John Corcoran 12:13
And I don’t know if you’re familiar with this, but I even read that Texas a year ago during the winter had some major energy crisis challenges. And I heard that because Texas has a lot of miners there now, that actually helped this winter with producing less of an energy crisis.
Harold Tan 14:18
Yes, exactly. So Texas energy grid has actually been partnering and inviting more and more Bitcoin miners to come to Texas to help stabilize the energy grid.
John Corcoran 14:30
Right. Devil’s advocate here, now, Texas is known for oil they’ve known for fossil fuels. Is that energy coming from fossil fuels? Or is it coming from more solar arrays? Where’s it coming from?
Harold Tan 14:46
It would come from renewables. So Texas actually has a lot of wind. And so it will help stabilize the wind and solar in Texas.
John Corcoran 14:57
Because the same thing with wind where like if there’s high In the middle of the night, no one’s using it get everyone’s asleep. It can be powering miners in the off times when the grid doesn’t need it.
Harold Tan 15:08
Right, exactly. And as you may have seen with oil prices, shooting through the roof, it’s not profitable to be mining Bitcoin with oil.
John Corcoran 15:19
I want to ask you about there’s some really interesting arguments happening, that people are making about digital money, DeFi, which is decentralized finance and Bitcoin, allowing the unbanked to take advantage of the financial system. Because it’s more accessible because people that don’t have a bank account, especially in emerging markets, so many people have got a phone and they can have money on their phone. What are some of your thoughts on that in terms of the applications there for Bitcoin for the unbanked?
Harold Tan 15:57
Yes, so I recently traveled to El Salvador and saw this happen in action for myself. So 30% of El Salvador’s GDP comes from remittances, meaning that they have family overseas, and they are sending money back to El Salvador. Now, if you’ve ever sent money overseas through something like Western Union, or MoneyGram, you’ll know that they charge exorbitant fees, much more than is really reasonable. And there’s delays and put lots of middlemen in between. So one of El Salvador strategies behind adopting Bitcoin is it gives the ability to cut out middlemen. So you get direct peer to peer transfer, you save on all those fees, and I’ll increase El Salvador’s GDP simply by cutting out middlemen, and using more efficient form of money mandatory transfer, and allows people in El Salvador to receive money that they who were previously unbanked. So in order to have received a wire transfer from the United States from their family, they would have needed a bank and not all El Salvadorians had access to banking. Now, recent stats came out that there are more El Salvadorians with Bitcoin wallets than there are with bank accounts.
John Corcoran 17:27
Well, that’s, that’s really cool to see that happen. I think that I don’t know if it was mandated for individuals to have in El Salvador to have a wallet. But I believe it was rolled out in like three weeks or something like every business had to have the capability to allow people to pay in Bitcoin within like three weeks.
Harold Tan 17:48
Right. So there were a lot of technical challenges. And now I wasn’t able to use it at 100% of the locations when I went to El Salvador, but I did pay my cab driver restaurants, my Airbnb, McDonald’s, and Starbucks, were accepting it. So you got to think if McDonald’s and Starbucks already have implemented acceptance in El Salvador, how easy would it be for them to roll it out worldwide?
John Corcoran 18:16
Right, right. I want to ask you a little bit about one topic regulation of cryptocurrency and Bitcoin. It’s been a big topic people are talking about these days, President Biden issued an executive order recently, basically just directing different agencies to study it, research it, come back with a report. You’re in a heavily regulated industry energy. I’m sure you have some thoughts on that, on what approach do you think should be taken?
Harold Tan 18:50
Yeah. So the United States has been a world leader in technology. I would say much of the internet boom came out of the United States, we have Amazon, Google, Facebook, Twitter, the United States has really led the world in internet technology. And if the United States is to stay a world leader in technology, crypto adoption would be the next form of that, and which is basically what Biden’s Executive Order has stated that the administration wants to keep the United States as a world leader in this technology. And so we now have several senators, which are lobbying for the adoption of Bitcoin, like Cynthia Lummis. We of course, have coin base that went public on the exchange. So as we have…
John Corcoran 19:44
Also some publicly traded miners.
Harold Tan 19:46
Yeah, publicly traded miners coming out of America. So we can see that there’s a groundswell of adoption in the US. And as more and more companies go public, as more politicians come to understand the techniques ology seems inevitable that the United States will support it.
John Corcoran 20:04
Yeah. Web3 is another term that’s thrown around a lot. First of all, how do you define that? Because I think a lot of people have heard that term view. They’re not sure what that means exactly.
Harold Tan 20:19
Yeah. So one simple analogy I’ve heard for web 3 is web 1 was a read-only. So web 1 was like the early 2000s, people had web pages. And you just go and read stuff. Web 2 was arrived social media, whereas read-write, so people can read and then write back or engage. And there’s this kind of two-way communication flow. The concept behind web3 is read, write and own. So instead of Facebook owning, and monetizing your data, each individual would do so.
John Corcoran 20:53
Yeah. And now we have decentralized entities that could be the owner. And then that leads me to ideas like NFTs and tokens, what are your thoughts on the rise in that. That industry is just gone crazy the last year?
Harold Tan 21:08
Yeah, I think there’s a lot of noise out there. I think a lot of the NFTs and tokens out there solutions in search of a problem. Whereas Bitcoin was created, specifically during the 2008 2009 financial crisis to solve the problem of money. So after Bitcoin was created, solve the problem, money, everybody else saw the breakthrough and double-spend problem and it’s like, okay, what else can we apply this to? But do we really need to record lettuce transactions on the Blockchain? No, I don’t know. Do we really need to put everything on the Blockchain? Probably not. So I think people might be running a little rampant with it.
John Corcoran 21:59
Yeah. As we wrap up here, what are you most excited about? Where do you see the potential as someone who’s watched this industry very closely for the last 10 years? What’s your eye on these days?
Harold Tan 22:14
Yeah, there are two big things. One is a revolution of the financial system. So the current monetary system we use now was developed generations ago before the internet and distributed computing. So if you consider a first principles mindset, and if you’re going to design money from the ground up today, with the power of internet and distributed computers, would we have only two decimal places? And now money? Probably not right. We fractionalize it more. Would we only allow money transfers Monday through Friday 9 am to 5 pm? Probably not.
John Corcoran 22:53
I’m laughing because like, everything’s 24/7 these days?
Harold Tan 22:57
Yeah, everything’s 24/7 our money should be 24/7. If I want to send money to my family in Australia right now, I should be able to do so and they should be able to receive it right now. Not waiting now for the everything to clear till Monday, next bank, whatever it is, should money also be politicized? No, I don’t think so. I think money is a basic human right and need kind of like energy. So when you have Bitcoin, which is a political, there’s no government behind it, there’s no CEO, there’s no central organization, it eliminates all the moral hazards of any centralized authority, as well as any kind of positive issues. So the redevelopment of money and emergence of a whole new monetary standard is profound. It’s like discovering gold for the first time.
John Corcoran 23:57
Yeah. And then the gold that can be transferred all over.
Harold Tan 24:01
Yeah, gold that can be transferred. And also cannot be seized is unseizable. So, there was an era in the US that gold was made illegal to own and hold. Bitcoin is the only asset in the entire world that humanity has, which is completely unseizable, so bank accounts can be frozen. Your real estate can be foreclosed or even seized by eminent domain. Gold of course can be physically seized, Bitcoin as the only completely unseizable asset.
John Corcoran 24:33
Since you have the technical background, I’m gonna ask you this question because there’s one thing that I’ve been stumped over. There was a big hack that happened a couple of years ago, I forget which one it was, but billions of dollars were just returned. Yeah. So what I don’t understand is that people do say like it’s unseizable money, but you can also track and address spur money. So in that case, was I forget the exact details, but there was a hack money was this Bitcoin was taken, but the people that had it billions of dollars couldn’t spend it. So is there a fear with Bitcoin that if money is trackable that their governments or entities or the everyone could decide like, okay, here, we know the address of this money, and people could prevent that person from spending it.
Harold Tan 25:32
Yep. So the one thing about Bitcoin is it’s programmable money. So you could blacklist certain addresses, but that is always going to be a catching up game. So you find an address, you blacklist it, they can move it to another address, you blacklist that address, and Bitcoin because of its program Matic ability, you could split it up into 100,000 different addresses, and have that essentially, churning, in microsecond levels and then you’d have these centralized databases continuously trying to track it, you mix it up something called coin join, it’s kind of like there was a period in time when the US would ban any money that had traces of cocaine on it. Eventually, all the money with cocaine on it got mixed with all the clean money, and pretty much every if you analyze any $100 Bill, you’ll have some tracer cocaine. And so the same thing will happen with Bitcoin. And once the government realized that pretty much every $100 Bill has some traits cocaine, they gave up on trying to blacklist that.
John Corcoran 26:49
Because the reason I am curious about this because there’s certain people like Elon Musk or like Michael Saylor from MicroStrategy, which everyone watches everything that they do, especially having to do with Bitcoin. So, I wonder, like, if we somehow found out the address for Michael Saylor or Elon Musk, then everyone would be watching them? Just like people are watching Elon Musk’s plane? And I’m not sure that people would want that.
Harold Tan 27:14
Yeah, again, it’s just depends on how private you want to keep things. So every wallet is that’s generated, anybody can generate any wallet address and that has no personal or what’s called KYC know your customer information attached to it. So it just comes down to how well a person secures the privacy.
John Corcoran 27:37
Got it. Okay, and last thing I want to ask you about is, Bitcoin has been called digital energy. It’s been called digital property. It’s been called digital software. It’s been called so many different things. What do you see it as?
Harold Tan 27:55
A good question. Yeah, has been called so many things. I see it as the foundational layer for new civilization.
John Corcoran 28:07
Wow, that’s broad. That is very broad.
Harold Tan 28:10
Though if you consider money, it all comes back down to first principles. With the concept that money has to be a foundational layer for civilization.
John Corcoran 28:24
Harold, this has been great. Where can people go to connect with you and learn more about you?
Harold Tan 28:29
Yeah, Haztan on Twitter is probably the easiest way.
John Corcoran 28:34
Excellent, Harold. Thanks so much.
Harold Tan 28:36
My pleasure. Thanks.
Thank you for listening to the Smart Business Revolution Podcast with John Corcoran. Find out more at smartbusinessrevolution.com. And while you’re there, sign up for our email list and join the revolution. And be listening for the next episode of the Smart Business Revolution Podcast.