Cody Ellingham (00:01.83)
Hello, I am Cody Ellingham and this is the Transformation of Value, a place for thinkers and builders where together we explore freedom, energy and creativity through the lens of Bitcoin. In this episode I am joined by Alan Farrington.
who co-wrote Bitcoin is Venice and Only the Strong Survive and is a co-founder of Axiom, a Bitcoin-focused venture firm. We talk about Bitcoin as Venice and the book's explorations of capitalism and the philosophy of economics. We also discuss Alan's current venture with Axiom investing in Bitcoin companies as well as broader ideas about capital allocation in a sound money world. Now this show is supported by you.
My vision is to make the transformation of value into something that we can take with us into the future. If you want to help me grow this show, please consider making a donation either through my website or by tipping directly to the show's bitcoin wallet. If you have any questions or feedback, I would love to hear from you. Part of what makes this show special is when people contact me. You can always email me at hello at the transformation of value dot com. Otherwise, on to the show.
Ease into it if that's okay. Sorry, I've actually just come out of a bit of a cold so a little bit nasally I've tried my best. I got some vapor rub to sort of clear myself out, but you know what? It's like man. You get a bit sick and This is like Rogan. We're just we're already chatting about Sorry too much information, but are you in Scotland by the way? Yeah, yeah, I live in Edinburgh. nice man Yeah, cuz I just saw you done something with the Westminster
as a national libertarian? Yeah, yeah, yeah. I was down in London last week with a bunch of people, primarily BPU cake. Yeah. Organizing an event, guess. We weren't really sure how to describe it, to be honest, because nothing like it had really been done before. So that was sort of what was exciting about it. But we sort of figured that it seems odd for a city, not only the size of London,
Cody Ellingham (02:23.682)
but as financially important as London, that there's just so little organized Bitcoiner activity. Like there is a Bitcoin meetup, but I've heard like not great things. don't think, I know many London Bitcoiners who don't bother going to it. There's a very good developer conference that happens every year, but there are little things here and there like that, but it's, they all seem very disconnected. And
we figured that we should try to connect them basically like all these, there's definitely enough people there. It would be nuts if, know, again, just given all of the very least the TradFi and Fintech workforce that there weren't significantly more Bitcoiners who weren't in touch with each other. And then the other kind of sad thing, like I live in Edinburgh obviously, so I'm not that, you know, emotionally invested in London's success as a Bitcoin hub, but given the kind of the dynamics of the UK.
It's kind of my only choice. if I want, if I want, if I want to be going to do well in the UK, I have to do well in London. So I have to get the train down and get people to Caribor. Yeah, I understand. I met with a few of the British guys when I was in Prague earlier in the year and the bridge to Bitcoin, which is really awesome grassroots meetups happening in the UK. they were there. And then just, I recently caught up with the Australian Bitcoin industry body. And they're also looking to set up something similar to Bitcoin UK kind of
Excellent. I'm not as great to see this stuff popping up all over. mean, BP UK itself is kind of as far as I'm aware, I don't think there's an official connection, but it's inspired, let's say, by BPI in the US. And so I'm sure there's there's like massive overlap in all these kinds of efforts other than the peculiarities of the jurisdiction. So the more they can just be kind of copied and pasted and the more they can be inspired. I think that's more the point. If people see that this is successful and they want to do it where they live, then that's great. Yeah.
But look, Alan, I've spent the last few days actually reading through Bitcoin as Venice. Oh, God. I'm so sorry. I've been diving into it. And I know you co-authored that with Sasha Mayer's really, I must say, an incredible read. Really spoke to me. It has a very strong sense of, I think, a philosophical rigor to it that traverses history, politics, and of course, economics. But what really struck me is there's this sort of...
Cody Ellingham (04:44.074)
Depth to it that also doesn't get too intellectual in the sense of the high intellectual that we're often familiar with in the academic institution and I guess I wanted to start off just going back a little bit to your background because I know you studied Mathematics and philosophy which are two very high-level conceptual Activities and I'm just wondering maybe a bit of a background there and how you've been able to connect that with the praxis of Bitcoin if that's okay, please
I'm sure I don't think this answer is all that interesting. Maybe it leads somewhere a bit more interesting. Yes, my undergrad was in math and philosophy. I knew a little bit more into what my actual specialty was. I don't know if your listeners will really be that interested in something quite so niche. But I don't really think either directly impacted my
understanding appreciation of Bitcoin or, you know, finance or economics more broadly. I do think they're both very useful, probably more so for Bitcoin actually than for, you know, what we end up actually talking about in Bitcoin as well. That's something we can come back to. You very politely explained that it has very little to do with Bitcoin, which I enjoy trolling people about on Twitter. I think for me, though, in both cases,
I think Sasha would say something similar for his academic background. It's more the way of thinking and the requirement for rigor, basically. With math, you can push it bit further in terms of kind of numeracy, I guess, of comfort with numerical concepts. just to be clear, I'm saying all of this in the first place to emphasize I didn't study cryptography.
or anything that is actually academically relevant to Bitcoin. One other connection I can make though, sorry, this is kind of jumping around all over, but that maybe nicely reflects the book itself. The book's not so much about Bitcoin, so can make a point here, teasing out my academic background into more of what the book really is about. One of the things that I do,
Cody Ellingham (06:59.47)
I do think my formal training, if you like, in mathematics was very, very helpful with. So by the time I discovered Bitcoin, so I was in undergrad, so I was studying math and philosophy at that exact time, but I told this story a few times before, but I was already relatively well read in Austrian economics, so that was very helpful in terms of not dismissing it, basically. But all the Austrian stuff I'd read was...
just out of intellectual interest. mean, guess this is probably, a lot of people have a similar version of this story that, you know, prior to Bitcoin, they didn't have much of a way of grounding their, you know, what they learned in Austrian economics and anything other than just the theoretical. And then suddenly there's, here's this practical example. For me, I had one kind of intermediate step, which was that I,
By virtue of being familiar with all the Austrian stuff, was also unwittingly, unwittingly, without wanting to be grudgingly, let's say, familiar with just mainstream whatever its proponents would call it, Keynesian, monetarist, don't know, mainstream economics. And the interesting connection that I think there is there to math is that, and hopefully this comes across in a lot of what we write in Bitcoin and Svenness, I can think of several different places.
we go pretty deep on this, that the way that they use mathematical constructs is really, really silly, let's say. It's not even wrong, if you're familiar with that expression. It's not just that they have the wrong idea about how the model should be made. It's that the fact they're making a model at all shows they don't understand the subject matter.
And I think this is a fairly common refrain with people who are familiar with Austrian economics and obviously now with Bitcoin as well, more in the sense of comparing what we're seeing with Bitcoin to traditional finance. In my case, I just felt a lot more strongly about it because I felt I had the academic background to justify what I meant by this rather than pure exasperation.
Cody Ellingham (09:19.992)
So that's one link, I guess, it's a little tenuous, but just to drop it out. Yeah. Well, I found it quite interesting. One of the early chapters, you talk about the relationship with MMA fighting and sort of the way that the sort of heterodox old school martial arts kind of came up against reality. And this is a common theme, I feel throughout the book where you say reality is messy and it is reality we should care about. And the models and the theories and the mathematics are often these abstractions and these kind of intellectual fantasies.
And just a little story for you, I'm from New Zealand and we have our Reserve Bank of New Zealand, which is our central bank. And I saw something recently from the Director of Knowledge and Information Management and they were doing a presentation. That's a title. He must be very smart. Yeah, I thought it was incredible that that one person could possibly direct all knowledge and information and manage it.
But that sense of the reality is messy that the market is this process, these kinds of things that we begin to understand as we explore Bitcoin, Austrian economics, praxeology, et cetera. I mean, exploring that connection a little bit, think I'd love to hear your thoughts on just that, I guess the MMA example, because that's something maybe a lot of people could relate to. Yeah. Even just for you, there is one thing I want to mention. You may have heard this because you mentioned you were in Prague earlier this year.
Okay, so for the audience, can just go find out on YouTube. The talk itself isn't really the point. It's just that it came to me as you were saying that New Zealand has the dubious honor of it being your finance minister who in, I think a TV interview, if I remember correctly, just completely made up the now notorious 2 % stable inflation figure. Do you remember that?
Did you know it anyway, maybe? Is this like a source of great national shame in New Zealand? No, so it's kind of funny. New Zealand is such a small country. So I've actually, there's two fellows, Roger Douglas, who was the finance mini you just mentioned, who came up with that number on the spot. And then the former governor of the Reserve Bank, Don Brash, who I've actually interviewed. And this was going back to the 80s. And it's just funny because it really is like just a couple of guys who came up with the number.
Cody Ellingham (11:27.406)
and made it happen and then it became the model for the entire world. So I mean, I've interviewed him, not Roger Douglas, but the former governor of the Reserve Bank and we had a good old yarn. Oh, you should try and the other guy. Yeah, yeah. He's getting on now. I think he's almost 90 years old, but yeah, I'd love to grab him and sort of find out a little bit more about that magic number. Yeah. But yeah, no, certainly I'm familiar with the story. Yes. Yeah. Okay. I want to make sure I mention that just because you mentioned the New Zealand Central Bank. Yeah. Yeah. So MMA, full disclosure.
For all of the MMA content, that was Sasha's initiative. I know very little about MMA. Most of what I know I've learned either from him or from the process of writing the book. I remember he got very excited too because when we launched it, what year would that have been? Miami 22 at that conference is when the book was, because Bitcoin magazine published it, so that's when they started promoting it.
And there was an MMA, I forget the guy's names, apologies, it would have been a lot more exciting for any of your listeners who like this does mean something to them. But there was a very well known MMA fighter at the conference and then it turned out that he was actually staying in the same hotel as Sasha as well. so Sasha got him a copy. We never followed up on that. don't know if he like, I don't think he tweeted about it anything because it would have caused a much bigger storm.
But yeah, so Sasha's the MMA expert. I fully, I co-sign it all though, because where that chapter came from is kind of funny. If anything, was probably the last to be actually written down, but it was the first to be thought of basically in terms of any of this content. the way, taking a step back just for a second, way, we can obviously go into this more too if you're interested, the way the whole book was written.
It was very messy. mean, a lot of it fairly obviously came from the essays that I had written about a year before, but that's quite a small portion of the content of the whole book in terms of how we then beefed it up. As a whole, it was basically conversations that Sasha and I had been having for five years or something at that point, definitely four five years. And that for maybe three of those years, we'd been saying, like, we really need to this down. We need to write this stuff down because we're going to forget otherwise.
Cody Ellingham (13:48.15)
And then me deciding to, that was basically like very TLDR of how the book even came about. The Bitcoin Magazine guys really liked the essays. I thought, okay, well, we can probably extend this into a book in that case. One of the essays that are already written was co-written with Sasha anyway. that was, this is not capitalism. As in at the time, well before the book had been co-written with him. And it just seemed like,
The momentum that that had seemed like the perfect excuse to, in fact, write all this stuff that we've been talking about for like five years at that point. But the MMA one, I think is the oldest. I think it goes back the furthest because he'd been into MMA for, I guess, as long as I'd known him a very long time. And he just kept chipping away at this really cool idea of the history. We can go into this. don't know if your listeners will be familiar with or if they haven't read the book or they don't just know it independently.
the history of MMA and then UFC developing around it is an amazing kind of almost metaphor in a way. I mean, it's stronger than a metaphor because it is our whole argument in the book. The reason we use it is that we think it is basically the same mechanics that are happening. I've had a metaphor for now though, why not? It's a great metaphor for free markets as a whole. And to be maybe even a bit more
of pretentious about it because I guess the book is a whole I keep saying it's not really about Bitcoin that might make you wonder what it is about. I think it's fair to say it's about something like the philosophy of economics. I don't know if you agree with that, if you think that's a fair assessment or not. Like how to think about economics and culture more broadly. yeah, the argument about what's happening or what happened historically
with the development of MMA is that a very, very similar, if not basically the same process happens with not only every market, but all acquisition of knowledge. So your guy, your New Zealand director of knowledge guy would probably find this fascinating or deeply threatening, I'm not sure. Yeah. Yeah, no, and it's interesting that again, there's this small group of people, this unelected.
Cody Ellingham (16:12.75)
group in fact that's sort of making these decisions and, and, you know, I'm quite close to that, you know, New Zealand, again, it's a small country and, you know, it's not doing too well and sort of bottom of the world and, and trying to navigate what that means with a small and committed group of Bitcoiners as well, trying to make things better for everybody and sort of trying to communicate what this means. And we're sort of coming up against, and you'll be familiar with this coming up against this kind of received knowledge of what economics and planning ought to be.
And it really is, it's sort of almost as, you know, bitcoins exchange rate increases, uh, dramatically, it becomes even more like these people entrenched themselves in these legacy beliefs. And, I find it very interesting and it's sort of, yeah, the sort of reality check of, of Bitcoin kind of like MMA, you know, if you look at the early UFCs, mean, um, there was certain things that just dominated and all of the older martial arts maybe just didn't even work, you know, it's sort of, you get knocked out and reality slaps you. So.
I guess, mean, zooming into that and maybe connecting this back to maybe some of the work you're doing, communicating with the legacy institution, what something that breaks all their models means. I mean, how do you even approach a conversation like that? I honestly, I don't think I'm the best person to ask this. Maybe three or four years ago I would have been, but I've frankly got to a point where I'm, think I don't want to be too like blackpilled about this. There is a silver lining to what I'm about to say, but I'm so
exhausted dealing with these people. And I'm also so much busier now than I used to be. don't, probably going to get onto this way, way, way later, but at the time, just quick snapshot of this. At the time we wrote Bitcoin is Venice. It's actually nice still. Well, it's actually still has the same job, but I know him from my old TradFi job. And also it was like kind of the, this is a little bit jokey, but one of the reasons we wrote it is it was in the middle of COVID and we were just locked in our houses and we weren't allowed to do anything else. So.
I was very up for arguing with people on the internet and writing books and all that kind of thing. Now we are allowed out our houses. I've since left that job. I work full time in Bitcoin. I used to work for a company with 1500 people. Now I work for one with three. I just don't have time anymore. I think the silver lining, guess, would be, you know, I now what I'm actually doing, which maybe you want to get onto way later. I don't want to jump around too much. can stay on the book for now.
Cody Ellingham (18:39.086)
But what I'm actually doing, I find much more purpose in it, which I guess is nice. It's a pretty common experience for people who are lucky enough to be able to make the leap full-time into working in Bitcoin. And I really like my previous job too, so it wasn't anything about rage-quitting or whatever. I like it a lot more. work itself feels a lot more valuable. I think maybe the silver lining is I have noticed too.
consider myself like a Bitcoin OG or anything. But I've been in long enough that I've now recognized newer waves of people coming in, not just as, you know, like noobs who are gonna buy Bitcoin and put on the laser eyes and whatever else, but actually taking up positions of havoc. It's kind of cringy because none of this is remotely official, obviously, so I don't want this to sound overly cringy, but you know.
developing public personalities and speaking publicly about the issues to such an extent that I feel I don't really need to anymore. can just, I think I hadn't exchanged, this has come full circle actually, I hadn't exchanged, I think it was with Freddie New, who's from BP UK. And I think this was on Twitter, if I remember greatly. hopefully other people saw this and had a chuckle where, and I was basically saying like, I just, and he's,
He's actually a perfect example of that, the way, because he's come in a lot more recently, but become tremendously effective in his advocacy. I remember saying to him basically that I just, I can't be bothered explaining anything to these people anymore. just, my recourse now is just mocking them. Like it's far more efficient. I'm just going to mock them. And, oh, I remember who it was actually. was, sorry, this was derivative of...
Freddie getting involved in this because it was around the time when he was one of the co-authors in the ECB debunking as well. That's where it came from. Or that's where that part of the exchange came from. But it originally came from something that Lynn Alden had said, which I was just amazed at the patience. She was just very politely explaining why somebody was wrong on Twitter at length. And I was just like, how can you do this? How can you be bothered doing this anymore? I just make fun of them.
Cody Ellingham (20:59.822)
Yeah, no, I actually I fully understand I mean it's sort of one way on one side you're trying to build bridges or you know for me You know, there's there is a bridge building exercise. You could call it pontification But then there is the reality that literally like what people just shut down and I've had this again and again You know you've you sort of incurred encounter people who are unable to process This is a thought and I think part of Bitcoin is Venice. It's this sort of way of thinking this reality check
Getting out of the models and in the mind and actually seeing the world and letting the instead of simulating the universe Let the universe do what it does And that's kind of the I mean that's we come back to the MMA thing, you know Bitcoin clearly is appreciating and value against fiat currencies that single piece of information If you look at it, you know, just look at the graph, you know, it's kind of number go up It's classic stuff that people talk about that, you know that should tell you something about what this is being valued in
You would think. You would think. It doesn't always. Yeah. But I did want to move on to talk a little bit about Axiom Capital, Alan. just maybe talk about the origin of that. did Axiom come from? It's pretty straightforward. So me and the co-founder guy called Anders Larsen, he's based in the US. We had, I guess there's kind of two threads in parallel. So one is that we still find this funny now that he seemingly is better known by his pseudonym.
Big Al than by his actual name. The reason being that he used that pseudonym when we co-wrote only the strong survive, which you might remember. so that was in the summer of 21. And at more or less the same time while we were writing that, we were both seeing in our Trad 5 roles. So he has very similar back, I don't go through his entire CV, but it's very similar to mine. And we were seeing in our Trad 5 roles. Basically the very short version would be like,
what we then wanted to do with Axiom seemed like we finally could. We've both been in Bitcoin for a very long time, arguably more kind of, well, not arguably, definitely far better known as Bitcoiners and within that space than anything we'd accomplished professionally in traditional finance. But I spent a long time waiting for our actual skills to be applicable, just being
Cody Ellingham (23:24.27)
you know, realistic and mindful and humble about the maturity of the space. And so in the summer of 21, we noticed that it basically seemed like there were enough startups that were Bitcoin only as opposed to having some crypto component, which is a lot more common previously to that, which were credible in terms of their business model, what it was that we're trying to do.
In a lot of cases, think probably the most important component for that timing, because I don't think it was just random, is that that coincided with the relative maturity of the Lightning Network. both in the sense of, it has kind of graduated from being just a cool toy, like a hobby project, to something that clearly works. Not to say it's perfect, but even back then it clearly did work. It was clearly going to continue to be successful. And it had been around long enough that enough
tooling had been built around it too, that people could actually do things with it quite quickly. They wouldn't need to do absolutely everything themselves. So we noticed all of this. And then obviously at the same time, we were writing only Strong Survive and becoming even more deranged in our hatred of everything going on in DeFi at the time, but frankly just crypto more broadly. Even more convinced of the merits of a Bitcoin only approach.
I just started thinking about how we do it basically. that would have been probably like October, November, we started making the plans and then we got started in, forget exactly when, early 22. So when we both left the startup vaccine. And I find it interesting on the website, you say you aim for your clients returns not to come from financial engineering, but from productive deployment of capital to solve real world problems. Yeah. So this is basically outlining that our
One of our theses, there's more we can go into if you like, but one of our theses is to how we want to deploy. So, you I mentioned a moment ago that at that point in time, it seemed like there was enough opportunity to deploy into to fill out a reasonable portfolio, make a real fund out of it, make a real company out of it. That's very much not to say that we will just invest in anything that is Bitcoin related.
Cody Ellingham (25:46.508)
We have, it's weird, it's actually kind of easier to understand most of this in the negative in terms of things that we won't invest in. One of them is, will be very obvious in this context, which is just Bitcoin only. don't invest in crypto. We don't invest in tokens, even if they are, know, the company itself is Bitcoin adjacent. I don't need to say that to you. I don't need say to your audience, but I very much do need to say it when we're pitching back into TradFi people, because that's the first thing that they're very likely to be confused about. The second one, which is what you're picking up on is
I think a little bit more maybe philosophical, but I think there's good practical reasons for it as well, which I'll mention in a minute, which is that we want companies that are extending the utility of Bitcoin by whatever it is they're building, as opposed to simply putting Bitcoin on their balance sheet and benefiting from its appreciation via those means. don't consider that sufficiently Bitcoin-y, I guess.
There's actually more than one now I'm thinking about the reasons for wanting to that approach. Probably the most honest one, it's as opposed to like ideological, for example, because I'm aware that that can come across as having an ideological bend, which I don't really think it does at all. It's simply not our skill set evaluating how well somebody can manage their balance sheet, right? Because basically what that amounts to is
levering up to buy Bitcoin, getting leveraged exposure to Bitcoin. We're first and foremost technology investors. We think we have a competitive advantage not only in evaluating the likelihood of success of a lot of companies we back, but really more importantly and more distinctly to us in access within the Bitcoin space because people know who we are and they're likely to seek us out for funding rather than vice versa.
and also likely to be rejected by many, more than they, that's basically the essence of our competitive advantage, right? There's so few people understand what these companies are doing. We get disproportionately cheap valuations while it's still not understood, but eventually it will be and all the generous will love it. They're just completely enamored with crypto at the moment. And that unfortunately might continue for a while, but we think that's where our skillset is. That's the most importantly of all,
Cody Ellingham (28:11.79)
Just in terms of our fiduciary responsibility, that's essentially the service that we're providing to our own clients or the LPs in the fund. If they wanted leverage Bitcoin exposure, they could just do that themselves. They don't need to pay us to do that. Even if we were good at it, I wouldn't, I'd still be uneasy with it. But the fact that I frankly have no idea how to either do it myself or evaluate the
the merits of some other approach that we found, it's a lot more comfortable just saying, no, we're going to stick to essentially technology companies. Well, what's very interesting to me is that sort of one of the underlying, I think the main thesis of Bitcoin is Venice is this critique of modern capitalism and it's sort of the way it's changed. And it seems as if what you're doing here with Axiom is an attempt to go back to actual real capitalism, if I can say that, in the sense of creating
opportunities for value and putting money to work effectively to give utility to the world's future money. And I wouldn't, see what you're getting at there. I wouldn't want to pat ourselves on the back too much. Basically because most of what I've outlined there either is or should be typical of, of venture capital, just as a, as an entire sub industry of finance. This will probably sound familiar to you because I've said this in a bunch of different
context that a lot of... Stepping back just for a second, but it'll be immediately obvious why I'm setting the scene this way. A lot of what's interesting about Bitcoin and maybe to push that a bit further, a lot of what riles me up, let's say, about issues related to Bitcoin. I think, I certainly think I have seen that that's common, right?
that other people get similarly kind of agitated and emotionally invested as well as just financially, let's say. Often that will come down to not so much Bitcoin being good or Bitcoin's influence being positive or novel even, so much as fiat being bad and negative.
Cody Ellingham (30:29.662)
And I really need to get this on a t-shirt or something, but they're like, I don't even like Bitcoin. just hate fiat. I've started saying that more more often because I think it communicates that pretty well. So that applies in a massive number of ways you can find Bitcoin interesting or approve of its influence. In this case, I think that most of what you've just described
simply ought to be true of venture capital. And it's the malign influence of fiat over the past, I don't know, 15 years, maybe longer than that, 1971, I guess, if you want. But certainly since the global financial crisis, the incentives within very much kind of Silicon Valley dominated, at least in terms of the public appreciation, the kind of the memes, if you like.
and has become more and more distorted away from what to my mind isn't so much a pro Bitcoin thesis or attitude as just a basically sound money, like sound thinking and sound principles attitude to how you ought to go about this. And I think the maybe the final thing to wrap that up again, to emphasize that I don't think this is particularly insightful on our part. It's not that we're deciding.
we're just going to be good. Like every everybody else is bad. And our competitive advantage is that we're going to be good. If anything, it's that a less jokey, actually quite serious version of that applies at the level of the companies that we're investing in. So if you're, this is another, this makes that dynamic I described before, I think way, way, more interesting to observe as interesting from the perspective of a professional investor. Maybe the average person isn't all that interested in it, but
It's good and it's relatively new in Silicon Valley fiat VC context for early stage high growth startups to have a real cost of capital as opposed to basically bottomless pits of money so long as they have increases in revenue. That's basically that is kind of a caricature, but that's kind of the dynamic that has become prevalent until very recently from say
Cody Ellingham (32:51.598)
2008 till 23 probably. And then it always threatens to come back whenever they lower interest rates enough. In our case, that's obviously still all happening in the background, but their opportunity cost is buying Bitcoin. And then even that goes back to, well, we don't want to invest in companies that just buy Bitcoin. No, there's anything wrong with that. I should have mentioned that before, by the way. It's not at all that I disapprove of companies
getting effectively leveraged exposure to Bitcoin. In fact, I very strongly approve of that. And I think eventually every company will have to do this. They just won't have a choice because it's like the melting ice cube, right? They won't be able to save. They won't be able to properly price their own capital allocation otherwise. So it's great that that happens. The much, much smaller subset of what we want to invest in though, I think, presents, this is what I think is the intellectually interesting component of this.
that for them, we very much don't want them to just buy Bitcoin. There's a separate question of like treasury management, fine, but in terms of why we're investing, it's because we want them to invest at superior rates of return to Bitcoin's appreciation. And that's very, very both challenging, I guess, but very interesting and very thinking through that, the logic of what those opportunities would even be.
and how tied to pushing for Bitcoin's broader adoption and increasing of Bitcoin's utility. That to me is really fascinating. But you can't approach it without a very rigorous sense of what their opportunity cost ought to be. And basically all of these kind of almost common sense in a way, principles of sound finance
that have just been destroyed in culture over my career probably longer than that too. So coming full circle to your question, I think that attitude is forced on us by the dynamics of this space. And it's really more a question of are we humble enough to recognize that rather than
Cody Ellingham (35:13.902)
just going nuts and ultimately making terrible investments. I think the more Bitcoin appreciates, wider adoption gets, more, the crucial point will be the more integrated it gets and normalized it becomes as a technology that, within software stacks and hence the typical remit of venture capital has to take seriously.
the more widely adopted exactly this attitude will be. again, I really want to emphasize, I don't think it's us being clever. I think if anything, it's kind of us being realistic, given the circumstances. Eventually everybody will have to do this, which is good. Yeah. Well, that's very interesting. Two things you mentioned, the kind of common sense of it and then the opportunity costs. And as you may know, I live in Japan and I sort of, you know, every now and then I bump into
people adjacent to the VC world and we have conversations and the situation here is very different. It's kind of a more advanced fiat interstate, I guess you could say, where basically the money, the interest rates are so low. mean, you see signs for 0.3 % interest on a normal bank account, et cetera. There's nothing there for people. And so there's this kind of weird dynamic where crazy kind of ideas, just anything that can get above that.
is gonna go and it's this really kind of Galapagos Island effect where these kind of crazy things happen. They're not even sustainable. I think the Silicon Valley VC worlds may be a little bit more worldly and a little bit more moneyed, know, being US dollars, but you the yen is a shit coin and it's kind of just weird to just see that and think, you guys could just buy Bitcoin and there is a few places you might be familiar with. might be familiar with MetaPlanet who are based out of here. Dylan. I mean, only really buy it.
Twitter. But yeah, I know what they've done. I mean, that's interesting. know, this kind of early, early to it, you know, you could have just brought Bitcoin, but I do find that interesting what you've just outlined. This kind of, it's almost a revolutionary idea though, just to go back to sound, you know, common sense and, you know, think about these things clearly. Right. Yeah. It's crazy. Right. It's absolutely revolutionary invest in things that will make a profit. Yeah. And that takes me, I guess, to the...
Cody Ellingham (37:34.21)
The next thing I wanted to talk a little bit about in the book, you often talk about this idea of capitalist strip mining. And this is quite reflective of what we've just talked about, this kind of current state of the political economy. And you use some interesting analogies to farming and sort of the idea of stewardship and the nurturing of the land, you know, so you can get a yield. And a lot of our words actually come from that, things like stock, yield. You know, people may not realize it, you know, it all comes from the land.
And I quote, you quote Wendell Berry here. I conceive a strip miner to be a model exploiter. And as a model nurturer, I take the old fashioned idea of a farmer. And I think there's something really interesting here. You know, I'm from New Zealand, you know, it's a farming country. It's very close to the primary sector. And what are your thoughts? Have you come across the idea that farmers, people who work in baselayer reality kind of understand Bitcoin a bit more than white collar people?
Honestly, no, but that's fascinating. I don't think I've ever even thought about that before. I'm not sure how, I almost like immediately want to go test this. Like is this true? I feel like my instinctive reaction is, this might be horribly stereotyping. I apologize if I offend anybody, but that on the one hand they ought to be via exactly that kind of intellectual.
heritage that you you cited there, they ought to be primed for it. At the same time, I wonder what exposure the, you know, the average or the median farmer, let's say, has had. This is one of the things that kind of is a kind of a chip on my shoulder, I guess, about Bitcoin or about Bitcoin adoption, that it does strike me as like weirdly unfair that typically the people who hear about it first
and are primed to take it more seriously, very much myself included by the way, are like Tradify people or tech people, but in some, know, the cantillionaires, right? The people who have unfairly benefited by the bullshit of fiat, they also have a kind of this, I've actually never thought about this before, by the way, I'm realizing I'm coming up with this on the spot. They have like a cantillionaire
Cody Ellingham (39:59.742)
or a Cantillon knowledge effect of Bitcoin because they're closest to the not only the money spigot but the know the problem spigot they they get this I would say first but sooner they tend to get it sooner which is really unfortunate so anyway I have no idea if that's actually true or not I mean the answer to your question is no but I'm very interested in exploring this I tell you what though I don't know if you know this I don't know how like probably isn't that
international as news, but there is going to be a huge protest. I believe, I believe this week, I think it's maybe tomorrow or maybe it's next week. I want to say it's on a Tuesday for some reason. Um, huge protest in the UK of farmers. Does that ring a bell? By the way, I need to say more? No, no, but it sounds about right. mean, I'm imagining it's about regulation and kind of the demonization of farming. it's more specifically, it's about inheritance tax. So we have a new socialist government in the UK.
after 14 years of a quasi socialist government, this one's actually socialist, and they passed their budget a couple of weeks ago, or they announced the budget. And there's a lot to object to in there, but the one that seems to have garnered the most objection is change, the details don't matter, I'm not sure I remember them specifically, but changing the rules and inheritance tax for farmers such that basically family farms will have to sell, they'll have no choice but to sell when the...
you know, the head of the family passes away. And it's obviously not, you know, detailed that way in the law, but it's the obvious consequence of what this is. So you know, it's seen as punitive. There's even, I dislike kind of indulging in especially Twitter sourced conspiracy theories, but this one actually seems unusually credible that they know exactly what they're doing. They want that to happen.
so that they can purchase, they being the state, basically can purchase the farms cheaply because nobody else will want to buy them either if this is the situation. And then they can turn them into solar farms rather than real farms. We don't have to go too much down that route. But basically, people are very upset about this. Rightly so. And I forget exactly when, but sometime soon there's a potentially very large protest about this happening. So I should.
Cody Ellingham (42:23.982)
I should look into like, can we infiltrate it and orange pill everybody on the basis of, know, agriculture being the source of all culture and finance and everything else you just met. Should we print out copies of chapter five of Bitcoin is Venice and just hand them out like pamphlets? Well, I I must say, I'm just expanding on that point. As I said, know, New Zealand is a farming country and always has been. And I think there's something incredibly humble and you know, can.
Look at that as a kind of an honorable thing, you know, it's that we and I mean I don't know if you're aware but most of New Zealand's banking system is Australian owned and you know, we've kind of got this funny, you know small country sort of thing going on and I've met a lot of Bitcoiners personally who are you know, primary sector and in fact some of my other work is consulting on agri tech and you know, there's sort of a whole thing there around, you know, whether a small country a small population we have to use technology to leverage the ability to farm and
There's something about that and often say you cannot print a kiwi fruit and you cannot quantitatively ease a cow. And so there's a reality check that, you know, as the, this kind of so-called illuminati kind of conspiracy tries to clamp down on farming, which is happening in New Zealand as well.
People start to ask questions. Well, where's the food coming from? These kinds of things. And I think the farmers, I've talked to people, they listen to stuff while they're out on the farm, on the quad bike, they listen to the Bitcoin standard, literally. That's great. I had a few thoughts on that. mean, one is that as we're talking about it, it's coming to me that in the US, I think in, I want to say Texas, it may be prevalent in a couple of other places as well, but there's a lot of overlap.
This is all second hand, by the way. I don't actually know this directly. I've just talked to people about it from being curious, probably ultimately from seeing things on Twitter. Maybe it's come up on podcasts before. But there's a very strong overlap with Bitcoiners and an interest in, I guess, a high level, regenerative agriculture. even that's kind of a funny one. That's just, think.
Cody Ellingham (44:28.982)
real agriculture. It's the same thing as with VC. It's like you can describe it in all these hilariously abstract ways, but you really just mean non-fiat agriculture. downstream of that intellectual interest, guess, it's probably more important that people actually act on it rather than just find it interesting trying to orange pill farmers and ranchers. There's a concerted effort to do this that I am aware of.
I've only ever heard of that happening in the US though I've never heard of it happening anywhere and in that particular region of the US as well where I think there's you know there's other cultural factors that can be tapped into that make it easier. I've never heard of it in the UK. I don't really know anything about New Zealand but it's encouraging that you know you're saying that it's non-zero there too.
I completely agree, by the way, with the... I mean, this is one of these things that it's almost like I just want it to be true. I don't have any actual direct knowledge of this, it feels like it should be true that, yeah, direct contact with reality kind of immunizes you against a lot of fiat bullshit because it's just intolerable. it couldn't... I mean, you put it... I don't want to be too...
weirdly intellectual about it. I think you're saying, yeah, you can't quantitatively use a car is the perfect way of describing it. Well, look, the next thing I just wanted to move on then, move on to with you, Alan is this idea of the magic of capitalism, which this idea that, you know, there's, there's a certain energy that emanates from capital. And I think the ability to put capital to work, to make things happen, to increase the quality of life is quite profound. And you really notice it when there's not capital flowing. see fellow fields, you see factories that are in disrepair, things not working. So.
It's also a very controversial idea in the sense that people use this word capitalism as a kind of boogeyman that they don't understand. So how do we talk about this word, the C word, Alan? That's a good question. I really don't know. Your final point there very much resonates with me that people who claim to dislike capitalism all seem to have their own private definition of what it is. And often it amounts to things I don't like.
Cody Ellingham (46:42.734)
It is very difficult to argue with and you're not really sure why they got that impression in the first place. think my, probably my best idea as to why they got it, I'm just thinking, I don't think we reference this in the book. I've talked about it once or twice before, but it's an essay by Robert Nozick. I think that I might misremember the exact wording of the title. I think it's why do intellectuals oppose capitalism?
And it's back to, you we were joking about the, what is it, the director of knowledge and whatever else it's that there is obviously very much a generalization, but I think for the most part seems to hold true, you know, anecdotally is the music admits it's anecdotal, but it's still pretty striking that they, without realizing it, they are often offended by the idea that there can basically be such a thing as spontaneous order, right? If there's
If there is to be order, then it ought to be designed by the most intelligent person up to the task, which coincidentally or not is, you know, they often think should be themselves as well. Very good essay, very, very readable, not too long. Encourage people to look into that. If they wonder why people hate capitalism, beyond that, I don't, I don't really know because again, it's hard to pin down what they even mean by it. Another thing that came to mind.
Just as you were saying of the question too, this isn't in the book. This is from a very short medium post I did a while ago, I think before the book. I think a decent amount before the book. this insight, I guess, had just occurred to me and I was like, oh, that's actually, that's kind of interesting. I need to this out. Is that I think something super unfortunate about what we think of as capitalism, I'm trying to...
like now use it seriously, right? It's not everything I hate. It's, we seem to be on the same page more or less about what we do actually mean. Unfortunate side effect is that it seems to create resistance to itself for a reason that I think is really unfortunate. the more capital we accumulate and in particular,
Cody Ellingham (49:03.234)
I don't think it's capitalism per se. It's more like marketing is kind of the missing piece here in making it widely understood. And the more effective marketing and advertising comes into the picture with sufficiently advanced capitalistic economies. What that creates is the products or the merchants even that do the best.
one component of them doing so well will be never articulated, obviously, because that's kind of the point. But a major component will be lightening the mental burden on their customers by obscuring what went into the production of this good or service. If the customer doesn't need to think about it at all, if they can just buy it and not have a clue how it was made, that's better than
having to think about how it was made. You can imagine this is not really a realistic scenario, but for the safe argument, you have two basically identical products. But somehow you are forced to understand one of them. The other one you can just buy. Maybe they lecture you on how it was made or something. Obviously, time is scarce, so you're just going to go for the other one. And that's the other component of it that makes it all unfortunate, that the scarcity of time is kind the crucial insight for.
building up an appreciation of capitalism in the first place, it comes full circle that the scarcity of time is why you then value not needing to understand complex production processes. Because if you have the option not to, then of course you won't. And I think the more complex the system becomes, the more specialized people become so they don't really know anything about any area that they're not directly involved in, the more susceptible they are to
I guess the first step and kind of more intellectually would be failing to appreciate that complexity and having this, you know, no Zicky intended. Well, that's not fair because he's, it's not in the mold of no sick. It's what knows it diagnosed nonetheless, having that tendency to think that you can just wait in and fix it because you're smart. Right. That'd be the first step. then
Cody Ellingham (51:21.122)
there's gradations of advancing emotionally and politically to also thinking it's unfair and thinking it just shouldn't exist in the first place. And so I think that's, I don't know if anything can frankly ever be done about this, but it is kind of an interesting dynamic, That the more, basically the richer we become in not terribly well-defined terms, admittedly. It's actually, it's almost more like the more we consume, the more we're able to consume, which is,
not perfectly, but largely a product of the complexity of capital accumulation. The more you're likely, I don't think it's definite. There could be countervailing forces to this, but all else equal, the more likely we are to inherit this kind of engendered social resentment of exactly this system. Yeah. Reminds me as well, just the farmer talk we had before, like the primary sector, you know, people don't understand where energy comes from.
They don't know where food comes from or any of these things. And there's a certain sort of Gnostic kind of received knowledge, know, there's like, there's real world skills to, you know, to grow stuff, you know, and that has to be passed on. And most people aren't exposed to that. And so there is a sort of magicness of again, capital where things just happen to appear in the supermarket and you don't know where or why they just, you know, they're there.
And, then, yeah, you critique, you critique it. And this is often talked about in the Austrian economic circle, the kind of, intelligence, the intellectuals critiquing things from within the ivory tower. And, I mean, that maybe this is almost getting into historical materialism, but it's sort of this process of, know, we get, we get, we get through the thing and then, we eventually forget where it came from, which is kind of a difficult place. Cause you come up against reality at that point and you're seeing this with their energy scarcity.
and food security globally right now is two major things. I don't know where that goes, but yeah, it's certainly interesting. Yeah, me neither. Other than it being kind of sad, unfortunate when you appreciate it. Yeah. Well, I mean, look, one final thing though, you've got here Wittgenstein's comment.
Cody Ellingham (53:33.996)
you know, about sort of imagining the way things could be and, and we sort of talk about the sun and the earth and sort of the idea that the earth, that the sun goes around the earth, you know, and Wittgenstein says, what if it did seem like the earth we're rotating? You know, let's just imagine that for a moment. And I think that's a very interesting thought experiment, a very humble one as well. And I wonder whether we need to think about this with Bitcoin and do that more, just what if Bitcoin is monetizing? What if Bitcoin is real capital again?
It's funny that you describe that as being humble, because actually the way I came up with that, it actually goes completely, but I mentioned this a long time ago that like, I just like mocking these people now. Although I wrote that at a phase where I was more interested in explaining, but clearly that tendency was there. That to me that's, I mean, it's not mockery in and of itself. It's presented almost as a thought experiment to try to encourage people. But I guess my attitude,
towards it. And in particular, the slogan, now I think, I mean, I'm not trying to pound myself in the background there, but I think that it's kind of become a meme because it's like, well, what would it seem like if it did, you I'm now predisposed to using that more of an, as an insult than it's an actual question. Yeah. Yeah. I actually like that. It's kind of meta, you know, what would it seem like if the Reserve Bank of New Zealand's director of information actually knew everything? You know, what would they, what would they do? What would they say? They'd probably say buy Bitcoin.
But I mean, I love it. And at the right at the end of the book, fix the money, fix the world, is sort of the concluding remarks, which I think summarizes several hundred pages quite well. Yeah, that's basically if you don't want to read the book, that's pretty much it. That's Fix the money, fix the world. But look, Alan, I appreciate you sharing some thoughts on this. Certainly, I I found it interesting. It seemed like the kind of thing I'd love to see that in undergrad classes, know, chapters of that being set as readings.
maybe it's far too, I don't know. It could be more rigorous. It's not supposed to be academic material. It's more like assuming you're familiar with, or at least nudging you towards a whole bunch of academic material. And then it's like snarky commentary on top of that. Yeah. And it sounds like the stuff I went through. cause I mean, this is, this is, is what universities do. They know they pick.
Cody Ellingham (55:52.27)
They pick a side and they run with it and they produce material. But I mean, I think there's more and more interest in this reality that you sort of outline. it sort of, I said, I do think it's quite intellectually rigorous and it certainly opens some threads that people can pull on and explore these other aspects of history. Yeah, I I certainly hope so. we, kind of danced around this in an earlier answer. This is worth emphasizing, just given how much we've talked about the book that it's certainly not for everybody. I mean, even for
all Bitcoiners, it's absolutely not an introduction to Bitcoin, not only because it's not really that much. It is a little bit about Bitcoin. It's not that much about Bitcoin, but it's also difficult, right? Like I kind of joked about that in various ways, but it's worth being upfront about that. And it's difficult on purpose too, because I think that's at least attempting to be reflective of not only the underlying
material and issues that we're discussing being difficult. But I think the more the kind of the meta point of that is emphasizing the seriousness of Bitcoin, that it is important enough that it can be seriously engaged with in these very difficult terms. so if anything, that's kind of, you know, fix money, fix the world, I guess. But that's that's the takeaway that we really want less so than like any particular
slogan or piece of historical knowledge or anything. Bitcoin is... I kind of joke because I'm saying a lot that it's not really about Bitcoin, but it's more like it's about so many other things and the implication is that Bitcoin will affect all of this eventually. And so this way of thinking about all of these issues will... It's difficult on purpose because these issues are serious and because Bitcoin will become relevant to them. And so you're almost like doing yourself a favor.
to know you need to like the favor doesn't need to be reading my book just to be clear, but like taking it that seriously now is doing yourself a favor because you'd be far less confused when all these things start to change, you know, hopefully for the better. Yeah. The way I see it, it's a, an intellectual scaffold from which some kind of sound money that looks like Bitcoin should emerge. yeah, I like that. I like that you said that it would be a bit.
Cody Ellingham (58:16.139)
wanky coming from each I understand. I mean, you could probably see I've got crypto sovereignty up there as well, Eric Cason. And I think his work also sits in that space. So it's a little bit more esoteric potentially, but I think it's the same kind of thing. It sort of explores a very intellectual space, but in a way that isn't in the intellectual high tower, the high modernist that James C. Scott talks about. This is very much a real thing. That's another good way of putting it actually. There was one point I wanted to get onto just to my quick.
kind of overview of the book that, yeah, when I emphasize, know, it's difficult, it's not an introduction, it's not that much on the face of it about Bitcoin. To be honest, I don't think those reasons are so much why not that many people will like it, because that's more just like your attitude going into it. Like if you're told all these things, you're like, okay, cool, well, I fancy something that's quite challenging. I think, frankly, the real point is
It's effectively a distillation of a handful of other authors who I think their work frankly is, I mean, it's certainly better than ours just to be clear, but it's probably even more difficult and even more esoteric. I thought of it now because you mentioned James C. Scott. And so I honestly think the simplest way to describe what The Conjurors of Venice is actually about is it's what James C. Scott, Wendell Berry, you mentioned earlier,
Jane Jacobs and Friedrich Hayek, maybe one or two more I'm forgetting, but definitely those four. It's like, what would they have thought about Bitcoin? So if you don't like them, I mean, you probably most people don't even know who Hayek is, the other three nowhere near as well known. If you do know them and you know you don't like them, then you're definitely not going to like this, but you kind of, you need that interest. I think
A couple of people have told me this, which is actually really like, this is probably the best feedback that I think from my opinion that I can get on the book is that it encouraged people to, like James C Scott pills people. Like that's the optimal outcome is that, you you otherwise wouldn't have read or maybe even heard of James C Scott and actually via that this is like a vessel to get you to seeing like a state. Yeah.
Cody Ellingham (01:00:37.846)
And for me, know, just personally, that's what's really interesting to me. Obviously you mentioned Jane Jacobs, you know, it's very interesting for my creative study of cities and these kinds of things. And yeah, it is the beginning of a thread pool that I think has the rigor that I mentioned in the beginning. that's, you know, there's, there's people who respond well to that. And I think that's sort of the speaks to that kind of person who's maybe gone through the academic world. They sort of understand that there's a way of sort of a, a bibliography.
of stuff here that they can sort of dive into. And I think this does a really good job of exploring that. So yeah, I really enjoyed it. And the fact that it's available for people to read online is really awesome. I think that's a really awesome approach that you guys took, letting people find it if they desire to. I mean, what was the motivation behind that? guess the articles, some of them were already online originally. of them were. What was the motivation? I mean, I guess kind of just philosophical. We probably don't have enough time to go down this.
doesn't really have anything to do with Bitcoin, but I don't believe in intellectual property. I think it's a scam. So there's that. The arrangement with Bitcoin magazine was such that this has to be copyright free. You can sell it as a physical book. obviously, you can't see it from the camera, but I have the physical book here. I encourage people. It's kind of a weird tension because I also have that belief, but I also am very wary of exclusively digital media. I think people should own books, like actual books.
To be fair, the free version of this is a PDF, so you can kind of own that, but Kindles, I think, are just weird and maybe the argument they're evil. So yeah, you can buy the book, you can pay money for the book, and Bitcoin magazine can sell the book, and that's all fine, but it doesn't have any copyright. So there is a little bit of overlap, which is that I think that's very much...
I don't think there's any legal connection, but it's very much in the spirit of free and open source software development, which is obviously pivotal to how Bitcoin works. yeah, people can fork the book for free. That's one way of funding by then. Yeah, I think that's really awesome. But I guess finally, Alan, just to wrap things up in terms of what you're working on, obviously Axiom is your main thing at the moment. Is there anything on your horizon you're looking forward to that you want to share? any other projects? not.
Cody Ellingham (01:02:59.566)
Really, I don't mean to sound too much of a downer about it, but we've just started fundraising for our second venture fund. I've got to be careful what I say about that because it's quite heavily regulated, like how it's marketed. If people are interested, they could find out. There's details on the site, and you have to opt into talking to us about it. But most of my time is focused on those marketing efforts. So I don't know when this is going to come out, but probably it'll still be before.
I'm going to Abu Dhabi for Bitcoin Mina. So that's the last big one. I've been jokingly referring to this as like my global tour of marketing. It ends with Abu Dhabi and then I sleep.
over Christmas, I take a break for what? that maybe that's the answer. I'm looking forward to having a break. Yeah, but a hibernation over the Scottish winter, very dark, cold. know it's getting cold here in Japan, but certainly Edinburgh, I imagine you get a bit of a bit of sleep. look, Alan, I appreciate your time sharing what you're working on. As I said, I thought the book was incredible. I'm glad we could connect. Thanks so much. Thank you for listening. I am Cody Arlingham and that was the Transformation of Value.
If would like to support this show, please consider making a donation either through my website or by directly tipping to the show's bitcoin wallet, or just pass this episode on to a friend who you think may enjoy it. And you can always email me at hello at the transformation of value dot com.
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