Viruses Don't Stop Revolutions

The 9 Most Interesting Takeaways From Interviewing Bitcoin Magazine CEO, David Bailey

Happy Monday from Henderson, Nevada 🗞

Last week, I was fortunate enough to interview the CEO of Bitcoin Magazine, David Bailey. BTC Magazine is the organization responsible for hosting the annual bitcoin conference I wrote about a few weeks ago. They are also widely considered the leading voice in Bitcoin media.

David has some strong viewpoints on the best future of money, and he is extremely committed to his goal of helping society reach hyperbitcoinization, a point of 100% adoption.

This week I summarized the most interesting ideas from our conversation.

Enjoy!

9 Takeaways From Interviewing David Bailey from Bitcoin Magazine

0—Quick Background & Disclaimer

David is the CEO of BTC Inc, a group of companies including Bitcoin Magazine, The Bitcoin Conference, and a hedge fund called UTXO Management.

David purchased Bitcoin Magazine from Vitalik Buterin and Mihai Alisie around the time they were launching Ethereum.

**Disclaimer: This post covers my takeaways following a conversation with David. Please assume any bad ideas, inaccuracies, or mischaracterizations are my fault.

1—A Clear North Star

How many CEOs can pinpoint the exact purpose of their company (besides making a profit and maximizing shareholder value)?

Bitcoin Magazine’s goal is to accelerate the rate at which society reaches 100% adoption, a term David calls hyperbitcoinization.

His extreme clarity about his ‘why’ helps guide the company’s decisions, attract the right employees, and build a devoted following of readers.

The focus on “cryptocurrency” was too broad. It was only when they went all-in on Bitcoin exclusively that things started to take off.

I have a lot of opportunities to improve based on this advice. Increased clarity about the purpose and mission of my podcast/ this newsletter would help simplify the work by adding a few creative constraints.

2—Make Mistakes As Early As You Can

Source

As every crypto critic will point out, digital asset prices can be extremely volatile. Since 2012, bitcoin has crashed 80% or more on more than three separate occasions.

David was a senior in college during the 3-day correction from $260 down to $50. In the interview, he shared how much of a blessing getting wrecked like this was in hindsight.

Getting crushed helped him learn how to manage his risk and better assign probabilities to unfavorable outcomes.

The earlier you make the mistake, the earlier you learn the lesson.

3—Making Career Decisions

Regret minimization helped David take the leap into crypto straight out of college.

He asked, “Which decision will I regret the least?”

If David was right about Bitcoin becoming a world-changing technology but was too scared to follow his conviction, he’d regret it for his whole life. On the other hand, if he did spend a few years in crypto and things didn’t work out, he’d still have learned a ton, met a bunch of interesting people, and probably been able to get a normal finance job.

Another element of his decision was choosing the people he’d like to be working with.

David was extremely impressed with the enthusiasts he met at conferences and meetups. The excitement and intellect these early adopters demonstrated were unlike anything he’d seen before. That was an additional motivation to go all-in.

What industries are full of ideas and people that excited and inspire you?

What will you regret not trying?

4—Don’t Shy Away From Expected Value Calculations

When deciding whether or not he should invest in bitcoin, David did some rough EV math.

For the unfamiliar, EV can be expressed as

• Expected Value = (the probability of x occurring * the value of x occurring) + (probability of y occurring * the value of y occurring).

Below is a hypothetical EV calculation for investing in bitcoin (Not Financial Advice).

In the best-case scenario, bitcoin becomes the default global store of value and world reserve currency, which would have a value of roughly $90 trillion (there are about 90 trillion in global equities).

$90 trillion divided by 21 million (supply of bitcoin) = $4,285,714.3 per coin.

In the worst-case scenario, bitcoin goes to zero.

Let’s also consider the digital gold narrative as a middle-case scenario. Here, bitcoin replaces physical gold and reaches roughly $10 trillion in total market cap —> ~470k per bitcoin.

Let’s assume a 1/1,000,000 chance of best-case scenario, a 1/1,000 chance of becoming digital gold, and a remaining chance of going to zero.

Here’s how the math settles…

• 0.0001% chance that bitcoin reaches 4.3 million per coin

• 0.1% chance that bitcoin reaches 470k per coin

• 99.8999 % chance bitcoin goes to 0

• ($4,300,000 * 0.00001) + ($470,000 * 0.001) + ($0 * .98999) =

• (4.3) + (470) + 0 = $474.3

When the possible upside is almost incomprehensibly large, EV calculations can yield unexpected outcomes.

Don’t completely write something off without at least doing a bit of back-of-the-napkin math.

5—Humans Vs Complex Systems

“Complex systems are systems whose behavior is intrinsically difficult to model due to the dependencies, competitions, relationships, or other types of interactions between their parts or between a given system and its environment.” — Wikipedia

Examples of complex systems include the human body, the natural environment, markets, the climate, and the economy.

We asked David what he thinks the central problem is with central banks. (Bitcoin is a monetary system without a central bank).

In David’s view, the core issue with central banks is that a small group of people thinks they can make better decisions than the aggregate.

Jonathan parodies this thinking in this tweet.

Jonathan Newman @NewmanJ_R

Don't worry about 1971. We've got experts at the @federalreserve sifting through the national income statistics and price indices, perfectly balancing policy objectives, and printing exactly the right number of dollars to maximize our collective well-being.

For a system as complex as managing the economic interactions of hundreds of millions of people, it is impossible to collect every piece of information. That’s why most complex decisions are at best (well-intentioned?) guesses.

In any complex system, whether we try to modify the weather, divert a river, or introduce brand new “foods” into our diets (looking at you, Canola Oil) we end up causing a chain of possible adverse consequences elsewhere in the system.

Complete noninterference is not necessarily the solution either. Sometimes some intervention is defensible and necessary. The point is to be wary of and avoid excessive and unquestioned intervention beyond what is clearly necessary.

6—Agnostic Technology

The Taliban uses WhatsApp.

Cars are used as weapons.

Drug dealers communicate over Snapchat.

I’m sure some shady things have been coordinated over email.

Critics will complain about Bitcoin’s perceived ties to crime.

Unfortunately, bad actors will find a way to use any tool for malicious purposes.

The underlying technology is what it is.

Everything has pros and cons. Weigh them.

Bitcoin also enables people shunned by the banking system to start storing wealth.

Bitcoin also enables virtually fee-free remittances.

Bitcoin also has a predictable supply.

Everything has pros and cons. Weigh them.

7—Understand Counter Arguments

When David first discovered Bitcoin he was trying to prove why it was a scam.

It was his inability to do this that turned him into a believer.

When you don’t take time to understand the counter to your arguments, you have low credibility and undeveloped knowledge.

It is only when you explore both (sometimes more than 2) sides, that you should start to have any degree of confidence in your perspective.

This leads to the next point…

8—Don't Be Weak

Ben Shapiro @benshapiro

Facts don't care about your feelings.

If you can’t hear ideas that you disagree with, you are a weak person.

If you have an emotional response to an argument, that is not a sign of your conviction. The strong, mature person can thoughtfully and objectively weigh ideas without making anything personal.

Remove the ego.

The goal is discovering the truth, not being proved right or wrong.

9—Viruses Don’t Stop Revolutions.

Were the founding fathers going to pause the revolutionary war because of a disease outbreak? Malaria, dysentery, and smallpox were all rampant.

Miami 2021

David hosted one of the first major (10,000+) person events after COVID-19 disrupted society. Why? As bad as COVID is/was/has been/might still be, Bitcoin Magazine is on a mission to help the world adopt Bitcoin.

Diseases shouldn’t stop you from fighting for causes you believe in.

You might have to get creative and work through some obstacles, but you don’t stop trying.

Thank You For Reading!

I’m experimenting with the every other week format for this newsletter.

I think it helps me show up with a bit more excitement.

Until next time,

Louis

Two Quick Clicks

(1) Interesting Website: Infinite Market Cap

Data visualization for trending stocks on Reddit, all global assets ranked against each other, and other interesting global financial info.

(2) Useful Software: Umbrel

Umbrel provides software to help you participate in the actual Bitcoin network directly, instead of interfacing through an exchange.

Their slogan, “Run your personal Bitcoin and Lightning Network node, self-host open source apps, cut out the middlemen, and use Bitcoin to its full potential. For free.”’

Photo of the week — Marrakech Mediterranean

I went to an awesome Moroccan Restaraunt with my family.

The food was really good. My dancing was not.