The Halvening – Live with Balaji Srinivasan

Published on
May 7th, 2020
Duration
68 minutes

The Great American Mall: Closed Until Further Notice – Live with Dan McMurtrie


The Halvening – Live with Balaji Srinivasan

Live ·
Featuring Balaji Srinivasan

Published on: May 7th, 2020 • Duration: 68 minutes

Crypto has taken the world by storm. It has inspired dreamers, confused skeptics, and ignited passions on all fronts ever since its inception. Of all the different instruments in this new financial ecosystem, Bitcoin is front and center. It is the first crypto asset to make its way into the mainstream. Bitcoin’s emergence has demonstrated to markets the seemingly endless possibilities of its underlying technology – the blockchain. As bitcoin fans, foes, and bystanders prepare for another halvening, Bitcoin marches ever closer to its final state. On this week’s Real Vision Live, highly accomplished investor, entrepreneur, executive, and academic Balaji Srinivasan joins us to explain what this event means for Bitcoin and how crypto may impact not just the world of finance, but the world in general.

Comments

Transcript

  • JK
    James K.
    31 May 2020 @ 20:30
    Best place to buy BTC in the U.S.? Coinbase and/or Square Cash and transfer to Ledger Nano X?
  • TB
    Tad B.
    17 May 2020 @ 21:53
    wow ! This was mind-blowing. Not something I would normally watch, but I'm glad I did.
  • kc
    konrad c.
    12 May 2020 @ 20:25
    Satoshi vs Hamilton mentioned by Balaji... https://www.youtube.com/watch?v=JaMJi1_1tkA
  • SM
    Scott M.
    10 May 2020 @ 12:36
    Great interview, but if you're really limited to an hour, don't spend time on personal history - that's on wikipedia. Just let him talk.
    • ds
      david s.
      11 May 2020 @ 11:27
      i agree. let the man talk
  • pp
    peng p.
    9 May 2020 @ 07:45
    1. The Fiat system has benefited the top 10 percent, but BTC will benefit the 0.01%, I think it will exacerbate the inequality.   2. For all the problem of the Fiat system, it has saved us from the financial crisis in 2008, and the flexible liquidity has created many jobs for the last 10 years, even now, it has helped a lot of unemployed and poor. There are many cases of abuse to it, the bailout of zombie companies, banks, enrich the asset owner, company management. etc. But consider the jobs it helps to create and the many financial meltdowns it has avoided. I am still hesitant about BTC. I am quite disappointed Balaji did not explain how BTC can solve those problems except it stops money dilution.    
    • PG
      Petter G.
      9 May 2020 @ 07:51
      Avoiding financial meltdowns is literally the main argument against fiat. Booms and busts are funtamental to free-market capitalism. Without the bust, no cleansing of the system.
    • TP
      Timothy P.
      9 May 2020 @ 11:26
      The legacy financial system and its badly managed monetary policy is the reason for boom and bust cycles. The Fed is an arsonist and the fireman. To congratulate the handlers of monetary policy by saying they put the fire out -- that they themselves started -- isn't a worthwhile enterprise. I'll gladly take AMP (algorithmic monetary policy) over human-fallible LMP (legacy monetary policy) any day of the week.
    • DR
      Daniel R.
      9 May 2020 @ 16:06
      Ahoj Peng. Thank you for sharing wit us. With regards to your 1st point, I'll try another take at it to help. Why would it benefit only top 0.01%? My best guess prior your answer would be one particular notion that many people tend to overlook. Bitcoin is just a unit of value. Like a million. You don't have to have a whole million. You can have individual million parts as if. Bitcoin is divisible into the basic units of Satoshi. There are 100,000,000 Satoshis in one Bitcoin. So it is not like you need to have all 100 mil. You can buy some and see value appreciate over the long run. Even if 1 BTC is worth a million dollars - you can save your hundreds or thousands of saved capital in it to preserve its future value and protect your purchasing power. To the 2nd point. I'd argue that the introduction of ever bigger money injections has increased occurrences of traditional boom bust cycles. By inflating capital in the future we are unable to forecast accurately which leads to very inefficient market decisions that have no choice but correct over time. More money we pump into the system, greater inconsistency is created. I think, if we don't stop, these will be ever more often and troublesome to contain. It works until it doesn't. Cheers, Danny
    • pp
      peng p.
      11 May 2020 @ 00:51
      Dear Daniel, 1. The stock market benefits the top 10% as only the top 10% holds the majority. As for bitcoin, only 0.1% (I think much lesser) holds the majority. I cannot imagine the inequality that going to cause if we are going for a crypto monetary system.   2. The fiat system causes a lot of boom and bust. During the boom, maybe the debt goes us by 10% and this can increase in real GDP by 1% then if we have not increased the debt, the stimulus in this pandemic is the best example. This benefits a lot of the poor, but of course, the wealth divide is getting bigger.   But real wealth is created for everyone (just disproportionately, imagine without the extra debt there is no Tesla). From 1971 until now, the real wealth that is added because of the fiat system has been tremendous due to the increasing debt.  Now comes the real bust part, where the poor have to pay the piper. That is where the debt jubilee comes in, So we have 50 years of extra real growth, and then in 1-2 years we will have to solve the imbalances in the system fairly, and this is the difficult part. For the BTC system, I don't see how it can increase GDP during boom time with an extra stimulus, and help us out during the mini-bust time. The only thing it prevents is the final big bust in the Fiat system. 
    • pp
      peng p.
      11 May 2020 @ 01:19
      The fiat system can be as hard as BTC, it is a matter of policy (unfortunately most of the time, the policy is skewed to favor certain group unfairly), But the BTC can only be hard and never flexible. I am afraid we lost something valuable once we go to BTC.
    • DR
      Daniel R.
      11 May 2020 @ 10:38
      Hi Peng, The most appealing part of the BTC argument is - that it doesn't matter if you hold a 1 thousand or 1 bitcoin. No one can take that away from you regardless of your size or position with regards to the system. The problem with fiat system is that gatekeepers can extract value from existing holders by indiscriminate issuing of new monetary units. Under systems such as BTC, that just isn't possible. You can't print new bitcoins. I don't think I see where your argument is headed though. Happy to explore but I'd need better push forward on your part. I am not sure I agree in an essence about statement that would argue Tesla as a debt trophy. Ever wondered if we could have had 10 Teslas already would it be not for the endless market turbulences? All the wasted capital that could have been used for something useful. Availability of easy money generally creates high time preference and discourages savings and investment in sound projects creating lasting value. Hence elevating living conditions for participants in such a system. Printing money is an illusion of wealth creation. Printing money is, I believe, wealth destruction as it is an elaborate form of a tax. Cheers, D.
  • VB
    Vikram B.
    9 May 2020 @ 09:26
    Hi @Ash Don't know if this point was made by a previous commenter already - but there were at least a couple of points where you were forced to interrupt Balaji's train of thought half-way through an argument. Eg he was going somewhere with his some things deflation, some things inflation line. I am sure you know what the other occasions were too. What's worse than not hearing a good argument is hearing the first half of it. Can you please request him to post online (here) a few 5 minute clips to let him take those arguments/anecdotes/narratives to their conclusion. Hope that is not asking too much but I am genuinely in pain because of this. Vikram
    • AB
      Ash B. | Real Vision
      11 May 2020 @ 03:57
      Hi, Vikram. I hear where you're coming from. The challenge with a guest as terrific as Balaji is to keep the interview moving so we can touch on all the important topics he's been thinking and writing about. We looking to get him back again soon!
  • Hv
    Hannah v.
    11 May 2020 @ 01:49
    Raoul? Can you make the text in the comments section “highlight and copy” please? Subscriber suggested URLs within a comment are tedious to type verbatim from a screenshot. Thanks:)
  • AS
    Alex S.
    11 May 2020 @ 00:43
    Thank god for Real Vision. And serious brews amirite Ash. IPA and crypto. Or perhaps Kombucha so perhaps I misread. Regardless, more off the cuff Balaji would be welcome. I would love to sit down and talk deep weeds with someone with such radically varied experiences.
  • AS
    Alex S.
    11 May 2020 @ 00:43
    Thank god for Real Vision. And serious brews amirite Ash. IPA and crypto. Or perhaps Kombucha so perhaps I misread. Regardless, more off the cuff Balaji would be welcome. I would love to sit down and talk deep weeds with someone with such radically varied experiences.
  • Hv
    Hannah v.
    10 May 2020 @ 22:08
    Hey Ash, fantastic interview! Balaji is a new favorite (.. & you too :). This interview got me cliffhung in a few spots. I’m wondering if we could get a super long form with him where you could just let him go without corralling to time constraints? Long form isn’t long enough for his vast ideas and intellect. I’m thinking 3 hours with some beers and tasty snacks along the way to keep him stoked. Introduce one setup question and then let him go!!
  • JR
    Josh R.
    9 May 2020 @ 00:17
    I really need to go back to school
    • Hv
      Hannah v.
      10 May 2020 @ 21:58
      You are at school.
  • CS
    Carlos S.
    10 May 2020 @ 19:31
    So amazing, we need to have him speak weekly!
  • CL
    Carl L.
    10 May 2020 @ 07:30
    I have a question about transactions. Let’s say there is 21 million Bitcoins created, then theres no incentive for mining anymore. Is it still possible to make transactions at that point? And IF it still works. How would that impact transactions fees? Can someone please answer me. I cant find a simple answer anywhere. It’s like no one knows for sure. Been wondering this for years now.. If no one knows it might aswell be a bubble.
    • JW
      JW2 W.
      10 May 2020 @ 11:08
      Not sure if I completely understood your question. Transactions between wallets remain a feature of the network even after the last BTC has been mined (in 2140 or so). One does not depend on the other. Miners will only be able to generate income from transaction fees as they continue to validate the blockchain. In theory - and who knows what this will look like at that time :-) - the amount of transactions will increase and the technology to benefit financially from the increased usage of the network will make it still profitable for miners to collect these fees.
    • SW
      Sarah W.
      10 May 2020 @ 17:07
      By 2140, and before that, miners will rely upon the transaction fees from all the transactions in each block. In theory by that point, the price of a single BTC will be high enough to allow the transaction fees to be enough. If not, miners will switch off, reducing the hash rate and decreasing the difficulty adjustment as explained in the video. The difficulty adjustment is key.
  • BN
    Barrett N.
    10 May 2020 @ 15:26
    Great interview! Thank you. B
  • AP
    ANTHONY P.
    8 May 2020 @ 20:16
    My halvening occurred when I followed Raoul's FX trade last month.
    • TP
      Timothy P.
      9 May 2020 @ 17:15
      "A poor carpenter blames his tools." I assume you did your usual due diligence and had some risk controls? I get your joke, but I think its poor form to throw it all on Raoul's shoulders.
    • AP
      ANTHONY P.
      10 May 2020 @ 03:01
      @Timothy: I'm not a carpenter, Real Vision isn't a tool, and I didn't "throw it all on Raoul's shoulders". Other then that, you pretty much nailed it.
  • TS
    Thomas S.
    8 May 2020 @ 23:41
    I could listen to Balaji for hours. Great thinker. We need more of this discourse in politics rather than the dumb politicos we have now. Hope to see more of Balaji on real vision
    • TS
      Thomas S.
      8 May 2020 @ 23:45
      As an addendum. Hate the time constraints. When Balaji started a discourse on inflation/deflation, for example, his thoughts were interrupted in mid stream. This has been my thesis for years....that we really do have inflation for the average person...sometimes referred to as "the pain index"
    • lm
      luke m.
      9 May 2020 @ 05:19
      I was also disappointed because it sounded like he was about to give his views on that critical question. The million dollar question right now is trying to figure out whether we will have inflation or deflation, or even both in different asset classes at the same time.
    • US
      Urska S.
      10 May 2020 @ 02:06
      @ThomasS Lookup Robert Breedlove he explains inflation/deflation dynamics in great detail. Not on RV, but his recent interview with Preston Pysh is a very good start.
  • KV
    Kas V.
    9 May 2020 @ 23:26
    Would love an deeper dive into DeFi and how that might change finance.
  • TP
    Timothy P.
    8 May 2020 @ 16:43
    Interesting interview, just a few points: 1.) I wouldn't automatically suggest that a new user get onboarded using the Coinbase exchange. They've shown in the past that they can't handle large volumes, and there have been incidences of KYC/AML queries seemingly coming out of nowhere for approved accounts that has locked up user funds. They also use chainanalysis, so they attempt to qualify the source of your coins - for whatever reason, not just the obvious ones - and if they don't like it, you're out in the cold. There are numerous exchanges, just look at traded volume and jurisdiction to choose. You won't regret it. 2.) The argument against algorithmic monetary policy (AMP) versus legacy monetary policy (LMP) is simple. Humans are error-prone rationalization machines. There's always a reason for a LMP actor to tweak the rules "just because its different this time" when it most certainly isn't. That is the advantage of AMP, it stays true to the ethical bounds and doesn't step over the line and slide down the hill of moral hazard like the Fed has. 3.) Promoting Ethereum and "DeFi" (Decentralized Finance) should be done with a huge caveat. When "code is law" (until it isn't, in the case of the ETH DAO rollback) you are combining the attack surface of a Turing Complete system with the critical parts of a monetary ecosystem. There have been, to date, millions lost in these systems. In some cases the money was returned, but even innocent mistakes can cause losses - one event lost $560,000 USD alone. On another point, ETH is in the process of pivoting from Proof-of-Work to Proof-of-Stake. There are large security risks in doing so, which is why this project has been delayed and deferred several times. I would keep this in mind if you're thinking about investing in this venture. 4.) ZCash and the like are privacy-oriented tokens, that use a variety of means to provide transactional anonymity. This is interesting, however the recent introduction of Schnorr Signatures (which is going to be merged into the main Bitcoin code soon) will make all privacy tokens obsolete. Be aware that any alt can be absorbed when you consider its feature set. Bitcoin has the most developer participation when you look at pull requests, merged requests and improvement proposals. No other ecosystem comes close. 5.) I suggest you keep at least 5% of your total portfolio into Bitcoin. I wasn't too happy with Balaji's non-answer. It certainly is his right to not do so, but I think its a dis-service not to provide alternate views. I've seen the 5% number from a few sources that run family offices and hedge funds. 6.) Please, please, please Real Vision -- do not use "Marketcap" like its a legitimate metric when applied to cryptocurrencies. It isn't. I suggest looking at more advanced metrics like those provided by IntoTheBlock for getting a true sense of dominance and actual utility. Marketcap is a flawed calculation for tokens that can be issued at a whim and traded on paper-thin orderbooks of third-rate exchanges. Please do more research. 7.) Bitcoin is the standard because it was the first that combined various concepts into a cohesive whole. First-mover advantage does matter, as much as it chafes the creators of altcoins that would like to recreate Bitcoin's massive success. The ecosystem is the largest, it has the deepest order books on exchanges and is able to transfer extremely large amounts for trivial fees. Also, as I mentioned before, Bitcoin has the most developer interest, which is useful when you are looking at preserving the security of your blockchain securing billions in value. 8.) Quantum Computers require a mini-keg of helium or liquid nitrogen to keep their "QBits" cold enough to do rudimentary calculations. There is some time yet. (And no, DWave's processor is a quantum annealer, not a true quantum computing device) And yes, as Balaji suggests, there do exist quantum-proof algorithms, so that risk is quite minimal in that regard. 9.) Taproot is coming for Bitcoin, which expands the use of the programmability, without exposing Bitcoin to the same attack surface as say, Ethereum. The point here is that its operations are constrained within a given domain, and not "Turing Complete" as ETH scripts purport to be. There is a ratio here -- the more functions you add, the larger the probability of a successful attack vector. Bitcoin's developers are acutely aware of this, which is why it has taken this long to get to this point. I could write more, but then Real Vision would have to pay me.
    • jf
      jens f.
      9 May 2020 @ 03:35
      You had me at Bitcoin and lost me at Liquid Nitrogen:) Appreciate that you are sharing your knowledge! Makes it easier for some of us to navigate this jungle👍
    • PG
      Petter G.
      9 May 2020 @ 07:42
      This. So much this! People fall into the Ethereum rabbit hole because stuff like DeFi sounds so compelling. The futuristic visions, the crisp logos the buzzword-filled whitepapers. This brilliant marketing makes it very easy for people (especially those who do not understand technology) to fall into it's web. I wouldn't have any issues with it if it wasn't for the fact that the whole premise upon which all of these projects are being built is false! Ethereum does. Not. Scale. Cryto-kitties took down the network in 2017. The blockchain is already 4TB(!) in size which mean the whole system is centralized. Not a single person would give up 4TB to store the chain. Only enthusiasts would, and soon not even these people will be able to do so. Please RV, start by looking at the underlying technology before promoting projects built on top. DeFi sounds cool, but if you take a scrutinizing look at Ethereum I think you would not be as excited.
    • JW
      JW2 W.
      9 May 2020 @ 19:49
      Thanks guys, for the interesting takes on Ethereum. I am not 'for' or 'against' Ethereum but I am interested in the developments. Whilst Bitcoin's 'unforgeable scarcity' is unique amongst crypto's, it does not mean this market won't have room for other technologies. Adoption is not only dependent on the technical merits (not that you are saying that btw). As with Bitcoin, there are several off & side chain developments going on (Chainlink) that try and resolve the more fundamental and sometimes ideological arguments against Ethrereum. Plus, for a lot (most?) of people, the technical discussions are way above their heads. It's about use cases and adoption of applications and partnerships. The tech we'll backsolve later :-) Ethereum scores pretty good on its network effects (developers, github activity, defi projects etc).. Having said all that I also understand that the move to 2.0 comes with huge risks and there are question marks about the fundamentals. But we are in the very early stages of these blockchain technologies so I would think it's normal to have these types of discussions. I somehow doubt that we will see only a bitcoin network that is driving the new applications of the future. The jury is out on Ethereum but that is true for the entire space I would think.
  • AP
    ANTHONY P.
    9 May 2020 @ 01:53
    Is there a consensus regarding a possible bitcoin decline immediately following the halving (possibly for several weeks)? Does that concern warrant tight stops on bitcoin or maybe even selling on Monday and reentering in several weeks? All thoughts appreciated.
    • PG
      Petter G.
      9 May 2020 @ 07:47
      If you are buying your first Bitcoin today, and your timeframe is 5 years or more, you should just start buying small amounts at a regular interval (DCA) until you reach your preferred position size. Tight stops doesn't work in Bitcoin unless you watch the markets minute-by-minute and can time your entry to perfection.
    • AP
      ANTHONY P.
      9 May 2020 @ 11:08
      Thank you Petter! I've built a robust position in the last six weeks at Raoul's recommendation and it's been great so far. I've heard a few times recently that a 20% pullback in 2 to 4 weeks (due to the halving) should be expected but I don't know if the sources are credible.
    • TP
      Timothy P.
      9 May 2020 @ 11:23
      Historically there has been a period where a slight depression in price has happened. I attribute this to marginal miners liquidating their stocks, and more established miners using their BTC inventory to cushion the blow of the halving. Those phenomenon can't continue indefinitely, which is why historically price grinds upwards again after the weaker players have exhausted themselves. This is normal, I suggest looking ARK Investments mining paper here -- https://research.ark-invest.com/hubfs/1_Download_Files_ARK-Invest/White_Papers/ARKInvest_031220_Whitepaper_BitcoinMining.pdf Typical news stories you hear about during this event will be the "miner death spiral", which is highly improbable on a chain that has decent incentives (an actual fee market) in addition to misunderstandings from uninformed reporters that think the block reward subsidy reducing is a sign of weakness. In short, Bitcoin will be fine, and marginal miners will be cleared away just like they were the last two events.
    • DR
      Daniel R.
      9 May 2020 @ 16:12
      Hello Anthony, Thank you for your questions. You need to have a long term perspective on this thing. Naturally, there is a huge potential upside. But remember, you should always go to sleep content with one particular thought in your mind. When I wake up the next morning, BTC might be worth nothing. Now, we can argue how likely or not that can be - but you need to make a peace at your heart with it. Create positions only that make sense. You still have to live in the real world, pay real bills. I can tell you, I've seen times where some of my holdings were down 80-90%. It takes a good gut check to persevere in those times as we still hold real world as the reference point to the BTC. Cheers, Daniel
  • KE
    Katrin E.
    9 May 2020 @ 09:28
    Great interview. Balaji is impressive. One question, isn’t one of BTC‘s principal distinguishing properties vs other cryptocurrencies that it is scarce? There is a finite number of BTC that can be mined, and because of halving the last estimated coin will only be mined in +100 yrs. Particularly in light of current central bank intervention, that is crucial. Are other cryptocurrencies as scarce?
    • TP
      Timothy P.
      9 May 2020 @ 11:33
      Good question. Other coins have large supplies, some have been 'pre-mined' (issuance prior to activating their chain - which is then held by a few devs and others) and some coins even have inflationary tendencies, like Ethereum. For example, XRP (Ripple) is a token that has a few centralized servers (I kid you not, ripple server1, ripple server 2, etc..) and its issuance is massive. More than half of its issuance is under the control of a few people at the top that manage that coin. It induces moral hazard if there is a massive pre-mine, or locked-up coins by founders and others. What differentiates Bitcoin from others is its issuance cap of 21 million coins, and the ability to sub-divide to eight decimal places if necessary as Bitcoin gains value. This provides the flexibility of being able to transact in amounts that make sense as its value increases vis-a-vie other currencies, while not falling to the moral hazard of "lets just print more, shall we?"
  • TE
    Tito E.
    9 May 2020 @ 06:57
    Balaji is great! Strong thinker
    • TE
      Tito E.
      9 May 2020 @ 10:33
      Balaji this may seem abstract but how do you get so much done? Do you consciously have a framework? Whether you do or not, how about an interview simply on getting shit done?
  • EH
    Ernest H.
    9 May 2020 @ 09:52
    This was one hell of an interview, five stars!
  • JY
    John Y.
    9 May 2020 @ 03:26
    Another brilliant interview with Balaji. Ash, I am looking forward to a deeper dive into "DeFi" on RealVision and the East-West interview conducted by Balaji. Thank you, RV.
  • pa
    paolo a.
    8 May 2020 @ 22:52
    This guy is really a great mind! He expanded my thinking! Thank you Real Vision
  • DM
    Dominic M.
    8 May 2020 @ 21:46
    "If [BTC] survives, it wins." It's virtually impossible to stop BTC. If BTC wins, the price will skyrocket. Worth a think.
  • jf
    jens f.
    8 May 2020 @ 19:37
    Now that`s what I call a big brain!
  • bm
    brian m.
    8 May 2020 @ 19:01
    I dont know which is greater, his smartness or my jealousy.