Dr. Lee Bratcher and Dr. Mark Turman dive into the world of cryptocurrency, why Bitcoin is uncensorable, how refugees use it to flee oppression, why Bitcoin will likely rival gold, and why blockchain technology is already being used by banks and governments.
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Show notes:
Dr. Mark Turman and Dr. Lee Bratcher discuss the Institute for Global Engagement at Dallas Baptist University and the Texas Blockchain Counsel, the nonprofit run by Dr. Bratcher. They reflect on what money is, the basics of economics, and the history of Bitcoin (8:16). They discuss the power of Bitcoin to be uncensorable, how even the US government cannot track it, and how it’s already helping refugees escape from authoritarian regimes (16:41). They discuss online “wallets,” how Bitcoin gained value, where it comes from, and how it uses the internet to be decentralized (19:50). Dr. Bratcher goes in depth into why Bitcoin is so secure and why Bitcoin has a market cap of around one trillion dollars right now (28:06). They consider why so many use Bitcoin and how it can be an asset like a stock (even though they are technically not) (38:25). Interestingly enough, they consider how this blockchain technology can make banking as a whole much more efficient and how China is using it already (45:35). Finally, they discuss why religious freedom and Bitcoin are connected, and why Bitcoin is fair according to biblical standards (51:25).
Resources and further reading:
- Thank God for Bitcoin – Jimmy Song, Gabe Higgins
- “Why did an online image sell for $69 million?” – Mark Legg
- Texas Blockchain Council
- Texas Blockchain Council YouTube Channel
- Institute for Global Engagement – Dallas Baptist University
About the host
Dr. Mark Turman is the executive director of Denison Forum. He received his DMin from Truett at Baylor and previously served as lead pastor of Crosspoint Church.
About the guest
Lee Bratcher serves as the Chair for the Politics, Philosophy, and Economics major at Dallas Baptist University as well as the Executive Director for the Institute for Global Engagement, a DBU-affiliated think tank. He is a Captain in the US Army reserves working as an instructor for ROTC cadets at DBU and UT Dallas.
Lee received a master’s in International Relations from St. Mary’s University and is in his sixth year as a Ph.D. candidate at UT Dallas writing a dissertation on the implications of blockchain technology on property rights and real estate. Prior to his transition to academia, Lee served in the military and as a police officer in the DFW area. Lee has been married to Becca Bratcher for 6 years and they have two daughters, Kenzie and Ivy.
Transcript
Transcribed by Otter.ai
Mark Turman 00:02
Welcome back to the Denison Forum Podcast. I’m Dr. Mark Turman, the executive director of Denison forum today I’m here with Lee Bratcher. And let me take a moment to introduce him to you. Lee is most importantly married to Becca, and they have three children, Kinsey, Ivey and Kaylee. Lee also has a significant background and resume resume that I want to share with you. But want to introduce our topic today. First of all, you probably like me, we’re sitting watching the Super Bowl. And it’s the one event where we watch the commercials as much as we watch the actual event in many ways. And you probably like I saw a number of these strange ads come across one even had a QR code that just floated across the screen that was somehow connected to this thing called crypto currency. And Lee is joining us today to talk about that topic. Let me just give you a little bit of his background Lee has served until recently as the chair of politics, philosophy and economics at Dallas Baptist University, one of our fellow institutions and close friends out in the Dallas area. He is also executive director of the Institute for Global Engagement at Dallas Baptist. I’ll get you to explain that in a minute. He is a captain in the United States Army Reserves and has and is serving as an instructor for ROTC cadets at Dallas Baptist and UT Dallas. He has a master’s in international relations from St. Mary’s, and is in his sixth year as a PhD candidate at the University of Texas at Dallas, writing a dissertation on the implications of blockchain technology, and on property rights and real estate. And former to being a part of academia and what he’s doing now he served in the military and has also been a police officer in the Dallas Fort Worth area. So thank you for both of those Lee. He is also now the founder and president of the Texas blockchain council. So for believers today, Lee, welcome to the podcast, first of all, and thanks for joining us. And let’s, let’s get a little bit of explanation here help everybody understand what the Institute of global engagement at dBu is all about.
Lee Bratcher 02:23
Awesome. Thanks, Mark for having me. I’m excited to have this conversation. The Institute for Global Engagement or we shortened it to IGE is a think tank within the institution that focuses on being a catalyst for moral and spiritual renewal in the public square. So it was actually incubated by now president of the institution, Dr. Adam Wright, and the founder of Denison forum ministries, Dr. Dennison, when they were on a trip in the UK, and thinking through what it would look like to have a think tank that equipped believers to have conversations in the public square about the issues of our day through through a Christian worldview. So that is the IGE. And we have fellows that write and put out articles, we host events and speaker engagements at dBu. You know, most recently we’ve had people as varied as General Mattis, the former Secretary of Defense, come and speak at dBu to just recently we had
Mark Turman 03:38
judge Ken Starr. Yeah.
Lee Bratcher 03:43
That was just a few weeks ago, Jetstar was out there talking about religious liberty. Right. So that’s the IGE in a nutshell.
Mark Turman 03:50
Okay. Well, something that’s maybe a little bit more foreign to us is, what is the Texas blockchain Council. Tell us what that’s all about.
Lee Bratcher 04:01
The Texas blockchain Council is an industry association. It was birthed several years ago, as a result of my research at dBu and writing about blockchain property rights for my academic research area. And I saw the need for someone to come in and communicate clearly with elected officials with policymakers, and even the traditional elites within Texas and then also broadly the United States about what this technology can do for the country, for our communities, and the community, especially the crypto community and in the Bitcoin community, at the time was not very interested in taking the time to do that. Right. They were building they were sometimes breaking things, you know, building and breaking. And when I say breaking I mean When you’re innovating, sometimes you have to break things, right? Because things have become calcified. And that no, I’m speaking very vaguely, we can get into certainly more specifics. But in general, I saw a need for a liaison between the industry and elected officials and traditional power brokers and elites. So what what I decided to do was start to, to engage those communities and bring them together. As an academic, I was sort of the neutral, right party there they that was non threatening, and I was able to reach out to both sides and the TPC or the Texas blockchain Council, we call it the TVC is an industry association. So it’s a nonprofit, it’s a 501, C six, and a C six means that we can engage in politics hire a lobbyist. That means that we’re not funded through donations, we’re actually funded through membership dues from our member companies. And we have about 90 member companies and several 100 individuals from across the state of Texas, that are dues paying members of the organization and grown from just me at the inception to a staff of about six at the moment. And we have a lobbyist, communications director, Chief Operations Officer, etc. So a team that’s, that’s really building and working on policy and also the traditional industry association type things, bringing companies helping them find their next potential client or employee or investor. In fact, I’m speaking at the lions den in two days at dBu. Lions Den as a investor conference, a pitch day for people in the faith community, people who are interested in impact investing, right where their dollars can be matched. Their investment dollars can sort of match their worldview and their ethical outlook. Yeah, so I’m speaking on Bitcoin blockchain and crypto. They’re kind of
Mark Turman 07:07
a kind of a version of the Shark Tank, if you will, it is exactly right. No. So okay, so it kind of sounds like a piece of infrastructure that needed to be built kind of a bridge between two parts of this world that we hope to understand more. So doing a little bit of just very, very basic kind of background. The idea of cryptocurrency, crypto, just by simple definition is kind of hidden the word it literally the word means hidden, or not obvious coded, if you will. And then as it relates to currency, maybe the best way to start off is is that for Christians, for Christian leaders emerging, trying to understand this world, just try to paint a basic idea, I think, seems like we have new words and new things coming into our our experience all the time these days, trying to think about when did I first hear the word crypto currency? Feels like somewhere in the last three years? Perhaps. But when we typically think about currency, we think about money, right? We think about something that is issued by a government authority and in typical thinking US Treasury issues and says this is legitimate currency by which you can buy and sell and do business with and that we understand that other countries have the authority and they create their own currency. And we get that again, that’s that’s where the average person kind of thinks. And so when you start talking about something like cryptocurrency, it almost is like the default mindset is is okay, that’s suspicious just by the name. What do we mean by a hidden or an encoded? Kind of, of money that transacts? Is that something that we just need to run away from? And then you start hearing other terms that you somehow discern are connected, but you don’t understand? So tell me if I’m on the right track. cryptocurrency is really a category and then you have players in the field like Bitcoin and is it Donkey Kong coin and hope I looked up there at least 25 Different crypto currencies that just popped up immediately in a simple search. So am I am I headed down the right path, at least in the most basic understanding?
Lee Bratcher 09:39
Yeah, I would say in general, the right direction. I definitely wouldn’t put Bitcoin in the same category as its DSGE Doge doge coin now, so some people think it’s doggy but it’s Doge Gog?
Mark Turman 09:53
I’ve heard people say it in different ways. Yeah. So
Lee Bratcher 09:55
there’s there’s certainly distinct differences and I can get into some specifics, but Um, if you don’t mind I’m gonna zoom back out a little Yeah, please do no and I’m gonna start 500 years ago okay with a Franciscan friar name or presence Franciscan monk named Luca Pacioli. During the Renaissance, okay developed double entry accounting. Double entry accounting is the the ledger system of debits and credits that we’ve used for the past five 600 years.
Mark Turman 10:23
Now you’re speaking the language of my daughter who’s a CPA, so Okay, absolutely. And
Lee Bratcher 10:27
this is generally what this innovation is all about. It’s about Ledger’s, it’s about trust, it’s about transacting value over time and space, double entry accounting allowed merchants to transact, transact and conduct trade over time and space without trusting their Counterparty. And we have institutions, entire institutions that have been built out of the banking world, the, you know, fiduciary world’s title insurance, all kinds of these payment processes in the 20/21 century, that have that have sprung up to create an ecosystem of trust. And they and they have done an amazing job at that. And the innovation that we’re talking about here, which is started with Bitcoin, but is broadly understood to be blockchain technology. I’m gonna talk mostly about Bitcoin at first, because it was the first and it is a good case study to understand the industry as a whole. Okay. We move forward in history, you know, 450 years, I guess, or several 100 years to the Bretton Woods. Era post World War Two, where money fiat money is, is, is established that the US dollar will be the world reserve currency, it’s tied to physical gold gold, which by the way, when we think of currency, today, we think of state issued money, but that’s only within our lifetimes, all of the generations before us and millennia, currency was actually often not state issued, because the state would immediately inflate the value of their currency. There’s numerous examples from the Romans to the the monarchs in England, that they would they would add adulterants to the coinage to make it go further, which is basically inflation, right? And so money has been something that’s fungible, something that’s, that can be exchanged, as has holds value as a store of value. So there’s different properties of money and, and really, gold has been the best example of money over the millennia. And it’s only within the last, you know, I guess, since 1945, that Fiat has reigned supreme. And since 1971 72, that Fiat without a gold backing when Nixon took the US dollar off the gold backing has existed as just the full faith and credit of the United States. And I’m a, as you mentioned, in the article, or in my introduction, a number of the US military. Obviously, nothing I’m saying today is the my opinions are solely my own and not opinions of the US military. But I say that to say that I’m very patriotic, and I support the peace and prosperity that the United States has established throughout our country and even the world in many places because of our institutions. So some people may look at crypto and Bitcoin and think they just want to bring down the institutions. In reality, I think we need to reform and change institutions, institutions establish trust, and it’s very important. But when institutions have existed for a long period of time, you know, this act in Lord Acton is famously quoted as saying power corrupts, and absolute power corrupts absolutely. And it’s also echoed in the Proverbs. Not only the Proverbs, but several places in Scripture. And
Mark Turman 14:15
in our audiences certainly heard Dr. Denson say this many times before that, you know, it was Frederick Nietzsche, who said that man’s will to power is at the very core of what our sin problem is. And when you start attaching that particularly to the power of something like money, yeah. Then then there can be all kinds of corruption and corruption that grows over time corruption that grows in institutions, right.
Lee Bratcher 14:39
Yeah. Yeah, and I should correct myself, Lord Acton was was probably referencing scripture when he made that quote, so I think we need to probably write in the record and understand that he wasn’t the originator of that thought, but he’s most famous for it. So long story short, there is a need to bring up an element of democratization. Going back to the transfer of value. When we saw what the internet did in the 90s, for the transfer of information, it made the internet ubiquitous it made information available at everyone’s fingertips, right, Bitcoin and blockchain technology as a whole will do the same for the transfer of value. So let me kind of restate that more succinctly. Bitcoin and blockchain will do for the transfer of value what the internet did for the dissemination of information. It’s it is really that profound,
Mark Turman 15:32
which is, transfer of value is simply a way of saying about one of the primary functions of money, it is a means by which we transfer value,
15:41
correct? Yeah. And I would even expand it beyond money to Ledger’s ownership, property rights, over your assets, be the money property. Whatever, I guess there’s there’s other categories, right? There’s there’s securities, that’s kind of a specific form of property, right. There’s real property, real estate. And there’s various other assets. So tracking assets, without having to use very expensive intermediaries. And also without worrying about censorship. This is one of the things that I think is interesting for our audience in. In the Western world, as Christians, we feel very safe from persecution, although that could be changing, right? And it is changing, right? Sure. But in the developing world, it is not the case, as I’m sure you and Dr. Dennison talk about on this podcast often,
Mark Turman 16:37
right? Places like Cuba, and what we’re seeing in the US, Laila
Lee Bratcher 16:41
Ukraine, absolutely. So what this technology can do, and then I’m going to start talking about Bitcoin, which brings us to almost the present 2008. But let me first say this what what this technology can do, it’s unsensible by tyrants, or governments. And that can be good or bad, right? It’s a moral, it’s a technology, it’s unsensible by the IRS, which is a little bit, you know, we need, you know, bearer assets like US Dollars are also somewhat unsensible as well, because you can exchange those without the knowledge of the IRS. That’s how people launder money. But with bitcoin and cryptocurrency, it’s a similar level of odds uncensor ability, but it’s more fluid, it’s more digital. It is a digital transfer of value. It’s a digital store of value. So think about the persecuted Christian or even just the general public in Venezuela, or in Ukraine, or in Iran, or Cuba, like these places, we’re talking about give you an example from from Venezuela, the last several years have been horrific there with hyperinflation, the state confiscating the assets of people, mass migration, and refugee flows to Colombia and other parts of Latin America and the United States, right? So these Venezuelans have no way to get their wealth out of the country, first of all, their wealth is inflating very rapidly, and dissipating into their spending power is becoming very limited. So they want to get their wealth out of the country, they turn it, they buy bitcoin, because if they bought gold bars, they’d be heavy for one and two, they’d be confiscated by border guards to be taken away Colombia or the Venezuelan military. And they have to do this, by the way, because this was instituted capital controls. And so they’re censoring people’s money. They’re censoring people’s ability to transfer wealth, based upon a myriad of factors, right based upon mostly just because they want that money to stay in the country, but also because maybe their political dissenters, or they don’t agree with the state, or they have a faith background that the state doesn’t propagate. So these individuals can buy bitcoin, they can either hold that on a flash drive, or in a digital wallet on their phone, if they’re afraid that their phone is gonna get confiscated. They can, they can put it in a, we’ll call it a hot wallet, online, which I can explain a little bit more about later. They can memorize the, the key, the key phrase, it’s a series of words that you can use as sort of your password recovery, if you will, because there’s no centralized entity that you can recover your password, this is all decentralized. And then they walk across the border, they may get everything stolen from them, but when they get to Colombia, all they need is an internet connection and that phrase, it’s in their mind or they can hold it or their memorize their cryptographic key and then they can recover that wealth. They can get it bring it back into Bitcoin and then sell that for you know, US dollars, euros, whatever currency they need.
Mark Turman 19:50
So it becomes about following your eye it becomes almost like a global currency that can be put into the currency of any place that you are correct. can be it can be essentially exchanged. Bitcoin can be exchanged for, you know US Dollars or pesos or francs, whatever part of the world you’re in, you can access it through through this digital gold global opportunity. It because it’s not being held in a central Treasury security within any particular country Correct. Which first makes me ask the question of what guarantees its security? Is it the simple fact that it’s decentralized?
Lee Bratcher 20:37
Great question, and let’s dig into that. So in 2008, the white paper was published by a pseudonymous author named Satoshi Nakamoto, or authors could be multiple people, it probably was, we still don’t know who those people are, or were many surmise that they have passed away because the, you know, with Bitcoin and other digital Ledger’s, it’s these these Ledger’s are visible to everybody online. So I could go and see transactions happening in real time. And now I see them happening from wallet to Wallet. And I see the amounts but I don’t see who owns that wallet. That’s why it’s private, and kind of a freedom technology or unanswerable technology, because you can see these transactions happening, but you don’t know.
Mark Turman 21:22
You know, who the players the players individual players are. And so
Lee Bratcher 21:25
the wallet that is, you know, attributed to the pseudonymous author Satoshi Nakamoto, had a lot of Bitcoin in it. And back in 2008, Bitcoin was worth zero, it was worth a few pennies in 2009, and grew in value from there, as demand increased for it. But to this day, that wallet has not moved money, or Bitcoin has not left that wallet, this person has not cashed out or this group of people have not cashed out there’s billions of dollars with a Bitcoin in this wallet. And those funds have not moved. So that’s why I think that that the original author might have passed away, right? It’s been, you know, 2008 was was 13 years ago, 14 years ago. So it’s been some time. So let’s talk about how Bitcoin works. And again, this is blocked. Bitcoin was the the invention, the white paper actually established this technology that eventually became what we know is blockchain technology. So Bitcoin is the birth of this. And what this is, is a decentralized peer to peer, cash network, peer to peer network. And there will only ever be 21 million Bitcoin, it’s important to know that it’s not inflationary. It’s deflationary. Because the, it’s hard coded into the system, that there will only ever be 21 million of these Bitcoin, they’re dividable they’re divisible up to 100 million of a coin. And so you, you can buy $10 with a Bitcoin, you don’t have to buy a whole coin, which right now is trading at like $45,000 for one for one. Yeah. So you can buy $1 with a Bitcoin $10 $100, whatever,
Mark Turman 23:14
in the same way that you would buy any other kind of stock or bond correct as an investment?
Lee Bratcher 23:20
Correct. You can fractionalize Yeah, like with Robin Hood, you can buy a share of Berkshire Hathaway stock, right. So so the way this technology works is it uses decentralization and cryptography to solve the double spend problem to solve digital scarcity. Because if we think about things online, there are there is a challenge with things online, around digital scarcity. You can’t create digital scarcity as you couldn’t before 2008. Think about Napster. Once the the internet or entrepreneurs on the internet figured out how to copy music, and stream it or basically copy it and send it to everybody, right? The record labels business model broke just fell apart. Yeah, like selling CDs fell apart. Because you can’t create digital scarcity you can’t finance in, like, once something’s on the internet, you can think about a Word document, it’s even easier to think about. If I send you a Word document has a picture of a $1 bill on it. And I claim that that’s $1 or I claim that that digital currency are worth something, you can just and say you believe me for some reason, you could send that dollar or that Word document to a million different people, right? Instantly inflate it to create a million dollars. So it’s hard to keep things finite or did scarce online. It’s hard to stop the double spin problem, right, right, or the triple spin problem or the million spin problem. Like if I give you that dollar, I also send it to a million other people and instantly there there’s obviously no value there. There’s no control over inflation or the monetary policy of that, suppose it currency. So with Bitcoin and other cryptocurrency, you actually have the real invention is the solving of digital scarcity solving of double spin. So in
Mark Turman 25:19
cryptography, so in the case of let’s just say in the case of Bitcoin, how did they solve that problem? How do they guarantee that there wouldn’t be millions and millions of more Bitcoin? That would actually get inflated? How did they solve that?
Lee Bratcher 25:33
Yes, so there because of the decentralized aspect of Bitcoins, so there are nodes, which are just computers, running copies of the ledger. Now let’s think back to what I started talking about the beginning, which was double entry accounting, right? This is all based on on Ledger’s who owns what is what really all the ledger is, right. So there are these copies of the ledger that are held by computers in the network that are unaffiliated to each other. And they all have the same copy of the ledger. And through cryptography, these Ledger’s are updated every 10 minutes to all have the exact same balances
Mark Turman 26:12
looks like a constantly updating record of who owns what exactly and and in the case of Bitcoin or other cryptocurrencies. This is how we know where all of it is. Exactly. This is how we know at any given moment, who’s holding what
Lee Bratcher 26:27
and you and I could go online or your listeners and through some searching on a block explorer could actually see you know, different wallets and how much Bitcoin they hold. Again, we can’t see the whole the owners of those wallets. Now, let me clarify, if you have bought that Bitcoin on like a US exchange, like Coinbase, or Kraken or Gemini, they probably know who you are, because you’ve gone through know your customer and anti money laundering checks, you’ve sent them your ID, you’ve done all the regulatory things that you need to do to satisfy the, the the IRS the SEC, and other regulatory bodies. But this asset is is is working without the support of a centralized entity. And so how it works is all of these nodes are running copies of the ledger, they’re all the same. If if a node tries to submit a false transaction, or user a wallet tries to send submitted false transaction, like say, I own one Bitcoin and I try to send you two, I don’t own two, I just don’t one. The Ledger will immediately see Haley only has one bitcoin in his wallet he’s trying to send to that transaction is void void, like, yeah, yeah. Or if I try to send you one and Dr. Dennis, in one instance, and the same time, and I only have one in my wallet, the one that the miners, which I’ll talk about what mining is in a second order in the transaction, first will be the one where that that takes place, and the other one will be voided. So I can’t there’s no way to duplicate or increase the supply.
Mark Turman 28:06
Right. So the trying to, again, think of how this might work for somebody is not as conversion is as you are. If I have money, US money in the bank, then the the entity that’s guaranteeing that is the federal government and not even guaranteeing it anymore, as you said, based on a gold standard. How much gold does the US hold in possession? Right? It’s simply based on the on the good faith of the federal government, right. But but that’s what I’m staking the credibility of that money that I hold is in that repository. What I hear you saying is, is that now it is this, this global ledger that is constantly updating and guaranteeing that okay, well, there’s not false multiplication of Bitcoin or other currencies. So that’s how you keep it from inflating in a false way. And the most important thing here is we need to make sure nobody breaks the internet, right? Because that’s where these let this is where this ownership ledger is being protected and held.
Lee Bratcher 29:15
Yeah, right. Yeah. And it uses cryptography to secure the network. So the miners, which are really just fancy servers, are are using a hash Alkire algorithm called Sha 256, Sha 256. And they are trying to guess they’re proving they’re using energy and trying to prove that they have solved a very, very complex cryptographic equation by throwing millions and millions of numbers into the equation trying to solve it. And the minor of that solves that equation gets the right to create the next block of transactions. So every 10 minutes, the ledger updates, okay, which is much better than every three days or or ACH, ACH or Swift or the current rails work right? There’s right? We it seems like it clears instantly. But all that stuff on the back end takes days. Right? And you can clawback an ACH transaction 90 days after it happens. I don’t know if
Mark Turman 30:14
no, no way. Nobody knows that. Yeah, or a bunch of us don’t know that much of us are just now catching up to this idea of what the SWIFT system is as a sanction against Russia. Right? I tried to understand it. Well, what does all that mean? That Okay, well, we just got to make sure that Russia can’t do business by taking them out of the SWIFT system.
Lee Bratcher 30:32
Right? Right. And so he uses cryptography to meet these miners are working to solve this very complex cryptographic equation, the one that solves it first, and it solves approximately every 10 minutes. So there’s a new block solved every 10 minutes, they update, they add the next block to the chain, they hash all the previous blocks to the change that that there, the chain is immutable before it. So you can’t go back and change records in the ledger, right? And all the other miners, while this cryptographic equation is very difficult to solve. Once you have the answer, it’s it’s really easy to backcheck because you just plug it in, you’re like, oh, yeah, that miner solved that. Now he gets to, you know that that computer gets to form the next block. And they they all come to consensus, that’s the term for it, they come to consensus on what the ledger is. And all the nodes, therefore are then have an updated copy of the ledger of the Bitcoin Blockchain.
Mark Turman 31:30
So it’s essentially like each of the nodes is holding the other nodes accountable.
Lee Bratcher 31:35
Exactly. And it would require more than 50% of the nodes and or miners, which are not full nodes, but they’re the servers to be malicious to break the network. So think about that’s called a 51%. Attack. If 51% of the nodes and the miners colluded together and said, We’re going to change the ledger, we’re going to, we’re going to create, we’re going to make one plus one equal five, and break the ledger basically give somebody an advantage or give them a million Bitcoin or something Well, two reasons why that won’t happen. One, it would be the economic incentive for all of these miners and the nodes is to keep the integrity of the system of the of the Bitcoin Blockchain because if they collude to break it, then all of the Bitcoins that they hold will instantly become worthless, because this whole system is built on cryptographic certainty, and non digital scarcity. And so they would break the whole system and Bitcoin would plummet to a value of zero.
Mark Turman 32:54
And so when when you’re talking about cryptography is kind of the basis of the language of this right? You’re really talking about encoding, right? Or what the average person would talk about, basically, computers speaking in code to each other. Right? Correct. And tell me if I’m wrong. Am I hearing in that? Obviously, there’s massive complex algorithms that are driving all of this. Is there an element of artificial intelligence that is driving these miners and nodes as they communicate in maintain sound like the the core of this is the ledger, right? This is the that’s the fundamental aspect and foundation of where Bitcoin cryptocurrency gets its value is from this agreed upon ledger, right. And, and is it? Is it simply that these computers and these massive nodes have been programmed in a certain way? Or is there a need that artificial intelligence is in some way at play here? Or is it simply just advanced computer technology called advanced computer encoding?
Lee Bratcher 34:05
Thankfully, artificial intelligence plays no role, because that would cause uncertainty. Right. Now, this is a very certain cryptographic algorithm that’s been existed for many years, and has been used by the US government, the military department defense. So this this element of cryptography is not new. There’s no changing the way the consensus mechanism works. And there’s certainly no artificial intelligence. So the miners are just machines that run they have application specific specific integrated circuit chips in them, so ASIC chips, and they just run the equation. And people like I, for example, have several miners myself, that I use to earn Bitcoin by plugging it in because you actually can earn Bitcoin as a result of using miners to mine Bitcoin. And there are there There’s really no artificial intelligence element to it whatsoever, which is, which is I think good creates a little bit of simplicity in, even though this cryptographic equation is not necessarily simplistic, it is elegant though, right? It is elegant cryptography. And there’s a trillion dollars worth of value like 1 trillion US dollars worth of value in the Bitcoin network. So what I mean by that is, Bitcoin has a market cap of just under a trillion dollars, sometimes it’s over a trillion dollars, depending on what the value of Bitcoin is, per coin. So that’s a pretty significant amount that is secured by this network, this global network, that hackers are trying constantly to hack, but they cannot. And I will stake my reputation. And my I don’t know, I would probably bet all the money that I have in the bank, that the hackers will never be able to hack the Bitcoin Blockchain. How hackers can hack centralized exchanges, like honey pots of data at some, some exchange, I won’t throw any names out. But these exchanges that operate as centralized entities that help people buy and sell, that those could and can and can be hacked. And you’ve heard maybe have a few of those been that have been hacked. That’s certainly but that’s, that’s, that’s not really using this technology. That’s an exchange that’s using the traditional on and off ramps, and that’s no different than like, the Citibank hack, or the experience hack, or these other hacks that we’ve heard the Yahoo hack right now, these are all the same. The Bitcoin blockchain has never been hacked, a proof of work block, you know, once once this gets big enough, not even the US government or the Chinese government could hack this. The what, cuz what would need to happen is the US government would have to spend hundreds of billions of dollars or trillions of dollars to try to buy up all this hash power and all these nodes and try to you know, but it’s just not it’s not feasible, even if even if the government decided they wanted to do that. There would be no market for there would be no mechanism for I mean, it’s so decentralized now. And it’s operating so efficiently, that the government wouldn’t want to do that and, and actually make, I regularly speak with elected officials, including Governor Abbott, Senator Cruz, Senator Cornyn, for those listeners outside the state of Texas may not be as familiar with those elected officials. But those are kind of the highest ranking officials in the state of Texas. I regularly converse with them about this technology. And they understand that this technology blockchain as a whole and Bitcoin in specific and crypto is very important for the US competitive edge and innovation. If we want the US dollar to remain the world’s reserve currency, which I do, and I think you probably do as well, and most Americans do, because that’s the reason why we can borrow so much is because our dollar is we can borrow in the dollar, which is the reserve currency of the world. If we want the dollar to remain the world’s reserve currency, we have to remain innovative and competitive. And bitcoin is not a competitor to the US Dollar as the world’s reserve currency, it’s a supplement to it. Think about it as digital gold, the more dollar or the more Bitcoin that the US government can hold.
Mark Turman 38:25
It’s like they’re acquiring more gold and asset. Exactly. And instead of putting gold bricks in Fort Knox or somewhere else,
Lee Bratcher 38:32
you’re putting Bitcoin in a digital wallet in in somewhere in the Treasury Department. And then other central banks around the world see, you know, the US financial position continues to increase and it continues to get better because look, more gold look. Bitcoin Bitcoin. Yeah. And bitcoins up the whole answer. It’s only a trillion dollar market cap gold is a $10 trillion market cap. Now gold is 10 times the size of Bitcoin. But we’ll come back into this podcast in a few years. And my estimation is that by 2028, Bitcoin and gold will have an equal market cap, Oh, wow. Okay, we’ll grow that fast, it will grow. It’s actually grown much. That’s kind of a conservative estimate, because it’s over the last several years, it’s grown much, much faster than that. On a percentage annualized basis, I get 100. And something. Well, I don’t want to quote the percentage because I’m gonna misquote it, but someone can Google and figure out the annualized increase in Bitcoin over time. Now, let me talk a little bit about adoption. Okay. Texas, 29% of Texas voters are likely Texas voters who are between the ages of 18 and older own Bitcoin or crypto. That probably is surprising to many of your listeners. Oh, yeah. 20 29%. And that is a survey done by a group that we actually commissioned the survey at the TVC group called onMessage. They do a lot of political polling, and that’s a 2.2 margin of error with our statewide survey. So It’s pretty significant number.
Mark Turman 40:01
So do you think most of those, you know, nearly 30% of registered voters? Do you think they have simply learned about this in various ways, were they perhaps advised this way by somebody like a financial investor, who presented this to them as, hey, this is, this is like a high quality blue chip stock that you might want to consider, you know, like, in years gone by, hey, if you can buy IBM, or you can buy Apple stock, or you can buy Walmart stock, this is something like that. It’s not a traditional stock, but it is something you know, I’ve heard of a number of people, friends that have invested small amounts, just because they’re kind of learning what this is, as something that is investable. Right? And is, is that what we’re seeing, that’s where this 30% of adoption has already risen from those kinds of things.
Lee Bratcher 40:57
It has, and let’s think through what you at the top of the hour of the show, he talked about the number of different crypto projects and protocols. There are actually 1000s Most of them are worthless. Most of them are just someone created, they’d replicated a blockchain copied some code. And they have a project and they’re using it as basically tokenized equity in their startup. And they’re not really
Mark Turman 41:25
that decentralized, right? So it’d be a comparison might be of, hey, a penny stock Apple Computer got going. And some people notice that they tried to mimic some of what Apple Computer was doing and get people to invest in their small computer company because Apple was doing so good. They wanted to be like Apple or become the next Apple Correct? That kind of thing.
Lee Bratcher 41:45
Correct. And yeah, you can look at the market caps and and understand the free market is a beautiful thing. So people are investing in the projects that they see had the most value to humanity, and that the most capital formation the most potential to make profit, right? So there’s a ton of projects out there again, most of them are worthless. But but if you happen to pick, there’s a little speculative asset aspect of this, which I don’t condone speculation, but some people try to invest in some of these really early ones, because maybe they’re a few pennies. It’s a penny stock, right? Now, it could go to zero or it could go 100x. No, that’s not my style. I don’t know enough about the market, even though this is my full time job. Now I run this industry association, and I think about these things. I only invest in the top market caps, right? That the vast majority. So the blue chip stock really is Bitcoin. The blue chip, crypto is Bitcoin. And I put it in a totally different class than all the others. It’s really more of a digital goal. It’s an asset. It’s the most decentralized and the most secure right? Now the next best is Ethereum, Ethereum has, it’s a little less decentralized and a little less secure. But it’s still very, very decentralized and secure, with several 100 billion dollar market cap. So millions of people around the world own this asset. And one thing advantage that it does have is it has a lot of developers building decentralized applications on it’s on his protocol. So theory is also very strong when you have several others, you know, algorand, Solana h bar, there’s a variety of other coins and tokens that are in the top, say 50, that actually have value and are producing things of value. But really, in the grand scheme of things. Bitcoin and Aetherium are, by the way, the only two that the SEC have declared to not be securities, right. So some of these other tokens, actually had to go through regulated securities tokens offer token offerings, with the SEC to even offer them on an exchange, Bitcoin and Aetherium had been declared by the SEC to not be securities. So they are they are not stocks, they are a new category, I’m going to call them a quasi commodity currency, security or stock,
Mark Turman 44:14
they’re trying to figure out what they’re going to call it right now.
Lee Bratcher 44:17
So the regulator’s don’t even know the CFTC, the Commodity Futures Trading Commission, the SEC, the Securities Exchange Commission, all of these entities, the IRS, Treasury, etc, are competing for who’s going to regulate these things. And Bitcoin and Aetherium are so decentralized. And the reason why they’re not securities is they’re not somebody in the middle that takes a profit when they these projects do well, right? It’s, it’s the whole community. Whereas some of these other projects say, not only the ones I’ve mentioned, say the other 1000 that are down the list that are very early, and they don’t, they’re not very decentralized. There’s a founder who probably holds most of those tokens that if that goes up in value They rebuilt outsized rewards
Mark Turman 45:02
that he’s the one that reaps the reward, right, like a founder of a company, correct.
Lee Bratcher 45:06
Which, which then that sounds more like a security that meets the Howey Test, which is how the SEC determines if something is a security or not a security. So the expectation of other the profit based upon the efforts of another is one of those rungs of that test. So that that coin hasn’t necessarily been declared by the SEC to be a security or not, but it probably is. Now, there’s some towards the top that are so decentralized, that maybe they’re not the SEC just hasn’t made a determination on that yet.
Mark Turman 45:35
Right. So. So it sounds like the SEC, every, every government, not just our government, governments around the world are all trying to figure out how to relate to these currencies, right? And try and how do they understand them? How do they relate to them, but it is becoming in a very significant way, the way the world does? business the way the world does transaction? Right. It seems to be operating in that way.
Lee Bratcher 46:06
Right? Yeah. And even banks, big banks, right. JP Morgan, Wells Fargo, all the banks that we know and use, are using this technology, right? They may not be holding Bitcoin on the balance sheet, although many of them are. But we’re like Fidelity, which offers cryptocurrency investment options to their high net worth. Client’s right? So the bank, the banks, so they’re adopting the technology, they’re lending on projects that are involved in the technology. But they’re also using the back end blockchain technology that was invented by Bitcoin to clear transactions, because it’s more efficient than the way that we did it in the analog world, right? The way that we clear transactions today is the same way we’ve done it for for many decades. And it doesn’t really work in the digital world,
Mark Turman 47:02
because it’s simply essentially too slow for the way the digital world operates.
Lee Bratcher 47:07
Correct. It’s not the it’s not the system’s fault, if you will, it was developed in a time when the internet didn’t exist, right? So when we basically bootstrapped this or strapped on an anachronistic system that worked perfectly well, decades ago, when the internet didn’t exist, to the digital world, and to digital transactions. And it’s not, you know, it may seem seamless to us. But in 10 years, just like the fax machine seems seamless to people in the 80s. Like that, and it actually provided a lot of value in that
Mark Turman 47:42
time, right? seemed like the most amazing thing anybody’s ever seen at that moment
Lee Bratcher 47:46
at that moment. Now, we look back on that and think, Well, that’s, that was great, then, but we have way more efficient, I send an email, right, and it’s much more efficient. We’re gonna look back and say, well, the the ACH or the analog way of clearing transactions or making transactions was very, it provided a lot of value for many decades. But it’s not the most efficient way to do this. And so whether that is, you know, Bitcoin, or crypto or just the underlying digital ledger, the blockchain technology that banks are using to clear transactions. That’s why many banks are thinking about Central Bank, digital currencies, maybe federal, or excuse me, central banks. So the Fed, for example, is is researching a central bank digital currency, President Biden has issued guidance about developing a central bank digital currency, China has been using a central bank digital currency for years now. And when the Olympians went to the Olympics, this is probably a podcast for another day. But the Chinese gave all the athletes from all these different countries, their central bank, digital currency, their digital Yuan, to use and try and play with and, you know, for free, basically, to try to disseminate that currency globally. Well, because they’re trying to compete with the dollar. Yeah. The problem with the Chinese central bank digital currency or the digital Yuan, is that it’s controlled by the Communist Party, right? It’s controlled by this the central government, and they have full financial surveillance into the the financial lives of all of their citizens.
Mark Turman 49:31
So in comparison in that system, whereas in Bitcoin, that type of thing, you can see the transactions but you can’t see who owns the wallet. In the in the Chinese case, they can see not only the transactions, but who, who actually owns each of these wallets correct and they can try to track it by individual or by by organization if they want to.
Lee Bratcher 49:51
Exactly and the public can’t see it because this is a private blockchain. There’s a difference between a private and a public blockchain Bitcoin public blockchain permissionless US and the Chinese cbdc. That’s what central bank digital currency cbdc for short. Is, is private. And so imagine, you know, they have the social credit score in China. So imagine if you have low social credit score, you start spending money on things that you that the Chinese government doesn’t want you to spend money on, and then they freeze your account. Wow. Now, you know, in the current system, you can somewhat you can kind of freeze an account, now you just freeze up, you tell a bank to freeze an account, right? In this system, they could freeze an account instantaneously, they could charge a negative interest rate on that account, instantaneously. Say you were just a general, a wealthy Chinese businessman or woman, and you were saving your money. But the Chinese government wanted to stimulate the economy. They could say, Okay, everybody whose account size is over a million dollars of Chinese digital Yuan. If you don’t spend at least 5% of that every month, we will start assessing a negative interest rate on your bank account. And it’ll automatically be
Mark Turman 50:58
there’s pull it out that way. Yeah. So it’s kind of the exact opposite of what you see, with like Bitcoin, where it’s totally decentralized, and there’s nobody that can freeze it interfere with it in that way, when it’s when it’s private, in the case of the Communist Party of China that they have come. It’s another way of control as opposed as opposed to a free, free market type experience.
Lee Bratcher 51:25
Yeah. Yeah. And that’s why this let’s bring this back. I know, we probably don’t have much time left on the on the podcast. Let’s bring this back to Christians and the worldview that we Yes, My point exactly. Freedom is financial freedom is integral to religious freedom. Because how do totalitarian excuse me, totalitarian governments and autocracies try to punish, or to limit the spread of the gospel all sorts of ways, right? Physical violence, but also financial repression and financial constraints and constraints. So to have an asset that is not controlled by a government is massively important for our brothers and sisters in Christ all around the world, it’s a little less crucial for us and United States, it is still important for us the United States, but we don’t depend on it right? Dollar is still important for other reasons. It’s important for other reasons, exactly. The dollar is still a huge blessing to people in the West. But people in Nigeria Christians in Nigeria, the adoption rate of Bitcoin in Nigeria is on real. It’s, it’s 10 times what it isn’t.
Mark Turman 52:39
So you get into the places like that, you know, I met somebody from Ethiopia yesterday, and you get in places like that, where governments are unstable. And the ability to use their currency as a means of of operating your life becomes incredibly unstable. And as you said, if you’re a part of a Christian group, or any group that people in power, want to restrict, one of the ways you can do that is by controlling their ability to operate financially, right.
Lee Bratcher 53:09
And I also want to bring up a point that to bring a biblical reference in here, and I’ve got to attribute this, this thought process to a friend of mine named Jimmy song, who’s a strong Christian. He’s actually a bitcoin core developer, like a programmer. So he builds like improvement processes, he does improvement processes to the network. He actually wrote a book called thank God for Bitcoin. And the premise is, God detests unfair Weights and Measures. Right. And the Bible says
Mark Turman 53:39
a lot about that. Yeah, exactly. Book of James, particularly in many other places. Right.
Lee Bratcher 53:44
Yeah. And so he talks a lot about the current system. Disadvantages some, and it’s really sort of that if you think about it, taxation is voluntary. Excuse me, it’s not voluntary, right? It’s, it’s compulsory, right? But, but we at least we understand the value trade off. Inflation is a form of theft, money printing, right? And the government deciding who should get what if we think about it devalues the wealth that we’ve accumulated. Now, not to say that as Christians, we shouldn’t be giving as much of that away as we can. We’re not trying to hoard it. But we also don’t want a centralized government, or excuse me, the federal government inflating that away and picking winners and losers of who should be whoever is closest to the printing press gets the most benefit from that. Right. So So Jimmy, Jimmy song has this book about, you know, the the innovation that has become and now, we all know, Jimmy would be the first to tell you that the gospel is the most important thing for human flourishing in the world. Bitcoin is not even on not even on that scale on that And nothing is on that. Yeah. But what I will say though, is bitcoin is just one tool of many for increasing human flourishing, right? What do they say? What does the Scripture say? Work for the shalom of the city, the human flourishing of the city? Nehemiah, I think is that reference, right where he is. Jeremiah, it’s Jeremiah is Jared worked for the good of the city, good city, even if you don’t, even if it’s not your people, because Jeremiah was not in Jerusalem at the time, he was working for the good of a foreign city city that he was a captive in. So as we work to build human flourishing, Bitcoin is a tool for that. It is a tool that, that through math and cryptography and some clever code has created some pretty straightforward mechanisms. That is, that’s not inflatable that you can’t put your finger on the scale of you can’t
Mark Turman 56:00
make it and become more fair for everybody exact right? So yeah, we’ll make sure we include that in the show notes that reference to that book, and people want to check that out as well. And that’s a good a good place for us to land, just a fascinating conversation about how things are changing in the financial world, and how how people can be a part of that, how they don’t need to be afraid of it, something for us to learn about something for us to grow in. And like said just when you start thinking about the opportunities and implications of that, particularly for people around the world, people in oppressive situations opera, the opportunity to still be able to function to be able to carry on their lives to thrive, especially in places where they’re trying to communicate the gospel where the gospel is not welcome. So Lee, thank you for your time. We, we definitely want to have you back to continue to explore this project. And to understand how this this part of the world unfolding thank you for being a part with us today.
Lee Bratcher 56:57
It was a pleasure gap hope to be able to connect with you again. And if your listeners want to learn more about this technology, we have a YouTube channel that can help educate them. It’s Texas Blockchain council.org. And same for the YouTube channel. They can just go and watch some free videos and absolutely understand this a little bit more.
Mark Turman 57:14
Yeah, a lot for us to grow in so that we can can be up to speed for sure. Thanks a lot for being here. Thank you for listening to the Denison Forum Podcast. If this is helpful to you, please share it with others and rate us on your favorite podcast platform. Thank you
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