➡ Trading hasn’t changed much in 27 years, despite technology making it more accessible. The traditional finance industry is stuck in old ways due to heavy regulation, while the crypto industry is pushing forward. The current system is overly cautious, preventing small businesses from raising funds through tokens due to investor protection concerns. This caution is compared to not allowing any new ideas or technologies for fear of potential harm, which stifles innovation.

You can’t really understand Bitcoin if you’re not an engineer. Systems engineering, control systems, servo mechanisms, system stability. You’ve got to understand all those concepts intuitively. If you’re a pure engineer and you reduce the world of I built a ship or I built a gun but you don’t consider the implication of the ships and the guns on the course of economic and political history, then you don’t really understand Bitcoin either because you have to understand the history of money and the history of economics and mercantile networks. I had a background in all those things. It seems like you could start to see maybe the future that that creates better than most people.

Bitcoin is crossing every one of those fields. There’s one question I’ve always wanted to ask you because I love history and I know you majored in history of science, but you also have the MIT engineering degrees in astronautics, system dynamics and history of science. It seems like this unique blend. And I’m just curious how that the history. So you sort of get the history as well as like aeronautics helps you maybe understand Bitcoin better and maybe sort of see where the future of Bitcoin goes. When you read history, I read a lot of history of late in its original form.

You see historians observing things. They’re making observations that are noting it’s suboptimal like observing 10,000 tragedies. Then occasionally you’ll see philosophers who are complaining about it. So philosophers synthesize and they complain about about what they don’t like or they lament that it isn’t better. The Austrian economy is the philosophers. The engineers build machines that work. Airplanes, ships, railroads, et cetera, electric motors. The scientists, they divine the relationships, the math that explains the universe and the physicists and the mathematicians take that to the extreme. I had a background in all those things. I think it was useful to have studied physics.

It’s useful to have studied math. It’s useful to have studied all of the sciences and the engineering disciplines, which get deep in thermodynamics and mechanics. And I think it’s also useful to have studied history and philosophy and the history of science is particularly interesting subject, because it goes back and looks at the histories, but it extrudes it through or filters through a scientific lens. The classic non-scientific historian says, this happened and this happened and that was suboptimal. And the history of science historian says, that happened because of this, guns, germs and steel. The Europeans didn’t just show up to the new world and then they conquered it.

They showed up to the new world, brought a germ and everybody died. They didn’t have to conquer it. 90, 95% of the natives died. And that’s actually a biological explanation for what happened. If you don’t understand the science of immunology or you don’t understand germs, you couldn’t explain it. And then if you think about the impact of steel, what’s it take to create steel and explosives and gunpowder? And so the history of science is all about how technology dynamics channeled the course of human history. And I think the reason it’s important to Bitcoin is you can’t really understand Bitcoin if you’re not an engineer.

If you don’t understand engineering, systems engineering, control systems, servo mechanisms, system stability, you’ve got to understand all those concepts intuitively. If you don’t understand thermodynamics, the people that are pure computer scientists who are weak on physics and engineering and systems, oftentimes they create Rube Goldberg devices in code that a hardcore engineer wouldn’t build. And so you can’t just be a coder. And of course, if you’re a pure engineer and you reduce the world or I built a ship or I built a gun, but you don’t consider the implication of the ships and the guns on the course of economic and political history, then you don’t really understand Bitcoin either because you have to understand the history of money and the history of economics and mercantile networks.

And the idea of credit networks are local. A German prince can have a credit network, a British prince can have a credit network, but gold or silver networks tend to be transnational. The French, the Germans, the Brits, the Persians, the Chinese could all agree to trade on a silver network or a gold network, but not on a Chinese paper money network. And so when you start to understand the impact of technology as metallic money on economic networks and then the impact of a ship with guns on it, you know, on that economic network or the impact of not having immunity to all the germs the Europeans brought or the impact of not having steel and being stuck in the Stone Age, all of those things have an impact on the way the world evolved.

And I think Bitcoin is, it’s crossing every one of those fields right now. Yeah. So being able to synthesize that information and understand the cause and effect and then looking at the changes today, as you said, sort of a multinational asset, strong as steel, fast, et cetera, then you can start to, it seems like you can start to see maybe the future that that creates better than most people. Well, I just, I think if you’ve got a broad, synthetic educational background, if you’ve studied a bunch of different subjects and a lot of experience, you appreciate Bitcoin more.

If you have a very narrow background, if you understand economics, if you studied economics but never studied engineering, you’d be missing half the equation. And if you’re an engineer that doesn’t understand economics and never been in business or never traded internationally or never traveled or didn’t know anything about history, you would also understand only a part of the equation. So I just think you need to know a lot of different subjects in order to fully appreciate the impact and the significance of the invention of Bitcoin. Yeah. Which is then in your professional career, building technology companies.

And so you kind of predicted a lot of those technology companies that have grown in some of your books that you wrote in the past, but then also navigating those tech companies through the capital markets and sort of gives you a new perspective to see the deficiencies in the current capital markets that we have today and then help you kind of think about fixing those with jumping into sort of like this refinery model, trying to see, solve some of the deficiencies in those capital markets, the way companies accrue capital. Yeah, I think what can be said of the capital markets is 99.9% of the companies are locked out of them.

So the first question you got to ask is, how come there’s 40 million businesses in the United States, but there’s only like 4,000 publicly traded companies? Right. So don’t have access to the capital. Okay, so it doesn’t sound like a … Like if I said only 4,000 companies have telephone and internet access and the other 40 million businesses don’t, what would you say? Yeah, that’d be a problem. Yeah, what if I said 4,000 companies have bank accounts and the other 40 million don’t? So you just start with the observation that the capital markets can’t be all that effective if 99.99% of the companies can’t access them.

And beyond that, the other observation is if you look at the companies that are in the public market, if you look at the thousands of publicly traded companies, it’s like 20 that control all the attention. And so most public companies or zombie companies, they’re uninteresting. No one cares about them. They carry a huge burden of regulatory compliance and they don’t get the attention they deserve. So one could characterize the capital markets as being unwieldy, ineffective. And what is that? They’re 20th century instruments that never really evolved in the 21st century. You got to ask the question, why does it take three years to raise money if you have a small business? Why can’t you do it in three days? Why is it impossible to take custody of your own stock shares? Why is it impossible to trade shares on Saturday afternoon? Why is it impossible to transfer things globally? Why is it that you can actually take a million dollars of cash and get paid interest on it but you can’t take a million dollars worth of stock shares and get paid for that? There are all these things that just are very inefficient that we just take for granted but they don’t work very well.

A lot of that is technology being inefficient. And here we’re in DC at this Bitcoin policy event. And a lot of that might also be regulatory. So a lot of that regulations maybe prevent some of that. Yeah, generally, oftentimes whenever you have a highly regulated industry, progression stops. The banking, if you look at the credit markets, they seem to be stuck in a mode that was probably modern 30 years ago. Like they’re 30, 40 years old and they haven’t advanced. If you look at the equity markets, it’s the same way. For example, my company came public in 1998.

We traded on NASDAQ from 930 in the morning till four in the afternoon. The year is 2025. We trade on NASDAQ from 930 in the morning till four in the afternoon. What’s the difference between the way my stock trades today and the way it traded 27 years ago? Nothing. Could you imagine any other industry where there was no material change for 27 years? And one of the differences, I mean, 27 years ago you didn’t have trading apps on your phone and now it’s even more accessible but yet the market is still held back even though retail could access it easier.

Because the traditional finance industry is highly regulated and it has settled into a comfort zone. The forces of progression are in the crypto industry. Most of the forces of the traditional finance industry are forces of regression. The knee-jerk reaction is, why shouldn’t we do this? Why is this a bad idea? If you listen to all the Gensler speeches for the last four years, it’s always why this is a bad idea. Why can’t I issue a token for my small business over the weekend? Well, we’ve got to protect the investors. So that’s why we’re going to disenfranchise 40 million companies for being able to raise money because the people that might want to invest in them might not be qualified to make that investment.

So it’s kind of like, well, why don’t we give cars to people below the age of 60? We’ve got to protect the pedestrians. You know, it’s like if you took that rule and you applied it to phones or cars or websites or flying in an airplane, we would have no automotive industry, we’d have no aircraft industry, we’d have no telephones, we’d have nothing because we wouldn’t do anything until we’re sure that no one would be harmed by the doing of the thing. Which is impossible. We wouldn’t even have fire. We wouldn’t want someone to get burned.

We wouldn’t have electricity. People might get shocked. You’ve got to protect the people that might get hurt by the new idea. So that’s pretty much the existing status quo in traditional finance and it has been for 30 years. Hey, if you like this short conversation I just had, you’re going to love the full length conversation. Don’t miss it. You can go ahead and click right over here and I’ll see you over there. [tr:trw].

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