it means that you can pay your debts back in it, any debt. So your debt to the state, your taxes, your debt to the bank, whatever.

Alex Gladstein (34:01):

What’s interesting is I think that, at least the way it’s unfolding in El Salvador is it’s like extremely optional, meaning still not very many people use Bitcoin. If you properly understand what’s happening, you’re going to seek to save as much Bitcoin as you can obviously, and then use your fiat to pay back your debts and stuff like that.

Alex Gladstein (34:18):

I think there’s going to come a day when some governments are going to basically demand taxation in Bitcoin. I mean, I think that’s kind of the long term ultimate thing because they’re going to need it. I mean, it does some good if folks pay their taxes back in that currency, obviously it generates some key demand, but at the end of the day, they’re going to want this outside money. They’re going to want this other kind of money. It’s the same way with merchants. This is basically how you’re going to see Bitcoin jump from just being a savings asset to an actual currency that people use all the time. It’s going to be because of merchant demand.

Alex Gladstein (34:45):

Like if you sell books and you live in Ukraine, I mean, I would certainly be open to be accepting Bitcoin as a payment. And then, you know what, because like within the same day you can just go ahead and sell it if you want to for something else. It gives you that optionality to like send it abroad or have it and save it for like a year and have it be maybe worth more in a year or two. And it’s like Ukrainian currency is definitely not going to be worth more in a year or two. So you’re already starting to see merchants kind of dabble and there’s some high end like real estate and things like that where people are like, “I’m only selling for Bitcoin.” That trend seems inevitable.

Alex Gladstein (35:17):

Bitcoin will eventually just be this currency that a lot of merchants around the world would prefer to fiat, and that that’s huge. And that starts to generate more activity because again, if you have enough Bitcoin and you have a fiat flow, you’re not going to want to spend your Bitcoin. But what if you have to? So what if you want that car and they’re not selling it for dollars. They don’t care. They want your Bitcoin. So that’s kind of the world I think we’re going to head in.

Clay Finck (35:42):

Is there a lot of activity for El Salvador specifically on the remittance side? One of the big headlines was El Salvador’s going to be able to save a significant portion of their GDP due to the remittances that are sent from US to El Salvador. Do you know if that has actually came into fruition?

Alex Gladstein (36:04):

Hard to verify. I mean, the government claims massive improvements, but I’m not sure I would trust that. But you know what? You don’t need the government wallet to enjoy the benefits of these things. You could use any lightning wallet, like a Muun wallet, M-U-U-N wallet, or any other wallet like that. And you can receive your remittance payment from your family in Los Angeles instantly with no fee and then you decide what to do with it. Maybe you decide to sell it into dollars through an ATM or whatever, but like it just gives you optionality again.

Alex Gladstein (36:31):

I am not sure I’d trust the official numbers, but I think over time, yes, it ends up having a massive impact on remittances and humanitarian aid, both kinds of payments. Obviously you’re seeing the humanitarian aid piece start to happen now. But I was talking with a guy the other day who works on Venezuela stuff, like such a massive percentage of the aid that goes there gets wasted or gets sucked up by third parties. We’re talking 30 to 40%. This is like criminal amounts. And yeah, Bitcoin fixes this. Like it can deliver the aid directly to people with no intermediary. Impossible to do that in the fiat system. Everything’s just like an agreement linked to an agreement linked to an agreement. It’s like people are taking fees and threatening to freeze all along the way. Not in Bitcoin.

Clay Finck (37:10):

You’ve mentioned in the past that Bitcoin’s privacy is one of its shortfalls or shortcomings. Why is it that this is a problem and is it something that’s being addressed?

Alex Gladstein (37:23):

Yeah, I think it’s a combination of things. It’s a combination of privacy and KYC compliance. If you never tell anybody your ID, Bitcoin is private. So for example, if I meet you on the street and I say, “Hey Clay, can I buy some Bitcoin with you with some cash?” And I give you 100 bucks and you send 100 bucks of Bitcoin to my wallet that I’ve just downloaded on my phone. And then I save it for like two years and then I decide to sell it to somebody else for cash, that’s completely private. That’s essentially anonymous.

Alex Gladstein (37:54):

The danger is where we start to link it up to what are called KYC or know your customer/AML or anti-money laundering law services, which are compliant with laws. So you set up a Coinbase account. Well, you got to put in your full name and your ID and face and all these birth date, address, all these things. So they and the government and the whole security state know that you have an account at Coinbase and that if you ever did withdraw to a particular Bitcoin wallet, that was most likely you, or you would be forced to explain who it was if it came down to it. Maybe you sent a payment. But most likely you were just withdrawing to a wallet you control. At that point it’s not private. Somebody knows it’s yours. They can follow the blockchain quite easily there.

Alex Gladstein (38:33):

Now, the cool part is there’s lots of ways to break transaction history. One method is a CoinJoin. So you can use an app like Samourai for example. This is basically a collaborative spend. It means you do a big spend with a whole bunch of other people and all of the outputs are equal. So no one really knows where you are there. These are improving technologies. They’re not perfect, but you have CoinJoin, you have the Lightning Network, you have a couple other. There’s things in the works like CoinPool. There’s other ideas in the works.

Alex Gladstein (39:00):

But right now you have basically what’s called equal output CoinJoin done by Wasabi and Samourai and JoinMarket. And then you also have Lightning Network, which does have some serious privacy tech involved in it. I think the way you can think about it is Coinbase would still know it’s you. It would be kind of like a bank account, like the government knows how much money’s going in your bank account. But when you go to an ATM and withdraw the money into cash, you’ve lost the trail. They know that you withdrew it, but they don’t know what you did with it after.

Alex Gladstein (39:26):

That’s kind of what we’re going to get to with Bitcoin essentially today if you know what you’re doing, but in the future I think for a lot of people is like you’ll have your Bitcoin at an exchange and everybody will know, so it might be hard to commit like income tax fraud or something like that if that’s what you’re doing, but you’ll be able to withdraw it via an ATM and then the government has lost it. And that’s a good thing, in my opinion, that’ll help protect civil liberties and freedoms. So I’m grateful that Bitcoin is improving in this area.

Alex Gladstein (39:50):

Also for deposits. You ideally want it to be as private as depositing $100 bank note. The bank has no idea where that note came from. It’s a bear asset, so it has no digital footprint. The idea is can we create Bitcoin in such a way that if you deposit it at a bank, that it just knows it’s your money, that it doesn’t know anything else about the past where it came from. And the answer is basically yes with the Lightning Network. Lightning Network has very strong sending privacy. So if you send Lightning to an exchange that accepts exchange deposits, that’s very good privacy for you, which is why some of these companies don’t allow deposits or withdrawals from Lightning. But we’re going to get there. I think I’m optimistic about it.

Clay Finck (40:28):

Censorship is definitely another really hot topic today. Could you talk about Bitcoin’s impact in terms of censorship by governments or possibly what’s happening in Canada?

Alex Gladstein (40:40):

Sure. I think this chapter is closed for now but hugely important I think for the world. Here you have a liberal democracy that’s supposed to be upholding all kinds of rights for its citizens and is usually seen as like one of the most open countries in the world. They had a widespread protest movement broken out over the idea of vaccine mandates which were very controversial in Canada. I don’t know the exact polling, but I do know that a significant part of the population did not want vaccine mandate, especially in certain provinces.

Alex Gladstein (41:04):

So they decided to protest and people who drove trucks and were part of the transportation industry decided to use their power like as an old school left wing labor movement to do this. They said, “Screw it, we’re going to stop delivering for our bosses basically and we’re going to protest until they drop vaccine mandates.” This is like a by the book protest tactic. Any peaceful protest movement would point to this as a success.

Alex Gladstein (41:26):

It was hugely successful from the point of view of disrupting the government and forcing them to change policies. In some circumstances, some provinces dropped the mandate. So the protest was, whether or not you agree with the politics of it, it was obviously quite effective in many ways. What ended up happening is that the protestors needed money to organize, et cetera, et cetera. They ran some fundraising software and they raised a lot of money. The Canadian government just decided that it was not appropriate money and they decided that it was whatever, terrorism money or God knows what, and they froze it.

Alex Gladstein (41:57):

So thankfully for these truckers, one group had started a Bitcoin fundraiser earlier, and this money can’t be frozen. They raised millions of dollars I think in Bitcoin and all the other platforms got frozen basically except for this one. They were able to distribute some of the funds out over time before the lead organizers essentially got under legal pressure and then they ended up giving I think the Bitcoin to custody of the government.

Alex Gladstein (42:21):

But the key essential difference here that’s just so, so important to understand is that in the fiat currency centralized system, the government could press a button and freeze an entire fundraising, with a button, with a phone call, with a button. It’s impossible in Bitcoin. They actually have to do the work, go through the courts and get the injunctions and go after people. It took them weeks and a lot of time and energy and they didn’t even stop at all.

Alex Gladstein (42:42):

So I think for a democratic society, Bitcoin’s very healthy because it protects people. It forces governments to use legal instead of extra legal means to stop, descent an organization and protest. So I think that’s my big lesson coming out of there. And like a lot of people saw this and they were like, just even before the invasion of Ukraine, they were like, oh my God, man, we’ve been debating the value of Bitcoin like last two years in terms of the price as an investment, but they’ve remembered the actual reason, well, one of the earlier reasons.

Alex Gladstein (43:09):

Bitcoin was created as peer-to-peer cash and it was created as something that couldn’t be stopped by governments and it had this cypherpunk ethos to it. I think a lot of people rediscovered that last month as they were watching this. They realized, “Wow, we need Bitcoin. We’re going to need Bitcoin, for sure.” And that was even before this whole financial collapse in Eastern Europe situation. So yeah, that’s my take on that.

Clay Finck (43:29):

Yeah. What’s somewhat remarkable to me is in what we saw with all the accounts frozen across Russia and just the things that were happening in Ukraine, we actually saw Bitcoin’s price go up. So there was some sort of swarm to this asset during this time of just immense uncertainty. I think it feels like Bitcoin’s kind of getting to that point where it’s more of a safe haven asset where people are realizing the real value of it can’t be stopped, it can’t be frozen like many of these other fiat accounts. So Alex, I better let you go. Before we close out the episode, can you let the audience know where they can connect with you and learn more about your work at the Human Rights Foundation and please give a handoff to the book that you have coming out later this year.

Alex Gladstein (44:15):

Yeah, sure. Well, you can follow me on the Twitter @Gladstein, G-L-A-D-S-T-E-I-N. My DMs are open. You can follow work at the Human Rights Foundation on HRF on Twitter. The book is going to be called Check Your Financial Privilege. Coming out soon. Recommend it as gift to someone who doesn’t know anything about Bitcoin. It’s not boring and technical. It’s telling the stories of people around the world who use this thing, and I hope it’s interesting for folks. But yeah, thanks again for having me on.

Clay Finck (44:38):

Thank you, Alex.

Clay Finck (44:40):

All right, everybody. I hope you enjoyed today’s episode. Please go ahead and follow us on your favorite podcast app so you can get these episodes delivered automatically. And if you haven’t already done so, be sure to check out our website, theinvestorspodcast.com. There you’ll find all of our episodes, some educational resources we have as well as some tools you can use as an investor. And with that, we’ll see you again next time.

Outro (45:03):

Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.