Robert Breedlove is the founder and CEO of Parallax Digital. He started investing as a hobbyist in 2014 and that hobby turned into a profession. He formerly operated crypto asset hedge funds. He started to get out of the role as a fund manager in 2020 to focus more on Bitcoin consulting. He still does some advisory work for a number of Bitcoin companies, including hedge funds and early-stage equities. More recently, he has been writing about Bitcoin, the history of money, economics, the deeper philosophical impacts of Bitcoin respective to the socio-economic effects it has on the world. (YouTube Twitter Medium)
Interview Date : 24th December 2020
Why is Bitcoin better than the central bank?
Every function that the central bank provides—facilitating international value flows, reconciling account balances, and maintaining monetary policy—involves an army of humans to accomplish. The federal reserve alone has 20 000 people working, there are probably another 200 000 people that follow their movements very closely trying to figure out what the federal reserve will do next, so they can communicate that information to the broader market. Bitcoin satisfies and provides all the aforementioned functionalities of the central bank with distributed software. Thus, its orders of magnitude are more efficient than any central bank and it’s a fairer game. It’s a game with rules that everyone can universally observe and volunteer to adopt versus the rules of central banking which are behind a veil of opacity. We don’t know how many dollars there are in existence, we don’t know how many more there will be produced, we don’t know what the criteria necessary to make that decision is, and we don’t even know who profits from US dollar production. So, it is a totally opaque, dark, and manipulative game of the central bank competing with an open, fair, and voluntary game of Bitcoin. People always favor games with fair rules over time.
How is Bitcoin consistent with Ray Dalio’s Principles?
When I launched our hedge fund in 2017, Ray Dalio, the most successful hedge fund manager in history, was instrumental in my thinking. I was reading his book “Principles” and other publications of his at the time when he was very bullish on gold, and at the same time very bearish on Bitcoin for several flawed reasons. In reading his book and writings, I realized the principles that he lays out in his book positively embodied in Bitcoin in many ways, even though Ray doesn’t see it so himself. He has the concept of an idea meritocracy which is essentially a free market for ideas. I argue that bitcoin is also an idea of meritocracy as it is free-market money. So, Bitcoin is consistent with Ray’s world view despite him not yet realizing it.
How much attention do you pay to legal development in the space?
I pay close attention to legal developments in the space when the proposed act or regulatory guidance pertain to a project I am working on. Most recently, Steven Mnuchin tried to pass some legislation against self-hosted wallets, possibly self-hosted multi-sig and custody schemes, but I think all of that legislation is doomed to fail in the long run. What happens is that in a jurisdiction like the US, the more they try to resist user access to certain tools or technologies, or the more they try to require higher levels of regulatory scrutiny, the more they will be pushing business to other more friendly jurisdictions. This is because capital is hyper-liquid and movable in the crypto-asset ecosystem. You don’t need to be in a specific location, so if a particular jurisdiction becomes hostile, you can move your entire business. We already have seen you have seen a lot of exchanges do that too. If I do not need to dig into the legislation for a specific consulting engagement that I am working on, I don’t give attention to it as there is a lot of noise in the grand scheme of things.
Could a New President bring change to the Bitcoin space?
I think things will change with the new president Joe Biden, but even with that change, they are all beholden to their central bank masters. They all serve the interest of the central bank and that’s the reason these types of topics are never discussed on the Senate floor. We never talk about the monopoly of money and how it victimizes people economically. Whether there is a democrat, a republican, or a green party, it doesn’t really matter.
Can third parties be trusted?
As Nick Szabo said a long time ago “trusted third parties are security holes,” but Bitcoin gives you great power to control the monetary network in a way it is useful to you. All of that functionality of the central bank has been collapsing to the software. You can now effectively have your private bank in your head or your pocket. Nevertheless, with that great power comes great responsibility, so I don’t think Bitcoin and this space is for the faint-hearted. There are good service providers in the space, and there are ways to go about doing business with them that medicates your exposure to the space. Be very selective about any information that you share with any custodian or exchange as it’s subject to leakage. “Invest in knowledge” is the best advice anyone can give you in this space.
What keeps you running in this crazy world?
I have a genuine hunger for satisfying my own intellectual curiosity. By collapsing the distribution cost of information, the digital age is basically unleashing human intellect in a way we haven’t really seen since the invention of the printing press. I think a technological shift or this digital renaissance is actually going to make us a lot smarter. Joe Rogan’s podcast is about 2-to-3-hour sessions of just open unedited discussions going deep into any topic that tickles their fancy. You can look at someone like Jordan Peterson who is one of the most prolific thinkers of our age, and he has just dropped his college lectures on YouTube and podcasts that are getting multi-million views and downloads. I think there is a real hunger for this. People are naturally, deeply curious and want to grow and learn. We want to understand reality at a deeper level, but I didn’t see that being provided in the bitcoin space. My podcast is not a bitcoin podcast per se. It is called the “What is Money” show that naturally leads us to Bitcoin as Bitcoin is the ultimate form of money. The podcast is intended to be a vehicle for exploring the rabbit hole that was revealed to us by asking us the question “what is money?”. For me, it is a great way to have conversations with really deep thinkers. I recorded with Michael Saylor, who was our first guest, and we recorded for 10 and a half hours. Most of these podcasts are one to 2 hours and most of them go through the same questions with a little bit of flavor here and there. However, I wanted mine to be a much more true university-level discourse centered on a first principles exploration of money. I thought that if I have such an appetite for intellectual curiosity, surely others do as well.
What is the most common misconception about Bitcoin
The most common misconception about Bitcoin is that people still think about Bitcoin purely in dollar terms. When you think about “what is the price of bitcoin” you oftentimes fail to look at your own frame of economic reference which is the dollar through which you are perceiving Bitcoin. That is the easiest way to think about Bitcoin as its dollar price is an indication of what it is doing. It also is a short sight of what we are thinking. If Bitcoin is successful in the way many believe it will be, the dollar price of bitcoin will eventually become irrelevant, and you will actually start thinking in sats instead of dollars in your day to day dealings with money. I would say that is a big pervasive misconception that many people don’t understand. Now, the only reason we think in dollars today is that the dollar used to be redeemable for gold and that redeemability was revoked 50 years ago. In other words, central banks have hijacked the economic consciousness of man to steal from us and to drive and exacerbate the business cycle through mass capital misallocation. This will eventually tear society apart. If you break the money, you break the world, so you have to fix the money to fix the world.
There are already taxes on bitcoin. It is treated as capital gains in the US, but regulators have increased the capital gain tax rate to ordinary income tax rate, so capital gains no longer have preferential treatment. I would not be surprised to see tax regimes increase their hostility as Bitcoin grows. It is very likely that you will be forced to purchase Bitcoin only on federally registered exchanges in the near term. However, the regimes that become overreaching are just incentivizing other regimes to become more friendly to get the business, the tax revenues, and get the bitcoin under their jurisdiction. So, I don’t anticipate any of these hostile tax regimes to be effective at stopping Bitcoin. They could possibly slow it down in the short term, but the more you increase taxes on Bitcoin the more incentive you give people for holding it. If the government is going to tax me on my capital gain by 40% or more, then I will rather just hold it. There are always unintended consequences when a central institution tries to dictate human action, and I think that any decree or other regulatory attempt to contain Bitcoin will fail.
Interviewer , Editor : Lina Kamada
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