The Bitcoin Reformation with Tuur Demeester

Tuur Demeester (Adamant Capital), David Bailey (Bitcoin Magazine)

[00:00:00] David Bailey: All right. Welcome everyone. Thank you for joining us for the Bitcoin magazine live stream today, we're joined by the infamous.  forecaster and Bitcoin extraordinare Tuur Demeester. Tuur, thank you for joining.

Tuur Demeester: Hi, David, happy to be here.

David Bailey: So, I wanted to have you be a part of this because I read something that you published this year that I found very interesting called the Bitcoin reformation.

and I'm a big believer that when you, when you look back at history, you can tell a lot about, you know, what's happening in the future and what's happening today. The pattern kind of repeats. So talk to me about what is the Bitcoin reformation what's this framework that you've developed?

Tuur Demeester: Yeah, well, the Protestant reformation 500 years ago was all about kind of challenging the monopoly of the Catholic church. And I think today what's being challenged as to, you know, the monopoly and finance, the monopoly of the international. The financial system. And with that, I mean, you know, of course central banking and centrally issued currencies.

And I think that we'll [00:01:00] see, you know, some more parallels than just that eventually led to freedom of religion, which was kind of unthinkable for many years before. And I think similarly, what we'll see is, is like this freedom of money where like, you know, the countries that allow for everyone to use whatever money they want to, are going to do amazingly well.

David Bailey: So, you know, in your mind, what was the kind of key innovation that came about that, that proliferated this change?

Tuur Demeester: Well, so back back then, it was the printing press that was invented, which reduced the price of a book from a year's labor to the price of a chicken in a hundred years time. So like huge revolution, all of a sudden, you know, ideas could spread like wildfire and like advances in navigation.

And like, it was, it was kind of like a compounding amount of things. and I think now the innovation is really, it started with the internet. And now Bitcoin is, is adding to that. And also of course, cryptography, which is very defensive technology that, people can use like millennials and, and, and people who are [00:02:00] excited about this freedom of, of money.

they can start using that and basically kind of create new institutions.

David Bailey: So, you know, one of the things I found most interesting about your piece is the parallels between the innovations that we have today, that you just kind of highlighted, you know, we have our modern printing press. It's the computer.

You know, we have our modern double entry accounting system. It's the triple entry accounting system. and the fusion of these technologies together are what, you know, change society. You know, I'm curious to hear your thoughts. Do you see these technologies as, as individual developments that happened in kind of a silo?

Or do you think that these are fundamentally tied together? Like did the printing press necessitate the need of the double entry accounting system?

Tuur Demeester: Yeah. Well, I mean, yes, yeah. In a way, yes. Because you know, the printing press allowed for ideas to spread more quickly. And so then, then all of a sudden you could hear like, Oh my God, in Venice, they're specializing in this.

And I'm, I'm very good at this. I can travel down there or [00:03:00] like, you know, they're, they're discovering new places on the planet and all of a sudden we running a business and we want to go international. So the first, You know, multinational companies were from that era, like the Medici bank, you know, others as well.

And so then it's like, okay, well, how the hell do you run an international operation when you can't just pick up the phone? So that's when this, this accounting became more and more important. So, yeah, it's true. Like it's like the germs were often already sewn, but then what it allowed them to sprout was that in other areas there was innovation.

And so similarly. You know, with the internet yeah. That, you know, cryptography was, has been around for a long time, but like now there is, more and more of a need for people to start using it. There's, there's actually money behind the demand. So it's, it's weird how this, you know, sometimes there's ideas that have been existing for hundreds of years, but they need a certain fertile soil to really kind of, grow, grow fast and become ubiquitous.

[00:04:00] David Bailey: Yeah, no, I think if you look at the advancement of society as a whole, you know, you have permissionless information.  you have permissionless trust and, you know, I, I thought a compelling part of, okay, your framework was a permissionless violence, you know, and you use the word defense. I think that's a better term than, than violence, but you know, the, the musket is the, is the Canon of the individual.

rather than just leaving the cannons with the King, you know, speak to that about how, how important, self sovereign protection and defense of your, of your. Individual ideas is to this,  reformation or revolution being able to happen. This intellectual,  revolution.

Tuur Demeester: Yeah. I mean, it really is.

The cypherpunk there. You know, their initial kind of the reason why they existed was because they said we're technologists, we're really good at it. This, we can kind of make things happen in the digital realm. Is there a way for us to help people just protect their own rights [00:05:00] without having to kind of petition the government or go in the street and protest.

And so this idea that you could just kind of, you know, put together something of value and then put a lock and a key around it with cryptography is just so, so powerful. and, and, and I think. And I think important. And it's just beginning, I think this is just the very, very beginning where with Bitcoin is the first time that you can actually have liquid value that then can be wrapped in this, crypto graphic, envelope.

So to speak to that, and then it's like with multisig and with time locks, like it's just mind boggling the amount of security that you can as an individual, as a very weak individual with no canons or muskets or anything that you can achieve. it's it's mind boggling and I think it's really gonna revolutionize how wealth is stored and allocated and how society is organized to some extent.

David Bailey: So I can get you on the record, who is the cipher punk of the 1500s.

Tuur Demeester: Oh, like that. I don't, I can't name an [00:06:00] individual really. Cause it was like, it was a lot of people. but like, I would say like props to the guys in Holland who were like, you know, not only have they built all these dikes, but then they also had this idea like, well, you know, if the Spanish come, what we'll do is just, we'll breech our own dykes and we'll flood them.

And like, and it worked amazingly well, like the span, like people don't realized, but the Spanish army, it was like, it was the most powerful, empire in the world. So it's as if the U S the entire us army is invading Holland. Like really, it's kind of this, this incredible David against Goliath, and they stood their ground for 80 years.

It was just incredible. And that's because they used water. In, in a very inventive way. And I think the analogy to me is like cryptography is similar where, you know, with not a lot of means, but by being really smart, you can actually stand your ground against very, very large forces.

David Bailey: You know, something that is, I think interesting when you look historically at history, especially this [00:07:00] time period, but that we haven't yet seen play out today is the transformation that society goes under when they are given these new tools and new powers and yeah.

Europe transformed dramatically, but even the places that were early to adopt this technology. So you mentioned the Netherlands, the Dutch. Yeah. Their society was very different from kind of what was the typical society of, you know, the day and, we're kind of the outcasts of society. I mean, there were refugees, fleeing, fleeing, France and Spain, et cetera.

So, you know, Talk about how did, how did Europe changed? Societally what cultural values shifted and, you know, do you have any kind of forecast on what that means for, for what we should expect in the 21st century?

Tuur Demeester: Yeah, I think that's really interesting. And it's. It's so kind of fascinating how, like a little tiny group of people really had this huge impact on, on culture and society.

and, and, and, you know, I think the stories shouldn't be [00:08:00] just the Netherlands. Cause of course they had, they did stand their ground, but a lot of Dutch and Fleming's, they fled to the, you know, it's now the UK. And also they, they, they were one of the earliest, you know, discovers like the, the, I forget now the, the Bay company that, that, kind of discovered Canada, Hudson Bay, those were Fleming's and Dutch.

And then of course, the guys who landed on Manhattan Island, they were Dutch. And, and what was different about them is that. They were not religiously motivated. They weren't like they weren't saying like, you know, Catholicism is wrong. This new religion is right. And we're going to just, you know, heaven on earth is going to be this environment.

This, this, a colony is going to be, you know, there were a lot of projects like that in the U S but, but what was unique about Manhattan was just, it was simply a trading post. Like they, they're just these pragmatic traders, these merchants, and they cared about. A market that function. And so they decided that it doesn't make sense to religiously prosecuted [00:09:00] people and they would allow him the Jews and they would allow in the Muslims.

And that was the foundation of literally what's New York city now, like the most powerful city in the world. And so I think. People now already talk about like, Oh, like the Bitcoin Citadel, like this idea of like the city on the Hill. And I don't know if it's going to be a physical place, but, but really I think that similar, there's like a similar pragmatism that can really lead to some just incredible innovation.

I mean, look at what it's just, you know, not to. Point at this one company there's many, but for example, Bitfinex, I think they should earn some props for like being very innovative in very adversarial circumstances and creating products to not only serve the customers, but to help themselves survive.

And, you know, it's kind of reminding me of these Dutch little towns in, in the Protestant reformation that were under siege by the Spanish there. For example, they were issuing bonds. It's like, they're issuing. loans to not only the people that live there, but also the, the other Dutch, [00:10:00] and, and that not only, you know, it was a profit motive for the people investing in them, but of course it helped these little cities survive because then they could fortify their walls, et cetera.

So it's interesting to me how, like some of these. You know, people kind of mock these, exchange tokens and things like that. But I think there is some significant innovation there. And of course, we're going to see a lot more innovation in like, in custody. I think that, you know, the, the bank of Amsterdam was really famous in, in the 15, 16 hundreds, sorry, 16 hundreds, because it was a full reserve gold bank.

It was one of the most secure banks in Europe. and so I think similarly, there's, it's such a contrast thinking of traditional banks versus these Bitcoin custody companies, Bitcoin banks, really, I'm, I'm very optimistic about what, what that's going to bring.

David Bailey: No, it's, it's interesting. the analogy of, of really blowing up the monopoly that was the Catholic church over religious ideas.

And I think that sometimes people can think of religious ideas as like, Fantasy, [00:11:00] you know, but I think that misses the larger picture of, you know, really religion is about passing down ideas over generations, culturally and through mythology that otherwise get lost to time. And so, you know, when you took away power from the Catholic church over what religion meant, you really took their control over the culture away, you know, are control over what ideas are, are considered valid and invalid.

Invalid. So, you know, today, I feel like if we were looking for the modern equivalent, it really is the, the political establishment or the, the academic establishment. It's, it's some sort of institution today that controls what thought is acceptable and what thought is not. And the cultural values of our society, you know, when the Catholic church lost that power, they didn't give it up freely and they didn't go, you know, quietly into the night, so to speak.

What did that change look like? Was it violent? [00:12:00] you know, were there people who were specifically targeted and what lessons can we distill from that today? Like how the establishment we'll react to losing they're controlled or monopoly,

Tuur Demeester: right. Yeah. And you're talking about the counter reformation, which yeah.

Which did happen. like basically the Catholic church was, was. Was being caught. Like they were not only a monopoly, but they were kind of abusing that, you know, the extent to which they had a monopoly, they were, you know, for example, one of the most egregious, projects was the St. Peter's Cathedral, which is of course a marvel to go there and see it.

But they were literally. Were literally, kind of, you know, manipulating people of faith all across Europe by saying like, look, if you really want to get into heaven, you got to pay more, you know, you need to like pay, pay the priest more. And then eventually that went to the Vatican. and it was even, you could even, I dunno, improve the situation of your loved ones who had already deceased.

Like there was this kind of whole elaborate, it's almost like a scam going on. and so they, they, they, of [00:13:00] course...

David Bailey: As all great monopolies become.

Tuur Demeester: Yeah, of course. Yeah. You can just abuse the power cause you feel entitled eventually. Yeah, yeah, yeah, yeah. Who's going to stop me. But so the Protestants were kind of like, you know, we can just read the Bible ourselves.

You don't need all the, all this infrastructure we'll find our own way into heaven. Like, don't worry about us. And so of course the Catholic church was, was insulted, and so they had like an intellectual campaign. They had the, you know, what kind of a new order. I think it was mostly the Franciscan order who was like more intellectual.

And they were kind of like trying to come up with their own arguments of why the, you know, the Catholic church was still right to do all that. and also, also they were like, they kind of reined it in a bit. So they had more austerity where like they were trying to show like, look, we are still important.

And so in a way, their services were cheapened and over time, which you're also kind of seeing in the central banking world where they're talking about we're going to do our own digital currency and they don't really know. It's just very [00:14:00] confusing. And it was similarly back then as like, they're, they're just kind of scrambling to come up with a narrative, but then also of course they had their ties into the political infrastructure.

And so for example, in Spain They w they would basically collaborate with the government to start prosecuting people who, were, were heretics and who didn't, who were not part of the Catholic church. and so, you know, it's, it's conceivable that like, you know, banks and banking lobbyists are going to try and push the government and, and probably will be successful in, in several countries, push the government to.

Go against a Bitcoin adoption and try to fearmonger or try to like come up with ideas to just dissuade people from, from using Bitcoin for all kinds of ways. And so that's why one of the conclusions of the report, because I think this is a valid parallel, is that. You know, Bitcoin tolerance or intolerance is going to be a major political fault line and it could even run, for example, in the U S it could run through the country.

It could be that like, you know, [00:15:00] New York, New York state, and it's going to be violently against Bitcoin. And then other States are going to be very friendly. Like it really is possible that political unions are broken up over this.

David Bailey: So, you know, from when Martin Luther kind of nailed his, treatise, I don't know the right term, ah, Up on the door to win, to when, you know, society fundamentally had been transformed and, you know, it was, it was clear to all that the Catholic church was not the same as it was before.

How much time expired? Like what, you know, was it, did it take a hundred years? Did it take 50 years or did it take 200 years?

Tuur Demeester: I would argue it was very, very heterogeneous the process. So in certain countries, like, you know, us was pristine. So, you know, in a way. In a way you could argue a  for New York city.

It was a hundred years. It was very, very fast. And then for France, for [00:16:00] example, you could argue like maybe it was like all the way to the start of the French revolution, which is like the 17 hundreds, like 250 years to like finally for the Catholic church to like take it down a notch. And, and, and it doesn't mean that things improved, but still like to kind of, to end that monopoly to some extent.

so that's why this, this fault line is going to be important and it could be one of our, you know, personal life decisions where like, where do I want to live? and, and I'm not going to judge anyone for staying  in a country. That's Bitcoin unfriendly. Cause there's so many reasons. To choose where to live.

but I do think it will be one of the factors on, on especially young people's mind is like, you know, I want to start a business or something like that. Like where do I want to live? Let's go to this Bitcoin friendly place maybe, but again, it could be in the cloud as well. And so who knows, like if a country that's Bitcoin friendly still to some extent Respects people's privacy, who knows? Maybe you could do fine.

David Bailey: Yeah. You know, if, if the parallels who controls the [00:17:00] monopoly, it's like, you know, the dollar is the monopoly and the U S government controls it. And, you know, it's, it's hard to see any person in control of the system giving that up easily. And so it's like you, I wonder if the places where this technology will proliferate the most or the change will happen, the quickest will be the places that are outside of The U S dollar hegemony outside of, you know, the political apparatus of the American empire.

Tuur Demeester: It seems possible, or even likely, but, you know, there's, there's a bunch of scenarios that you can imagine where. Yeah, cause it's, it's tempting, right? It's such good money. And so like, you know, you could, you could imagine if it's think about Bitcoin, like doing another a hundred x.

So we're talking about a multi-trillion plus market cap. And then you have companies and they start kind of lobbying the government and the, in certain ways, or the government is like, Like you have to imagine society keeps changing and we are gonna face, a fiat crisis. Like it's, it's [00:18:00] kind of a little bit different from the Catholic church 500 years ago, because.

This, this collective, like people didn't lose their faith overnight. Like it wasn't like that. So there was this slow erosion of, of kind of faith in the Catholic church, but not like religiosity didn't really disappear for that. That took like atheism only came in maybe a hundred years ago. but, but so today, if.

If the dollar starts inflating, like that is a very kind of economic, very real deflation of faith. Like all of a sudden it's like, you know, the curtain is pulled out of your eyes and, and, and, and it's like, this is a scam or what's going on. This is, was not supposed to happen. Right. The dollar was strong.

So I think that that could really accelerate things. And then you have to think from the position of a politician, it's like, okay, you really have a tax income problem. Like we saw that with the disintegration of the USSR, Russia, where the ruble was hyper inflating and they had a huge problem raising [00:19:00] taxes.

Cause that one of the hardest thing in the world, if you're a government and you're facing hyperinflation, how do you get income? How do you get the money to trickle up and still have some value? And so that's where. It could be that they are actually going to just allow companies and individuals to pay their taxes in Bitcoin.

Well, I know it's very hard to ban something that you rely on for your subsistence. So like, you know, those things are, and also like there are States, you know, the U S is an energy producer there's States that are going to have substantial Bitcoin mining industries. And also I think about the other countries like Brazil, other energy producing countries, they're going to be Bitcoin friendly probably anyway.

So there's a lot of variables and I think it's, it's too early to really know, but you're right. I mean, know, it's kind of saying like, you know, how long did Italy take to kind of let go of their Catholicism? A long time because the Vatican was in Italy. So I think it's a great point. It's definitely something to be aware of.

David Bailey: Yeah. And you know, I, I, I think the USSR example is such an interesting [00:20:00] example. It. It parallels our experience so well in many ways, but the one difference is that there was an alternative system that was viable for people to off board into. And so it wasn't, you know, like when the USSR and the United States where we're head, they each had their own kind of universes that they were, you know, King of their own universe.

And when the USSR collapsed, now we have the system where there's like one universe. And there really isn't, as far as I can see right now, a viable, alternative, other than things like Bitcoin, but that things that need much more time to evolve and to advance before they're like ready for prime time. It's like, what is the.

What is the alternative system for people to check, check into?

Tuur Demeester: Yeah. Yeah. And so, so, and like the way the French revolution happened was, and I am working on a piece on this is that, so, so the first problem is debt. Like, you know, like global debt is 350% of GDP. Like this is [00:21:00] like just. You know, even on the, in the U S the debt levels were only like a hundred, 120...

I'm talking, sorry, I'm talking. Not only government debt, like all the debt combined is 350% GDP. The total debt in the U S in the sixties, even it was below 150% of GDP. So just to give an idea like this is mind boggling the debt. And so the debt is a problem. We need a debt Jubilee. It has to be wiped out because there's no way anyone can pay it back.

And so the currencies have to fail. That's how the debt gets wiped out. But so it's likely that as that happens, government Is going to try and come up with some kind of stop gap measure to be like, okay, well, here's the currency. How about that? And I'm sensing that they're working on stuff that eventually it's going to be like, well, we have this currency, that's backed by something flashy and sexy, whatever.

Like it's going to be like all the ETFs that we bought and everything that's on the central bank balance sheet, like this, this new currency. And it's backed by it. But it'll be a joke because you won't be able to actually convert.  [00:22:00] whatever tokens for what's supposedly backing it. And that was the problem as well in France, in the 17 hundreds.

That a huge debt problem. And, and, and, and, and to kind of kind of keep paying the debt. They confiscated the lands of the church, huge lands goods that you would confiscated them. And then they issued a token and said, it's backed by the lands of the church, which was a joke because you could never redeem it.

Like, so that went to zero. And I think maybe similarly, we'll have this kind of joke. Digital currency. That's supposedly backed by all kinds of stuff, but people will see that it's just... And so maybe that'll whatever, be five or 10 years of like, they're going to try that until eventually we have actual monetary....

And so what saved France was. They went back to a gold standard with Napoleon who was actually paying the soldiers and real silver, and that's kind of where things started stabilizing again. So I think the solution to all this debt is first we need a jubilee and it has to be wiped out, and then we're going to go [00:23:00] to hard money.

And I mean, it's going to be a hell of a ride. I think it's, I wish we could just fast forward. Cause I don't think it will be very pretty, but you know, we just, we just have to, we have to do it. And luckily, you know, if you're in Bitcoin, you've bought insurance against exactly. This kind of. problem.

David Bailey: So, so Bitcoin is King when the military starts demanding payment in SATs only.

Tuur Demeester: That's a great, that's a great summary. I totally agree if soldiers get paid in Bitcoin, that means we're probably across the chasm somehow.

David Bailey: so one last note before we wrap this up, you know, I feel like people, you know, I want let's end on a positive note. So, you know, people, I feel like lose perspective of, of how important.

Bitcoin is in . The history and the, the how formative it is in human society as a whole. And you know, we're talking about the Protestant reformation, but even if you go back one generation like, the, the creation of writing in the first [00:24:00] place, the creation of sound of money, a gold currency in the first place, the, the single ledger, no, those innovations gave us a huge amount.

Gave us a huge amount of technological change and really a golden age that came, you know, the Protestant reformation. Soon after we had a golden age and enlightenment and culture and art, you know, we had new ideas like corporations that form for the first time, rather than just family businesses. Alright.

Looking forward, you know, what does the golden age look like for the modern society? And, you know, do you think Bitcoin plays a key role in that.

Tuur Demeester: Yeah, it gives me chills just thinking about it. Like that's really what, just, what keeps exciting me is that, you know, what, what, what, what what's going to have.

I don't know which ideas, but certain ideas that are very minority, very fringe today where a lot of the people who strongly believe in them that they have so much value and who've been discouraged over and [00:25:00] over. Some of these ideas are going to get huge platforms and, and, and, and, and we're going to see educational institutions being massively reformed, or even new ones that come out like that was part of, you know, the, the revolution in the Protestant revolution was that all these new universities popped up and new ideas got.

And of course there was like an amazing revolution in the arts as well. And in science, It's incredible stuff. And so similarly, like society's going to become less wasteful as a whole. And, the people that call the shots, quote unquote, economically, and the people with the wealth, it's going to be different, a different culture because there's going to be this wealth transfer.

you know, I did some, some calculations a while ago. and just looking at like the ultra-high net worth, you know, population of the world. And of course, you know, money is not everything and it's not the people with the money that, that dictate everything. Like a lot of it is bottom up, but, you know, to some extent it makes sense to look at this little group.

so there's about 20 million people around the world that have a net worth of [00:26:00] over $50 million. If Bitcoin goes really to like a million dollars. Up to, up to half of the world's wealthiest people could be Bitcoiners. Like that is a real possibility. And so in a way, all our little stupid memes and like all our jokes and like all our kind of, you know, I, you know, in a way it's the start of a culture and it really could have a huge impact for the next hundreds of years.

And so, in a way, I think it matters a lot. If you're pursuing something intellectually. Just keep going at it. And just trust that over time, you might have a much different platform to present these ideas to, to the world.

David Bailey: So Tuur, thank you for joining us. I can't imagine a better message to welcome in the next epoch and Bitcoin.

And, I look forward to seeing this, this new golden age unfold. Thank you

Turr Demeester: really exciting. Yeah, me too.