Elon Musk on Mars, Dogecoin, and Bitcoin – CryptoGlobe

During a recent interview, Tesla and Space X CEO Elon Muskshared his latest thoughts on money, cryptocurrency in general, Dogecoin, and Bitcoin.

His comments came an interview for episode #252 of the Lex Fridman podcast. Below are some highlights from Musks comments during this excellent interview.

Fridman and musk started this portion of the interview by talking about the planet Mars and that despite Musks tweeting (more or less) that the ideal cryptocurrency for Mars is Dogecoin, Mars needs to have its own completely separate cryptocurrency (i.e. one not tied to Earth):

Well, we need to have a different currency because you cant synchronize due to speed of light not easily Because Mars the closest approach is four light minutes away, roughly, and then at first approach, its roughly 20 light minutes away, maybe a little more.

So cant really have something synchronizing, you know, if youve got a 20 minute speed of light issue. If its got a one minute blockchain, its not going to synchronize properly. So I dont know if Mars will have a cryptocurrency is a thing, but probably. Seems likely, but it would be some kind of localized thing in Mars.

Musk next talked about cryptocurrency in general, calling it an interesting approach to reducing the error in the database that is called money. He went on to say:

You know, I think I have a pretty deep understanding of what money actually is on a practical day to day basis because of PayPal Right now, the money system actually for practical purposes is really a bunch of heterogeneous mainframes running old COBOL.. Pity the poor bastards who have to maintain that code

Banks are still buying mainframes in 2021 and running ancient COBOL code. And, you know, the Federal Reserve, probably has even [something] older than what the banks have. And so the government effectively has editing privileges on the money database and they use those editing privileges to make more money whenever they want. And this increases the error in the database that is money.

So, I think money should really be viewed through the lens of information theory and so its youre kind of like like an internet connection like whats the bandwidth? You know, took total cut rate. What is the latency generator packet drop? You know, errors in errors and network communication.

And then what system, from an information theory standpoint, allows an economy to function the best and you know cryptos are an attempt to reduce the error in money that is contributed by governments diluting the money supply as basically a pernicious apprenticeship full of taxation...

Just think of money as a database for resource allocation across time and space.

Musk next talked about Bitcoin and its disadvantages (vs something like Dogecoin) as a form of payment:

Theres a fundamental issue with Bitcoin in its current form in that its transaction volume is very limited and the latency for confirmed transactions is too long much longer than youd like. So, its not its actually not great from a transaction volume standpoint or a latency standpoint.

So, perhaps, its useful to solve an aspect of the money database problem, which is store of wealth or an accounting of relative obligations, I suppose. But it is not useful as a currency, as a day-to-day currency

Part of the reason why I think theres some merit to Dogecoin even though it was obviously created as a joke is that it actually does have much higher transaction value capability than Bitcoin and the costs of doing a transaction the Dogecoin fee is very low.

Right now, if you wanted to do a Bitcoin transaction, the price of doing that transaction is very high and so you cannot use it effectively for most things. Nor could it scale to a higher volume

When Bitcoin was started around 2008 the internet connections were much worse than they are today, like an order of magnitude. I mean theres the way way worse, you know, 2008. So having a small block size and a long synchronization made sense in 2008, but in 2021, its like comically low

And I think theres some value to having a linear increase in the amount of currency that is generated If a currency is too deflationary theres a reluctance to spend it But if this some dilution of the currency occurring over time, thats more of an incentive to use it as a currency.

So, Dogecoin, sort of randomly, has just a fixed number of coins that generate every year. So, theres some inflation, but its a fixed number. So, the percentage of inflation will necessarily decline over time. Im not saying that its like the ideal system for a currency, but I think it actually is just fundamentally better than anything else Ive seen just by accident.

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Elon Musk on Mars, Dogecoin, and Bitcoin - CryptoGlobe