LET’S TALK BITCOINEpisode 119 – Wildcat Currency with Ted Castronova

Participants:

Adam B. Levine (ABL) – HostStephanie Murphy (SM) – Co-hostTed Castronova – (TC) – Author of Wildcat Currency: How the Virtual Money Revolution is Transforming the Economy

ABL: Today is June 17th, 2014, and this is episode 119. This program is intended for informational and educational purposes only. Cryptocurrency is a new field of study. Consult your local futurist, lawyer, and investment adviser before making any decisions whatsoever for yourself.

My name is Adam B. Levine. I'm the editor-in-chief of Let's Talk Bitcoin and pleased to be with you, today. From the wilds of New Hampshire, we're joined by LTB host Stephanie Murphy.

SM: It's wild up here.

ABL: It is indeed wild. You're getting ready for PorcFest. This is our last recording session before you take off for a while.

SM: There's actually two. I'm going to be going from Bitcoin in the Beltway, which somehow they scheduled the week before PorcFest – straight to PorcFest after that, so I'll have a lot to report in the next couple weeks.

ABL: Well, that sounds like a fun time. We'll definitely miss you here, and I guess I'll be doing some solo interviews while I'm all by my lonesome. I think Andreas is supposed to be at at least one of those events, and possibly two, as well.

SM: No way. If he comes to PorcFest, he's going to get mobbed by fanboys.

ABL: I've been hearing about people who're going. Idunno... Just leave Andreas – LEAVE ANDREAS ALOOONE! Anyways... Here at LTB, we hear and talk a lot about money, but bitcoin wasn't the first private currency and neither was the centralized e-gold before it. We're pleased to have Ted Castronova sitting in with us. Ted is a professor of media and cognitive sciences at the Indiana University, and author of the recently released book, Wildcat Currency: How the Virtual Money Revolution is Transforming the Economy. Edward, thanks for taking the time.

TC: Thanks for having me. Adam, Stephanie, pleased to meet you guys.

ABL: It's an interesting time to be working in a monetary space. In the last couple of months, we've seen some big movements from other global powers as far as the US dollar as a global

reserve currency is concerned. It's interesting to take this opportunity to look back at the past of what's come before as far as money's concerned and also to look forward. Your book is incredibly appropriately timed, Ted. How did you – I know a lot of people working on cryptocurrency books. How did yours come about?

TC: It's a combination of luck and luck, basically. The first luck is that I've been working on economy game spaces for decades. I think anyone who's been involved in games understands what currencies are. If you have any economic training or just a lightbulb went off, you would've said, “wow, there's no real reason that can't be in the real world.” It was just luck that I was working in that area. The other thing is I happened to get an NSF grant to look into this stuff back in 2010. Bitcoin was out and I could just sort of see what the medium-term future – like the next 5-10 years – looked like. It was pretty obvious Bitcoin was gonna spawn a bunch of things like it, and there'd be an explosion of little currencies. That was fairly clear. What was lucky about it was that nobody else was really thinking about it in the academic, book-writing space. I'm kind of surprised my book ends up being the first hefty book coming out of the academy about this phenomena. I think it's incredibly important and I just feel very fortunate that I was in the right place at the right time.

SM: Ted, I'm curious what games you got started on. I remember back in maybe 2007-2008, around that time, there were lots of people talking about Second Life, and I know that had a currency called Lindens... there was a little bit of crossover into the real world, like people were buying Lindens for dollars, and there was discussion on how to tax items in the game. What games got you started on virtual currencies?

TC: Back in the day, I was mostly involved in a game called Everquest, and there were a few other big ones at that time, and it was very common in that world for people to earn currency in that game, accumulate massive amounts of it, then say, “ah, I'm going to quit the game, so I'm going to go on eBay and sell what I have.” I launched my career in this area by looking at those currency transactions and I've just kept my eye on that space ever since. Second Life, Stephanie, you mentioned – it came along and they had real aspirations of piercing the wall between the virtual world and the real world, and it took off for a while, then sort of faded away. I think it's still being used and it's not a bad platform, but the thing was that it was sort of heavy. To use Linden currency, you had this really heavy download, have Second Life on your machine, and you had to have a super-duper machine. If you think about it, the cryptocurrencies, they're like, “who needs the 3D figures? Who needs immersive landscapes? All you need is the currency.” What we've seen in a lot of developments in different areas, the virtual worlds have spawned things that then individually jump out and start a new phenomena. You could look at Facebook or social media applications... just sort of started in the game space, jumped out, picked off a niche in broader society without all the game stuff. You might think of games as a laboratory where people just having fun innovate these new social and economic forms.

ABL: We're recording this on Mumble, an open-source version that essentially improved on game communication platforms for use in real-time clan stuff, where latency and quality's really important. There's definitely huge amount of innovation that's been sparked by the game space. You're talking about tokens and currencies, so you take away Second Life from Linden dollars – is it better, is it worse, or does it matter?

TC: Any question on a technology better or worse depends on what you're using it for. All you have to do is look in the real world and ask if there's a need there that can be served there

by some subset of technology from games. In the case of this interview, certainly. There's a need for people to be able to connect at a distance and have clear, immediate conversations with no difficult set-ups, and the same thing for currency. There's a need for people to be able to do fluid transactions that have nothing to do with gameplay.

ABL: -So you're, of course, talking about the dollar. We use the dollar for everything, so why would we want to use something other than the dollar?

TC: Because, like Second Life, the dollar is incredibly encumbered. There're all kinds of good reasons for it, but it's just very encumbered. It's natural that economic systems – they're always looking for a cheaper way to do things. I'm anthropomorphizing the economic system, but that's kind of the way cultural and economic evolution works. Someone comes up with a way of doing things that's easier and better, and that's going to take off, and I think that's what's happening with virtual currencies.

SM: I think both of you are saying the currency can be divorced from the game and used in life, and what do you need the game for? The game is a way for people to connect online, but it almost serves as a way of mining, if you're drawing an analogy to Bitcoin – it's a way to distribute the currency, and a way for people to exchange their time or effort, and usually it's time as I understand, in these games, for units of these currencies. Am I right?

TC: Yeah, you're exactly on point with that. The game industry is innovating the concept of gating, which is – I have stuff I think people want, and how do I put a wall between the people and the stuff so people pay me, or so they have to go through something to get it. If you think of Bitcoin as a currency, that's a technological problem – solving hashes, solving problems, things like that – but in the game world, they're developing on that as a psychological problem. What's the optimal way to get people to use the processors in their heads and the clicks of their fingers to move through an environment, through the content you've gated, so they have a good time and you're paid for what you've made. It's a tricky psychological problem, but they're really... all this free-to-play stuff, all this monetization and revenue, and this's probably going to be the next wave of change in the real world – you know, how does Chrysler gate its cars?

SM: The question I always come up with is, what gives virtual currency actual value? Essentially, in a lot of these games, it's people who have a lot of time and effort and energy to invest in the game are getting some kind of token, essentially in exchange for the amount of time and effort they put into the game. What makes that valuable is that other people want the things they have. All value is subjective. It's just fascinating to me that games can just issue these tokens to people who spend a lot of time playing it – poof, value is created out of this because people value what those tokens can do.

TC: Yeah. When you strip it everything away, what gives money value is only one thing, which is the fact that money has value. What it is – it's a collective expectation, which is not a tangible thing at all – it's, frankly, a metaphysical concept. If I sawed through your brain and looked into it, I'd never see any concepts. There off in the space of non-reality, and value is one of the metaphysical concepts. What makes money “money,” is when you and I share a value, and that's how you get things like in Finland – beaver pelts were money, but in PoW camps, cigarettes are money, and in certain insane asylums, plastic tokens are money. People start treating things as money for only one reason, which is the understanding that other people will treat them as money. When you get right down to it, that's kind of an ephemeral –

it can be iron-clad in a way. You can't escape it. If you're in a society where everyone understands beaver pelts are the money, you can't avoid that. You have no power over it, but it's very ephemeral in that, in an instant, everyone could decide, “you know what? Beaver pelts aren't money, badger pelts are money,” and suddenly, everything shifts. There's more to it... this is an issue economists wrestled with for about 150 years – 1750, from Adam Smith to about 1900, which was, “how do you find the value of something?” If I have a diet coke, the value is that it tastes good or it took a lot to make it. With money, you take a dollar bill out of your pocket, it doesn't serve any purpose and it's easy to make, so how could this $100 bill be worth $100, and it's in that area of shared expectations.

ABL: -So money, in effect, is a confidence game. Money is the assumption that other people are going to think it's money. It's not a ponzi scheme, it's not a pyramid scheme – there's nothing like that going on, but it is a confidence game where in order for the system to operate, everyone has to be on-board and understand reality in the same way. It actually is quite similar to bitcoin, it's just the mechanism isn't transparent in older types of money, whereas in bitcoin, everything is just totally out in the open, you can see what's going on.

TC: Absolutely. You can see what's going on. It's a confidence game but it's not a ponzi scheme because a ponzi scheme is unsustainable. This is sustainable. It's sustainable for as long as people treat bitcoins as having value and then --

ABL: -But wait! Didn't you just say it's sustainable as long as people do “this”?

TC: It can be sustainable. You can't sustain a ponzi scheme. You eventually run out of people, I guess that's my point. With the currency, there's no technical or.... –

ABL: Because it's an ecosystem.

TC: Yeah.

ABL: This loops back around. The title of your book is called Wildcat Currencies. It's not specifically about cryptocurrencies, it's kind of about the broad historic context in which we find ourselves and where you're projecting we're gonna go from here. Let's talk about Wildcat Currencies. What's at the most base level of a wildcat currency?

TC: It's a currency people make up. It doesn't come from any particular regulatory regime.

ABL: So it's an unregulated, privately-issued... any other characteristics that define something?

TC: That's enough. The metaphor I was going for with wildcat was wildcat exploration in Oklahoma and Texas back in the '20s and '30s where people would just walk out and put down a derrick, and you'd just have fields of these up, people looking for oil. It was unregulated, it was kind of wild-west, and that's sort of what I see... Dogecoin is a perfect example, what I'm talking about. People just say, “well, let's just make a coin around this dumb dog,” and it's like – well, why not? Why doesn't my university have it's own coin, the US Army could have its own coin... The technology's all there where everyone can do it, and the socio-economic structures are ancient.

SM: I'm not buying any Army points. Isn't that US dollars?

TC: You could say that. The Army, I believe, has, or had, a kind of scrip. You give the soldiers the money and they can go to the PX, so they have kind of had their own currency, I guess.

ABL: Store credit type things.

TC: Yeah.

ABL: -So these private currencies in general – I'm trying to understand, historically, how have these things worked? What have they looked like in practice? We look back at credit cards and the earliest examples we see are diners' cards from the late 1950's types of things. As far as these roll-your-own currencies are concerned, clearly it's not new to Bitcoin, so where did these things originate?

TC: It goes back, if you want to just want to just talk about paper money, this goes back to the middle ages where the king would sit there and he'd coin heavy metal, so that was the coin of the realm, but anybody who's running a goldsmithing operation and had gold in the bank would start to issue pieces of paper saying, “this piece of paper is good for a bar of gold down here at the bank,” and then when banking itself emerged, the banks started to make their own money, and for a long time, the idea of governmental paper money was really hotly debated. In this country, the idea of a bank, the Bank of the United States, was debated for many years. Common practice was for big banks to be the source of a lot of paper money, but what was associated with that was a lot of booms and busts because if I've got a portfolio of money and half of it is JPMorgan-Chase and the other half is some local bank, Joe's Bank, and Joe's Bank goes under, I just lost half of my holdings because it was a privately-issued bank currency. As that continued to happen across Europe and the United States every 15 or 20 years, there was this push – we should really have regulated currencies. Banks issued private currency for hundreds of years, but there was a lot of chaos. Banks would go under and you'd lose the value of your portfolio, so economists and policy-makers continually stressed there should be a single, centralized currency to get rid of the chaos and the financial risk, and it should be regulated at the top level and carefully taken care of, but along the way, they never said other people can't issue their own currency, they just made currencies so stable and so good, they took over.

ABL: -So that's worked really great for us, I can tell, looking back through the last 20 years of financial history, now that we've settled on..

SM: -So stable it's lost 25% of its value.

TC: That's the thing. There've been debates among monetary economists for a long time on what – so now we have the government being the sole source of money, what should that be like? “Well, we should tie it to the gold standard.” “No, no, no, that doesn't give us enough freedom. We should let it grow according to a basic rule, like 2% money growth a year.” “No, no, no, we should intervene and pump up the money supply when we have unemployment.” All this debating – what this does is it makes the money – it ties the money to political culture, and that's great when your political culture is great, and when the political culture is awful, that's really, really bad. Germany, in the early '20's, that country was under the burden of having to pay France a whole bunch of money because of this little thing called World War I, and the German government said, “Okay, well pay you,” and they just turned on the

printing presses. Within about a year and a half, the value of the German Mark fell from about... it got to the point where people were buying bread with trillions of Marks. They basically just wiped out their own currency. Idunno what the right answer is, but I do know having it centrally governed means you're really dependent on having good politics.

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ABL: -So it seems like there's not really a removal of risk that's possible, at least not that in practice has worked. Rather, it's just deciding who and how concentrated it will be.

TC: I'm not ready to give up all hope in removing the risk, though. We're at an age where a million people can make their own currencies. Bitcoin has opened up everyone's eyes to the idea that you could program a bot to manage the money. Effectively, the securing function, the hashing business, the technology backend, is also policy statement, so we're in an era where we can discuss what kind of money is going to have exactly the features that're best. We might be able to solve the risk problem, like if you had a money that was issued automatically to people who, according to some deep database calculation, were needy, for example – those kind of social policy things could just be written into the protocols of the money, that it would seek out people who don't have food in their house, and suddenly, currency would appear there. It would seek out people who're apparently speculating and it would impose taxes there – I'm not saying you SHOULD do that...

SM: Yeah, nobody's going to game that system.

TC: I'm just saying these are the opportunities that're available. Creating a money is like creating a governing policy for an economy, and we can have this conversation, and it's not going to be limited to 500 guys in Washington. Anyone can do it.

SM: Except it's not like creating a governing policy because with privately-issued currencies, you can opt-in or opt-out, you don't have to use it. For instance, I don't think I would personally use a type of money that would seek out people who were doing certain trades and impose taxes on them through the blockchain or redistribute money to people who had no food in their house. I prefer to do that on a human basis instead, through charitable means. -But that's fine because those are privately-issued currencies, so I don't have to use them if I

don't want to, and that's the difference between a government currency and a private currency. With government money, legal tender laws – yeah, it doesn't exactly mandate you have to use it for every transaction or anything like that, but in certain situations, you do have to use their money, and it's so prevalent to the point it's difficult to opt out of that system.

TC: I agree with you. I guess I'm seeing it as – imagine a world where there are all these different governments and different planets. You can instantly move to the one you like the most. It's sort of like that. You'd have all these currencies and they all have policies on how they operate, and whatever one seems like it has the best set of policies, everyone will go to that one. The one thing the government, the current actual, real government has on us is that it's really hard to move out from under it. There's nowhere to go. With these new systems, you could join the economy that works best for you.

ABL: What role do you think mission creep plays in the degradation of currencies over time? Certainly, something that's stuck out for me as I looked at different monies is that, looking back at the past 600-800 years, you'll see periods of 100-150 years where a country has their currency as the world reserve currency, but it always ends. Maybe things are different this time. It doesn't really seem like they're different this time... Is that about it not being the same thing at the end that it is in the beginning? The reason I bring this up, specifically, is because one of the things that's different about cryptocurrencies that I think people find really refreshing – the fundamentals, the monetary policy, as you were saying, is really locked in at the launch of the token and you can't really change it after that point without jumping through a lot of very difficult hoops, which is very different from the current system.

TC: I see that trend as well, and I think it's a really good thing. The idea of making a policy commitment and then saying, “and this will not be changed by the political winds,” and that's been something that's been desired by a lot of people in this area for a long time. They've always said the central bank that runs the money should be independent from the political system as much as possible, so this is a big deal with the German Central Bank, and one of the reasons the Mark in the post-WWII period became one of the strongest currencies even though it wasn't a reserve currency. The United States, in the '70s and '80s, we had this debate about how much the money should be manipulated. I think you're onto something in that nothing stands forever. You get a period where you get people running the money who're like, “well, we don't care. Our job is to keep the money safe. We're keeping the money safe, and that's our mission.” You get other periods where that kind of breaks down. Well, hey, if it's in the code, it's just in the code. Now, the question is who can change the code. Once, in a peer-to-peer system, it can't be changed, so that's why decentralized cryptocurrencies are another step in the right direction.

ABL: I just got your book yesterday, so I haven't got the chance to read through all of it, but I was looking through some of the different examples you have, and there're some really interesting ones. Can you talk about some of the more interesting non-cryptocurrency, private token systems you can think of?

TC: By far, the funniest ones are the Yap stones. This is some island in the South Pacific where there are like eight huge stones on the islands, and archaeologists look at it and they look around, they go, “these stones don't come from this island.” No, they come from an island 80 miles away, so if you want to add to the currency, you gotta get a bunch of crazy guys in a boat, sail off and get this two-ton stone and bring it back, and then these stones just sit there on this island, and as villagers go about things, the ownership of the stones changes

hands. -So I'm really wealthy, I've got two stones, or my family's really out of luck, we don't have any stones at all. -And the stones just sit there! I think that's a perfect example of how money works.

SM: I'm familiar with that – sorry – I'm familiar with the Yap stones because we had this great article that was written on letstalkbitcoin.com, over a year ago, now, at this point, by George Ettinger, called “The Island of Stone Bitcoins,” and he actually used it as an analogy to the Bitcoin blockchain because I guess it's some kind of public ledger that shows who owns the stones. Do you know anything more about the history of that island and how that came to pass, that they decided, “okay, these are money; these immovable, giant stones.”

TC: Actually, as a social scientist, the thing to note – the exception proves the rule – is that this happened in one island in the South Pacific, so that says something about that form of money, where, as you see, token money all over the place. Going back, they've found sea shells that are evidently sea shells that are evidently not part of ornamental jewelery in neolithic burials that're hundreds of miles away from any oceans, so it's not like sea shells coming from ancient periods of the dinosaurs or something like that, when it was all oceans, it's actual shells that've been taken from, say, the Mediterranean Sea, deep into the heart of Russia. It's probably some kind of token money they were working with, so that seems pretty common, and economists identify something likely to become money, and it's things like – can you pack a lot of value into something that doesn't weigh much? Is it hard to counterfeit? Those sorts of things.

ABL: -So the Yap succeeds on the hard to counterfeit, and does not succeed so much on the easy to carry around part. If you think about it, though, Yap does succeed in that in that you never move the stones, you just move the understanding of whose property it is, so it actually is. They solve the problem by abstracting the weight.

TC: In our age, we could abstract that completely. We could have a currency based on the planets. All we need is a recording of who own which planets, or which star. Again, it goes back to the shared expectations thing. As long as we all agree these are the rules of the game, it would work perfectly.

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ABL: Do you think there are practical limit to how much we, as a society, can handle these things, or are these tokens really just tools for us to drill down into specific niches? I can see

really either way. It seems like, eventually, we have to hit a saturation point, but at the same time, there's a huge amount to be saturated before that can happen.

TC: Well, there're tensions in two directions – rather, forces in two directions that create a tension. There's a force toward collecting, which is a network effect. If you and I don't have the same money, now we've got a pain in the butt problem of trying to translate what your money is worth in terms of mine. There's always going to be this pressure for us to have one single currency, but every time a single currency is identified, it starts to become encumbered by the forces you talked about, mission creep, but also by the tendency of large organizations to want to use transactions in a currency as a way to kind of siphon off their own value. That force tends to make the currencies want to run away into the corners. I suspect there'll be, similar to some of the other cultural environments like the environment of religion where you have a few big ones and a bunch of little ones all around it, and that that ecosystem will sustain itself, I think, for a long time.

ABL: From a tax implicatoin standpoint, how have these private currencies been treated historically? Assume for a second that Yap is something that's traded here. Is that something the IRS is going to care about, is that even something they consider money? Are these things money in the eyes of the government?

TC: Historically, the government has overlooked private currencies as part of tax implications. Mostly, though, I think, for administrative reasons, not philosophical reasons.

ABL: -So it's just they practically can't exact tax from Yap, because how do you do that?

TC: -Or Burning Man had a currency, and they actually sent an IRS agent to walk around Burning Man, see whether or not all the... – he just said, “Nope, we're not going to be able to do anything here! I'll be back in a few weeks!” -But now, there's no reason in the world why the government couldn't use the same technology to track any cryptocurrency and tax it, regulate it, just as it does the dollar.

ABL: -But as far as they're concerned, they have the right to tax all of these things. It really doesn't matter, it just matters it has value?

TC: The underlying principle of taxation, where value is created, it can be taxed.

SM: -But so much of it depends on people self-reporting. If you think about barter transactions, most people – they trade a chicken for some medical checkup or something like that, they're not going to pay taxes on that, although that's technically – they're supposed to. They're supposed to report it.

TC: Yeah, that's why you'll see – well, if we trade houses, someone's gonna notice, but if we trade a chicken for an apple, nobody's going to notice. This is going to be an arms race between the natural forces of the economy and the efforts of the government to keep up. Towards the end of the book, I argue, for better or worse, I think we're entering an era of weakened state power because I can't see the government sustaining the amount of control it has right now as these things take off. Some people think it's crazy, some people think it's awful, but I just think that's gonna happen.

ABL: Is there a basis to these claims? Again, looking historically, it seems like things like this have existed and there may not've been the ability to collect taxes on them or whatever, but just the base authority level, where does government get the right? Do they give it to themselves? At what point does it come into play that they basically get to determine the course of all private monies and, frankly, make it so you can't have them. Is this even a thing or did it happen over time?

TC: In our country, it's the Interstate Commerce Clause, that the central government has the right to regulate interstate commerce has been interpreted as the ability to anything and everything in the economy. As far as money goes, though, money is not really mentioned in the Constitution. There's no statement other than the legal tender thing you brought up. We're supposed to accept dollars, but there's nothing in the law that says people cannot create their own currency and use it. That's why the IRS declared Bitcoin to be a good and not a form of money, because then, as Stephanie mentioned, that creates this barter tax obligation. I think it's all very much up in the air. Judges and legislatures are going to have to deal with this, and they're going to have to make a statement, and it's probably going to have to involve claiming complete control, and it'll probably be similar to the net neutrality debate.

ABL: One of the other areas where national governments claim control, and again, I'm talking about the US in this particular case, is with bedding, and gambling, and generally games of chance, and sometimes games of skills. Poker's had problems with that. Do these currencies change anything? We've definitely seen, now that these tokens are out there, people are using them for these applications. Does that impact legality as far as you're concerned? Does it even matter?

TC: I think there's a really important legal line that needs to be drawn between things that we call games and things we call the real world. There's nothing in the technology that will naturally create that line. We're going to need to sit down, as a society, and say, “okay, the stuff going inside The Elder Scrolls Online – that's a game. We're not going to tax that. That's the fantasy world. Things happening outside of that” –

SM: Why would that have to be decided instead of being the default?

TC: Watch and see! This is--

SM: I know that's the mindset of governments. Their default is just, “everything belongs to us. Give it to us or we'll hurt you.” Our default – or the default I think of, is, “I'm a free person, and you're gonna have to threaten or extort me to give you money,” which is what they do.

TC: We're in a period where the whole concept of limited government – let's just say under social discussion. I feel like it's really important for the governments not to make huge mistakes now, and put stakes in the ground that're later just gonna mess us up for generations. One of them is to allow private spaces to exist even though they have money in them, private money in them. You could make a case that if someone is using a cryptocurrency, trying to avoid oversight on things like child labor or something... well, you know, you could make a case there that that should be regulated. Look at it this way – if I'm in a game, I pay a kid 100 gold coins to go get me that Silver Icon of Worthiness, that's not child labor, I'm playing in the game.

SM: Right, but the law would probably say that is child labor.

TC: That's what I'm afraid of. I don't want that to happen. At the end of the book, I'm like, “politicians, please don't screw this up.” Making precisely this point...

SM: You can trust them not to screw it up.

TC: It's just unfortunate. We have a really bad political culture right now, so we can't really trust them. I wish it wasn't like that, but that's how it is.

SM: Can I just jump in with one question I wanted to ask a little earlier, but there wasn't really an opening for it? I was curious about Burning Man specifically, because I'd heard they had sort of a ban on money, like you weren't allowed to use money there and you weren't allowed to buy and sell things except coffee and waterrrrr.... something like that? Can you – how did they end up with their own currency that the IRS was coming after?

TC: They had a big barter economy, and they do. They have a barter economy. Under the rules of barter economies, there were tax burdens being generated. Like I said, the IRS sent a guy out there to observe these barter exchanges, and he wandered around for a while and said, “there's nothing we can do.”

SM: I doubt people were trading huge... I mean, what're they bartering for at Burning Man? Their RVs? Drugs? Yeah, that sounds like a different department.

TC: I think LTB needs to fund some sort of exploratory mission by volunteering....-- (laughing)

SM: With Burning Man, it's so funny. The ideology seems, and I don't want to mischaracterize them or anything, but to have a festival and say, “yeah, we're going to ban money, and you can barter, but you can't buy or sell anything.” Why would they do that unless they thought money was evil in some way? That's not something I agree with, but where does that... it doesn't seem to make sense, because if barter transactions are occurring, why is that good but money is evil? It's just a medium of exchange, and you're just using a different medium to exchange, but you're still exchanging.

TC: There're some other functions of money I think economists overlook, and one of them is – how to treat fairness. Medium of exchange, sure, but I think the perception has arisen that token money inevitably leads to people breaking rules and being unfair. Whether that's true or not, I don't know. There's also like the community money movement, like, “let's keep our money local,” and I think it revolves around the idea of fairness. The other thing is money can make people happy or unhappy. Joy, the happiness function of money, is often overlooked. If I'm at Burning Man and we have a token form of money, and here comes a jerk running around, holding his tokens of money, yelling, “look how rich I am!” That makes me feel unhappy. The minute you have money, you have to start thinking about if this is making people feel better off or worse off.

SM: Really?! There are lots of people in the world who have lots of money in the world, and I don't feel unhappy when I see them. I don't have to feel unhappy. I can choose to just say that's theirs and I'm going to focus on myself and not feel jealous or...--

TC: I'm with you. I could[n't!] care less who has what money. I don't care. The record shows people get their underwear in a bunch about who's got what money. The games've solved this very interestingly by being really, really clear that everyone's sort of equal to start, and there will be no policy statements about how unequal it becomes later. People pretty much accept inequality of outcome in video games.

SM: Because the starting point is the same?

TC: Yeah. That's interesting.

SM: -But what about games where you can take items and buy items and swords and stuff? That's not an equal starting point.

ABL: That's re-introducing it back in exactly.

TC: There's a big debate about it. There're some people who refuse to play in a world – it's called pay-to-win – and there're lots of gamers who say they'll not play in a pay-to-win environment. -But in Korea, that's how you do it. You wouldn't even imagine a game that doesn't have pay-per-win, and they don't care that the dentist's kids do better than the truck driver's kids in that game, it's totally cool. It's a cultural thing...

ABL: Ted, your book, Wildcat Currency: How the Virtual Money Revolution is Transforming the Economy, is out. If people are interested in it, where should they go?

TC: Amazon!

ABL: Amazon. It's the place to be! Amazoncoin?

TC: Yeah, sure, buy it with Amazoncoin, use your Kindle.

ABL: Sounds good. Are you gonna be, or do you accepting cryptocurrencies? Is there a way to do that?

TC: I don't think there's any way to do it, but if people want to send me cryptocurrencies, I'll send them a book!

SM: Sure, there's a way to do that!

TC: I mean within the context of the press. You wouldn't believe the effect of a contemporary press on what an author tries to do. I have another book where we've been wrestling with trying to get it as an electronic copy... they're way behind.

SM: Self-publish, man!

TC: Maybe the next one. Totally.

SM: You can put it on your website and have people download it for bitcoin as easily as you could start Wordpress.

TC: Well, we assume the book is valuable, but I'll leave that to the readers, but if it's valuable, it would've been more valuable a year ago when it was actually done. It takes like a year to get things out. It's ridiculous.

ABL: One section of the book we didn't really touch on at all is “what comes next?” I know this is a terrible thing to do, leading us out of this episode, can you just give us 60 seconds on what you think the most important take-away is, and why people should read the book for that last part?

TC: Yeah, the state is gonna get weaker. The state gets its blood from the economy, and it's going to be harder for the state to control the economy, so as our problem's getting deeper, we can't look to the government as this all-powerful solver of problems, for better or worse – I don't think it's gonna be possible.

ABL: Thanks for listening to episode 119 of Let's Talk Bitcoin. Content for today's episode was provided by Stephanie Murphy, Ted Castronova, and Adam B. Levine. This episode was edited by Adam B. Levine. Music for this episode was provided by Jared Rubens, General Fuzz, and Owsey. Any questions or comments, email adam@letstalkbitcoin.com. Have a good one!