Ep. 47: Jimmy Song | Bitcoin Developer, Author & Educator

Jimmy: You can't just print willy-nilly anymore because the central banks aren't buying your treasury. So what do you do? Well, you have to keep rates high, at which point you can't just inflate away from all the debt obligations and stuff. And you're hearing much more about taxes, right? Wealth taxes, and exit taxes, and real estate taxes, and all of those going up. And they're universally unpopular. No one likes taxes.

Tarek: But it creates a bid for the dollar.

Jimmy: Yeah, it does. And it creates a big tension politically, it creates a big tension monetarily, and so on. So I see Bitcoin becoming more and more prominent as all of these headwinds sort of drive Bitcoin adoption. Welcome to Yallstream.

Tarek: Today, I speak with Jimmy Song, Bitcoin pioneer, expert, and author. He's the machine of the day, the machine that smashes. 100% legit. So, Chris, you want a cup of coffee? I just want to be the best. Jimmy, how about a cup of coffee? I'd love to have some. I got you this special coffee mug. I may look like I'm listening to you, but in my head, I'm thinking about Bitcoin. Probably very true of many Bitcoiners. So, Jimmy, I've been following you for years. You're famous for the cowboy hat on Twitter, now X. I would love to just maybe get into your background a little bit and try to understand some of your journey. You were born in South Korea, is that right? And you came over to the United States when you were young. Fill us in on the story.

Jimmy: Yeah, my dad was working for a textile manufacturer in Korea, and he was stationed in New York because back in the 80s, all the clothes were made in Korea, and all the fashion designers in New York wanted to know what clothes that they were getting and stuff. So he had an office in New York, and he was stationed there originally, supposed to be three years. It ended up being five, and by then we had gotten a green card, so he decided to stay. But that was back in the 80s. But yeah, I came over when I was eight years old. And you came to Texas directly? No, I went to New York. I mean, I lived in New Jersey. My dad worked in New York. And yeah, I went to college at Michigan. I lived in Boston for many years before moving to Texas. I guess it was 13 years ago.

Tarek: And the moment that you landed in Texas, you got that cowboy hat?

Jimmy: Not exactly. I waited until I was more in Bitcoin, and part of it was because I wanted people to know that I'm from Texas. And I'm sure you know, when you meet somebody that's from Texas, one of the things that they want you to know is that they're a Texan, right? And that's one of the things that I wanted to project, and I thought the boots would do it, but they didn't. So now I have to wear the cowboy hat, and that's become sort of a trademark and a great branding decision, frankly. What brought you to Texas in the first place? It was a cost of living. I'm also a programmer by trade. So you know, I have a lot of kids, and at a certain point, it just didn't make sense to be in Boston. And I wanted to have it so that my wife could stay at home. And I look for the best ratio of income I could make to the price of real estate. And Austin came up, and I moved here and been here ever since.

Tarek: And this coincided almost directly with your Bitcoin journey too, right?

Jimmy: Yeah. So I started getting into it in Boston, but certainly, I think being in Austin helped a lot, because there was a Bitcoin meetup here, and I could talk to other people about it that were enthusiastic about it, which I didn't have when I first got into it in 2011, and I was in Boston. And that was, you know, like, it's very isolating, right? When you're like the only one, and you talk to people about it, and they give you like, kind of this quizzical look, right? Like, you're kind of crazy or whatever, whenever you talk to them about it. So it was really nice having like a community and stuff. I started going to the Bitcoin meetup here in Austin in 2013. I still remember, you know, going to them and talking to people about them. And yeah, and it turns out that a lot of people that are into Bitcoin are into a lot of the other things that I'm into. So it was fun.

Tarek: Yeah. How did you first hear about Bitcoin?

Jimmy: I read a story on this tech website in 2011. It's called Slashdot, and it's kind of a joke, right? Like, you used to always say, like, URLs with HTTP colon slash slash, and then the URL and, you know, whatever. The idea being like, slash slash slash dot dot org, right? Like, that's, that's, it's like a little bit of a joke. But there's a bunch of tech stories on there. Their tagline is news for nerds, important stuff. I used to go there every day just to see what was up, right? Like, here's a new iPhone, or here's a new Linux distro, or here's a patent troll that's failing in court or something like that. And I saw a story there that I had no idea what it was, right? And it was internet only currency Bitcoin reaches dollar parity. And I was like, I could barely parse that sentence. I was like, what does this even mean? Internet only currency? Like, those three words were just kind of like, I don't, I don't know what this is. So this was February of 2011. And I looked into it, like, for most of the rest of that day. And I found out that it was digital, that there was a 21 million limit, and that it was actually kind of difficult to go and buy, because I wanted to buy some, but like, I couldn't go and put my credit card somewhere and go get some. That's not how it worked. And the only exchanges at the time were like Mt. Gox and this other place. And yeah, it wasn't easy to get money there. And yeah, that ended up being a whole journey in of itself.

Tarek: Yeah, I remember. I remember learning about Bitcoin early around that time. I was actually living in Argentina. So it was interesting in South America for people who were trying to escape the peso, right. And, and you're right, it was like Mt. Gox was the only place and I felt personally pretty unsure about transacting with this, you know, random exchange, you know, across across the world. And it really wasn't until Coinbase came around and had the backing of, you know, all of these tech giants that I felt comfortable, you know, finally, you know, starting to buy some of this stuff. That was like 2013? Yeah, it was around 2013. Okay, I was pretty, maybe 2014 timeframe in that zone. But prior to then, were you able to find some of this internet money outside of the exchanges and stored in Bitcoin wallets? Or how did that all play out?

Jimmy: So I did find, you know, first thing you do as a nerd is or pretty much anyone does these days as you Google it, right? Or I guess nowadays, people use LLMs or whatever. But back then, you just Google it and see what hits you yet. And I did find something called Bitcoin faucets. So you're you can get a little bit of Bitcoin, but you have to set up a wallet. And I didn't know how to do that. So I found this web wallet. And I was like, Okay, let's, let's take the address from here and put it in the faucet and get some money. And believe it or not, back then, they were giving out 0.05 Bitcoin, which back then was like 5 cents, but is currently like, you know, $3,000 or something, right? And they were just giving it away. And I was like, Oh, okay, great. I'll put it in this web wallet. Unfortunately, I didn't know how to self custody at that time. And that website went out of business and took my Bitcoin with it. The 0.05 that I had in that wallet.

Tarek: Explain what self custody is for those who are uninitiated.

Jimmy: Yeah, it's I'm your precious metals guy. So you know, the difference between gold on an ETF and gold sitting in a vault somewhere versus gold that you have in your own house. Self custody is Bitcoin that you hold yourself versus in an ETF or on an exchange or something like that. And so I didn't know how to do that back then. And it wasn't obvious. There was something called like Bitcoin core wallet and stuff and it had to sink and you know, it wasn't easy back then to to self custody or Bitcoin with although it's it's a lot easier now. And so I didn't know and I ended up getting screwed by it. Yeah.

Tarek: And so walk me through that next phase. So now you've been burned. But you haven't abandoned the Bitcoin dream. Now you still are exploring and yeah, what's the next phase look like?

Jimmy: Yeah. So I think for me, understanding sort of the economics and this goes back to what happened in 2008. I'm sure you remember what happened back then.

Tarek: Yeah.

Jimmy: I still remember, you know, there's this election and, you know, McCain is running against Obama and George W. Bush is still in the White House. And, you know, everyone's saying, OK, things are going to explode unless we bail out all these banks. And there's this bailout bill called TARP and it's 800 billion dollars. And I still remember thinking that is an insane number. Right. Like I lived in Boston. I still remember the big dig that that was a two billion dollar federal project that ended up being 20 billion. Right. And I thought that was an insane number. 800 billion just sounded like lunacy. Right. Like that's that's a number I I couldn't even imagine anyone needing. Yet that was the number. And and that that led me down sort of this rabbit hole of Austrian economics, you know, Ron Paul's and the Fed and and books like that, which led me to understand a little bit more about how money worked. So when I saw Bitcoin, that was sort of like the instinct that I had was, OK, there's something here about an absolutely scarce money versus, you know, the 800 billion dollars, which I like I think I think it was Paulson or somebody somebody that was asked directly, like, we're like, how are taxpayers going to pay for this? He's like, oh, taxpayers aren't paying for this. Right. We're just going to basically print it out of thin air is more or less what he said in a paraphrase way. So that that led me to understand that money like our money, the dollar, the currency is more or less like uncapped. Right. Like and they can print it at any time or whatever. And having a cap currency of twenty one million was very attractive for me for that reason.

Tarek: You and I had a similar journey, I think, in some respects, because when I came off of The Apprentice in 2006, I've told the story previously, but I grew up in a lower income household and nothing about money. One of the primary questions that I asked myself was, you know, why does the dollar have value? Like what what is it about this piece of paper? I can't exchange it for gold or silver or anything like what what is what is the value that is underpinning all of this? And I would say it's kind of what led me down the yellow brick road. That's what brought me to gold in the first place. For you, it seems like you were asking many of the same questions, but it kind of led you to to Bitcoin eventually.

Jimmy: Yeah. And I mean, if you read Ron Paul's end of the Fed, you know, he does make the case for gold and so on. But for me, when I when I read about the twenty one million limit, that that was like sort of a little bit of a light bulb moment, although I wouldn't say I fully understood it until I read Safe Dean's Bitcoin Standard later on. But so 2011, you know, I'm looking at all of this stuff and thinking, OK, if this really is absolutely scarce, then I want to be one of the first holders, not one of the last. And as it monetizes. And, you know, the short of it was that it was too annoying to get money to Mt. Gox. One of the greatest regrets of my life was like not doing all of that earlier. But that summer in 2011 was the first Bitcoin bubble. It went from something like a dollar all the way up to 30 and crashed down to two. And that was when I was like, OK, I need to get some of this stuff. And I completed the very complicated process of getting money to Mt. Gox and finally bought something. And that was my first sort of like exposure to it. And, you know, honestly, we had kind of a bear market in 2012. And, you know, it took a while for me to really get excited about it again. And that was in 2013 when it started going up again. And this happens to everybody within Bitcoin is you get more interested as the money.

Tarek: 2013 was like a seminal moment because it hit a thousand dollars, I remember at that time.

Jimmy: Well, it had two peaks. Right. So there was an April peak of 266 and it began the year at like 13 dollars or something. So it was it was a pretty big price increase within the span of four months. And then it had this, you know, Mt. Gox crashed along with it. The Bitcoin price, it went all the way down to like 50 dollars. And then later in the year, starting in October, and I think what triggered it was Russell Brooks arrest. I think that was October 1st, 2013. And, you know, culminating in the peak of I think it was December, something like eleven hundred dollars on Mt. Gox.

Tarek: I remember having conversations at that time talking about how the asymmetry of Bitcoin at that point was so attractive because, you know, you could put ten thousand dollars in a Bitcoin. Most you could lose was 10k. But if Bitcoin really outperformed, the upside potential was enormous. It was like a technical trader's dream. Low downside risk and almost infinite upside. Yeah.

Jimmy: And that came out that ended up being what played out. That that is what played out. And the unfortunate thing is, like for a lot of people, that meant that they would maybe five times their money and then they would get out. And that that was the big mistake is is, you know, like I bought at 50 dollars and I sold at 250 or something like that. And they think they're a genius, right? Because they made 5x their money and that's good enough. Had no idea that it would continue to do what it did. And that that's, you know, honestly, one of one of the real fortunate things about my life is is I didn't sell during that run up. And then once it starts sinking, then, you know, then you're more motivated to hold just to just to go back to the peak again. But, yeah, I think 2013 was was when I started contributing to it as an open source developer. Like I said, I'm a coder by trade and I started trying to make money in Bitcoin. And and there was a forum post on Reddit, rBitcoin. This was where all the Bitcoin discussions were happening back then and about a new forum called Jobs for Bitcoin. And I looked and there was a guy that was looking for software developers in Python. I was like, OK, I'm that. Tell me what you want me to do. And he said, well, OK, what's your rate? I said this much per hour. OK, I can pay you in Bitcoin. Great. Give me some work. He gave me some work. I got it. I got it done in like three hours. I was like, here it is. He's with all the tests and everything. It works. And he's like, yeah, good job. Give me your Bitcoin address. I gave him my Bitcoin address. By then I had self-custody and my own wallet. I gave him my address. He gave it to me in 20 minutes. And I found out later he lives in Ukraine and I'm a guy sitting in Austin, Texas, and I'm getting paid by a guy. And that was sort of like a big light bulb moment. I'm like, oh, wow, I'm getting paid like this and I'm getting Bitcoin. And price was rising and everything else. So that whole month, I think, I had a 40 hour a week job here and I was working 40 hours a week at home trying to do more work so I can earn Bitcoin. And yeah, that was what kind of really got me into it. And yeah, I've been sort of a coder developer ever since. It's more of a capitalist story, I guess.

Tarek: You've been a champion for Bitcoin now for a very long time. You're either the author or contributor to five different books. I just recently read this book, Bitcoin and the American Dream that you contributed to. I want to understand a little bit about your philosophy. You touched on it at the outset here in this conversation, but what is your vision for Bitcoin? You're referred to as a Bitcoin maximalist. Do you accept that title? And what does that mean? And what is money today? What is the future of money?

Jimmy: Yeah, I am a Bitcoin maximalist in the sense that I think all the altcoins, all the Ethereums and Solanas and Ripples and everything else is junk. It's not even in the same category. Those are more or less centralized currencies, fiat 2.0, if you will. Bitcoin is qualitatively different because it is decentralized. So for me, Bitcoin is the only one that's worth buying. All of the other stuff is more or less gambling, speculation, something like that.

Tarek: Explain the decentralized versus the centralized difference to somebody listening that maybe isn't as initiated.

Jimmy: Sure. So decentralized versus centralized in the physical world, I think most people watching this can probably understand, right? Decentralized currency is something like There's no permission required. If you own a piece of land, you could dig for gold as much as you want. You might not find some, but if you find some, great, that's yours. You don't need anyone's permission. Fiat currency is centralized. There's a central producer of the currency. So U.S. dollars, for example, are a centralized currency. You can't produce any of it unless you're the U.S. government. If I try to print $100 bills in my backyard, I will get arrested by the Secret Service as soon as I track that. That's part of what makes something centralized versus decentralized. There's a central controller of the currency. All of these altcoins, like Solana, like Ethereum and many others, have a central foundation. They set rules on what they call the emission schedule, right? Like how much of it comes into existence under what conditions and so on. And oftentimes they change. So Ethereum has changed its monetary policy like 30 times, and it's not very different than the Federal Reserve, right? That changes the monetary policy by changing the Fed funds rate, and that changes the monetary expansion rate more or less. And that's essentially what all of these altcoins do or can do at any time. Bitcoin is very different because it has a very strict finite limit, $21 million. No one can change it. And that's one of the real properties of it. Plus, you know, anyone can mine it if you want. As long as you have computing hash power or hashing power, as we say in Bitcoin, you can try to mine Bitcoin. Now, there's a lot of hashing power searching for that. So it's very unlikely for your particular machine to find it. But, you know, like you can do it. It's kind of like trying to dig for gold in your backyard. Unless you happen to sit over a gold mine, you're not likely to find it. Unless you happen to have a lot of equipment that does the hashing, you're not likely to find it, but you can.

Tarek: Got it. The money aspect of Bitcoin, let's talk about that some, because I feel like the, let's call it for lack of a better term, the marketing of Bitcoin has changed some over the years, that when it was first introduced, it was the new money. And it was not widely adopted as money. It was not widely used as money. And then it kind of transitioned, and I would say this was probably around 2017 as the alternative to gold. So Bitcoin is the new gold. And that changed, I think, during the COVID era, when people couldn't get toilet paper at Costco, and people started realizing, well, maybe there's a place for both. But now I feel like it has changed into something that's a little bit more of a technology that facilitates, well, like what you just described, you know, getting funds from the Ukraine and totally bypassing the SWIFT system that is the centralized controlling arm or the gateway to, you know, transferring money back and forth. Now with stablecoins and the technology that is available to instantly send funds anywhere in the world to anyone at any time, even if they're unbanked, that seems to be sort of the defining feature of Bitcoin. Would you say that's accurate or inaccurate?

Jimmy: Well, for me, I think those narratives have always been around, at least when I first got into it in 2011. By like 2013, the big thing that Bitcoin was known for back then was darknet markets, right? You can transact in darknet markets over the internet and not have any trouble or whatever. Because obviously, if you're trying to buy weed with Visa, they're not going to let you do it. So actually, one of the first use cases of Bitcoin was when Wikileaks was cut off from PayPal and Julian Assange found Bitcoin and, you know, they decided to take donations in Bitcoin as a way to get around all of that. So that was an early sort of like narrative around Bitcoin. I think it became much more like gold and store of value at like starting in 2013, 2014, certainly by the time Safe Dean's book, The Bitcoin Standard came out, you know, he made that case significantly in that book so that it became much more of that. And I think that's the, you know, method of payment versus store of value use case. Those two have always been around. And whether one is more emphasized or the other, you know, that, you know, it varies depending on who you talk to and what they value it for. Certainly, if you're, you know, living in Nigeria and you need to get some money from somebody in another country, you know, the method of payment aspect tends to be very important. But if you're, you know, trying to fight inflation or have long-term savings, have a little more predictability around the future, you know, it turns out store of value is actually very important. And, you know, all these other narratives around stable coins and so on, they're really more method of payment use cases. And I personally don't think they're that interesting. We've had a lot of stops and starts along those lines within the Bitcoin space. Not a lot of people remember, but 2014, 2015, we had a whole bunch of e-commerce websites that started taking Bitcoin. So Dell did it. I think Expedia had it. We had overstock.com and several others that were taking Bitcoin payments. But almost all of them just stopped after six months or a year or something because it was too much work and not enough people were buying with those things. And it kind of makes sense because if you have an asset that's going up, you kind of want to keep it. I think it's called Gresham's law where you spend the bad money first and that ends up being sort of the main driver of how that plays out. And there were tax implications too, right? Yeah. And for a lot of people, the capital gains on the Bitcoin would mean that if you used it to go buy something, then even if it's like a cup of coffee, it would be a headache.

Tarek: If you're enjoying Yallstreet, please like and subscribe and share with your friends. It really helps the show. Yallstreet's a division of Texas Precious Metals. If you've ever been interested in buying gold or silver, check us out at texmetals.com. We take good care of our customers and we're proud to say we do the Texas way. So when you think about the definitions of money, then it is a medium of exchange, store of value, unit of account, those three. And as a store of value, I think the argument that you've made is, hey, there's only 21 million. There's always going to be value in Bitcoin. I think it's largely similar to the same argument for gold, that there's a finite amount of gold. It takes a certain amount of energy to extract it out of the ground, et cetera. As a unit of account, it seems to me that both gold and Bitcoin suffer from the same psychological challenge that they're always measured in the denominator of the United States dollar. And we don't really have a sort of a mechanism to think about Bitcoin as the denominator or gold as the denominator in these transactions. So that's one question I have. And as far as the medium of exchange, both have some limitations in a sense. In the case of gold, you couldn't conduct a transaction with the gentleman in the Ukraine in gold because of how difficult it is to move. Gold is heavy. It's unsafe to carry on your person. There are challenges, even though it's freely accepted in most local environments. There are limitations there. With Bitcoin, it's very simple to transact anywhere, but it's the one medium of exchange that requires another medium to exchange. So I'd love to get your feedback and your comments on each of those as money and how you see money transitioning over time.

Jimmy: Yeah. So the unit of count is always interesting. I did read somewhere that one ounce of gold has more or less always been worth about one cow through most of history, right?

Tarek: Or a finely tailored suit.

Jimmy: Yeah. That's the other one. Yeah. And I don't know how accurate that is right now, but I know beef prices have gone up significantly. So I suspect it's kept up. Yeah. With Bitcoin and gold, the unit of account I think comes later once it's much more dominant. Certainly before the establishment of the Federal Reserve and sort of a fiatization of money, you had a lot more idea of what gold was worth. And most people knew that it would be worth more later rather than now. So they held out for really good quality things. I still have woodworker friends that want tools from like 1870 because it's just made much better. And that's another whole topic of how when you have like a good store of value, the quality of everything else goes up. But the unit of account aspect of it, I think only emerges once it's the dominant currency. And neither gold nor Bitcoin are that. And I don't think it needs to be. I think that's just sort of natural. If your free markets are allowed to work, that's the natural way things sort of go. You don't have to wait for that to happen to get benefits out of it. And at an individual incentive level, I think that's what's going to emerge anyway, because it is a better store of value. So you're more incentivized to hold it. You're going to spend everything else first rather than this. And that's going to mean that at some point you're going to be all in on one of these things. And then at that point, you have to spend it. And that's the tendency with currency. And that's why a lot of countries, for example, in the 1800s switched from a silver standard to gold because everyone else was on it. There's a tendency towards sort of like a unification. It's like Highlander. There can only be one that sort of thing with money. We can debate whether that's going to be a coin or gold. But that's the unit of account aspect. Method of exchange or medium of exchange, or as I like to call it, method of payment, it's a little trickier. Gold does suffer from the fact that it's physical. You can't transmit gold instantly. Though, if you centralize it, then it's much easier. In fact, this is how fiat currency came about, was to make it so that you can exchange over space much, much faster. And there are similar attempts like tether gold and things like that to do something similar. When I was talking to Peter Schiff earlier this year, this was one of the things that he was super excited about was, hey, you could do the same things with gold now as Bitcoin. The problem with that is that you need a point of centralization to make that work. And this is not a small thing. As you know, with the history of gold, soon as you centralize it, well, now there's a big honeypot for the government to go and seize. And you get Executive Order 6102 and so on, which makes it so that the government owns all of it, at which point they could fiatize it or make it so that it's no longer linked to gold and they can print as much of it as they want. And that's, for me, the big difference. But as far as Bitcoin, the harder thing, rather than the medium through which it goes, and I hear this from a lot of gold bugs, what if the internet goes down? Then we're not going to be able to do it. Actually, you can. There are other communication methods that you can use. It's just we haven't had to test them, but you can use radio waves. You can use satellites. You can even use Bluetooth on your phone or QR codes, all kinds of ways. They haven't been developed that much because there's no real need for them yet, but this isn't something that's unsolvable. The bigger hurdle to method of payment is merchant adoption. And this tends to be the case with almost all of these things. But it's not something that's unsolvable, at least in my opinion. If you wanted to have a merchant that takes gold, for example, use tether gold as their medium of exchange, they could do it. And it wouldn't be that difficult from a technical perspective. In fact, one of the things that I've learned about the credit card industry, they already support something like 34 different currencies. The euro, the yen, the won, the dollar, Canadian dollar, New Zealand dollar, Australian dollar, whatever. They could very easily add gold to it. They could easily add Bitcoin to it. It's not that hard. They already have all these mechanisms of FX trades or whatever to stabilize things or whatever. Method of payment, medium of exchange is more or less solved as long as there are enough people that want to do that. The problem right now is that for people that own Bitcoin, they don't want to spend it. They'd rather spend the dollars that they have or whatever crappy currency that they have. Similar with gold, right? You don't want to spend your gold. You'd rather spend your dollars.

Tarek: It also comes back to the taxation issue, right? Especially we talked about gold is way up this year. If you have a gold-backed debit card, how do you handle the taxation? Because ultimately the gold has to get sold and converted into USD because USD remains the denominator. And there's a taxable event that's attached to that transaction. So I do think that there are political challenges actually attached with these alternate forms of payment and remain a challenge for both gold and Bitcoin.

Jimmy: Yeah. But even if the capital gains tax was zero, and there are certainly jurisdictions where that's true, people still don't want to spend it because it's a better store of value. I'd rather have Bitcoin or gold than the dollar, the denier or whatever. And that's the real problem is that merchants aren't demanding it yet. Now, this tends to happen when you have hyperinflationary events and so on. You go to a black market merchant in Venezuela, they want dollars and not their own currency because it's hyperinflating and they'd rather have dollars. So you get situations like that where the merchant starts demanding it because the other currency is bad. That's the point at which method of payment becomes a much more prominent thing within that sphere. We haven't reached that with the dollar. And the dollar is more or less the global reserve currency already. So it's highly saleable and useful for many people, including people in places like North Korea, which is kind of crazy, but that's the truth. And until the dollar unravels, I don't think you see high adoption as method of payment. And once you get method of payment, I think you get unit of count as well, just because you have to price things that way. And then it becomes much more prominent.

Tarek: If somebody were to pitch Bitcoin not as money, but as the first decentralized tech company that had an IPO in 2011 with 21 million shares. And those shares have been freely traded for the last 15 years. They move similarly with the queues and technology companies. And all you're actually trading are shares of this technology. What would be your response to that?

Jimmy: I would say that, what does it mean to be a decentralized company? I'm not even sure what that means. I think I kind of skimmed over this, but this is a part that usually breaks people's brains when it comes to Bitcoin is that, okay, it's digital and it's decentralized and scarce. How does that work? Because the mental model that most people have is if it's digital, then it's infinitely copyable. You have an MP3 file. Okay. Then you can send it to anyone. It's infinitely copyable with perfect fidelity. And it's not scarce at all, or it's centralized. You have tickets from Ticketmaster that's digital and you can go to the stadium or whatever, but that's controlled by the company Ticketmaster. And if they accidentally issue extra tickets or whatever, I suppose you'd have no way of knowing or whatever. But that's how scarcity is enforced through some centralized thing. With Bitcoin, it breaks people's brains because it's neither of those two things. It's not decentralized and infinite, and it's not centralized and scarce. So they're like, okay, how can it be decentralized, scarce, and digital? Decentralized and scarce, those two things would be something like gold. And we didn't think that was possible either until Satoshi Nakamoto came up with the system. And the answer is that you have a global ledger that everyone keeps track of that lets it be scarce, but is decentralized. And that's the part that really breaks people's brains. And it's not a company per se, it's money. And that's what Satoshi designed it as. And I think that it's worked very well in that regard, especially as a store of value.

Tarek: We've always said that the cryptography is impossible to break. With AI, has that become a concern that these powerful supercomputers are going to be able to one day break the cryptographic models of Bitcoin?

Jimmy: Yeah, good question. I think there's a much better chance of alchemy working and making lead into gold, which actually they've done. They have lasers that will turn lead into gold through some weird process. It's just the cost. Yeah. And the cryptography is such that at least the best known algorithms for doing it are so expensive that it's not worth it, right? So you can't produce more than 21 million Bitcoin. There's no inflation possible just because of the way the rules work. The best you can do is try to take Bitcoin from other people. And just to give you an idea, the space of all possible Bitcoin private keys is something like 2 to the 256, which is roughly 10 to the 77th power. Now, that doesn't sound like a lot, but the number of atoms in or around the Earth is 10 to the 50th. In the solar system, it's 10 to the 58th. In the Milky Way, it's 10 to the 69th. So it's like a billion galaxies worth of atoms to get to something like 10 to the 77th. And even in the universe, I think the upper limit is 10 to the 80th. So it's like one one thousandth of all the atoms in the universe, right? Like that's an insane number. To crack something like that from a cryptographic standpoint is like brute forcing it is just plain impossible. Now, could there be shortcuts, ways to get around that? Those would be the real vulnerabilities. No one's really found them yet. I personally don't think anyone will in the next 50 years or so. But I mean, who knows? I don't think it's AI that necessarily breaks that sort of thing. It's the way the math works is that you have to find a shortcut that works consistently, but it's so tangled up and interdependent that I don't think there are useful ways to do that.

Tarek: Switching topics for a second, I went through your recent posts on X and I want to read a couple of them to you and just kind of get your feedback. You wrote, it feels like Elon is driving away Bitcoiners.

Jimmy: Yeah, I've always been a little bit suspicious of his Bitcoin forays, largely because he's been such a doge like advocate or whatever. And I suspect it's mostly because he just finds it fun.

Tarek: Right.

Jimmy: And even like when he worked with Trump, he named it the Department of Government Efficiency as like a nod to the altcoin or whatever. And his big thing, you can see this even in his products. I have a Tesla and there's a feature called Actually Smart Summit. And you don't need the actually, he just likes the acronym ASS. That's what he does. It's sort of like juvenile humor, but it's his type of humor. And for me, when he does stuff like that, where he's sort of promoting something like doge and it's become like a top 10 altcoin, largely on his advocacy. It's confusing the issue. It's conflating Bitcoin with all of these other things. And this is one of my big gripes with the tech journalists and everybody and the VCs and everybody else. They try to combine the two, say, okay, yeah, Bitcoin is part of this larger ecosystem of cryptocurrency. No, it's not. They're categorically different. And they like the association because they like the price rise of Bitcoin. And by saying, oh, I have an altcoin, see, you look at the price chart on Bitcoin, well, are coins going to do the same thing? And of course it doesn't. In a few years, it always fizzles out or whatever. And that's the part that I think drives people away is this conflation with altcoins. And ultimately, it causes way more harm than good.

Tarek: You wrote another post that not everyone should custody Bitcoin. Why is that?

Jimmy: Well, for the same reason that you should have custody, self-custody gold in 1933 or 34, because the federal government might take it away. And if you have it in a central place and like going back to Executive Order 6102 when FDR did it, most of that seized gold was just the ones that were in the banks, right? They weren't going door to door and raiding your house and looking for gold. They did do it a little bit. But the vast majority of the gold that they seized were already sitting there in a central pot. I think that's inevitable once you have Bitcoin become the dominant currency is it's going to be easier for the government to go and seize the money rather than tax everybody. And this is a pattern that we've seen is governments want to tax, but taxes are unpopular. Under fiat currency, you have the option of expanding the money supply to fund all the things that you want to do. But if you have a hard money that everyone else uses, you need to go grab that hard money as a way to fund all the programs that you want to do.

Tarek: Could the government do the same with Bitcoin and just make it illegal for people to transact in Bitcoin both online and if they're caught in person so that the government then takes control of the digital currency? It becomes sort of the new dollar. Is that a fear?

Jimmy: I think they can try. I suspect it's going to be much, much harder with Bitcoin. With gold, it's a physical possession. And even if you have it in your house or something, they can take it away. The nice thing about Bitcoin is that you can put it in your own brain or in password-protected things where they can't get it. And that's an important property or feature is that unseizability. Now, does it get to that point where they're going to individuals and stuff? Probably not. It's just way too costly for too little gain for the most part. I mean, how much are you going to get from an individual when your budget's in the trillions? It'll probably be a lot easier just to go to the custodians or the big players that they already know and just grab those and say, oh, you now have an account with us that's worth this much, but we're going to only let you withdraw this much or whatever. That's what I suspect. But the nice thing is you can travel with it. And this is one of the beautiful things about Bitcoin is you can cross borders without having the thing on your person. And this is very difficult with gold, where you had a lot of people in Venezuela, for example, that wanted to leave, but all their possessions are there. And how do you leave if you have all your possessions? Well, Bitcoin gave them an out. A lot of them converted all their wealth to Bitcoin in Venezuela, crossed the border to Colombia and sold the Bitcoin and had money again. For a while there, Colombia had a discount because of so many people buying in Venezuela and selling in Colombia. People have tried that with gold, right? Like hide it in their car or something like that. And there are all these stories of...

Tarek: But theoretically, you could do the same with gold. You could sell your gold, convert it to Bitcoin, bring your cross-border and then buy your gold in Colombia or wherever else.

Jimmy: Right, right. So you would have to use Bitcoin as sort of like the transaction currency or something like that. That's kind of what makes it very powerful is that it's not physical. And that's a feature, not a bug. A lot of gold people tend to see it as a bug. Well, it's not physical. I can't see it or whatever. I can't touch it. Actually, that's a good thing. That means that you can cross borders without it and so on. If the government did ban it, I think you would have a lot of other alternative ways to use it or go to other jurisdictions and so on. And the first jurisdiction that says, hey, welcome Bitcoiners. We're not going to prosecute you or whatever. I think you get a lot more wealth in your country, a lot more investment. I think the competition would be great.

Tarek: You put a poll out there and it made me smile. Now, your background is in mathematics and in programming. So you obviously had an interest in the technological aspects of Bitcoin from day one. But you put here, what do you think of the taproot soft fork? And it made me smile because I was thinking about my mom and what that would mean to her. What does it mean to the common person on the street if you said, you know what the taproot soft fork is? And this is one of the intimidating things about Bitcoin or cryptocurrency for a lot of people, is it still just feels so out of reach mentally for how I can wrap my mind around what this exactly is.

Jimmy: Yeah, it is. And I wouldn't focus too much on the technical nerd fights that we have within the Bitcoin community. The bigger thing that breaks their minds is that decentralized digital scarce aspect, which is honestly kind of mind blowing when you think about it. How can it be decentralized, digital and scarce? Two or three of those things make sense, but all three at the same time, it just seems kind of impossible. And that's why people try to explain it in technical terms to show, hey, this is possible. But if you sort of accept that part, then you don't really need to understand too much of the technical side. If it's decentralized, digital and scarce, and you know how to operate your wallet, whether it's on your phone or a hardware device or whatever, you really don't need to worry about much else because you know the denominator, it's not increasing. And you know how much of it you have. And that's it, right? Not a lot of people know the ins and outs of fiat currency either, right? Like how the Federal Reserve has a discount window and banks can get loans through that and use it for their reserves and loan out more money. Very few people understand that aspect of it, but they still use dollars. That's fine because they know how to transact with it, although very few people use cash now. It's mostly just digital cards, right? Tap to pay or whatever. And I think that's the level that most people are going to remain at. And that's okay. The eventuality is that people are going to have self-custody over their stuff. Or maybe some, you know, localized, centralized stuff. Maybe a family member helps you get it and you can still spend it and so on, but you have like a family bank account kind of that's self-custody. I think that's the direction that we're going to move in in the future.

Tarek: As we wind down here, I'm really interested in understanding sort of what your vision is for the next five years. And by that, I don't necessarily mean the price of Bitcoin, although I'd be interested in that too. But more, you know, the future of Bitcoin has shifted from everything. There've been huge waves in alt coins. There have been, you know, the talk of how smart contracts are going to completely transform the world. The current focus is on stable coins and how it's going to change the international monetary system. The future of Bitcoin as you see it, what is it?

Jimmy: Yeah, it's always sort of wrapped around what's going on around it. Right. And it's kind of like price. And people ask me about price predictions all the time. Well, when's it going to go up or whatever? I'm like, I don't know, because it really depends on everything else. You know, the more the Fed prints, the higher the price of Bitcoin will be, just like the higher the price of everything will be just because there are more dollars chasing the same amount of goods. That's just how economics works. But it's very dependent on what the dollar does and less dependent on, you know, like what Bitcoin does, because we more or less know what Bitcoin is going to do. There's 21 million limit. It's a fixed supply. The predictability is the future. The unpredictability of the dollar is what makes predictions like that very difficult. So for me, the macro trends that I see are that the dollar is becoming less and less of a reserve currency all over the world. And this, I think, largely started with the war in Ukraine, where Russia was taken off of the dollar standard more or less. And shortly after that, oil started selling for euros and yuan. And that meant that the petrodollar standard also was being sort of rolled back. And you're seeing some of the consequences. A lot of central banks are buying gold instead of dollars. U.S. treasuries, in fact.

Tarek: That's been the reason for the run up in the price of gold, the central bank buying. It's not retail.

Jimmy: Yeah. The central banks are deleveraging their treasury assets. China has been selling their U.S. treasuries small amounts at a time so they can make the most. But they're more or less switching away from the dollar, which means that you're going to get a different reserve currency. Now, gold is definitely a part of it. I think Bitcoin is going to be a part of it as well. And you've kind of seen that with what's happening in the trade of Hormuz, where at first, the Iranian National Guard, is it? I forget. The Iranians were taking payment in stable coins, but then the stable coins being centralized got a court order saying freeze these funds. And so they started taking Bitcoin. And that can't be stopped. So you're going to get more and more situations where the centralization of certain things is going to be very obvious. And when you have a multipolar world, which I think we're headed towards, you're going to need some sort of mutual currency. And I think that process, I think over the next five years is going to go further. Part of what we're seeing in the U.S. is that you can't just print willy nilly anymore because the central banks aren't buying your treasury. So what do you do? Well, you have to keep rates high, at which point you can't just inflate away from all the debt obligations and stuff. And you're hearing much more about taxes, wealth taxes and exit taxes and real estate taxes and all of those going up. And they're universally unpopular. No one likes taxes.

Tarek: But it creates a bid for the dollar.

Jimmy: Yeah, it does. And it creates a big tension politically. It creates a big tension monetarily and so on. So I see Bitcoin becoming more and more prominent as all of these headwinds drive Bitcoin adoption, largely because there's no choice in the world. So now, does that mean that I can point to something specific happening? I mean, other than central banks continuing to sell treasuries and more of them trying to expand the money supply, at some point you get somebody thinking it's a good idea to go print more money and get a short-term boost for a long-term loss. That's going to happen at some point with the dollar, too. I suspect that it's going to cause more Bitcoin adoption, more gold adoption as well over the next five years.

Tarek: What does the next five years look like for you personally? What are you focused on?

Jimmy: My kids. The thing that a lot of people don't realize is that we are kind of forced to be obsessed with money in a fiat world because of the constant debasement. I think the monetary expansion rate of the M2 money supply, if you measure it from 1959 to now, somewhere around 7-7.5% a year. $289 billion in 1959, currently around $20-something trillion. You annualize that, the CAGR ends up being 7-7.5%. That's a lot of debasement to run. So you have to be obsessed with money just to keep the value that you have. And 7% tends to be the hurdle that every investment manager has. Because that's the monetary expansion rate. When you're in Bitcoin, the nice thing is you don't have to worry about that. And you don't have to constantly be watching out for all of that. Instead, you can focus on other things. And I found that to be true for myself. I don't worry about investments. I'm not looking for the next deal. I'm not looking for extra deal flow and making connections just so I can get in on deals that are popular or whatever. I'm fine just holding Bitcoin and I can go do other things. And that's, for me, the deeper and more meaningful parts of life, like family and learning and contributing in ways that are meaningful to me instead of running on a fiat treadmill just to stand still.

Tarek: If I'm a 21, 22-year-old new college graduate or somebody about to graduate from college, what piece of advice would you have for me today?

Jimmy: I would suggest that you try to start a business. I think the corporate world is highly fiatized. If you're going into a company, what you'll find is that there are more and more Byzantine rules and weird ways in which you get promoted and stuff. And it's not really about merit or skill a lot of times. So I think the better path is starting your own business. And I wish I did that much earlier because I learned a lot and I was able to bring my full self to bear on that rather than the narrow set of skills that a company pays you for. And adding value, I think, has its own psychological benefits. If you're an office drone and you're in a back office somewhere, what's the value that you're adding? It's not entirely clear. And I think that's what causes a lot of people to get addicted to drugs or Netflix or social media, all kinds of things. If you're providing value to other people and it's more direct, then it's a lot easier. Now, what that looks like for you, hard to say. Because I don't know what your particular talents are, but there is something. And going and finding that is a journey in of itself. But that's what it means to be an adult. It's to go and find what value you can provide to other people and getting paid for it. And if you can do that, start your business, have a successful business that can generate profit, that gives you a lot more upside. It's sort of that asymmetry that you were talking about earlier that you had with Bitcoin. You can have that asymmetry in your life. You have a fixed cost in starting a business, but the upside is much, much higher. And don't take VC money. That would be a piece of advice because they'll make you grow at all costs. But find something where you can add value and start a business. It doesn't have to be big, but...

Tarek: Start local.

Jimmy: Yeah. It doesn't have to be that complicated, right? Something that people don't want to do that you could do easily at scale maybe or automate or something like that, that you happen to know a lot better. Go do that for a bunch of people. And this is how you make money.

Tarek: That's great advice. If people want to follow your work or read about you online, where do they go?

Jimmy: My website is jimmysong.org, but you can follow me on xjimmysong. I have a newsletter, jimmysong.substack.com, and you can find all the other stuff I do, like my podcasts and stuff.

Tarek: Can't let the Bitcoin guy go without giving you some complementary precious metals. This is a Yallstreet silver coin. Oh, wow.

Jimmy: Look at that. Thank you. Is this an ounce? That's one ounce of silver. Wow. It's not...

Tarek: It's something.

Jimmy: It's a store of value.

Tarek: Jimmy, thanks so much for joining us on Yallstreet. Thank you. How do y'all drink this? That's a Yallstreet.