One of the most fascinating discussions about Bitcoin I’ve ever heard comes from an interview featuring Robert Breedlove and Anthony Pompliano called, “An Open Letter to Ray Dalio.” Correction: this is simply one of the most fascinating conversations I’ve ever heard about economics and philosophy.
While there are dozens of talking point, and the podcast deserves to be listened to twice or more, they touch on something that warrants this post: arguing from first principles.
When I first started looking into Bitcoin (rather than dismissing it as most people initially do) I discovered that Hodlers were asking different questions than most people. If you watch BNN or other financial news outlets looking for the latest stock pick, the driving question behind everything that is presented is this: “How do I get more money?” The financial expert wants to recommend the companies that will earn investors the most money. You, as an investor, are looking to find the next deal that will make you the most money. It’s all about making more money.
Hodlers are different. They are on a completely different wavelength from the average investor. Rather than asking how they can make more money, they are asking a far more fundamental question, which is: What is money?
“What is money?” is the question behind the question. It’s peeling back the layers to understand why we spend 40+ hours a week trading our precious time to accumulate coloured papered (we Canadians have colourful money), or to see a number go up in our bank accounts. What are we hoping that money will accomplish for us, that we are willing to sacrifice to get more of it?
Let me give you a couple of answers to this question from two people way smarter than me:
Michael Saylor comes at it from an engineering perspective when he says money is monetary energy. He then ads that Bitcoin is the only thermodynamically sound monetary system. The fiat system, on the contrary is not thermodynamically sound because it has a leak in the form of inflation. In other words, when the government prints more money, the value of your cash goes down. Bitcoin doesn’t have that problem.
Ross Stevens says money is technology. It’s a technology that enables us to take our wealth today and make it available for consumption tomorrow.
There are two key factors to consider when deciding what the best form of money is: saleability across space and saleability across time. Saleability across space means the money is mobile. Saleability across time means it holds its value far into the future.
The best forms of money are easy to transport and bring with you. A house is a poor form of money because although it can hold its value far into the future (saleable across time), it is not very transportable (not saleable across space).
On the other hand, that $50 steak I bought from the Keg last night can be brought with me anywhere (saleable across space) but no one will want to buy it from me at any point in the future (not saleable across time).
Considering what makes something a good form of money is an essential question one must ask when thinking about econonics from first principles. For a fascinating history of the evolution of money, from seashells to glass beads to gold and to fiat, check out our highly recommended book, The Bitcoin Standard by Saifedean Ammous.
Back to the podcast mentioned at the beginning. In “An Open Letter to Ray Dalio,” Breedlove is trying to convince the world’s largest hedge fund manager (Dalio) of the efficacy of Bitcoin using Dalio’s own prinicples. One of the principles that Dalio advocates for at Bridgewater Associates (Dalio’s investment firm) is that of a meritocracy.
A meritocracy is a system in which the ideas that have the most merit win. It’s a free market of ideas. It stands in contrast to both an autocratic system (in which the person or people with the most control win) or a democratic system (in which those who can rally the most votes win). Dalio likes this system as it allows people from all levels of the organization to speak into matters in order to make things better. If someone can create something that works and solves problems better than others, their idea will win. The proof is in the pudding.
According to Dalio, there are three principles that make up a meritocracy: 1) Radical Truth, 2) Radical Transparency, and 3) Believability weighted decision making.
To have Radical Truth is to have an accurate understanding of reality. When an idea is in line with reality it has merit. There are natural orders to our world that we as humans do well to understand and fall in line with. When we recognize and comply with the law of gravity, for example, we are spared from the harm of falling.
When central banks began deviating from the gold standard by lending more IOU’s than they had gold to back it up, they deviated from the truth. Once this lie was committed it was almost destined to be perpetuated. Since the US moved off the gold standard in 1971, they have been incentivized to print money into obscurity. This has been done during the COVID crisis at an unprecedented pace and has resulted in robbing from the poor to give to the rich via asset inflation. As Jordan Peterson says, “tyranny feeds on lies” (12 rules for Life, loc 2017).
Bitcoin on the other hand is the most truthful money that has ever existed. Bitcoin simply is what it is. There is no backroom of central bankers fudging numbers and inflating the supply and there can be no manipulation of the source code due to its immutability. Bitcoin has no leaks in its system, and cannot be inflated… ever.
To have Radical Transparency speaks to the openness of process. Dalio sates, “by radical transparency I mean giving most everyone the ability to see most everything.” This again is where fiat money falls woefully short of Bitcoin.
Breedlove gives the following analogy: Imagine a poker game where the hand rankings changed every few hands at the whims of the Casino. Without sound rules upon which to play the game, no player would engage for long and they would quickly leave the table. A similar game is being played by everyone living under a fiat currency. The rules are opaque. How many dollars are in circulation right now? How many will be printed in the next few years? Who gets to decide and who stands to profit at their production? No one knows except a handful of central bankers who live behind closed doors and don’t publish their record books.
Bitcoin on the other hand has a transparent and reliable rule of law. The source code and the block chain are both open for all to see. Therefore everyone who plays the Bitcoin game is knowingly playing by the same set of rules. Everyone can see that there are currently around 18 million Bitcoin in circulation, with a max of 21 million coming in the year 2140. Additionally, the rate at which new Bitcoins are entering the market is fixed by the source code. Bitcoin is radically transparent and therefore everyone can benefit equally from it.
The third component of a meritocracy is believability-weighted decision making. This one is a mouthful, but Dalio explains it this way:
“Believability-weighted decision making is a way of supplementing and challenging the decisions of Responsible Parties, not overruling them. As Bridgewater’s system currently exists, everyone is allowed to give input, but their believability is weighted based on the evidence (their track records, test results, and other data). Responsible Parties can overrule believability-weighted voting but only at their peril. When a decision maker chooses to bet on his own opinion over the consensus of believable others, he is making a bold statement that will be proven right or wrong by the results.” – Dalio’s Facebook entry Feb 13, 2019
Believability-weighted decision making is what required early Roman architects to stand under new arches and bridges they built when the scaffolding was removed, often with their families. They were willing to stake their lives upon the integrity of what they had built. They had skin in the game. In fiat currency however, decisions are made by people who will be just fine regardless of the outcome of their decisions, no matter how devastating those decisions can be to others.
In the Bitcoin world, there are many people who are staking their livelihood on Bitcoin. Few examples are more striking than Justin the “Crypto Kid” who several years ago sold almost everything he had, moved into a treehouse and invested his net-worth into Bitcoin. Talk can be cheap for those with no skin in the game, but examples like Justin demonstrate how some people are backing up their talk with their wallets. As Nassim Teleb says, “Don’t tell me what you think, tell me what you have in your portfolio” (Nassim Taleb).
Radical truth, radical transparency, and believability-weighted decision making are all principles that give an idea merit.
Christianity is built upon the idea that there is a sovereign God who created the universe… time, space, matter… everything, including us humans as his crown jewel. That God did not only create all things, but is involved actively in all things. This was demonstrated through Jesus, the God-man who came into the world and lived among us, died for us, and rose again to life.
Jesus checks the criteria for radical truth because he is real. Jesus was a real person from history. And Jesus never lied. The truthfulness of his sayings have withstood the test of time for the past 2000 years. His most audacious claim, that he was God (John 10:33) was proved by his rising from the dead (Romans 1:4). History demonstrates this clearly, as mentioned by William Lane Craig.
Jesus checks the criteria for radical transparency too. His rising from the dead was witnessed by hundreds of people. When the apostle Paul gave his defence before King Agrippa in Acts 26, speaking of the resurrection of Jesus, he made the comment, “this has not been done in a corner.” What happened regarding Jesus was public for all to see, such that even this Roman King had heard about it. Today, the Bible is the world’s most circulated and most translated book, giving almost everyone on the planet has access to hear the story of Jesus in its original form. Nothing is being hidden.
Finally, Jesus checks the box for believability-weighted decision making. While Justin the Crypto Kid sold everything he had because of his faith in Bitcoin, the history of the Christian Church is full of people who gave their very lives because of their faith in Jesus. Jesus’ original disciples were martyred for their belief. These were those who lived with Jesus, saw him crucified and spent time with him after his resurrection. People don’t die for things they don’t fully believe in. There are many others throughout history who have given their lives for Jesus.
One such man was William Tyndale, who was executed in 1536 – burned at the stake. His crime? Translating the Bible into English. In Tyndale’s time, the official language of religious practice was Latin, but the common tongue of his home, England was, well, English. The authorities were more than content to keep the population in the dark regarding the content of the Scriptures, but Tyndale was a firm believer in “decentralizing” Christianity and getting the Bible into the language of the people. Today, I have a Bible in my native tongue largely because of the sacrificial effort of William Tyndale. You can read more about him in the excellent book, 131 Christians Everyone Should Know.
It is important when seeking to learn something new to ask the hard questions. When it comes to Bitcoin, one such question is, “What is money?” When it comes to Jesus, the question being asked are, “What is life? Why am I here?” Engaging in these kind of questions can help us understand reality better, and hopefully, align ourselves to it for our own good and the good of others.
PS. If you are looking to explore questions of life, faith and meaning, may I suggest finding a local Alpha group in your community or online. Alpha is a free course designed to explore these questions in a safe and fun discussion-based setting. We highly recommend it.
HODLing Jesus 
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