Elon Musk Discusses the Future on X Spaces
On December 21, Elon Musk made an appearance on Cathie Wood’s X Spaces to talk about the future. Musk, who owns X (formerly Twitter), joined Wood, the CEO and CIO of Ark Invest, an investment management firm with a keen interest in cryptocurrency.
Musk’s Lack of Interest in Crypto
Interestingly, when asked about Bitcoin (BTC) and its potential impact on the financial system, as well as Tesla’s holdings in the cryptocurrency, Musk expressed a lack of interest in crypto.
“Honestly, I have to say I don’t spend a lot of time thinking about cryptocurrencies. Hardly any at all.”
– Elon Musk (01:15:32)
Money as Information Moving on a Network
Despite his disinterest in crypto, Musk did share his thoughts on the nature of money. He described money as a database for resource allocation and mentioned that fiat currencies can work well if they have a predictable money supply without excessive inflation or deflation.
“What is money? It is really a database for resource allocation. (…) Fiat currencies are actually fine as a database for resource allocation if you have a predictable money supply and it doesn’t get inflated or deflated too much.”
– Elon Musk (01:15:46)
Musk then went on to describe an ideal form of money that would solve the “money problem.” He applied the concept of “information moving on a network” to money systems and emphasized the need to minimize noise, latency, and packet loss. Inflation was seen as adding noise to the system, while transaction delays added latency. Fraud was compared to packet loss.
“So when you think of any given money system, I sort of apply information theory to a money problem. So think of it like it’s an information system, and you want to minimize noise, minimize latency, minimize packet loss. And so any inflation would be adding noise to the system. If what it takes to conclude a transaction is a long time, that adds latency to the system. Fraud is kind of like packet loss. So I guess I kind of think of money like I think of information moving on a network. Bandwidth, latency, jitter, which is the variance in latency, packet loss. Those fundamental elements.”
– Elon Musk (01:16:57)
An Ideal Monetary System
In summary, Musk believes that an ideal monetary system should facilitate fast transactions with minimal resource loss. It should have no inflation to avoid adding noise to the system. Interestingly, Musk has previously mentioned the need for a “low-latency” monetary system where the one with the least error and delay would prevail.
While Musk did not discuss specific cryptocurrencies during the show and refrained from making recommendations, it is worth noting that he is known for his support of Dogecoin (DOGE), which has led to significant price increases in the past.
Hot Take: Elon Musk’s Vision for an Ideal Monetary System
During his appearance on X Spaces, Elon Musk shared his thoughts on money and its ideal form. He described money as a database for resource allocation and emphasized the importance of minimizing noise, latency, and packet loss in monetary systems. According to Musk’s vision, an ideal monetary system would enable fast transactions with minimal resource loss and no inflation. This perspective aligns with his previous mention of the need for a “low-latency” monetary system. While Musk did not delve into specific cryptocurrencies, his disinterest in crypto is well-known, despite his support for Dogecoin in the past.
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