Bitcoin Is Hard Money

Published on
November 20th, 2020
Duration
58 minutes


Bitcoin Is Hard Money

The Interview - Crypto ·
Featuring Simon Dixon

Published on: November 20th, 2020 • Duration: 58 minutes

Simon Dixon, CEO of BnkToTheFuture.com, joins Ash Bennington, Real Vision senior editor, to discuss Bitcoin and its implications for nation-state monetary policy, central bank digital currencies, and the future of finance. Dixon explains several possible future outcomes that may result from the invention of Bitcoin, both good and bad. He believes the economy is currently in the great depression of the 2020s and that Bitcoin will assume an increasingly important role on the world's financial stage because of the way governments will mitigate the effects of this economic slowdown. Filmed on November 10, 2020. Key Learnings: Dixon articulates the importance of Bitcoin and digital assets in the current macroeconomic environment. He makes the case that Bitcoin is a hedge against a wide variety of near term economic policies initiated by governments. Dixon believes that, in most scenarios, Bitcoin increases in value and importance and that government action will force greater adoption of Bitcoin as a store of value - a hard money.

Comments

Transcript

  • NL
    Nicholas L.
    29 November 2020 @ 12:05
    Always enjoy listening to Simon, whether you agree with him or not. He thinks 10+ years ahead of everyone else!
  • MH
    MICHAEL H.
    29 November 2020 @ 10:08
    I've been following Simon for the past few months. He has eloquently summarised his beliefs and vision of the future in this interview. Thank you Simon Dixon and Real Vision
  • PJ
    Peter J.
    24 November 2020 @ 22:31
    Great interview. Ash excellent questions. Loved Simon’s view on speculation, bang on the money.
  • BD
    Brent D.
    24 November 2020 @ 03:14
    I found Simon's final summation compelling. It is exactly why I started watching RV.
  • LS
    L S.
    24 November 2020 @ 00:58
    Great job Ash. And with a great guest. My two favorite interviewees are Mr. Dixon and Mr. Richard Werner. Gentlemen, scholars, and you can tell - solid men.
  • NI
    Nate I.
    23 November 2020 @ 05:17
    I own some bitcoin, but I see it as an insurance policy. For now, bitcoin is a collectible. If it becomes money (writ large) or pristine collateral as Raoul often says, it will be the first time in human history that something with no intrinsic value did so. Note: I don't count fiat because it's only money because people with armies and nuclear weapons force it upon us. Bitcoin doesn't have a nuclear armed sponsor. Commodities and metals have filled the money role throughout history mainly because they have intrinsic value that can be realized at a later time. Sure, it could happen with bitcoin and it has undeniable scarcity benefits over commodities. That's why I hold the bitcoin insurance as a hedge, but I think it's a low probability long shot. My allocation is less than 1%. If it goes to $0 I won't be hurt. I wish RV would be more balanced with their viewers about the bitcoin risks. It will be tragic if RV members lose a huge chunk of their savings in the event that bitcoin goes bust, especially since most came here for democratized financial information.
    • LS
      Lewis S.
      23 November 2020 @ 07:02
      What if its intrinsic value is its unique place in history?
    • TH
      Timo H.
      23 November 2020 @ 07:13
      Agree wholeheartedly. Risk analysis would be most welcome here. I see three fundamental risks for any asset, that derives its value and scarcity from math-based trust. Those risks are, ordered by their size: 1) The need for such trust is eventually less than you might think. The biggest risk here is the introduction of a proper mechanism for achieving a web of trust between the participants of the economy. In the real life, you don't hold gold or bitcoin in your pocket to do your business. Instead, you do business with parties whom you trust. I consider this as an eventuality. 2) The market decides, that the scarcity actually is not real, i.e. other similar assets are also deemed as valuable. This is purely a market narrative risk and can happen at any time. One smartly written white paper may be all it takes. 3) The math-based trust fails due to some major technological breakthrough, e.g. quantum computers. I consider this as a tail risk. In a few years, I think that at least one of those will realize.
    • TH
      Timo H.
      23 November 2020 @ 07:31
      Another viewpoint: Bitcoin narrative today goes roughly like this: 1) The trust on central authorities will fail in the foreseeable future. 2) We need a replacement for the failed trust. 3) The replacement necessarily MUST INVOLVE Bitcoin. The narrative states the obvious in steps 1 and 2, and assumes, that the reader buys also into the step 3. I've been long enough in this business to know, that such narrow-mindedness seldom leads to the right outcome. I think therefore, that the step 3) should read: 3) The replacement will probably have different components, of which one MAY BE Bitcoin. Now you have a narrative, that you can use to size your exposure to Bitcoin. The key words are "MAY BE". By all means, get some Bitcoin into your portfolio as a hedge, but after that, please move on and try to figure out the other components of the solution. Having e.g. a quarter of your portfolio in one call option is pure insanity. There's a good chance, that such option will expire worthless for reasons you cannot yet imagine. Quite a few of my call options have done so.
  • MD
    Matt D.
    23 November 2020 @ 03:49
    Great! interview Ash and Simon. I think the quality of the interview is reflected in the comments - very thoughtful and intelligent. People want to interact with the discussion with Simon and Ash. I was really impressed the first time I heard Simon on RV earlier in the year, and he has backed it up here. Thanks lads.
  • RT
    Ryan T.
    22 November 2020 @ 11:48
    I learnt so much from this interview. I find that Simon presents a balanced, pragmatic view of the new crypto world with respect to the conventional global economy. Ash Bennington, as always, has been a great interviewer. This is easily one of the best sessions for me. Well done guys!
    • MS
      Mark S.
      23 November 2020 @ 01:22
      Agree with your summation
  • JC
    John C.
    22 November 2020 @ 23:28
    Great interview by Ash Bennington. He asks all the right questions to one of the most knowledgeable people in the space.
  • JW
    Jeff W.
    22 November 2020 @ 21:29
    This interview was awesome. I respect that he is a pragmatist of the current situation we are all in. Learned lots!
  • BC
    Bill C.
    22 November 2020 @ 16:11
    Interesting how Simon Dixon conflates the idea of socialism with democracy at about 15 minutes in.
  • TH
    Timo H.
    21 November 2020 @ 13:20
    Even though this comment would gather a record number of down votes, I would like to take an issue with the title of this video, along with a couple of other things. Bitcoin is not hard money. (Neither is gold.) There's only one thing in this world where I agree with Ben Bernanke. He was right when he said, that gold is not money, but an asset. In theory, you can use gold as money, but in practice you won't. The same very probably applies to Bitcoin. I personally like to hold assets and use money. I can't do both with the same instrument. To irritate the die-hard bitcoin maximalists even further, I might add, that Bitcoin is not a decentralized network. A proper network is one, where new nodes either increase its capacity or its functionality. Bitcoin does neither. Adding nodes only increases the redundancy of the network, both in terms of data storage and transaction processing. For this reason, Bitcoin "network" can not have any network effect, not at least in the traditional meaning of the word. Instead, Bitcoin it is a massively redundant central asset creation platform, where the asset creation process is decentralized between the copies of the database of the platform. The trust on the platform is based on math. There's absolutely nothing wrong with this. You just need to understand, where this kind of platform and the asset that it manages, has its place in the big picture. Because it is not a network capable of inherent decentralization of trust, assets and logic, it cannot function as a foundational layer of any decentralized value management network. Instead, it can be a component, that can be plugged into such network, that IS properly decentralized in terms of trust, assets and logic. The following is my last point, that probably irritates some folks :-) I have the impression, that most members of the current crypto community don't really think in terms of full decentralization. They don't have a proper mental framework for that. To wit, Bitcoin is often referred as the math-based replacement of a central bank. None of us is old enough to remember times, when there were no central banks. It is a historical fact, that such times have existed and that there was a functioning economy even at those times. If you want to imagine a fully decentralized economy, you need to remove all those mental models from your head, that have any aspect of centralization. It is much harder than you might imagine. Sometimes you need to go back 100+ years to find the right mental model. What do I mean with the above in practice? It is a very useful mental exercise to think of the most decentralized way of creating money possible. Here's how I see it: Alice and Bob know each other well enough, that Alice can buy a good or service from Bob by promising the payment in a month using an unit of account that both agree. To reduce the risk of the transaction, Carl is invited into the transaction as a guarantor. Carl knows Alice well enough to be able to price the risk. Carl also has some collateral to back his guarantee. Now we have essentially created a money-good instrument. If we make it transferable and divisible, we have created money for a month, in the most decentralized manner imaginable. All the technology needed for doing all this already exists. The last piece, that has been invented (thanks to the core innovations of Bitcoin), is the mechanism for establishing digital trust between Alice, Bob and Carl. What's the role of Bitcoin in this thought experiment? It is one possible candidate for the collateral that Carl holds. Not certainly the only possible one, but actually very conveniently usable as collateral, as its existence can be verified from a very public ledger. Just my 2 sats...
    • LJ
      Luke J.
      21 November 2020 @ 17:13
      Really interesting comments and it doesn't irritate me - far from it - I think we need a more nuanced critique of this new space (not less). One reaction to the above is that, at least in my opinion, the "network effect" of BTC that is most commonly promoted is actually referencing the "social" network of users/wallets rather than nodes. Using the social/adoption based interpretation, I think that the functionality of the network is indeed growing as new nodes are added (in much the same way as the Mobile Communication network for example).
    • SW
      Stephen W.
      22 November 2020 @ 10:17
      I'm a maxi, doesn't trigger me. I'm not 100% sure bitcoin will be 'money' but I am sure that nothing currently will store value better going forwards. The network effect often referred to in Bitcoin is not the physical network but the social one. I run a node, it's a referee not a player, so you are right there but it can remove power from the players by enforcing or changing the rules in order to ensure the overall goal of the game is achieved - optimum value preservation. Your Alice and Bob scenario, isn't this the Lightning Network?
  • SP
    Simon P.
    22 November 2020 @ 09:44
    defi pulse(DPI) is a token ether which is and index of top defi coins. easy way to play the space https://www.indexcoop.com/dpi
  • nR
    niall R.
    20 November 2020 @ 20:40
    Great interview, Simon is lucid, intelligent and thinking a long way down the road. Look forward to seeing him back. Like how Ash guides the conversation and clearly knows his onions himself. Would like to fung shui Ash's office, although perhaps we're spoilt from seeing Raoul's gaff.
    • AG
      Anna G.
      21 November 2020 @ 20:46
      if you look in his eyes and listen to how he speaks you have a feeling that this guy is literally a genius. And there are a lot more unkown guys like him investing in crypto. That's make me feel good about my overweight crypto portfolio.
  • AK
    Ado K.
    21 November 2020 @ 16:32
    Great interview, Simon is always very analytical, calm and thoughtful in his approach. In every market, especially one with high vol like the crypto market, discipline is key. Avoiding FOMO, asking fundamental questions, and having a somewhat skeptically oriented intellectual base can save you. Simon has navigated troublesome sees for quite some years, there are few I would recommend to "follow" more then him in this space. His view on DeFi as currently being to risky to invest in for the vast vast majority I wholeheartedly share.
  • CD
    Christopher D.
    21 November 2020 @ 16:25
    His early thoughts about banking echo Dr. Werner's. See the iw of Richard Werner and Hugh Hendry on RV and a few of his books.
  • PJ
    Paul J.
    21 November 2020 @ 13:16
    Simon Dixon was an investment banker, I was once a white rabbit. I can't that this dude seriously.
  • DF
    Daniel F.
    21 November 2020 @ 09:36
    Finally someone who speaks openly about the risks of so-called DeFi, which is a welcome contrast to some of the previous guests who only speak about the benefits. Also, nice to see Simon enivison a world where fiat currencies/CBDC and Bitcoin can coexist, rather than being mutually exclusive.
    • TH
      Timo H.
      21 November 2020 @ 12:29
      Ethereum-based DeFi is drowning already in the swamp of complexity. There's one fundamental rule concerning systems design: if you end up with overwhelming complexity, you are either missing a component from your design or some functionality is in a wrong component. Computer engineers who try to conquer huge complexity issues are in my eyes not particularly smart, but people, who can't take a step back, when they get into trouble. The smartest engineer I know, has no trouble attempting three or four fundamentally different designs, before being satisfied with the simplicity of the outcome. Ethereum is missing a big component and because of that, many elements of the architecture have been modeled wrong. Even the concepts of "smart contract" and "token" are poorly defined. This has resulted as performance and complexity issues, that are probably unsolvable without a complete rewrite. The fact, that Ethereum's value is measured in a digital currency of the platform, is the reason, why nobody wants to do the rewrite the platform. You don't want to make a change that fixes the problem but makes you poor. Bitcoin may or may not have its role in the big picture as an asset, whose trust is derived from math. Whether it is the only such asset, as many bitcoiners insist, will be determined by the market. There is no technical reasons for it to have competitors. In any case, in the real economy, vast majority of assets are something else, typically contracts between parties who trust each other and the legal framework enough to execute a contract. This does not change, when the economy, not only finance, is decentralized and digitized.
  • AM
    Alexander M.
    21 November 2020 @ 02:26
    Two very clever cookies. Ash could find a needle in a haystack. Straight to the point.
    • AB
      Ash B. | Real Vision
      21 November 2020 @ 09:21
      Ha. Thanks, Alexander. Depends on the size of the haystack.
    • TH
      Timo H.
      21 November 2020 @ 12:15
      Ash should try to find the Digital Identity needle from the haystack. That's the one that's missing from the big picture. That's obvious to anyone who thinks, how the economy actually works. Trusted people create and exchange trusted assets in trusted processes. Analog or digital, you can't ignore any of those three aspects, if you want to get the model right.
  • DR
    David R.
    21 November 2020 @ 10:27
    Really good - thank you.
  • SS
    Steven S.
    21 November 2020 @ 09:58
    Very happy to see Simon back on. He's incredibly insightful and balanced.
  • BQ
    Benjamin Q.
    21 November 2020 @ 01:29
    This was really good. Thank you so much!
  • AM
    Andrew M.
    21 November 2020 @ 01:17
    Excellent interview. Simon's commentary always captures my attention.
  • TN
    Tim N.
    21 November 2020 @ 01:17
    Excellent interview. Simon appears to have a very balanced view on all the outcomes. A lot of commentators are split into extreme inflation and deflation camps, but I think Simon rightly points out that in a stable political environment politicians and central bankers still have the tools to engineer the outcomes. Ultimately they are more afraid of a disorderly debt deflation or hyperinflation, so will try to engineer a soft default on the debt by allowing moderate inflation while keeping interests rates artificially low as explained by Russel Napier (boiling the frogs slowly so to speak) over decades. Too keep the political situation stable will require global coordination. Otherwise the risk of extreme financial dislocations become very real.
  • SW
    Stephen W.
    20 November 2020 @ 20:56
    Simon really knows his stuff, especially interesting on DeFi and Ethereum! buyer beware, if you are not a sophisticated investor who understands the technicalities of some of these products stick to bitcoin.
  • JD
    Jonathan D.
    20 November 2020 @ 20:51
    Legend
  • Fv
    Freek v.
    20 November 2020 @ 20:28
    So much value!
    • Fv
      Freek v.
      20 November 2020 @ 20:29
      Tnx!
  • JB
    Jaycob B.
    20 November 2020 @ 19:22
    Chromecast not working for me :(
  • ML
    Max L.
    20 November 2020 @ 19:08
    Great interview, thanks.