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Dennis Porter of the Satoshi Action Fund (SAF) and Murray Rudd of Satoshi Action Education (SAE) spoke in my Bitcoin class this week. Together, they are leading efforts to educate and inform policymakers at the state level on Bitcoin. Dennis works directly with the policymakers, while Murray leads the research efforts at SAE. They are both playing the important long game.
They are establishing Bitcoin Councils, which can serve as a clearinghouse for the Bitcoin industry and academics and policymakers. We have one such council in Texas, but given the novelty and complexity of Bitcoin, this is useful to have in other states as well, especially given the high mobility of Bitcoin miners. SAF also has specific outreach programs to educate policymakers on Bitcoin mining, utilizing orphaned wells, balancing the energy grid, and basic education on Bitcoin. SAE seeks to jumpstart academic research on Bitcoin. Murray presented an interesting paper where they scraped and took almost 400 transcripts of podcasts on YouTube and ran them through ChatGPT to identify major research areas for Bitcoin.
Let me comment on my own experience as it relates to both the policy and research side.
The Council of Economic Advisers
In 2007 and 2009, I served on the Council of Economic Advisers (CEA) in the George W. Bush White House. The sole purpose of the CEA is to educate and inform the ultimate policymaker, the U.S. President. President Truman formed the CEA because he was getting conflicting advice from his cabinet secretaries. The Department of Commerce wanted him to lower the minimum wage because it was better for companies, while the Department of Labor wanted to raise it because it is better for workers. So, he built an in-house team of economists to help them sort through these decisions. I served during the great financial crisis, which is a story in itself, and likely the opening chapter of my next book. Let me address the value of research in the policy process, which the CEA was and is uniquely tasked to do.
One might think that after watching the sausage being made in Washington, I would be skeptical of the value of the Ivory Tower since Washington, DC is full of sleazy politicians, backroom deals, handshakes in smoke-filled rooms, and trading favors. While those stereotypes ring true, ironically, my year in policy gave me greater confidence in research and independent thinking.
Here's why:
First, data is useful at the policy stage for staffers. Don't underestimate the role of the policy staffer —- most decisions in government are made by staffers. For example, the president signs off on hundreds of decisions, but most of which he doesn't know about and are handled by his staff. The reach of the executive office is far and wide (don't get me started on that). And it is impossible for any president to know the full extent of the office in national and international policy. Staffers are young, data-oriented, ambitious college graduates. They can easily use data to insert it into a speech, line a series of talking points, or write their own internal memo. I believe this is true for Bitcoin as well. More data will help Bitcoin adoption, most likely by avoiding horrible policies.
Research is also useful for theory. This, in my view, is the most useful when arguing and debating with the top policymaker and his advisors. In my case, this was the president and the assistants to the president. No single fact would move the needle in these big debates, which are ultimately about the size and scope of government. Instead, what carried the day was strong argumentation through a solid understanding of economic theory. Knowing the size of the Federal Reserve balance sheet was less important in these debates than the ability to argue persuasively that markets are able to respond to disruption during a financial crisis. Research still matters here, but it looks different than before. It's more about strong argumentation than facts and figures.
Application to Bitcoin
All of this matters to Bitcoin, where both facts and theory matter. Getting the facts straight on how much energy Bitcoin consumes is an important first step, since the media often vastly exaggerates this number. Dennis told the story of a politician who thought Bitcoin mining consumes a fifth of all energy in the world, an astronomical figure that would put Bitcoin energy usage to eclipse the entire United States. But theory matters, too, and possibly even more. Bitcoin miners respond ruthlessly to the price of power, making them globally mobile consumers in the free market for energy.
One feature of our work at CEA is that we occupied the middle ground between the policy table and the research lab. It is true that we summarized and interpreted the vast array of academic research for policy. But the truth is, we often had to do our own analysis, through some back-of-the-envelope economic analysis from publicly available sources, some simple charts and graphs, and strong persuasion. This is ultimately what proved to be most useful in moving policy; a mix of facts and theory, not a deep dive into both. Ultimately, Bitcoin will need something similar: dedicated policy shops in the mold of the CEA, staffed by economists and social scientists trained in their academic disciplines, but operating at a faster cadence and speaking economic truth without the jargon that politicians can understand. To my knowledge, this outfit does not yet exist, though I believe the Bitcoin Policy Institute is trying to fill this need.
The Research Frontier
Let me comment on the initiative of Satoshi Action Education to jumpstart research on Bitcoin. I tried my hand at this a few years ago when I held my second annual Bitcoin conference at Texas A&M. I issued a call for papers across the Social Science Research Network and received 100 submissions, of which I picked the best 10 for a conference in College Station in the May of 2022. I was surprised to get so many submissions. A third of them were crypto and therefore not relevant for the conference. But the remaining 67 papers were good. I noticed that there was interest in Bitcoin research among the world of academics that did not have an outlet for this research.
One thing I noticed is that every paper approached Bitcoin from its own discipline. This should not surprise, as it simply reflects the disciplinary structure of universities. But it did miss what is the true innovation and beauty of Bitcoin, its ability to connect disciplines together in deep and surprising ways.
The real challenge for stimulating academic research on Bitcoin is to find ways to induce greater research that still fits within the disciplinary boundaries that professors must adhere to. These boundaries are non-trivial. My department for example has a list of journals for which it expects faculty to publish. If you publish outside those journals, you essentially get no credit for it. All research funding and summer salary support is contingent on publishing within these 30 journals or so. Thus, this essentially outsources the assessment of research to the hands of a cadre of editors who are other professors at other universities, which today are largely agnostic or negative on Bitcoin.
Interdisciplinary journals, while they exist, still have not penetrated the ranks of the academy. The American Economic Review, the Journal of American Medical Association, the Journal of Political Economy, and The Astrophysical Journal will still command the most respect and are still the main currency in higher education. So, the challenge of the research front is to: (a) publish in interdisciplinary journals that can garner respect from the academy, or (b) convince existing editors to publish more Bitcoin content. Of these two, I believe the latter is more likely to succeed but the former is more exciting.
I will probably get involved in these in the future, but for now, I have my eyes on educating my students. I find it easier to convince a 20-year-old about the value of Bitcoin than his parent or grandparent. So, the highest ROI is the young generation, on which I've got my laser eyes.