Is Bitcoin Just a Flash in the Pan? Peter Thiel Responds – Walter Bradley Center for Natural and Artificial Intelligence

In this fourth and final episode based on his talk at COSM 2019, Peter Thiel who founded PayPal in part to help break up currency monopolies offers some thoughts on cryptocurrencies future. In the earlier episodes of his discussion at COSM 1919 with philosopher of technology George Gilder, top venture capitalist Peter Thiel offered Three Contrarian Ideas: 1.Big Tech, as it operates today, is communist. 2. Big Tech is also slowing down. And 3. Learning today has almost nothing to do with the so-called educational system.

Now, about the future of cryptos:

This portion begins at 27:21 min. A partial transcript and notes, Show Notes, and Additional Resources follow.

George Gilder: Peter, you started PayPal, in part to overthrow this government monopoly of money. Hows it going? What can we hope for in the future, in the cryptocosm.

Peter Thiel: Its a little bit harder than I thought in 1999, certainly. One of the books that tremendously influenced me, when I started PayPal, was The Sovereign Individual, written by Rees-Mogg, the father of Jacob Rees-Mogg, the British Brexit parliamentarian. It was about, how were going to have cryptocurrencies, and it was going to be a decentralized world, where sovereignty would itself, would get decentralized to the individual level.

I read that book in the summer of 98, and it inspired me to start PayPal as this libertarian project that was going to liberate peoples money from the control of the central monetary authorities. Theres a whole set of ideas we had around that. In the context of PayPal, we certainly built a successful business, but that part of the vision turned out to be quite hard to do.

There was certainly forms of electronic money that, in theory, were decentralizing and in practice enabled more centralization and more control. Especially after 9/11 and the Patriot Act, and all the ways that the regulatory state, was able to more precisely track the flow of electronic money, it may have actually trended quite the other way.

Now, I do think of Bitcoin as the real thing. Its sort of the centralized currency that we fantasized about at PayPal, but didnt quite build. I have speculative thoughts on who Satoshi is and the Bitcoin origin story. Without, without stating precisely who I think it is, let me give what I think, is the key origin story for Bitcoin:

Note: Satoshi is the name or pseudonym of the mysterious creator of Bitcoin, the best-known cryptocurrency. Many have tried to discover his identity without success: Google Satoshi Nakamoto and the results will lead you straight to image after image of an elderly Asian man. This is Dorian S. Nakamoto, named Satoshi Nakamoto at birth. He is almost 70 years old, lives in Los Angeles with his mother, and, as he has reminded people hundreds of times, is not the creator of Bitcoin. Business Insider

Peter Thiel: When I started PayPal, I went to this financial cryptography conference in Anguilla in early 2000. Its an annual conference and it had this gathering of people who are libertarian, into cryptocurrencies, and probably a decent number of people working at the NSA, spying for the US government, other governments as well.

My theory, is that Satoshi was at that conference or at one like that in early 2000. These ideas were germinated in the late Nineties. One of the manifestations of cryptocurrency at that particular conference was a system called EGLD anonymous encrypted electronic gold certificates. It was a company, that was based in Southern Florida. They had servers distributed all over the planet, but it was in theory, this gold-based alternative to the dollar.

It was going to be encrypted and safe. And there were all these problems with EGLD. We made it interoperable with PayPal. It turned out that there was a lot of criminal activity. Maybe thats always part of the territory of these things. We disconnected it but, the people who started it eventually got in a lot of trouble and the whole system was shut down. The company was targeted, they were prosecuted and I dont think they went to jail, but the whole thing was disbanded.

There was something about the EGLD architecture, that was, in theory, a cryptocurrency and, in theory, fairly decentralized, with their servers in Iceland and Dubai and one or two other places. But in practice, it was still centrally attackable by the larger central government,

I believe that the true Bitcoin origin story was in contrast to EGLD. Its almost the same name in a way. Change E to Bit, and GLD (for gold) to coin. I think the reason we do not know who Satoshi is, is integral to the history of Bitcoin. If we knew, our too-powerful central government would probably do some very unpleasant things to that person.

George Gilder: Peter, why do you believe that the Communist Party of China could nurture or run giant companies, with tremendous capabilities that actually are competitive with the best companies in the United States? How is it possible, that a communist party can actually be a threat, in this commercial creative domain?

Peter Thiel: Well, I think these companies are a threat, and I think they are very tightly controlled by the Communist Party. So thats the empirical answer.

The theoretical answer is, I dont think centralized totalitarian communism, is that good at creativity. You did have a good number of theorists and good chess players in the Soviet Union. So there probably are certain forms of creativity youre able to have even in a Stalinist or Maoist system. But I dont think the creativity is essential.

The competitive threat from these companies in China is that they are just extremely fast at copying, theyre very fast at copying things that work.

Theres always, in any sort of creative business, theres a balance between the creative inspiration, what I call the Zero to One, the miraculous beginning, and then, scaling the business and building it. I think in every area of technology and innovation, the United States and the West more generally, are still at the cutting edge. Were still ahead. Were the only place in the world, where innovation is really happening. But how much value it is to us, depends on how quickly it gets transferred, and exfiltrated to China.

The West developed the atom bomb in 1945, and that was, again, a form of innovation that was possible in a free society. But, within four years, once you had proven that it could be done, it could be copied, even in the Stalinist Soviet union. Copying is much easier to do than originating, and if you have no IP protection, if we have this massive exfiltration of information and ideas, then the disadvantage is not that great for China. And they can be quite a big threat.

George Gilder: How does your understanding of technology inform you about what the current pulse of personal relationships, and the broader social and societal fabric looks like. Now, and into the future, you can talk forever, Peter. Any room for the human spirit in our futures?

Peter Thiel: Well, one would hope so. I think there are all sorts of unhealthy trends in our society, and things that are very off.

The way I understand the Jordan Peterson phenomenon is not that hes correct about Jungian psychology, which I think is just ridiculous. Petersons been effective because Jungian psychology, is a politically correct way, to talk about the extremely dysfunctional gender relationships in the United States, and the West. I agree with that premise of the question that there are some really big problems. I disagree with the claim, that its mainly driven by technology. Maybe there are aspects of tech, of the sort of constant attention distraction, or things like that, that are unhealthy, and that are socially unhealthy.

But there are many things that drive it, and my intuition for whats gone wrong in a lot of these cultural areas, is just the general sense of cultural malaise, of stagnation, of the future is not getting better. Our society is not progressing when people retreat into playing video games, or living in their parents basements, or staying in graduate school.

I think the solution is, maybe you should give them a Jordan Peterson-like psychology lesson. Maybe, you can tell them to turn off their iPhones, or take away their iPhones. But I think the real structural thing is we have to get back to the future. We have to get back to growth in our economy generally. Thats at least, always my bias.

Heres the live stream:

Heres are the Three Contrarian Ideas, with transcript and notes:

You may also wish to read: Peter Thiel speaking in person at COSM, Seattle, November 10. As a world class venture capitalist, he is known for bluntness about what works and what doesnt. COSM 2021 focuses on the converging technologies, remaking our world. Thiel asks, is new tech soaring or slumping?

and

What does super-investor Peter Thiel think you should read?Some books to consider include history as well as business strategy. The two cannot be separated. A book maven tells us what Thiel has recommended, if you are thinking of starting a business or thinking about life in general.

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Is Bitcoin Just a Flash in the Pan? Peter Thiel Responds - Walter Bradley Center for Natural and Artificial Intelligence