The B Word Live: Bitcoin as a Tool for Economic Empowerment with Elon Musk, Jack Dorsey & Cathie Wood

Primer: Join Elon Musk (SpaceX, Telsa), Cathie Wood (Ark Invest) and Jack Dorsey (Twitter, Square) in this incredible lineup of exceptional CEOs held at The B Word conference, to hear their thoughts on all things related to Bitcoin and the crypto world in general.

What shaped and influenced your views on Bitcoin?

Cathie

• Started as a curiosity when Brett Winton, Director of Research, started talking about Bitcoin in 2011 when brainstorming

• Realised the internet didn't have a payment system because it was built for commerce

• Her mentor, Arthur Laffer, was asked to collaborate on a paper on Bitcoin

• He was initially a naysayer but realised it is a rule-based monetary system he had been waiting for his entire career.

"But as we learn more about this open source ecosystem, that might fulfil the role of the payment system that the internet neglected to build into the system, not expecting commerce, we thought this might be something." - Cathie Wood

Elon

• Been thinking about money since PayPal days

• Money as an information system for labour allocation

  • Which system has the most throughput?

  • Which system has the least error lost and drops the fewest packets? (fraud or governmental interference are sources of error)

• Current systems are not secure, like ACH and credit card system

• Hence makes sense to support something that improves the quality of information which we conduct the economy

• Bitcoin is a good candidate with potential, but still, some issues that need to be ironed out

• Tesla owns Bitcoin, Elon owns Telsa and personally own Bitcoin - would want Ethereum and Dogecoin

"And you've got the credit card systems, which are also not secure to be like handing your username and password to a stranger in a restaurant if you buy a meal. So there's definitely an opportunity for something that is that is better from an information theory standpoint." - Elon Musk

Jack

• The network and the community are deeply principled

• Reminded him of the old cypherpunks when he was fairly young

• Inspired to work around the existing predatory financial system, but realised Bitcoin can replace the whole foundation instead

• Older payment systems are not relevant to the future, especially in other countries

"If the internet gets a chance to get a native currency, what will that be? And to me, it's Bitcoin because of those principles, because of that creation story, because of its resilience, because of the number of tests it had been." - Jack Dorsey

Bitcoin changes everything

Jack

• Our monetary policies and systems cause a lot of distraction and it is costly

• Bitcoin is not controlled by any state, bank or corporation, and is trustless and verifiable through the source code

• All the advertising business models we have on social media platforms will change if Bitcoin is around

• A lot of innovation opens up when the whole internet is considered instead of going to different countries individually

"If I happen to be in Ghana, and my family is from Nigeria, currently I can take anywhere from 10 to 30% off the top just to send that money back." - Jack Dorsey

• If Bitcoin is the internet's native currency, then will solve the global remittance problem because it will cost less, is a simpler system and is way faster

Thoughts on Bitcoin's fixed supply cap

Cathie

• US monetary base is 8 trillion dollars and is still rising, causing inflation/hyperinflation

• There are 3 roles of money: store of value, means of exchange, unit of account

• Bitcoin serves the primary role as a store of value because it is capped at 21 million units - not so much of the other 2 roles

• Purchasing power goes up globally against a fixed supply is a good thing

• Hedge against the confiscation of wealth through inflation or hyperinflation, especially in emerging markets

• Also hedges against deflation and associated counterparty risk in the United States

Can Bitcoin become peer to peer cash?

Elon

• Bitcoin has a fundamental scarcity limit at the base layer, so it cannot scale to be the monetary system for the world

• However, we can add in layer 2 systems like lightning, to scale up - the same goes for Ethereum

• Can also consider something else that has higher maximum throughput with lower transaction costs

"I think there's some merit to consider something that has higher max transaction rates, and lower transaction cost, and kind of seeing how far you could take a single layer network where the exchanges act as a de facto second layer." - Elon Musk

Will scaling cost Bitcoin in terms of decentralisation and also its censorship-resistant properties?

• The average person is not going to run a Bitcoin node

• The trend now is to have higher bandwidth with lower latency for Internet connections

• Confident that we can maintain a decentralised financial system while still having a much bigger hash ledger

• Had an idea of running a mining node (BTC, ETH or DOGE) in space

"I had this idea, which is kind of off-the-wall, but let's say you need a little space heater. And normally your space heater would just be pure entropy. Well, what if that space heater was also a Bitcoin, Ethereum, Doge mining node? Pick your currency. And so then you'd be heated up." - Elon Musk

Why is Elon Musk drawn to Dogecoin?

Elon

• Loves memes and dogs

• The DOGE community doesn't treat itself seriously

• Had a variant of Occam's razor - The most ironic and entertaining outcome will be the most likely one

• Hence a cryptocurrency that began as a joke but ended up as the leading cryptocurrency will be ironic and the most likely outcome

Bitcoin and its energy concerns

Elon

• Appears to be a positive trend in renewable energy usage for Bitcoin because of a drop in Bitcoin price

• Had said that Tesla will resume accepting Bitcoin as payment only if renewable energy usage in mining is 50% or higher

• Emphasized that both he and Tesla are not selling any Bitcoin and their position in Bitcoin is more than in Ethereum or Doge

• Showing reticence about Bitcoin energy usage will hurt them financially - still had to be done because Tesla's mission is to accelerate the use of sustainable energy

• Need to confirm due diligence, but likely the renewable energy usage is likely now at or above 50%

• Most likely Tesla will resume Bitcoin payment

Problem with using mainly renewable energy like solar or wind to mine Bitcoin

• Running hashing rigs requires a baseload to run 24/7

• If we are using solar or wind energy only, hashing regularisation will be much less

• Will have to use solar, wind plus battery to ensure a stable source of energy

Jack

• Imagine being able to convert all the unused energy that we are dumping and not using anyway, and using it to mine for Bitcoin

• Ark and Square came up with a paper to look into this - how the energy asset owners of today can become the essential bitcoin miners of tomorrow

What can be done to accelerate the transition to renewable energy?

Elon

• Tesla reason for existence is to solve this type of problem

• The company's limiting factor is cell production - can't get enough supplies to make batteries

• Existing hydroelectric energy sources, geothermal and also nuclear energy are all good

• In the long term, renewable energy will actually be the cheapest form of energy but won't happen overnight

Bitcoin's relationship with ESG

Cathie

• ESG - Environmental, Social, Governance

• There is a huge movement in the institutional world to embrace ESG

• E - Believes that Bitcoin is currently and will be much more environmentally friendly than traditional gold mining or the traditional financial sector

• S - Allowing access to payment technology worldwide that saves on fees, also saving citizens living in countries with double, triple digit inflation from the destruction of their purchasing power

• G - Complete transparency of the ecosystem, with a huge part played by the Bitcoin core developers who knows economic history better than most people, with a sense of purpose for a noble goal

What can corporations do to preserve Bitcoin ethos?

Jack

• Sceptical of corporation since young

• Square Crypto is created to hire open source developers to work on whatever they think is important to help Bitcoin

• Formed a non-profit organisation called COPA which they gave up all of their crypto patents to persevere the industry's open source spirit

• Going to do a lot more in hardware and software in a transparent and open manner

• Has the potential to change everything and make lives better for everyone on the planet

• His own personal role in the companies he runs is to push for more decentralisation - more open development and more open source

• The biggest focus right now is on a decentralised social media protocol named Blue Sky

• Considering letting Twitter advertisers pay in crypto, also to focus on creating economic incentives in the network itself rather than on advertising

Cathie

• Ark stands for 2 things: democratization and transparency - have Bitcoin DNA

"We're the closest you'll find to venture capital funds in the public equity markets. And I kind of feel that we have bitcoins DNA from that point of view." - Cathie Wood

• One of Ark's missions is to educate

• Retail community is attracted to them first, then now the institutional community is coming along

• There is transparency of research in the social media, pushing out their research for free to anyone in order to help the community

Elon

• Believes if there are more off ramps from crypto to real products and services, it'll be better

• Supporting crypto has the highest probability in terms of making the future good

• Good to have a prosperous crypto market so that it will have an empowering effect on the individual and increase the power of the individual relative to the government

"Really, you know, if you think of government, it is just a corporation in the limit. So sometimes, some people are against corporations, but for government. It's like, guys, a government is just a corporation in the limit. It's the biggest corporation of all, and it's got a monopoly on violence." - Elon Musk

• Government is really a corporation with a monopoly on violence

Thoughts on Bitcoin on the company's balance sheet

Cathie

• Learned from the experience of Square and Tesla in putting Bitcoin on their balance sheet that it is treated as an intangible asset

• With an intangible asset, if the asset goes up in price, it cannot be marked on their books yet if it goes down, it must be marked down

• This asymmetry needs to be changed before considering putting Bitcoin on their balance sheet

• Agrees there is a lot of good in doing so though

Elon

• Tesla's bank balances in Europe have negative interest rates which is insane

Hopes for Bitcoin in the future

Elon

• Hopes that crypto, in general, will improve the efficiency of the information system that we call money

• If the core efficiency of money is improved and it has less error, it will naturally lead to a better standard of living, giving more power to the individual

Cathie

• Hopes that crypto may be the best money in the ESG point of view so that it can solve some of the world's problems

• Is excited about the idea of the network effect and the convergence of blockchain technology and artificial intelligence in ways that cannot be imagined right now

Jack

• Hopes for world peace

• All the monetary system today costs us and distracts us from the bigger problems that we can get to solve like multi-planetary humanity

• Once the foundational problem is fixed, everything around will improve tremendously in the long run

All information presented above is for educational purposes only and should not be taken as investment advice. Summaries are prepared by The Reading Ape. While reasonable efforts are made to provide accurate content, any errors in interpreting and summarizing the source material are ours alone. We disclaim any liability associated with the use of our content.