00:00 Hello, I'm Seth Simmons, and welcome to Season 1, Episode 7 of Opt Out. Opt Out is a show where I sit down with passionate people to learn why privacy matters to them, the tools and techniques they've found and leveraged, and where we encourage and inspire others towards personal privacy and data sovereignty. Where does privacy fit in to opting out of a broken or breaking economy or society? How can we build parallel economies using privacy tools?

This episode, we're sitting down with Uri Bednar to chat about his own personal privacy journey, how parallel economies can and will work, and what role Bitcoin plays in building up a parallel economy around us. Welcome to Opt Out, Uri. Thanks for coming on. Thanks for having me. Yeah, I'm really, really glad to be able to sit down and chat with you today, especially on the topic of parallel economies. Just the more that I've read from you and listened to talks you've given in the past, the more excited I get for that idea of a parallel economy and what that can really mean practically to people's lives, especially just as the world seems to be getting more and more chaotic or authoritarian.

There's some shifts where parallel economies, I think, become a clearer and clearer bright spot in way to opt out. So, really excited to jump into that. And for those of my listeners who aren't familiar with what you do or the topics that you're passionate about, would you mind introducing yourself a little bit? Yeah, thank you. So, I'm passionate about IT security and other interesting topics. I've been, and I would say, old cypherpunk when I was young.

I was following all the things about PGP and everything else, and it kind of rolled from there. I co-founded Parallelna Polis and Parallelny Polis, which are two spaces where we try these ideas out. They also host an institute of cryptoanarchy. So, it all boils down to a very interesting version or a remix of a hackerspace. So, that's one of the things I've done. I also wrote a few books on these topics. I'm really interested in uncertainty. Obviously, cryptocurrency is privacy.

I wrote my first book about the privacy things in, I would say, 2002. So, quite a long time ago, and I've been just going through it lately because it's been sold out. And I published just a version for people to kind of see what we were talking about, how we were approaching privacy back then. So, most of my books are in Slovak language. So, unfortunately, encrypted for most of the listeners, but I'm working on an English book as well. A classic type of encryption.

Yeah, yeah. And what was it that woke you up to the need for personal privacy? You know, I've been, first of all, mostly interested in the technology, in the encryption. It was fun for me to break these kinds of things. And then I studied it at college. And I became a netizen, which we used to be, we were used to call ourselves that back then. So, one of the first users of the internet in Czechoslovakia, of course, in the US, people have been online for a little bit longer.

But I had to wait until the communism fell down and we could connect to the internet. And I realized that nothing is encrypted. If you know what to do, you could listen to conversations. You could see what people were searching, what they were downloading. You could pretend to be someone else. And on one hand, it was very, very interesting to play with these technologies. But on the other hand, it was also interesting to see the implications for the, I would say, social structure on the internet.

What does it mean if someone is anonymous? Are they, you know, nicer or are they jerks? Or how does this apply to, I would say, relationships between people? And it was our world back then. I, of course, had great friends in the real world. But for me, it was interesting that I could interact with, you know, a professor from Finland. And because we were talking about code and geeky stuff, they didn't even know that I was, you know, 12 years old guy or 12 years young guy.

So, so it was very interesting because on one hand, the anonymity kind of, I would say, didn't allow the full expression of individuality, especially if you were only chatting. So, I think, on the other hand, you could see other interesting parts of people because there were no, no, I would say, judgments based on your appearance or your accent, in my case, or anything like that. Because it was all text. And unless they asked and someone truthfully answered, no one knew who is the person on the other side.

So, I think that was kind of exciting. Yeah, I think that's an aspect that I don't really think about much is that, like, there are definitely huge benefits to being able to be pseudonymous or anonymous online. But it is still a, it's an alternate identity. It may not be the entirety of who you are. So, there is still such an important aspect to having that, that in-person community or maybe just a non-pseudonymous or anonymous community that you feel like you're safe enough around to be able to reveal your kind of true identity around.

So, that's an interesting perspective. I don't think, think about very much. I think it's also morphing, I would say, you know, I'm now, I'm not the same person I was when I was 12 and you probably are not either. And I would probably not even enjoy having a, you know, a conversation with my younger self. So, so then there's also the question, what is the true identity? If you, if you even know what it is and maybe you can have more than one. So, yeah, yeah, it's interesting.

And so that's kind of why you got into privacy. And then what is it about privacy that makes it such an important topic for you today to, to talk about, educate about, or to learn about yourself? Yeah. So, as I said, I come from what is now a post-communist country. Well, people would say that Slovakia and Czechoslovakia or what's left of Czechoslovakia, meaning Czech Republic and Slovakia. We are a liberal democracy, but it was not the case just a few decades ago.

And I think we still have many things that we, we can learn from our past and see that things can change really, really fast. So it's all good. So, you know, we are mostly free, you know, sometimes the governments say that, you know, we can't smoke this plant or, you know, travel during a pandemic where we want to and so on. But compared to what, what was happening when I was growing up, it's a very free world. And I think the appreciation for the fact that it can also change for the worst, that the history is not a linear or exponential progression towards a better world, but it can also go backwards.

And that's what we, I think, and that's what we see right now happening with COVID and all the things. And when this happens, privacy is super important because privacy is an ability to selectively reveal yourself. So privacy is not about, you know, no one knowing my real name. I told you my real name. It's not about, you know, doing everything in secret and being fully encrypted and locked in a black box or something like that. It's about choosing if I want to go out on the street naked or if I go naked only to sauna and only with friends that I know.

10:00 is very important in case something happens and in case you need to do things that suddenly become illegal or not socially acceptable and it's up to you. When you lose the privacy, you no longer have this option. But when you kind of tend to it like a garden, then you might at some point find that it's quite useful depending on what happens around you. Yeah, it's so valuable, I think, especially for people who have, I mean, like myself, I've grown up in the US, so I've generally had very good freedom. Obviously, there's been different groups in power that care about different things and allow different things and legalize different things. But generally, it's been a pretty relaxed environment to grow up in, as far as freedom is concerned. Obviously, there have been lots of privacy issues pervaded by the government and corporations now especially. But I think it's really important, at least for myself, but I think also just people generally in the West to hear from people who have grown up with different

experiences or from countries with different experiences who the memory of an oppressive government is close enough that they can still think about what could happen and why is this important? Because I think a lot of people, it's hard to turn them on to the idea of caring about personal privacy because they see today as it not being a core issue to their lives. And they're not able to connect it to any past oppression or issues or censorship that they've seen.

And they're not able to clearly see how that could change in the future. So hearing those perspectives about people who have seen the negatives of a loss of privacy and of people not caring about privacy and can then take that to heart and say, even though right now it may not be life or death or it may not be essential to who I am, taking the steps to care about privacy right now so that if something changes down the line, and again, hopefully it never does go back to something like a communist regime or something, controlling a country. But if it does, you're prepared and you're ready. So I think that's a really, really valuable perspective there.

Yeah, I often say that when the governments want to pass a law to usually to keep us more secure, I tell them, okay, now imagine that in case of Europe, the Prime Minister, in case of the US, let's say the President is your, you know, worst nightmare politician, you know, guy with the mustache with a kind of two straight head or something like that. And for example, in Slovakia, there was this law that allowed censorship of internet, but only based on the internet, you know, the illegal gambling, you know, the law that allowed to be a part of the law to be a part of the law. So I think that's a very specific law.

So I think that's a very specific law that's a very specific law. So I think that's a very specific law. Okay, this is against illegal gambling and if it's not illegal gambling, you cannot use this law to block it. And I say, okay, it's quite interesting. It's a, of course, the state wants their gambling revenue. People who don't want to pay taxes, they will go around through a VPN. And it's this long play. It's been happening for quite a long time. But now the internet service providers had to build the infrastructure, they have these, you know, big red button, and they can turn off any website. And I say, okay, so all it needs is, you know, more than half percent of members of parliament voting for different law.

And everything else is already there. The red button exists. It's just not blocking gambling, but free speech or markets or anything like that. So that's, I think, a useful way to look at it. If this law passes, would it be good to have it in the hands of someone horrible that you are afraid of? Yeah, that can be especially powerful, I think, in the US is everything is so I mean, I'm sure there's it's like this in other countries, obviously, I'm speaking from personal experience here. But just seeing how people kind of view their party or their candidate is like perfection. And they like to think that they're only doing things that that benefit you. And then they view the party or candidate that they don't like, as just like pure evil and always looking to do the worst thing. So when the candidate or party that they do enjoy, is putting in laws that they feel like protect them, or maybe they're not going to do the worst thing.

So when the candidate or party that they're not going to do the worst thing, they're not going to do the worst thing, they're not going to do the worst thing. So what happens when the other party or candidate takes over, and they have access to those things that you're cheering on right now. And they turn those tools against you or against the political ideas that you care about or that kind of thing, it can be a very powerful tool to shake people up and make them realize like you may like how the tool is being used today, whether or not that's actually being used for good, but you may like what the tools being used for today, but that could change very rapidly.

Yeah. And what's a common myth about personal privacy that you've run into? Very common one is, I don't care because I don't do anything bad or evil. And that can come and bite people. I think one of the one of the good instances if we talk about cryptocurrencies is I'm saving in crypto, I am willing to pay the taxes when I take out the profit. So I don't care about KYC and all these requirements to identify myself to say that, for example, to report how much crypto I have, and so on.

And again, the first thing is of course the same approach as we mentioned, and that is okay. Let's say the taxes are now 20%. What if they become 90%? Would you think the same? Okay. And your current intention of taxing something doesn't, unless you can predict the future and can say, okay, this is how it's always going to be. It's quite short sighted, I would say, especially in situations when you don't have to, you're not breaking any rules, you can perfectly okay by crypto anonymously.

Mostly it's not illegal. It's not, or in most countries, if you buy from friends with cash or if you buy from an ATM, you don't have to identify yourself. So it's a choice and you chose the not so private, maybe cheaper, maybe more convenient way of acquiring the crypto. But it can bite you and you don't even need to have some evil interest or something bad that you are willing to commit. Of course, the other problem is, which comes to the things that people don't realize often, is that in this case, you're enemy is not the government, but also private parties who can extort you and so on.

So in the US, you have the FATCA reporting law in other countries around the world. It's the OECD CRS, common reporting standard, which most of the countries in the world, with notable exception of the US and maybe Paraguay and a handful of other countries signed. And this is a standard similar to our international agreement similar to FATCA for the US, which forces institutions, exchanges and so on to report your account balances, your some of your transactions and so on.

So my question is, OK, I buy Bitcoin on, let's say, some regulated exchange. They of course want to have access to the banking infrastructure. So they have to comply with all these CRS and FATCA rules. And what happens is that they report at the end of the year what happened with your account. There's a data structure that is in case of CRS standardized. And this exchange will send this information to my tax office.

20:00 office. And even if I don't fear my tax office, I well, I'm a hodler, so I'm not selling any crypto. So I don't have to tax anything, which is not a problem. I don't really care if these guys know about my crypto that much or I don't need to care. Practically, I do care. But the problem is, okay, someone with a big fat envelope or a suitcase come to the tax office and they say, okay, give me a list of people who bought crypto worth more than, I don't know, $50,000 or $10,000 or any crypto at all. Select it from the database. Here's the suitcase. You can buy a fancy new car or something like that. And these people that are working in these tax offices, I don't know about the US, but in Europe, they they're not the best paid people. And there have been cases, for example, in in Netherlands where where people were being, I would say, violently forced to reveal their private keys. And I don't know where they got their information from. But this is an obvious, easy leak that that can happen. So so the myth is that I'm not doing anything wrong. I don't need to care

about privacy. I have to tell you, I am not doing anything wrong. I'm a good person and I don't intend to cheat or or do something bad to the society. But I do care because the society can change and there are people who can abuse this private information. Yeah, I think it's a really good distinction. Oftentimes, when I'm talking about privacy, especially on this podcast, I do kind of focus on government or capitalism, like surveillance capitalism, that that type of thing. So I'm usually thinking about government or private company actors being the problem. But there's a really good point that oftentimes privacy could also just affect us from that kind of $5 wrench attack that we talked about in cryptocurrency where, yeah, you may have secured things well and have things down. But if you've put all that data out, we put down your ID and passport and a picture of yourself and home address and everything, if that if that information gets leaked by that cryptocurrency exchange or by that tax office, or if like you mentioned, someone buys that information and gets access to it, you could be a

target because you've chosen not to protect your privacy, even though it's not a government or a company that's coming after you, it could just be somebody who wants access to the money that they know that you have because you did not choose to to acquire it privately. So yeah, I think that's a really important important aspect. And I think what people don't really understand is the extent that this information is shared. So if you go to the PayPal website, for example, and you go through the terms and conditions, they have a list of companies they can share your information with. And at least on the German PayPal website, the European market, which kind of covers the European market, they have a list of more than 100 institutions that they can share your financial information with. And it's not all state institutions. It's like the credit rating agencies, marketing agencies. So you can have a... they can target uh advertisements uh better and and kind of um make them more personal there are risk rating

agencies there are all these uh kyc and and background checking registries and so on and uh it really sparks like fireworks it's not you know i i always imagine okay if i use paypal to buy something uh it's not uh you know most people think it's the the receiver of the payment that learns information about you obviously um it's paypal it's maybe your credit card company and bank uh and you but uh in reality uh the the sparks go much wider and this information is shared with many more parties than people realize with cryptocurrency exchanges uh many people don't know that uh for example if the cryptocurrency exchange uses chain analysis company they share information with the chain analysis company uh as well so it's not not a one-way information exchange that uh you know the exchange asks uh uh the uh the chain analysis company about some risk of the address uh but when uh when you uh withdraw from the exchange uh the exchange in some cases uh can and thus report back to the chain analysis company that okay this is a withdrawal from our

uh uh from our uh hot wallet uh to someone's account and now the question is okay what other information is attached is it uh does it say you know this is a withdrawal from coinbase to a personal account and they don't say whose account it is or do they mention my name and uh we don't know yeah yeah that data sharing can be can be brutal and can be really unseen i mean i think even paypal listing out the companies that's probably a fairly rare thing to list out clearly who the data is being shared with and obviously who knows if that's the limit of the list but it's a an important aspect to keep in mind rethinking about the personal data some of them some of the companies are probably aggregators and they share it with other parties so you don't really know it's just uh the the reason i mentioned the number more than 100 is that people think you know it's a it's a relationship between you and some payment processing company and the and the recipient of the payment and uh when when you hear the word

100 uh it kind of shackles this uh shakes this uh uh perception but you know uh risk creating company can maybe share this information further maybe by them asking about the transaction they also share it with some other registries we don't know yeah yeah absolutely and uh before we dive more into this idea of parallel economies that i really want to get to today um i do want to ask one more quick question and that's what's something that you feel like almost no one agrees with you on um the the importance um uh of uh i would say peer-to-peer economy parallel economy so we can go back to that but why i mean that is that um people are often waiting for the solution for for the institution that's all something you know people say okay bitcoin solves this problem or monero solves this problem and so on and i think uh when when we have some problem uh in the economy in our daily lives uh or in particular in cryptocurrencies uh we are waiting for the for the next project to solve that for for for a beautiful solution

and so very often the solution is not that beautiful it's kind of easy many uh many of the uh of the solutions are you know writing down on paper something you know uh drafting a contract uh between people uh and uh um so one example would be uh would be uh we are talking about exchanges you know everyone wants uh super easy one click exchange that protects your privacy has almost zero fees and uh it's private and it's secure and it goes to your hardware wallet and so on and uh what i often realize is that uh the hard way for me uh meaning uh create a social structure of people who are using cryptocurrencies who want to exchange them and you know have someone to write okay i want to buy to monero for cash uh where should we meet and uh this is kind of like a like uh uh i would say easy but a little bit dirty solution to people you know it's a it's a difference between between a restaurant chain and the street vendor um so this this kind of uh centralized all encompassing uh solution versus the the dirty peer-to-peer market

chaos that people people don't like and uh for for a lot of people it's uh you know either this uh nice

30:00 polished solution exists or it does not. But what I came to appreciate is the street vendors, it's the easy solutions. It's not asking about the ultimate solution of, I don't know, who would build the roads in a free society or how would you provide justice in a free market society obviously I'm a libertarian, so I'm interested in these things. But I think that cryptoanarchy brings us more down to earth, more to what people are actually doing instead of creating these philosophies and possible future market structures.

So what I often do in case of, for example, justice, I say, okay, if you have a dispute, what do you do? Obviously, people don't often go to state court, especially in post-communist countries because that takes 10 years and the result is as good as a coin toss. So people have these solutions. They just don't have a perfect solution for everything. So for justice, I think, you know, Uber, Airbnb are justice providers because it's part of what they do.

How do you convince your customers that someone will not cheat you? So the peer-to-peer exchanges like HODL-HODL or BISC are also justice providers because they deal with the situation of cheating. Even dark markets, even the first version of Silk Road has had a justice mechanism to make sure that people were not cheated. So it's not a, you know, a universal solution to all problems of justice in the world, but it works in these particular cases.

And I like to explore and, you know, think about, write about, and experience all these dirty solutions that are somewhere down in the hierarchy, maybe too specific, but they work today and we can use them. Yeah, let's dive into that a bit more. You sent me a chapter of your upcoming book that you're writing on parallel economies and you focused heavily on how vital parallel economies can be to surviving or even thriving in times of economic or social collapse and chaos.

Can you break down a little bit of what a parallel economy is and why it's an important aspect to being able to opt out of the normal economy? Okay, I'll go a little bit more broadly, but we'll get to the economic part of it as well. So, so, so we started this space called parallel police, police not as cops, but as a Greek work for, worked for a city or the small social structure. So with an S at the end. And this was invented or wrote about a guy during communism in Czechoslovakia.

And the reason was that there was this attempt of intellectuals to reform, not, not cause a revolution, but to kind of convince the government to not be as evil as they are. And they failed spectacularly. So this guy realized, okay, now we have basically only a few options. I can escape. I can find a way to cause a revolution, which can be expensive and bloody. And maybe, maybe it wouldn't work out. Or I have a third option, which is, I create a backup society.

I create, you know, the, you know, like Elon Musk is talking about creating a multi-planetary species. It's the same idea, but on the same planet. So what these guys were doing is, for example, there were some allowed concerts and bands and some that were not allowed. So, okay. They created a structure for, for these censored or not allowed bands to play in secret somewhere. You needed to send your children to a mandatory school. And this school was teaching Marxism, Leninism.

And I would say a little bit brainwashing, brainwashing the children. Of course, you couldn't say, oh, fuck you communists. I'm not sending my children there because then you would probably go to, go to jail and the children would go to a state orphanage or something like that. So you had to do it. But there was no real way to stop you from saying, okay, Saturday, 5:00 PM in the kitchen of this guy, there is going to be a talk about Western democracy or, you know, Austrian economy, which was a sci-fi back then.

They didn't know too much about it, but any other topic that was contrary to what these children were taught in school. So they could do it. Of course, they had to tell the children to not talk about it too much, but they could create this backup parallel system. So one of the aspects I told you about culture, so these bands, but of course writers and other people who were doing not state sanctions, sanctioned culture. I was talking about education.

They had another pillar, which was religion, which was completely bent. The only allowed religion was what they were calling scientific atheism. So that was the only allowed official religion. Then there was information exchange, which was crucial back then. Now it's a little bit more okay. And the last part was something that this guy, who was called Vaclav Benda, was most afraid of. And that was the parallel economy or black markets. And it is important because all of these pillars are, I would say, basic pillars of society.

And if they're controlled, if they're not working well enough, it takes a lot of time to reform them. They have this inertia and people tend to be not very happy about reforming them too fast. So these parallel solutions for these societal institutions, what they provide is a way to experiment and is a way to have a backup plan in case the main plan fails. There is not necessarily something to replace it, but there is something in place that is already tried and that people have already built because these things don't appear from thin air.

But you need to work on them. And it's quite a lot of work to keep this going. So for parallel economy, we have several things that can be problematic and that parallel economies are quite good at. So for example, at least in Europe, what we saw beginning of COVID epidemic was quick regulations of face masks and FFP2 and FFP3 respirators. The government's bit anti-price gauging laws or they were completely regulating the sale and that ran prices to the roof.

There was quite a big scarcity of these things. And what was interesting to me that immediately you could see the parallel structures. usually people who were trading before, some of them were trading, for example, farm meat or

40:00 vegetables from their farm. Some people were maybe trading wheat or dealing wheat and so on. And these people, they already had their customers, they already had these relationships and they very quickly found, okay, this is something that people want. So I need to find a good source and then I can sell it to the people. And it was very interesting. I was super surprised how fast it happened. So this is, I would say, one of the main reasons for parallel economy. What if something happens to the supply chain? What if, you know, there's a huge scarcity of something? Do we have a parallel trade and distribution structure when the states decide to centrally plan the supply chain and they usually fail miserably in this task? So that's the first one. It also relates to cryptocurrencies because the supply chain are exchanges. So what do you do if the state bans cryptocurrency exchanges or sale of cryptocurrency and so on? We've seen that. So we don't have to guess.

So there are countries like, we don't have to guess. So there are countries like Colombia, maybe Nigeria, where it's illegal for exchanges to I think, I think, is that they can't buy Bitcoin, for example. So you can't buy money to buy Bitcoin, for example. And you could see that these market participants, they supply all these needs of the economy within a parallel structure. So it's not an official structure. It's, you know, a guy that sells you wheat.

They can also sell you Bitcoin or buy Bitcoin from you or something like that. So that's the supply chain part. And the other part, which is money, which is super important. And you maybe want to have money that is not easily inflated, maybe a little bit private, maybe not censorable, all these features the current money systems are losing in the name of, you know, fighting tax evasion or tax avoidance, money laundering and all these horrible keywords. I think they're breaking the system. I like the name, my friend who is an economist of the only true school of economics, which is Austrian school.

He says that money is a database, a memory of good deeds. So if I do something good for someone, I get a record in the form of money in this database. It is in a way distributed, decentralized, but often corrupted. And if we have a problem with this database, the question is, okay, what do we do? Do we, you know, vote better and hope for change? Or do we try to use some other database, some other memory of good deeds that is not corrupted? And that is the parallel monetary system that we can use.

So it's a backup. One last thing, and then I'll let you ask another question is that there is a difference between an alternative and the parallel economy. And difference is crucial. An alternative is something that you're building with the goal of replacing the primary one, which is not what we are doing. I don't think we can tell other people what to do. I'm not comfortable with people used to US dollars or euros telling them, oh, no, US dollars is, you know, you cannot use it anymore. And you, we are going to replace it.

I think that's a route and it's not ethical. We, what we are doing with these parallel economies, we are saying here is a parallel solution to some problems that you maybe have. And if you choose, you can switch to the parallel solution. You can even try it out a little bit. You don't have to abandon your ways, the things that you're used to, and you can try out something else. And what I say to people is it's a good idea to have a record in this parallel memory of good deeds. Just in case something happens, I hope it wants. I'm not the guy that would say, okay, US dollar burned to hell. I think a lot of people depend on the US dollar or the mainstream economy working. So I'm not a, you know, let's burn everything down guy. But I tell people, I think it's a good idea in case something happens to have a record in the parallel memory.

So I think you tried out, try out parallel education, culture, communication, and see, maybe you find some good use for it. Yeah, I think first off that, that idea of a memory of good deeds being what a money system is, I think is a really fascinating one that jumped out at me when I was reading through that chapter. It's just that, I think the language really kind of evokes the idea of what money really is. And I think it helps to helps to hit home why it can be important to go ahead and go ahead and at least get familiar and comfortable with cryptocurrency specifically. I know Bitcoin is your focus, Monero is my focus more, but they serve similar purposes and just people going ahead and getting familiar with those getting a little bit learning how it works can be an essential way that they can be prepared, at least on the monetary side.

And for if a parallel economy is something they need now or something they need in the future. So I think that's, it's really essential. And I love your idea of how parallel economies are very different from an alternate. Because I think, especially for me, the more I learn about how the world functions, the more I learn about parallel economies from people like you and crypto anarchy, the more I think it hits home that the idea of cryptocurrencies serving as an important tool in parallel economies or in crypto anarchy is a much more, to me, realistic idea than like Bitcoin replacing the dollar or something like that.

And like you mentioned, I think in many ways it could be a more ethical and freedom focused view because we're not we're not forcing that onto somebody we're not hoping for the destruction of the the fiat system so that um so that bitcoin becomes like the the monetary system uh even though maybe if that happened there would be some good there but there would also be a lot of destruction and a lot of collapse and a lot of ruined people um but just having it as a having it as a key tool that is essential to building parallel economies and to having that that thing that you can opt out of the normal system into whether you need it today or you need it in the future i think that's such a such a vital way to view cryptocurrencies and i think to me is really one of the most the most impacting and powerful things that cryptocurrency brings i think it's a really big breakthrough in bringing that economic portion of parallel economies and do you have any more thoughts around like how cryptocurrency changes how parallel economies can function from

maybe before cryptocurrencies were around or before they were this accessible well they made it global so uh currently most people uh they don't see any kind of problem right now with the economy you know in europe uh the uh the bank wires which are called called uh sepa single europe payment area uh they are free or or super cheap uh they usually work uh you know uh you can use your credit card uh it works so people don't see any kind of problem of course inflation is coming but uh you know we need to save the economy whatever that means uh after after the lockdowns and pandemic and uh uh mortgage crisis of 2008 and and so on so so people maybe feel something might be wrong but uh in general it works you know you go to a grocery store you uh take out your uh 10 dollar or 10 euro banknote you uh you buy your groceries and you go out and and it works in general so um what cryptocurrencies uh bring uh is that uh we can uh scale and try try these uh parallel economies on a more global scale which is very good because uh

because uh these parallel economies are of course uh smaller than

50:00 and the main economy. So, you know, if you want to buy traditional Alpaca socks for Bitcoin, there might not be a store that is willing to exchange it in your hometown for Bitcoin. But there is a guy in the US maybe or Canada that will send it to you. And we have a global economy right now. So cryptocurrencies bring this global currency worldwide and enables worldwide trade. So I think this also helps with poverty in general, because right now you can hire a programmer from Iran, from Belarus, from Africa and so on.

Until now, the main problem for people was the payment, either sending it to such a country because of some because of not so well connected payment networks, but also receiving it without some local dictator taking it from your pocket and stealing it. So I think this is very important and something that couldn't be done before cryptocurrencies were invented. Even, I would say, this is only possible with decentralized cryptocurrencies, because Bitcoin is not the first cryptocurrency, but it's the first decentralized one.

So that's one interesting thing. So you can use other money in parallel economy. So parallel economy doesn't need to use use cryptocurrencies. For example, I often buy things like coffee or or farm raised meat or something like that directly from the vendors. It's parallel economy because it's not part of the official economy, but I pay cash and it works. It's private. So I'm a huge advocate for cash and I don't need to push this on everyone. Of course, I always tease the vendors that they could accept cryptocurrencies and they often do.

But locally, cash is also a good and usable way of payment. It's private. It's uncensorable because you can can just hand a banknote, a bill to someone and it just happens there's no third party involved. I like if you are interested in pearl economies. I don't know if you if you mentioned this on the podcast before, but I really like a very short book by smuggler and XYZ, which is called Second Realm. Second Realm is a different name for parallel economy.

And I like that they're thinking about all these aspects, the security aspect, the cultural aspect, the separation of the first realm economy and society and the second realm economy and building a clear interface in an ethical way in which you don't force other people to go to Second Realm, and so some of them are really not comfortable with that. And I don't think it's ethical to kind of push too much. And I think I think pearl economies should be opt in, strictly opt in only for people who really want to try it out.

And it's good to be an advocate for parallel economy. But but we need to accept that not everyone is like us and not everyone cares about this in their lives. Yeah, absolutely. It's not something that most people are going to wake up to, or at least that most people are going to see the need for before there's some kind of major event that makes them think about some other way to get the produce that they're used to or the groceries that they're used to or something like that.

But in the meantime, important for those of us who do care and who do know to be building out those things, to be be a part of that parallel economy and to be to be educating around that so that we're ready in case of that. And there were there were two kind of key roles that you talked about in parallel economies in the chapter of the book you sent me. The first one to focus on is something you called and I'm sure I'm going to butcher the pronunciation here, but ethical Vexlocks.

I'm just going to I'm going to roll with that. Well, that was perfect. Well, I'm proud. I'm proud of myself. And then the second was proxy merchants. But I want to dive into ethical Vexlocks first. And you talked to them as being really crucial to on and off board people to a parallel economy. Would you mind kind of breaking that down that term and idea a bit for listeners? Yes, sure. So the term also comes from communist Czechoslovakia and it was not easy to travel abroad.

And when people did travel abroad by travel, I mean either legally or escaped because Czechoslovakia was behind an iron curtain and you needed the permission to be able to go to the West. You needed money. So so what was happening is that there was a group of people that needed a foreign currency. which was most often at that time Deutsche Mark, German Mark, which later became Euro or US dollars. But Deutsche Marks were were more, I would say, used.

And these people, the term Vexlock came from what they were saying. They were saying in German, Geld Wechseln, which means trade money. So that's the exchange. So if someone from the West, doesn't matter if they were local or local people coming back from abroad or or travelers from abroad who got permission to go in, they were probably carrying foreign currency because you couldn't buy Czechoslovak crowns abroad, at least not for a good exchange rate, usually not at all.

So when people entered, they needed the local money and they needed to exchange it. Of course, there was an official state exchange, but that was on one hand more expensive. And on the other hand, it was not private. And some of these people didn't want the government to know how much money they have. On the other hand, the privacy was more important. If someone wanted to escape to the West, they needed needed money for life to maybe to bribe someone and to be able to travel as far from the communists as possible and live as long as possible.

So they were saving money. And of course, you couldn't go to a state exchange to say, hello, guys, sorry, I don't have a travel permit, but I would really like to buy Deutsche Marks for these Czechoslovak crowns. That was not a good idea. So these guys were quite tolerated, I would say, but definitely illegal. And they were at every bus station, train station, even airport on some squares where tourists often came and they were they were dealing with currencies and doing an exchange which was better for the customer.

By the way, because they had spread, which was quite huge, still lower than the official exchange, but quite huge. People to this day really don't like them. that's why I put the word ethical before it because when you say in Czechoslovakia wexlakt, people get this, you know, this idea of someone who wants to cheat you because they make money on the exchange. But of course, that's the way they they're making their living. So how important they were after the fall of communism, when the when the National Bank had to set an exchange rate, they came to the square and they asked the wexlakt, what should the exchange rate of now relatively freely traded Czechoslovak crown be because they didn't know they only had their, you know,

1:00:00 imagination of what the price should be. But the Vexlax knew better because they were trading it both ways. So they saw the market trades actually happening. So the central bank asked them. Why I think it's important now and why I say that the time of the Vexlax is back is because we are having, or governments are introducing the economic regulations for cryptocurrency exchanges. And what is also important, a lot of these regulations don't come out of parliaments or governments because there are international organizations that fight tax evasion. That would be, for example, the mentioned OECD or money laundering, which would be a financial action task force or FATFA.

People who are into crypto have for sure heard about this organization because they introduced the crypto rule and they are actually writing the international regulations on fighting money laundering. So these organizations are limiting how you can acquire cryptocurrency. They're limiting the anonymity. I would say in most countries getting your cryptocurrency anonymously is still legal. And why I'm talking about it, I made an online course, I will sure translate it to English as well. I started in Slovak.

I started in Slovak. I started in Slovak. I started in Slovakia. I would like there to be a network of these people. And this network should be here before we need it. So in some cities, in Czech Republic and in Slovakia, you can buy crypto anonymously. In ATMs, we have, especially in Slovakia, not so much in Czech Republic, but in Slovakia, the ATMs are really cheap. They charge, I think less than 3% fee. And it's an anonymous exchange, but these are in a, I think less than 3% fee. And it's an anonymous exchange, but these are in a, I think less than 3% fee. And it's an anonymous exchange, but these are in a, in a few cities and they have limits. They have some problems. One of the main problems is that if crypto falls down too quickly, they don't have enough money on the exchange, the operators of the ATMs. So you cannot actually buy because everyone is buying like crazy. So, their fiat account on the exchange that they actually use to buy the crypto is depleted. When crypto jumps up, there are a lot of people who want to cash out and of course the cassette in the ATM

is limited. It doesn't have infinite number of banknotes. So when, for example, at the time when Bitcoin hit, you know, $50,000, you couldn't get any fiat out of the ATM because it was gone by 9am because everyone just ran to the ATM and took it off. So these Vexlux, first of all, they can be in every village, in every city. They can create their network of people who they know are into cryptocurrency. They can help them set up a hardware wallet. They can explain to them how it works, what to do, what not to do. That's why I teach them to be ethical, to not, you know, push some shit coins onto their clients or something like that, but to really educate the people. So that's another role that is different to an exchange or an ATM is that when you have a physical person that you know and you can talk to, they can actually explain you how this all works and make sure that you don't do anything dump, you don't, you know, buy some ETF or some scam and they can facilitate the trade within within some community, some area. So what I've been experimenting with, which is quite a new project for me, but it has been quite common is I'm just because let me first say, after I created the course, I was teaching these Vex slugs, how to how to hedge the exchange rate, preferably anonymously, how to what to do if, you know, they have all their money on one side or the other and so on.

So I was teaching them how to become these dealers. But people started to write me, they don't care about learning, they just want to find the Vex slug to do the trade with. So they were asking me, okay, is there a central registry of the Vex slug, you know, like a website, and I say no. And the reason is the same as why there is no central registry of illegal weed dealers, you know, that would be kind of pointless, because then even the cops could just look at the list and go and arrest them. So no, there is not a central list. So okay, how do I find, find one?

And I say, I say, 14 year old person, at least in Czech Republic and Slovakia can buy weed anytime they want, you know, they ask, you know, a brother or sister, you know, older, older schoolmate or, or anyone. And after asking, four times, they, they have a signal number. And then they have a signal number or something of a weed dealer and they can buy weed. So the same structure, which is what I was saying, you know, it's not a super nice registry where you click, okay, I'm in this city, and I would like to buy Bitcoin for $500. No, that doesn't exist. Or if it exists, it will end like local Bitcoins.

So yeah, that doesn't exist. But what you can do is you can say, okay, I have these 20 friends, they're all interested in, in cryptocurrencies. Let's create a signal group, they or three my group or something like that. Everything except, except WhatsApp and Telegram because there's a lot of people. spyware and create some rules for trading. And you can ask, you know, you're in the same city. You would like to buy some Bitcoin. Maybe someone wants to sell some Bitcoin.

And you create these communities. You leverage the existing social structures. You know your friends, you know, they have friends and you can expand this network. And and basically organically discover that some of these people realize, OK, maybe if this guy wants to buy Bitcoin, maybe I can sell it to them. Maybe I can add a small fee on top of that. Maybe I can hedge the exchange rate. And maybe if I do this quite often, I can make some additional income.

I can help other people and you will discover that some people realize, OK, you know, the economy is hard and and maybe maybe I would like some additional income. So so I will be doing this service. I will be the guy that will always answer yes to most trades. I will come to the cafeteria, make the deal and so on. And if this happens, it doesn't matter what the future rules for exchanges will be, that they need to report and so on. But and this is what is organically happening in in the countries like Colombia or Nigeria, that people created this structure.

But I think it's better to have it to already help people discover who wants to do these kinds of trades and and how to how to create this structure, because it takes some time for people to discover how to do it and and and how to facilitate these transactions, how to build reputation, how to verify reputation and so on. Yeah, I love the I love the organic nature of this idea, like how it can spread so easily, how it can have education at the core of what these people are doing.

I mean, it's something that I've done a little bit of in the past. Obviously, not to this scale that you're talking about, but the the personal nature of it.

1:10:00 especially when it's like face-to-face for cash, is I think so vital. And I've had some really good conversations with people. I've had some time to just sit down with people and really explain what cryptocurrency is about or like Bitcoin or Binary specifically, how to use them, what they should be concerned about, what they don't need to worry about. There's a very unique personal angle that comes with it being, like you said, a person who you know through someone or who you've been connected with somehow, rather than just a kind of nameless exchange that wants to profit off you.

And that doesn't mean that the person doing this isn't making a profit. Obviously, they need to make a profit for the service they're providing, especially if there's any kind of legal risk or any kind of, obviously, they're also taking on exchange risk and stuff like that. So them making a profit is definitely not a bad thing, but they're not just kind of a blind exchange. Yeah, it's quite interesting because a friend started a group that was focusing on small introductory trades with Lightning.

So it's called Lightning Wechsel, also encrypted group, but more open. It's quite easy to get in. And first I subscribed and first people were, you know, offering or asking for trades and no one was taking the orders. And I said, you know, guys, it's okay to ask for a few percent more. Don't be shy. You know, people look at the fees and they're kind of, you know, scared that, you know, it should be free because we are in this friendly environment and the goal is to educate people to get them their first Lightning Bitcoin.

By the way, it organically started trading Molero as well. But it was like it really needed a notch from me and other people that it is okay to ask for an extra fee. And I also told the people that were that were asking for the exchange to say, okay, tell them that you will pay two percent more and maybe that will raise the probability that someone takes the offer. And now it's standard. Now it's quite often the case. What is really interesting that people have been offering other forms of fees.

So two of the funniest were, of course, a little bit of homegrown wheat in addition to Bitcoin. And the other one was also really interesting was a directory with pictures with Bitcoin memes. So it doesn't have to be fees, but you can tell people that it's okay to incentivize the trade. If you see that, you know, I'm asking, I'm asking and no one is taking the offer. Okay, so maybe you're on the wrong side of the trade. Maybe everyone wants to do what you're doing.

If Bitcoin goes up and you want to cash out, it's understandable that people don't want to buy expensive crypto from you and you need to incentivize them. And, you know, I was surprised that you needed to tell it to people that it was not natural to them. They were kind of shy to do this. Yeah, and I mean, especially if people want this type of thing to persist and to keep going. I mean, the people who are putting in the time and effort and money to becoming an ethical vex lock, like they need some way to recoup the things that they're putting in.

I mean, maybe some people can afford to do it with all their time and money and not make a profit. Generally, the people are going to need something that keeps them into it, that keeps them able to dedicate that time and effort. I mean, they're providing a non-easy service to provide. Like, it's not necessarily something that's simple and anyone can pick up. So I think something I've talked about in the past with other people, not on the podcast, but like on Twitter, is people often get scared of a premium for using like cryptocurrency exchanges that don't require KYC, know your customer information, or people freak out when they go on like, used to be local Bitcoins, now LocalMonero is really the only version similar to that.

But they go in there and they say they have to pay a 5 or 8% premium and they freak out. But they're not realizing that the discount you're getting when you're going to that central exchange or when you're going to that government approved exchange is that you're giving them over all of your personally identifiable information. You're sacrificing your privacy and you're getting a discount in exchange for that. I really viewed whatever the market rate on the street is, whether that's just directly peer-to-peer with somebody or if that's something like BISC or LocalMonero, that's really the market rate.

And you can get a discount if you're willing to give up your personally identifiable information. But I think people need to realize that that trade is obviously going in the favor of the governments and central exchanges that are choosing to do that. And it's well worth paying a perceived premium for keeping a service alive that's really providing an essential piece. And I love that that was a focus of this section of your book. Yeah. Yeah. And also, of course, the more these dealers, there are the fees would be lower.

So I rarely see anything above 5%. And usually, it's much less. It's more like 3% to 5%. In most cases, in the most extreme cases, it could go higher. But I also advise people not to do stupid things like, you know, go meet a random person on the street with a suitcase of cash and buy or sell. It's maybe worth playing it safe and really using the social network and the reputation and doing it maybe sometime less is more. So I think starting with something like a small signal group where you really introduce people when you say, okay, I'll sell you Monero for $20 or $50 just to try it out, just to see if you can create a wallet.

Settle your debt with friends, you know, someone pays for the lunch and you send them Monero or Lightning, Bitcoin just to settle the lunch and, you know, play with these transactions because everyone wants to, okay, they read about crypto, they see, okay, so if I wait for years, it will be 10x and I'm going to put in a lot of money and then they're sad because more often than not, it crashes and doesn't go up. But just, you know, using it, playing with it is much easier.

One of the best use cases for crypto that I had was I was traveling with friends. We went to Amsterdam. one time we went to South Korea and we were doing this, you know, we wanted to, you know, rent a boat so someone paid for the boat, for example, with their credit card and we all needed to settle. but if you have a friend who is from Czech Republic and uses Czech crowns and is outside of the single euro payment area, so the exchange can be expensive.

Someone is from South Korea, you don't wire money to South Korea because that's insane, that's expensive. And then on the other hand, people need to do accounting, you know, I don't understand Korean or Czech crowns because I don't use them. So normally, normal case, it becomes quite difficult to keep tabs and to settle it and, you know, or you have to handle a local currency, which is also, you know, local banknotes and so on. So what we did is we decided on the settlement cryptocurrency everyone created their own wallet, which they didn't need to do anything.

They just installed the app and created the private keys. Then we were just showing QR codes. If I wanted to request 20 euros because I paid for lunch, I typed 20 euros. The guy who was thinking in Czech crowns because he's from Czech Republic, they didn't need to do any exchange rate calculation. They scanned the QR code. They hit send and that's it. No international transfers, no currency conversions, no local banknotes wherever we were and so on.

So I think these super easy use cases among friends are the most important because that's how you can do it. You

1:20:00 transactions you don't you just save and huddle but you can you can try it out you can see okay with monero i paid one guy and i don't have any any other output to spend and i need to wait 20 minutes and you learn that by experience you don't you know you can read the documentation but but when you do it every day when you when you understand what's going on when you when you exchange one crypto for another as well uh that's the way to learn so i i suggest people you know not going big at first you know take whatever 20 50 100 dollars uh buy some crypto and play with it and and use it with your family with your friends and that's the way to uh to learn yeah it's a really cool opportunity when i was at defcon this i guess a week ago now um both that piece of just being able to to keep a a way to settle between friends i mean there are a lot of people from the monero community there and we would go out for dinners go for lunches and we settled all of our debts by just paying each other back in monero super simple we had people from different countries like you mentioned

we didn't have to care about exchange rate i just said okay lunch was 80 split it four ways 20 each like you said just make a qr code that requests 20 worth of monero they sent it to me it was a super simple way to do that and a nice way to cut out the exchange rate headache um and the other cool piece that i got to experience at defcon was just onboarding some people into monero um one guy got like the uh the best exchange rate of all time because i missed a decimal point so i sent him 10 times as much uh monero as i meant to so he gave me a five dollar bill and he got fifty dollars worth of monero but uh he he tipped the um there's a coffee company called gratuitos that's run by some people in the community um and they were there they're very very cool project yeah it really is i love what they're doing i drank way too many shots of espresso while i was there from them um but they were letting people tip in monero directly to the farmers who had grown the coffee beans so like i on boarded this

guy to monero he went got some lunch when he came back he got some coffee and was able to tip them directly with the monero that i just on boarded him to so just really cool experiences like you mentioned you only you only get those by both just actually educating and onboarding people but also um doing those things in real life showing them how it works getting them on board and really showing them the the way that these things can function it's cool to see people grasp that in real life in a way that maybe you don't see just online but you know what is interesting that people say that uh uh you know uh crypto is difficult and keys and qr codes and they say okay it should be as easy as venmo or revolute or or paypal and i always tell them okay but but do you understand that venmo is definitely not easy for me because i can't have it i'm not an american i don't have a us phone number i don't have a us credit card bank account nothing so it's not easy because i cannot do it at all it's not

that you know the user interface is uh is you know easier or not easier uh it's absolutely unusable for for me it's a it's a total no-go because i just cannot use it at all and um i think most people appreciate the simplicity of cryptocurrencies when they start uh uh doing international payments so so that's that's i would say the sweet spot so for example uh i was saying that uh the people um they don't uh understand why they should use crypto because they just send the wire and it arrives the next day and it's almost free and it works or these uh solutions like paypal and venmo of course when you uh when you uh deduct the fees especially of paypal uh but when you do these international transfers you realize how difficult it is actually and what kind of problem uh crypto solves so um two examples uh one is i was doing international business with um with uh international companies and very often the bank wire would take a month and you would need to uh uh you would need to give the uh the receiving bank all the information about the transaction

contract uh you know who will who was working on the project uh invoice you know and uh describe the relationship with the relationship with the customer and so on so unless you do you know of course you can you can buy coffee and wire a hundred dollars but when you hire programmers from outside of your currency area and you want to pay them uh the banks start asking questions and it takes a month and for a a programmer a month is a long time without without getting paid so uh so one thing is uh is this uh uh international transfers um the other issue is i have a friend from uh from uh from panama and after panama uh he was uh uh uh he was uh trying to send uh uh less than thousand dollars uh to his daughter who is living and studying in spain and the uh and by the way uh she also has a spanish passport uh so uh the bank uh the bank stopped the payment the receiving bank the spanish bank stopped the payment because it's from panama so it's you know dirty money laundering and it was less than thousand euros you know it was not

10 million it was less than thousand uh thousand dollars uh and uh and the payment just didn't go through they they returned it and she couldn't uh couldn't pay for uh for her tuition or or dorm or uh or whatever the money was for uh so unless you try these things you don't really know how how the situation is really bad you you you know you say okay why are you bothering me with this crypto i can just uh you know with revolute or or this uh fintech stuff i can just uh send money to a phone number um and i say yes to a person living in the same country using the same currency and if it's uh not a lot of money you can and it works uh but for other things uh the crypto is just more user friendly today it's not a not a vision of the future it's it's uh uh uh waiting for a monero miner to mine my international transaction for the for the payment for the services that i buy versus uh waiting for a month for for the transaction to arrive uh to to the supplier and uh and submitting all the documents and going through all that harassment it's a no-brainer

i think monero is definitely uh more user friendly than than international wire uh between uh business entities that are not uh from the same country yeah yeah big piece of that is just is the middle man that you're dealing with someone who's easy fast and cheap to process payments or is it complex and like you said a lot of people their experience with payments may just be their friend in the same country but there are a lot of other hurdles that maybe they don't have experience with where cryptocurrency really hits home um the other kind of main role that you talked about in parallel economies is this idea of proxy merchants would you mind kind of talking about the the role that they play in building and supporting parallel economies yes uh so proxy merchants are are basically the gateway between the main economy and the and the parallel economy uh so one of the example would be uh someone uh you know you have a only crypto and you want to buy something from amazon you care about your privacy so you don't want to create an amazon account uh but you want to buy something and you would

like to find this uh middleman that can handle the transaction um but these proximan merchants can be much more uh so uh for example um uh there there is uh quite a large market with uh discounted uh gift cards uh so they can uh they can uh kind of pass part part of these discounts uh to the to the to the uh to the people uh from the main economy so they just want cheaper stuff and uh uh they can use these proxy merchants to you know find the uh find the gift cards uh process the payment order it and everything and uh they can uh they can uh they can um bring uh bring uh bring these uh uh these services of the of the parallel economy to the mainstream economy so i think it goes both ways And there are

1:30:00 many reasons why someone is not able or willing to interact with either the mainstream economy or the parallel economy directly and they need a middleman. One of the reasons is privacy. The second reason is that they just don't know how to do it. So it's a skill issue. It's, you know, if I want to buy a solar panel for my grandma, you know, she will certainly not go and contact the Vex Slack to buy Bitcoin and order it on some store. She needs someone to do it for her.

So it's a very usable service. And also the other way around. So, for example, I was talking about the shortage of FFP2 respirators. What didn't happen was someone from the mainstream economy going to the parallel economy, buying them where they were available and selling them to the mainstream economy. So if there was a hospital and there was a shortage of medical goods, they were not able to buy it because the mainstream economy the mainstream economy doesn't have access to the parallel economy. So they need a proxy merchant that can that can do that. And it's a very useful service because it's a difference between not having the the medical goods and having them. So it's quite important. Another thing is that the, you really want a liquid market. So, So, so, so, and it's not, not always possible for people to, to access one or the other. So there was the open bazaar, there was a DIY economy. So people were printing these face shields during COVID. They were printing spare parts to, to lung ventilators and so on.

And the, the proxy merchants are people who can bridge this demand and, and create this liquid market because when they signal that there is a demand, people start creating it. So for example, proxy merchant, what they could do and what I would I saw at least in Czech Republic and Slovakia is they created a crowdfunding campaign. So, if you're interested in, on the parallel economy, on the parallel economy, on the parallel economy, for the parallel economy, then the result of this crowdfunding campaign was that they were able to, to procure this, this do it yourself 3D printed things in the parallel economy because these were not registered companies. One of the differences may be between European style of doing things or doing business and, uh, uh, and American is that in Europe, uh, you need a business permit for doing most of the things outside of employment. One of the few exceptions is, uh, when you, uh, create, uh, uh, intellectual property. So when you write or record a podcast or something, you don't need a permit for that. But if you, um, if you would, uh, for example, 3D print, uh, uh,

face shields and you want to sell them and it's not a one-time sale of something that you produced or you had extra. But if it's kind of continuous, you need a special kind of permit. Even if you don't want a limited liability company, you cannot just do it and declare it as income, but you need a special permit that you are a self-employed entrepreneur. So that's something that these proxy merchants can kind of bridge because they have no problem buying from private people.

They don't need to exactly know where it arrived from because they just sent someone crypto, they receive it in the mail, they don't know the person who created it, and then they can put it together and sell it to the mainstream economy and or give it to them for free if it's a crowdfunding campaign. So there are many of these useful things. And I think there's a lot of red tape with merchants with mainstream markets. And proxy merchants are one of the ways how to remove this red tape and make the markets more liquid and thus people more wealthy.

Awesome. Thanks for bringing that down for us. Another question I had was just how does privacy play a role in the success or failure of parallel economies? I know we've touched on this a little bit, but maybe just to kind of summarize how important privacy is in building out these economies. Well, parallel economies are seen as competition by the mainstream economy and especially by the state. So if you're not private, you will be shut down. It's as simple as that.

So that's one of the reasons I don't like central registries. That's why I go the I like to go the less effective route and use the less effective effective way of asking people around, okay, who is willing to sell me their farm meat or vegetables or Bitcoin or something like that. Well, I think that's why I don't have to do it because when they do it in a way that is seen by these institutions, they can be easily shut down completely. And if not now, maybe in the future. So I think it goes hand in hand.

That's why I think it goes hand in hand. I don't think privacy is one of the main things that creates the border between the mainstream economy and the parallel economy. So unless you do it in a private way, you probably are in the mainstream economy, even if you like to pretend you're not. But this privacy can can be applied in different ways. So for some people, it is enough that no one knows their exact income. You know, the plumber that takes cash.

Well, they're probably listed somewhere on in the whatever current version of yellow pages is. So you know that this person is a plumber, but you don't know how much how much cash they they earned doing their job. So they can be said that or it can be said that part of their income is in the parallel economy. It's not black economy. They're not, you know, doing anything hardcore. They're just doing their job and maybe not declaring all their income.

And thus they are for creating forming this this parallel economy. For others, it could be complete darkness, complete privacy. Again, my my most used example, as you probably heard, is the weed dealer. They're definitely not listed anywhere. And depending on the on the situation about weed in different countries, they take precautions. Some of them use burner phones, some of them do drop deliveries for prepaid orders. Some of them you meet, some of them you don't meet.

So it's a wide variety. But once they set up a shop like a dispensary in the US, and they smile from behind cash register, they're no longer part of the of the parallel economy. So I would say that that privacy is one of the borders that that shows you if this mainstream economy or parallel economy. So it's a very important piece of the parallel economy. And the last question I had around parallel economies for you is, again, something I think we touched about here and there throughout our discussion today.

But how can the people who are listening to this take active steps?

1:40:00 towards connecting with and supporting a parallel economy. Great. And it's very simple, but not many people are really doing it. You know, when you meet people, you talk to them, okay, what do you do? And when you realize that they're good in something, that they have a unique ability, hire them, buy their products, you know, in the parallel economy and also participate in it. So for example, we have a group. Also, this one is on Facebook, I think even.

And it's just a flea market for crypto, but people are selling stuff they don't need. So it frees this stuff, you know, old computers, printers, hard drives, whatever, cars even. They can turn stuff that they don't use for crypto. So this group is strictly crypto only. It doesn't matter what kind of crypto, but there are no fiat deals. And people learn to participate in the economy. The second thing would be to kind of build these social structures of the parallel economy.

Because parallel economy is not about the trade you make. It's not about your friend who grows organic meat or vegetables that you know and you trade with. But it's about this discovery process and discovery not only of prices, but also of the vendors or the people you can exchange with. So the first super easy step is create a really simple, maybe signal group. I really like signal groups, but you can use three more element or something like that.

So the first thing is that is encrypted. It's not public. So you need an invite to get in and just ask your friends, your family that you like and that you trust in some way to participate. And to introduce and bring new members. And when you create these groups, they are really nice because they ignite interesting discussions as well. So it's not only about participation in the parallel economy, but also about growing together and exchanging information and thinking, exchanging ideas.

But when you do this, you really are creating this fabric of this parallel economy. So it's not the people that you know, but the whole kind of the tree of people that you can invite. And when you do this, what happens is that, for example, you create two groups, you live in one city, but you grew up in another city. So you create one group with your childhood friends from the city where you grew up and you create another group in the city where you currently live.

And what happens is that sometimes someone in one of the groups will have a request and you can proxy it into the other group. So you can become this connector that enables the trade and grows the tree. So of course, you cannot have a signal group with a thousand people because then the reputation breaks down. People are chatting and just insane and people just leave. So you need to make them small, but you don't need to participate only in one and you can become this connector.

And when you start doing this, so creating, so first trading, second, creating these small, small trading groups, I would say. And then routing among these trading groups and helping people do mutually beneficial trades. And you can also do the same thing as a small, small trading group, you can also do the same thing as a small trading group. And then, you can also do the same thing as a small trading group. And then, you can also do the same thing as a small trading group.

And then, you can also do the same thing as a small trading group. And then, you can also do the same thing as a small trading group. So, for example, the way I write the book is I found in parallel society, someone who is willing to edit the book. It's a different person for Slovak and for English version of the book. I found in parallel society, a person that is doing the graphics design. I found people who are willing to distribute it in some cafeterias and so on.

And this is all peer to peer relationships with people that I know personally. I can opt out from the old school corporate version of doing things of bosses and hierarchies and so on. And you get this entrepreneurial experience. You are not shy about asking for a premium. You are not shy of hiring people and you just become embedded in the parallel economy. And that's how you build it. You use it day to day for many things. Of course, I shop in a standard grocery store as well.

I use the mainstream economy as well because it's very useful. It is good to have access to markets for a lot of my needs, but especially for things that are important to me and that is people who I cooperate with. I think it's good to create these kinds of parallel relationships and it also kind of shapes who you interact with. So if you have a strict rule of producing by paying suppliers in crypto only, you are 100% sure that the money doesn't come from some state subsidy fund and you don't have to talk to bureaucrats and so on.

So it shapes your environment, the people that you interact with. So it's very rewarding, I would say. So trade, build groups, connect groups together and then become entrepreneurial in the parallel economy yourself. Yeah, thank you for thank you for breaking that down. And just this whole conversation about parallel economies has been really enlightening for me. It's something that's been kind of becoming more important, but there's not as many places to learn about it because it's kind of a niche idea at this point at least.

So thanks for breaking that down. And I love that just throughout the whole idea of parallel economies, really something at the core of it is just building relationships with like-minded people. That that's really what undergirds the whole concept of a parallel economy and the people you're trading with and the relationship you're building are just building up this very strong community that can exist outside of the normal economy. It's a really fascinating concept.

I think one that I think would hit a home with a lot of people if they did dive into it. So I hope that hope the listeners will take that seriously and see what steps they can take, like you just mentioned to dive into that. I do have a couple more just kind of normal questions. Obviously, parallel economies is really kind of the core of what I wanted to chat about, but have some questions that that I talked about with every guest. So I'd love to get your your thoughts.

But the first one is just what are some of the tools you use regularly to opt out that you recommend others to take a look at and then why? I think it's going to be interesting. I think it's going to be interesting. It's an encrypted messenger that is distributed so you can run your own server. It's similar to email. Then of course, for crypto, I use Trezor hardware wallet, Monero wallet with my Trezor model T. I use Lightning wallet because that's a good way to make cheap and private Bitcoin transactions.

What else for privacy? I use it as a good tool to use. I use it as a good tool to remove metadata from pictures. VPN, of course, Tor. I also I like to to kind of blur faces on some pictures, which is interesting. You mentioned DEFCON. I'm not sure how it's at DEFCON, but CCC and Parallel Police both have

1:50:00 have a very strict policy against taking and publishing photographs of people that do not opt in. So you need to ask them first, not no opt out, but opt in. And we're kind of being jerks about it, but it's quite interesting to teach people to ask if they can take a picture of someone. So that's what we've been doing as well. Like even if there's a party, either there are no faces of people or if they are, they need to consent first. But if I take a picture of, for example, something on the street that is interesting, I like to blur faces of the people that didn't consent to being taken and were just at the place.

From the other side of taking pictures, a very good privacy tool is just your hand. If you see someone taking a picture with their phone or camera, just put your hand in front of your face. Of course, face mask. I wrote my own. I published it because it's it's combined with face detection. So not face recognition, but just detecting where the where the faces are. So what we did, for example, at events is we have a photographer, we have a directory full of photos and we just start start this script that goes and blurs all the faces that are in the directory.

Of course, someone has to manually check it because it can miss some faces. But I use that. I think it's on the on the website of Parallelpolis. It's open source. I think it's also on the Parallelpolis GitHub and on the on the phone. I don't remember what's the name. I used ObscuraCam, but I'm not sure if it's available anymore. I've been just using something different. I don't remember now. I think Signal is the ability to blur faces, but I haven't used it myself yet.

Yeah, that's a new feature, but it's only for well, if you're sending it, of course, you can send it to yourself. Not many people know that you can send a signal message to yourself. If you search note to yourself in your contact list, it's a default default contact that you have. You don't you don't send it to your phone number. You just search note to self and that's a special window where you can send messages to yourself. So that's that's quite useful.

So that's basically the main ones. And of course, cryptocurrencies allow you to to keep your privacy in many more ways. So paying for services, hosting, email in a private way. So what I do quite often is I buy gift cards like on BitRefill or other websites and pay with that instead of a credit card. It's quite difficult these days to do a private transaction. I live near Czech Republic. So what is neat is that in Czech Republic you can still buy anonymous prepaid SIM cards.

So that's also useful if you need to give someone the phone number for either verification or if the delivery company needs a phone number to deliver something to you, it's good to have a private phone that you change from time to time. So that's quite nice thing to do. What else? Well, these are I think these are the good list. the main tools that I use. Awesome. Well, last question I have for you is just what advice would you give to someone who's just starting to realize the need for personal privacy?

Start trying, start small. Well, first of all, it is incredibly difficult to be fully private and people don't realize it. So what one experiment I would suggest would be just to try it out, just to be just to try to be as private as you can be. then you realize that you really didn't do a good job. And by this, I mean, OK, leave your home without without a record of of you being somewhere. So of course, you realize, OK, I need to turn off my phone.

Then you realize, OK, my phone or your operator put your phone in airplane mode. Maybe you use Wi-Fi. Then you realize that your phone connects to a Wi-Fi. Then you realize that maybe there are CCTV cameras on the street. Maybe you pay with a with a card for the for the for the public transport and so on. So just be aware, first of all, what kind of what kind of record people or companies have about you and kind of try to avoid it as much as possible.

You will if you start doing it for for for a longer time, so not for an hour, you can go out for two hours without the phone and do nothing and just basically walk. That's not as difficult. But in a regular day, it's very difficult to go without the record. You know, don't use your loyalty card at the cafeteria unless it's the stamp kind that is not recorded in the system. And when you realize how difficult it is, then, you know, don't just give up and say, OK, this is too difficult.

I will never be able to do it. But try to lower your blueprint that you that that you leave. So one of the first things I would suggest is use or either switch or at least start using as a second account, maybe a more private email provider such as ProtonMail. even if you don't want to mess with GPG, you know, I personally use ProtonMail. I like it quite a lot, although I don't use email that much these days. More more interesting stuff happening on Signal and I don't have any colleagues to write me emails with reports.

But start using these tools and be just a little bit more private every day and just be aware of what is happening. Another good tool I didn't mention and it's a good one to start with is install some kind of ad blocker such as uBlock or microBlock or something like that. It's not only about blocking advertisements, which is which is also neat, but but it also leaves less you leave less tracks during your online activities with the browser when you turn off advertisements.

I I'm so used to to blocking advertisements that I until a few months ago, I believed that Pirate Bay is this very nice, simple website with just one search box and two buttons and the logo and then someone opened Pirate Bay on in their normal browser without without an ad blocker. And I was shocked that it's full of junk. So I forget how bad ads are when I'm like someone else uses a device that doesn't have uBlock origin or something installed. I'm not even used to what that's like.

It's it's ridiculous. Yeah. Yeah. Awesome. Well, thank you so much for coming on. You're a it was a really good, I think, very unique conversation and look into your thoughts and your writing around parallel economies. And I know this is going to be incredibly helpful for the listeners. but this has...