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#606- Balaji S. Srinivasan — 5-10-Year Predictions, How to Start a New Country, Society-as-a-Service (SaaS), Bitcoin Maximalism, Memetic Warfare, How Prices Are Born, Moral Flippenings, the One Commandment, and the Power of Missionary Over Mercenary

The Tim Ferriss Show

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  • Investing in Cryptocurrencies If twitter was open source, or rather, more specifically, of his open state, that is to say, not just the source cote was available, but the back end was available. And you could plot the number and the depth of interactions on bitcoin and etherium and all their offshoots. These are like countries that have built out. And those are things that just have mass to them. They’ve got downs and they’ve got ups, but they are absolute massive things with tens of millions of dedicated people around the world. So, ye, i don’t believe that they are going to go away. That’s its just my personal belief. Transcript: Balaji S. Srinivasan For you. Tim Ferriss In our first episode, I think at some point you mentioned for someone who is not going to make a full-time study of things, splitting their allocation to crypto, and this is not investment Advice, this is two people talking for informational purposes only, but splitting 50-50 Bitcoin, ETH, does that still hold? Or would you, based on what you’ve seen since and what you’re seeing now, maybe any developing theses change that? Balaji S. Srinivasan No, I’d say stick with that. I mean, again, not investment advice and so on, but basically those ecosystems are just still absolutely massive. If you look at, as I said, I think I said something like, buy it and then hold it for 10 years. And let’s see where we are in 10 years. The fundamentals in terms of not just number of users, but conversation, if Twitter was open source, or rather more specifically, if it was open state, that is to say not just the source Code was available, but the backend was available, the database was available. Okay. Not just through an API, but that you could just hit a key and see every tweet if you wanted to, every public tweet, at least. If it was open state and you could plot the number and the depth of interactions on Bitcoin and Ethereum and all of their offshoots, not just those keywords, but the thousands of keywords And memes and communities and so on that would be built on this. These are like countries that have built out. And those are things that just have mass to them. And you can mark them to market. They’ve got downs and they’ve got ups, but they are absolutely massive things with tens of millions of dedicated people around the world. And they’ve come out of nowhere. So yeah, I don’t believe that they’re going to go away. But again, not financial advice. This is just my personal belief. You can get much more sophisticated than that. But like the absolute worst thing to do, by the way, and this is maybe obvious, but I’ll just say this, is the worst thing to do is buy an asset when it’s in the news and sell it when it’s in The news. Do is it’s inevitable that something will pique your attention. And then what you do is you set a calendar reminder, you know, let’s say 30 days, 60 days, 90 days, so that you are almost like retargeting yourself. And then you go and you actually do research on it outside of the scrum, outside of people yelling about it. You intentionally do it async to the market sentiment. There’s a famous cartoon. It’s a guy, he’s like, it’s like goodbye. And someone over here is there like, buy, buy, buy, buy, buy. And then the guy’s like, this stock could really excel. And then someone over here, sell, sell, sell, sell, you know, like this, right? And it’s this hilarious sort of loop, which you don’t want to be the current thing. You don’t want to be the person who is buying high, selling low. And I think the only way to not do that is set calendar reminders, assess your portfolio, like whether it’s a quarterly basis or something like that, and try to make async decisions. You almost never want to sell on bad news, buy on good news. That’s my macro outside of any given specific thing. (Time 0:08:58)
  • How a Price Is Born? There’s this concert called market depth. And if you’ve ever looked at coin base pro or any crypto exchange, you see this like v like thing with the te buy orders on onea side and sell orders on this side. This is like how a price is born. Normally, most people in normal life are price takers. But when you’re purchasing in bulk, suddenly people are negotiable. That’s kind of like buy and sell pressure. So it’s social and financial volatility. It’s so lit’ art with financial because it’s more quantitative than people know better. Transcript: Tim Ferriss Can you tie those two things together? So I followed you on the futures contracts, and maybe if they’re dealing with currency, certainly they would have other protections in place. But how do we go from that to preventing people from walking around with AKs? Sure, sure. I believe there’s a connection. I just would love for you to elaborate. Balaji S. Srinivasan Absolutely. So it’s social and financial volatility. And the way I think about that, so let’s start with financial because it’s a little more quantitative and people know better. There’s this concept called market depth. And if you’ve ever looked at Coinbase Pro or any crypto exchange, you see this V-like thing with the buy orders on one side and the sell orders on this side. And this is like how a price is born. Normally, most people in normal life are price takers. You go to the store and you buy orange juice for whatever the price is now, 50 bucks or something. I don’t know what it is today, but you know what I’m saying, right? Okay. A gallon of orange juice is, I don’t know, some price. Okay? And you’re a price taker. It’s set price, $4.99 or something like that. The thing is, if you start emptying out the shelves, if you buy 100 units of orange juice, and then you go to the next store, it might be $5.50. And then the third store hears you’re coming, and they set it to $7, and so on and so forth, right? You start moving the market price. You are now a price setter, in a sense, when you start clearing out units. So you’ve got 100 units at $499, and then 200 units at $550, and now you can get 300 units at $7, and your supply increases as the price increases. And then conversely, on the other side. And so that is actually how a price is born. Most people don’t usually think about this, because you’re buying single individual consumer units. You’re not like a bulk purchaser. But when you’re purchasing in bulk, suddenly people are negotiable. You know, they can make more money on it. They’re okay with negotiating. Okay, what’s my point? This idea of market depth, just like we see like a price shift back and forth, you know, with sentiment, that’s the same concept in financial terms as the Overton window. The Overton window is the set of what things are politically acceptable. And sentiment shifts back and forth. There’s a thing, here’s the current center. And as radicals push, that thing that was totally unthinkable moves to the center. Or conversely, conservatives push, and suddenly it gets pushed back. That’s kind of like buy and sell pressure. In fact, you can think of it a lot like that on any given issue. And you have essentially almost like votes. You have a thousand votes for this level of the policy and 5,000 votes for this level of policy and 10,000 votes for this level of policy. And then you have someone on the other side. And when you can shift over those vote banks, you shift that midpoint, which is a policy, just like if you can shift over the order book, you shift over the price. Tim Ferriss Yeah, that’s clever. I like that. Balaji S. Srinivasan So once you kind of see, that is the macro of how I think about prices and policies. You know, when people say, oh, it’s getting political, what they’re really talking about is just like with the price example, most people are price takers. You know, as I said, you go and buy the orange juice. Just like most people are law takers, the policy is just applied to you. But if somebody is like powerful enough, or it’s like a weird enough situation, that law flexes. Concrete example, Singapore, you know, a couple of taking example that’s like out of our time and place, you know, and so on. So people don’t get mad. Singapore, like two and a half decades ago, I think in 1987, there was an American citizen, Michael Fay, who was vandalizing things in Singapore. Tim Ferriss I remember this. Balaji S. Srinivasan You remember this, right? And Singapore was going to cane him as per Singapore law. And frankly, had he been a Singaporean or he’d been anybody other than an American, he would have been a law taker. OK, the law would have just been applied. But all kinds of pressure got applied on this side of the policy market. And Lee Kuan Yew was like, OK, we’re going to like reduce the number of strokes of the cane. He didn’t set it to zero because that would have been too much of a give. But as a consideration for that, like the U.S. Government made it like a diplomatic situation and like the president got involved and all this stuff for tiny Singapore. So the pressure for Singapore was significant on the policy side. And so now the law was negotiable. That’s what it means for something to, quote, get political, is that you have huge masses of people that assemble and they shift the midpoint of the Overton window, just like huge mass Of people shift the midpoint of a price. The thing is, as I mentioned earlier with Twitter, that back end is not open state. So because it’s not open state, we cannot see sentiment moving as we can with price, not as easily. Tim Ferriss Not as easily. There (Time 0:14:43)
  • Price setters vs price takers There’s this concert called market depth. And if you’ve ever looked at coin base pro or any crypto exchange, you see this like v like thing with the te buy orders on onea side and sell orders on this side. This is like how a price is born. Normally, most people in normal life are price takers. But when you’re purchasing in bulk, suddenly people are negotiable. That’s kind of like buy and sell pressure. So it’s social and financial volatility. It’s so lit’ art with financial because it’s more quantitative than people know better. Transcript: Tim Ferriss Can you tie those two things together? So I followed you on the futures contracts, and maybe if they’re dealing with currency, certainly they would have other protections in place. But how do we go from that to preventing people from walking around with AKs? Sure, sure. I believe there’s a connection. I just would love for you to elaborate. Balaji S. Srinivasan Absolutely. So it’s social and financial volatility. And the way I think about that, so let’s start with financial because it’s a little more quantitative and people know better. There’s this concept called market depth. And if you’ve ever looked at Coinbase Pro or any crypto exchange, you see this V-like thing with the buy orders on one side and the sell orders on this side. And this is like how a price is born. Normally, most people in normal life are price takers. You go to the store and you buy orange juice for whatever the price is now, 50 bucks or something. I don’t know what it is today, but you know what I’m saying, right? Okay. A gallon of orange juice is, I don’t know, some price. Okay? And you’re a price taker. It’s set price, $4.99 or something like that. The thing is, if you start emptying out the shelves, if you buy 100 units of orange juice, and then you go to the next store, it might be $5.50. And then the third store hears you’re coming, and they set it to $7, and so on and so forth, right? You start moving the market price. You are now a price setter, in a sense, when you start clearing out units. So you’ve got 100 units at $499, and then 200 units at $550, and now you can get 300 units at $7, and your supply increases as the price increases. And then conversely, on the other side. And so that is actually how a price is born. Most people don’t usually think about this, because you’re buying single individual consumer units. You’re not like a bulk purchaser. But when you’re purchasing in bulk, suddenly people are negotiable. You know, they can make more money on it. They’re okay with negotiating. Okay, what’s my point? This idea of market depth, just like we see like a price shift back and forth, you know, with sentiment, that’s the same concept in financial terms as the Overton window. The Overton window is the set of what things are politically acceptable. And sentiment shifts back and forth. There’s a thing, here’s the current center. And as radicals push, that thing that was totally unthinkable moves to the center. Or conversely, conservatives push, and suddenly it gets pushed back. That’s kind of like buy and sell pressure. In fact, you can think of it a lot like that on any given issue. And you have essentially almost like votes. You have a thousand votes for this level of the policy and 5,000 votes for this level of policy and 10,000 votes for this level of policy. And then you have someone on the other side. And when you can shift over those vote banks, you shift that midpoint, which is a policy, just like if you can shift over the order book, you shift over the price. Tim Ferriss Yeah, that’s clever. I like that. Balaji S. Srinivasan So once you kind of see, that is the macro of how I think about prices and policies. You know, when people say, oh, it’s getting political, what they’re really talking about is just like with the price example, most people are price takers. You know, as I said, you go and buy the orange juice. Just like most people are law takers, the policy is just applied to you. But if somebody is like powerful enough, or it’s like a weird enough situation, that law flexes. Concrete example, Singapore, you know, a couple of taking example that’s like out of our time and place, you know, and so on. So people don’t get mad. Singapore, like two and a half decades ago, I think in 1987, there was an American citizen, Michael Fay, who was vandalizing things in Singapore. Tim Ferriss I remember this. Balaji S. Srinivasan You remember this, right? And Singapore was going to cane him as per Singapore law. And frankly, had he been a Singaporean or he’d been anybody other than an American, he would have been a law taker. OK, the law would have just been applied. But all kinds of pressure got applied on this side of the policy market. And Lee Kuan Yew was like, OK, we’re going to like reduce the number of strokes of the cane. He didn’t set it to zero because that would have been too much of a give. But as a consideration for that, like the U.S. Government made it like a diplomatic situation and like the president got involved and all this stuff for tiny Singapore. So the pressure for Singapore was significant on the policy side. And so now the law was negotiable. That’s what it means for something to, quote, get political, is that you have huge masses of people that assemble and they shift the midpoint of the Overton window, just like huge mass Of people shift the midpoint of a price. The thing is, as I mentioned earlier with Twitter, that back end is not open state. So because it’s not open state, we cannot see sentiment moving as we can with price, not as easily. Tim Ferriss Not as easily. There (Time 0:14:43)
  • Google Trends - I Didn’t Yet Interrupt. In one sense, we’ve got far more information than we ever had. In another sense, i know we have a hundred or a thousand ks left to go. And so it’s over worse as if that data set was open, we’d have a completely different understanding of society and history and politics. It would be at the same level as the unlock going from a t and t eunuchs to lennox,. Or the unlock of going from pap al tobiin slaby jubin. Transcript: Tim Ferriss Are other tools that I also, you probably don’t know this, but I pay a good amount of attention to this type of thing on a number of fronts. So Google Trends, I mean, they’re not open state exactly, but you can track certain types of sentiment or interest or fear longitudinally. But continue, I didn’t mean to interrupt. Balaji S. Srinivasan No, no, no, no. You’re right. In one sense, we’ve got far more information than we ever had. In another sense, I know we have 100 or 1,000 X left to go. And the reason is that, think about the difference between, and this is a tech analogy, so you might be like, well, think about it, huh? Okay. But think about the difference between AT&T, UNIX, and Linux. Okay. Now, most people, all right. So if you’re an engineer, you’re like, yeah, dude, AT&T, UNIX was good, but it wasn’t hackable. I couldn’t customize it. I couldn’t take it apart, look at the engine block. I couldn’t make it work on tiny devices and giant servers. I couldn’t make it mine. And so currently it’s good, yes, that we have Google Trends and that we have, like you can kind of get some sense from the Twitter API and so on, but they’re very locked down in a certain Way where there’s queries you can’t easily run. You might have to pay a lot for the API. And so it’s over. Versus if that data set was open, we’d have a completely different understanding of society and history and politics. It would be at the same level as the unlock going from AT&T, Unix to Linux, or the unlock of going from like PayPal to Bitcoin. Tim Ferriss So let me jump in because (Time 0:19:24)
  • Sugar Free Society A hundred % democracy is a consentual society, where every single person in this community has agreed to be there and can leave it any time they have consented. In lots of countries, at any time, on the order of 50% on the country feels the election, you know, they don’t agree the election rit i’m not talking about any particular situation. The poke is in that, quite a few counties in the us, there’s also only one party on the balot. And then people just simply ratifies whoever’s at the top of that party’s selection process. So that’s the poke. another question in a few moments, so i might jump in and instruct Transcript: Tim Ferriss Have another question in a few moments, so I might jump in in a sec, but please continue. Okay. Balaji S. Srinivasan So I’ve talked about one, a one commandment society, which was like the cancel proof one, just to extend the sugar-free one for a second, like keto kosher sugar-free society. So step one is all meals change, all restaurants change, all grocery stores change. On the one hand, that’s a big thing. On the other hand, it’s focused. You’re not saying, again, you’re not saying traffic lights change. You’re not saying there’s 50 other regulations, thousands of regulations that apply. Not saying you’re not trying to change building codes you’re not trying to have self-driving cars you’re focused on one thing in that community do one thing really well and that one Thing of sugar-free after people lose 30 pounds then what happens maybe then everybody gets equipped with a cgm continuous glucose monitor right or you start rolling out other quantified Self stuff to the community. That moral innovation unlocks another moral innovation and another, and you start going from one commandment to 1.5 and you start actually building it out. Now, to your point earlier about how do you know that this isn’t like some kind of cult? How do you know that it doesn’t go wrong? It’s checked by exit. Everybody can leave at any time. It’s literally got to recruit subscribers. And if you don’t like it, you don’t subscribe. And if you do like it, you keep your subscription. And if you liked it, but now don’t like it, you cancel and you leave. It’s society as a service, SaaS, the next SaaS. Tim Ferriss Isn’t that good? Yeah, that’s good. Clever. Balaji S. Srinivasan And that is something where it also does something else, which is it’s 100% democracy rather than 51% democracy. 51% democracy is what it sounds like. 51% democracy is 49% dictatorship. 49% of people did not vote for this guy at any time nowadays. And for the last 30 years or something like that, these elections have been very, very close. And they feel rightfully so that they did not get their guy in power. And they do not feel empowered. This is not just in the US, it’s in lots of countries. At any time on the order of 50% of the country feels the election, you know, they don’t agree with the election, right? I’m not talking about any particular situation, simply the fact that you just keep getting 51%, 49%, 49%, 51%. The alternative to that, where it’s like the Fosbury flop, as we talked about, the Fosbury flop of democracy, is 100% democracy, where every single person in this community has agreed To be there and can leave at any time. They have consented. And it’s a consensual society. The consent of the governed is actually the upstream thing of which voting is only this very downstream thing. And voting can be manipulated. Voting in the Soviet Union. You know how they voted in the Soviet Union? You went there and you had a ballot and it had nothing on it if you wanted to vote for the communist. And you could write the name on it if you wanted to vote for a non-communist. And everybody would look at you and be like, you really want to do that, right? The poke is in that quite a few counties in the US, there’s also only one party on the ballot. So it’s actually not as dissimilar in the sense that the smoke-filled room of the primary is the actual election. And then the public just simply ratifies whoever’s at the top of that party’s selection process. So that’s the poke, is that laughable communist process that we talked about is not that far away from a primary or a party selection process that’s a real election. And then people just pick their party candidate in the general. Okay, go. Okay. Tim Ferriss And go. All (Time 2:45:42)