Is Bitcoin the only crypto that will survive FTX? | Interview with Bitcoin maximalist

Celsius, Three Arrows Capital, FTX, 
and now BlockFi. 2022 has seen crypto   Companies falling one after another, 
undermining trust in the ecosystem. All of crypto is trying to rebuild a financial 
system that we already have based on manipulation. "But Bitcoin is something different!", 
say the Bitcoin maximalists. To them,   Bitcoin is the only crypto that has no 
counterparty risk and therefore the only   One that can be trusted. But can Bitcoin really 
fix all this mess? Can Bitcoin really be the one   And only base layer for the financial system 
of the future? We discuss these questions   With Jeff Booth, entrepreneur and author 
of "The Price of Tomorrow". I'm Giovanni,   On this show, we challenge the ideas that 
shape the world of crypto. In each episode,   We assess a crypto narrative, a macroeconomic 
outlook or a potentially disruptive technology.   Only the most solid ideas will make it to 
the other side. If you enjoy our content,   Please consider leaving a like and subscribing 
to our channel. Now, let's get into it. First of all, let's start from your basic 
theories. You are convinced that one of   The major problems of today's society is the 
"manipulation of money". Tell us more about that. I understand that you envision 
Bitcoin as the base layer   For the future financial system so that people 
won't have to rely on these third party entities,   The centralized entities like FTX, like Celsius, 
like all these examples that we saw this year. So that's exactly what's happening. So all of 
crypto is trying to rebuild a financial system   That we already have based on manipulation 
and centralization. The entire stack besides   Bitcoin. And Bitcoin is the only thing that 
changes that. We don't need another system   Requiring greater credit that can never 
be paid back, that has to manipulate   Our time and information to pretend it can 
pay it back. We need a different system that   Puts the incentives of all of us together and 
aligned incentives to the best of us instead of   Based on the theft. And so, that's actually 
partly the reason why this entire system,   The entire crypto ecosystem is 
going to go to zero besides Bitcoin. After the collapse of all these CeFi 
platforms, a lot of people are saying:   "This is time for DeFi to emerge." So we 
notice that there has been an increase   In activity on DeFi platforms because 
as we know, DeFi offers this sort of   Peer-to-peer services which don't require 
custodians, third party risks. And so,   They seem to provide a solution. But you 
don't believe those are a solution, right? We've talked about DeFi. Decentralized finance   Cannot exist. It's impossible for it 
to exist on a centralized platform. When you say centralized platforms, 
you mean Ethereum, right? I mean anything other than Bitcoin, because I have  

Not seen something that passes the test 
that can be decentralized in security. A lot of people see it, see decentralization as 
a sort of spectrum. So you can have more or less   Decentralization. And probably the traditional 
financial system is still far more centralized   Than those platforms that you are criticizing 
on which the DeFi system is working on. So maybe right now, but if you project it 
forward and the world moves on top of it,   Not a chance. Not a chance, because functionally 
they have to become more centralized, they have   To. That's not a guess. That is looking at the 
logic on how it's built. And if you look at   Ethereum today and if you look at how it could be 
overcome, how the state could just take it over,   It's because it has to be become more centralized 
as a function of how the blockchain works. And now let's explain better how 
Bitcoin is addressing this trilemma,   The blockchain trilemma. So you claim 
that Bitcoin is the perfect protocol   For building the future financial system, 
specifically because it solves two of the   Three components of the blockchain trilemma 
and it doesn't need really to solve the third. And so that's an important, really important 
differentiation. And I'm saying it doesn't have   To solve that in a layered system. Technology 
protocols develop in layers instead of one   Big behemoth that solves everything. And for the 
layers to function properly, they have to harden.   And that means they have to be super, super 
resistant to any changes at the base layer   Until the next layer can be built on. That base 
layer needs to be proven decentralized and secure.   And so Bitcoin has hardened for 13 years, provable 
more secure, provable more decentralization,   And outside of control of any government, 
nothing can stop it on the base layer.   And then layer 2 comes on and can talk to 
the base layer. And layer 2 becomes Lightning   And it opens up an entire new payment rail 
on top of payment rails on top of layer 1   That we couldn't see that many people 
that were talking about crypto,   That why they went into crypto the first time 
is Bitcoin couldn't provide the payment layer   Because it could only do 5 to 7 transactions a 
second on layer 1. So they solved scalability   Or they tried to solve scalability and 
sacrifice the decentralization by doing so. So Bitcoin critic and Ethereum proponent Ryan 
Berckmans explained three reasons why Bitcoin   Won't be able actually to become this 
base layer for everything like the one   That you explain. So here are Bitcoin's three 
problems according to him. Let's address them   One by one. So the first problem according to 
him is that Bitcoin is uncompetitive because   Of its lack of apps and the high cost of 
proof-of-work. So let's address that first. So the high cost of proof-of-work on the 
base layer, as we've already talked about,   Is a feature, not a bug. It is the way that 
you drive decentralization and security,   Period. It's the only way to be able to, from 
a physics standpoint, to be able to do that.  

And yes, it doesn't on the base layer, it 
doesn't allow apps to be built, it doesn't   Allow scalability. That's actually the feature. 
But in layer 2, it allows all of that scalability.   I can send Lightning transactions around the 
world, I do send Lightning transactions around   The world right now for fractions of a penny, 
unlimited. So now you have your second layer   Talking to your first layer without sacrificing 
the second layer, without sacrificing the first   Layer, they can build an entire ecosystem 
on top of that for the lowest cost, period. And the short follow-up question why there 
are not so many developers on the Bitcoin   Blockchain compared to Ethereum, for example? And that's a pretty simple question. So if you 
had, let's just use block size as an example.   Let's say increasing block size, you could put 
more things in, you could build smart contracts   In. Right? And then that would give a whole bunch 
of developers a way to build a whole bunch of   Interesting things on top of your blockchain. So 
it would empower an entire audience. But by doing   That at the base layer meant that block size 
would have to increase and the compute power   To run to audit the system would have to increase 
and that would concentrate the centralization and   Very few nodes that had the money to be 
able to do that. It would be a tradeoff. That was pretty clear. So now let's address 
the second concern. So Bitcoin security budget   Is unsustainable because its transaction 
fees haven't and won't grow nearly enough   To make up for BTC issuance reduction from the 
halvings. So as a result, Bitcoin is currently   On track to suffer successful 51% attacks. To 
solve this, the Bitcoin community must become   Willing to sacrifice a 21 million supply cap and 
inflate BTC on an ongoing basis to buy security.   So how could you comment this? So when I see a question like that that is just so 
factually backwards, it's hardly even a question   That's worth, because if that was true, then 
hash rate wouldn't be moving up on Bitcoin.   Security wouldn't be increasing. And security 
wouldn't be increasing on Bitcoin. So if it   Was easier to attack Bitcoin today and 
there was that much power to attack it,   Then why hasn't it been attacked? So the 
security is exploding. If you look at   Exahashes on Bitcoin as a measure of the energy 
use of Bitcoin, security and mining of Bitcoin,   It's exploding all around the world. So it gets 
harder and harder every year, not less hard. Let's address the last of the concerns 
which is about quantum computing. So   He's making the point that one day there will be 
this technology, quantum computing, that will be   Able to break the cryptography that Bitcoin is 
based on, thus kind of undermining its security. You just say, okay, quantum is going 
to break security at some point.   Wouldn't you expect quantum to try to break 
security on something like a bank first?   Or the Federal Reserve first? Because this 
security underlying this it is encryption  

Security that runs the entire world. And so, 
if quantum in some time is able to break this,   Then it could also break every other 
security instrument and every other crypto,   Every other financial institution, 
every single other thing, nuclear codes   And wouldn't there as well, as that would 
happen, wouldn't you expect that all of   The people within Bitcoin, if that were to 
happen, to develop quantum resistance in   That threat just like that would happen all over 
the world? So that's the way technology evolves,   And you're constantly looking to, okay, what's the 
next threat and you're moving ahead of that. Even   If you took that to its logical conclusion 
tomorrow, there's quantum that could break   That. It's likely not going to break Bitcoin first 
because there's not enough incentive to do so. And   If it did, it would ruin the same incentive that 
it was trying to crack to be able to crack it. Thanks a lot, Jeff, for this incredibly   Insightful conversation. I hope 
to have you again on our show. Thanks, Giovanni.