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You know people, people um, blast me and probably you too for like outrageous tweets and just trying to get people all crazy, you know using incendiary language.

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Sure.

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It's Twitter man.

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That's how you get people to, to, to pay attention.

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If I didn't, if I wasn't such a dick with a lot of this stuff, nobody would care.

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There's a lot of people saying the stuff I'm saying and the stuff you're saying.

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There's a lot of people saying it.

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I'm with you.

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But they're just like little, they're little mice, right?

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They're like, you know, nobody listens.

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You know, so it's like you message you want people to actually hear it.

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Right?

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Right.

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Right.

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Whether it's positive or negative, whatever it is.

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I enjoy the challenge of like writing something viral.

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There's a, there's a, there's a nuance in the language that I enjoy, you know.

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that the most important part of your decision needs to be the ethos of the team that's developing

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This team has proven over and over that they're committed to freedom of their users.

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trust-minimized hardware wallet.

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And what do I mean by trust-minimized?

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I mean you never have to plug this into your computer.

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When you use other Bitcoin hardware wallets, you have to connect them to your computer

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in order to use them.

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You scan QR codes.

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You use an SD card.

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There's a number of ways that bypass the need to connect directly to your computer.

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You may have seen me upload this photo to Twitter the other day and wondered what I was

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so excited about.

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It's my brand new Ronin Dojo Tonto Bitcoin Full Node.

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The only way you can use Bitcoin properly, the way it was meant to be used and stayed

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truly private, is to run your own full node.

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Have your own copy of the blockchain on your own full node.

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And when you send a transaction, you're using your full node and not somebody else's so

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that nobody else can associate your IP, your UTXOs, or anything back to you.

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When you use a full node like the Tonto, you are using Bitcoin as privately as you can.

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Go to Ronindojo.io.

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Use promo code BLEK to get $10 off your purchase of a Tonto full node.

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Ronindojo.io.

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Justin Bonds.

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Yes, we have a lot to talk about.

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We were just saying like, let's stop with the chit chat before we stop recording and

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save the good stuff for when we're actually recording.

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Thank you for agreeing to come on.

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I know we've had interactions on Twitter, and we spoke once on a Twitter space, I think.

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This is good.

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This gives us time to get more in depth on some of this stuff.

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Oh, yeah.

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And I was very happy when you reached out to come talk to me because I feel like we

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have so many things in common.

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We also disagree on some major things as well.

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So it's a really interesting combination of ideas I think we have between the two of us.

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So I'll see how much of that we could have.

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Yeah I have like a short list of things, but we probably won't get through it.

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Yeah, no, certainly.

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So you run a hedge fund?

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Is it a hedge fund?

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Yeah.

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Okay.

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So you manage other people's money.

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Yeah, that's correct.

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As a centralized institution, the type of thing that I think the creator of Bitcoin

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wanted to mitigate that sort of risk.

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And I think I'm aware of the paradox almost, right?

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That I'm an advocate of decentralization, yet I manage a centralized fund essentially.

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But I do invest in decentralized assets.

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And I try to serve as a bridge between different worlds and I think traditional structures

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also still have a place in our ideal world as well.

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Not that I think you'd be too much of a fan of a type of a smart contract fund anyway,

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would you?

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Well okay, so first of all, we all do centralized things.

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So we all work in centralized ways in some form.

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Nobody leads a fully decentralized life, right?

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So I always say, I don't go out there.

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A lot of people think that I'm just against everything centralized.

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That's not true.

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There's plenty of centralized stuff that's fine.

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And even banks and exchanges, at least they're honest about their centralization.

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They're honest about the fact that you can't see all the stuff that's going on.

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My issues are really with transparency.

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So I figure as long as you're, like if you were out there saying you were running a decentralized

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hedge fund, then I might have a problem.

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It's kind of like saying you're running a decentralized layer two where you got a multi-sig,

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right?

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So, well, otherwise like, no, you got to make a living and you got, you're really good at

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doing something.

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Is your hedge fund all like 100% crypto?

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Yeah, 100% crypto.

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We only invest in things that are decentralized and passable, all of our fundamental checks,

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so to speak.

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We're not based in the Bahamas or something either.

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We're based in the Netherlands.

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So we try to tick all the boxes from a kind of regulatory perspective.

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And I talk to a lot of institutional parties actually as a evangelist, if you will, which

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I think within the cryptocurrency community, I'm a bit more of a critic, I think.

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I think some investors-

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What's the largest holding?

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We actually do not disclose what our holdings are.

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Yeah.

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We're the secret source for the type of fund that we're arguing.

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I bet you I know what the largest holding is.

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I bet you would actually.

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Bitcoin Cash.

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No, I'm just kidding.

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No, no.

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I mean, I'm glad you bring it up.

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I'm glad to talk about all of these things, you know, because I used to be a Bitcoin Cash

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supporter, but not since 2018, if I'm remembering my years correctly.

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Back when it was the end thing.

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Right.

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Well, I feel like-

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No, I do want to talk about that with you.

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No, I would love to, because I feel from my perspective, I was being consistent with my

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principle.

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Yeah, we respect that.

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I appreciate that from you actually.

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Well, the most recent thing that we connected on and agreed on was the issue with Ethereum

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layer 2s.

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And by the way, your largest holding is 100%, Heath.

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I know that.

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I won't confirm or deny.

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But layer 2s have a serious problem, right?

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And we sort of saw eye to eye on the fact that specific to Polygon, which is not a layer

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2 actually, I'm kind of mixing things up here.

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Polygon, the side chain, has a very centralized governance structure, you know, when you consider

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the fact that it has a multi-sig, can almost do anything.

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But then that extends out to layer 2s as well.

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So how does that, because if it were your largest holding in the hedge fund, does this

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kind of stuff factor in the fact that the push seems to be to be pushing business, so

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to speak, or transactions out to these centralized layer 2s, and that could be the future of

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the protocol?

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Absolutely.

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Yeah, no, I think that this is big influence on us in terms of not seeing as bright of

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a future anymore for Ethereum, because it's pushing this layer 2 narrative, which I just

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don't think is as competitive, at least in terms of like a long term kind of utility

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based perspective on, you know, fundamental perspective on value investing based perspective

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on investing, right?

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Because that changes the calculation a bit.

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And in that sense, I just don't think it's a competitive solution.

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And if you don't have the advantages of decentralization, and you know, I mean, look, the layer 2s

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can be technically decentralized, but you're building out an ecosystem that's extremely

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fragmented and will definitely still include like a lot of centralized and custodian solutions.

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Like that's not going away.

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That's why I've been, you know, so against this kind of L2 narrative, quote unquote,

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you know, the L2 scaling solution, right?

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Which I don't really consider a scaling solution at all.

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But do you think that this is the future, whether we like it or not?

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Or do you, are you advocating for a different path?

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Oh, yeah, absolutely.

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No, I think I think on chain scaling is the way forward.

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You know, I really think that we can scale on the base layer and, you know, while preserving

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decentralization, right, that there's a balancing act to be had there in terms of tradeoffs.

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But scalability is still important.

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And there's certain technologies, I think, that are very interesting from my perspective,

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such as sharding and things like enshrined roll ups, I think, which, which to me are

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distinct from layer 2s.

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Yeah, like this stuff that Vitalik just wrote about a day or two ago, right?

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Did you read that post from Vitalik?

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I'm not sure about this.

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He did a long post about enshrining ZK roll ups.

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Yeah, I haven't read that particular post.

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I do.

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But I have been staying up to date with the whole ZKVM space.

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And my main problem with it is, you know, when we have computer scientists and engineers

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telling us, oh, yeah, it's going to be five plus years away when we figure out how to

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do this.

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That's just a giant red flag.

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So for me, my criticism, like I'm not against this idea of ZKVM.

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I think it's a fine idea.

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But I think if it's an idea that's projected to be five plus years out, I mean, what that

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tells me in my experience is they don't have a clue.

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Basically that's some sky and like pie in the sky type of thinking.

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And that's not really what I appreciate in this space.

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I'm not going to apply any double standards here when it comes to such claims.

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If I'm looking at some small cryptocurrency and I'm deep diving that and they're like,

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oh, yeah, we'll figure out this key technology in five plus years from now.

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No way.

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Are you kidding me?

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You don't have a clue.

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Right.

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What's your philosophy on how you approach the space and how you decide to criticize

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and stuff like that?

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First, I'll tell you mine just to compare.

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So it's really for me about it's about most of the time it's about strengthening an ecosystem.

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So with Bitcoin for me, it's about if I see weak spots, I see opportunities to influence

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opinions on a certain thing.

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I'll go there and I'll sort of reveal the soft spot in order to get people talking about

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it knowing that it might take a year or two or five for people to eventually get to a

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place where they want to make a fix.

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I'd say that's 50% of my time.

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And the other 50% is almost like a warning people about what I see.

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For instance, with Ethereum, I don't think Ethereum is something that can be fixed to

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the point where I would align with it philosophically anymore since it's switched to proof of stake

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and I want to get into that with you too.

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But it's almost like I feel like people need to understand all of the red flags and the

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warning signs with regard to centralization potential for the future, with regard to how

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it could be a compliant blockchain in the future with all these enshrined features.

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How do you approach the space when it comes to critiquing and offering up public opinions

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like that?

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It's a very good question.

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And what I mentioned earlier is in terms of us having similarity and differences, I think

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we were both very outspoken critics of Polygon, as you mentioned before.

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So we've overlapped, I think, as critics in the space on a bunch of different topics.

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I think in this case, it's really good to go to first principles for me.

241
00:14:01,560 --> 00:14:07,120
And I'm guessing we have most of our first principles in common because for me, that's

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really the empowering vision that Bitcoin originally brought forward, like that self-ownership,

243
00:14:15,440 --> 00:14:23,360
self-sovereignty, having this sound decentralized money, a separation from the monetary power

244
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from the state.

245
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It's about freedom, I think, on so many levels.

246
00:14:30,480 --> 00:14:36,240
And a lot of that also, for me at least, goes back to a lot of my political ideology as

247
00:14:36,240 --> 00:14:43,720
well, which does have some libertarian roots and things like Austrian economics.

248
00:14:43,720 --> 00:14:44,720
And I think we...

249
00:14:44,720 --> 00:14:46,000
Do I have that right?

250
00:14:46,000 --> 00:14:47,640
Is that we all have that in common?

251
00:14:47,640 --> 00:14:49,240
I suspect we do, don't we?

252
00:14:49,240 --> 00:14:51,960
Well, the two of us at least, not everybody.

253
00:14:51,960 --> 00:14:54,120
Yes, of course.

254
00:14:54,120 --> 00:14:55,120
So far, yeah.

255
00:14:55,120 --> 00:14:56,120
Yeah, okay.

256
00:14:56,120 --> 00:15:01,800
So I think for me, there's this grand vision of what we can achieve with cryptocurrency

257
00:15:01,800 --> 00:15:06,960
and how we can do good in the world from our perspective.

258
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And that's the vision I'm trying to maximize.

259
00:15:10,000 --> 00:15:15,400
And I feel within the space, my role, because I also am a cryptocurrency researcher and

260
00:15:15,400 --> 00:15:21,920
have been for many years, my role as a critic, I think, is a way of giving back and putting

261
00:15:21,920 --> 00:15:27,520
my weight on the scales a bit of history as we can at such an early stage.

262
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And that's, to a large part, what motivates me in terms of my public critiques that I

263
00:15:33,520 --> 00:15:37,520
do, is I try to identify, okay...

264
00:15:37,520 --> 00:15:40,080
And I have to weigh up the difficulty of doing a critique.

265
00:15:40,080 --> 00:15:44,080
Some things are much harder to critique than others, takes a lot more time.

266
00:15:44,080 --> 00:15:48,960
And then I look up, like, okay, how many people are going to get hurt by this?

267
00:15:48,960 --> 00:15:51,260
How badly is the crime?

268
00:15:51,260 --> 00:15:55,040
How badly is the potential for pain here?

269
00:15:55,040 --> 00:15:56,840
And in terms of like...

270
00:15:56,840 --> 00:15:58,480
The pain you're going to inflict?

271
00:15:58,480 --> 00:16:02,960
Well, no, no, of course, the pain of the victims here, right?

272
00:16:02,960 --> 00:16:03,960
Because I'm not the victim.

273
00:16:03,960 --> 00:16:06,960
Yeah, who are the victims?

274
00:16:06,960 --> 00:16:09,040
In a lot of cases, the...

275
00:16:09,040 --> 00:16:10,040
Sorry?

276
00:16:10,040 --> 00:16:11,040
The developers?

277
00:16:11,040 --> 00:16:14,000
No, no, definitely not the developers.

278
00:16:14,000 --> 00:16:20,080
No, maybe in some cases, but in most cases, it should be things like investors that I'm

279
00:16:20,080 --> 00:16:24,360
thinking about primarily, you know, when people put a lot of money into a token, and their

280
00:16:24,360 --> 00:16:27,600
hopes and dreams is all the psychological stuff that goes along.

281
00:16:27,600 --> 00:16:32,320
And some people are just feeding into that, I think, in an irresponsible way.

282
00:16:32,320 --> 00:16:36,920
And especially when, you know, their claims don't match up with reality.

283
00:16:36,920 --> 00:16:41,200
And especially when someone claims to be desensualized and they're not, right?

284
00:16:41,200 --> 00:16:44,860
This is, I think, one of the big crimes as well that I think we're both motivated to

285
00:16:44,860 --> 00:16:46,360
call out.

286
00:16:46,360 --> 00:16:47,360
Yeah.

287
00:16:47,360 --> 00:16:54,320
So, wait, do you mean that before you critique something, you're thinking about how you could

288
00:16:54,320 --> 00:16:56,560
affect its market value?

289
00:16:56,560 --> 00:17:01,560
Or you're talking about saving people from losing money by critiquing something?

290
00:17:01,560 --> 00:17:02,560
More the latter.

291
00:17:02,560 --> 00:17:04,320
But I suppose the two go hand in hand.

292
00:17:04,320 --> 00:17:06,240
I mean, anything goes hand in hand in this market.

293
00:17:06,240 --> 00:17:08,440
You know, it's the nature of cryptocurrencies.

294
00:17:08,440 --> 00:17:13,360
It's all attached to this token of value, which is what introduces a bunch of skewed

295
00:17:13,360 --> 00:17:15,160
incentives.

296
00:17:15,160 --> 00:17:22,360
It's like it adds all this friction that no other technology ecosystem has.

297
00:17:22,360 --> 00:17:31,920
When the technology is the money, it creates such a mess of incentives that you don't see

298
00:17:31,920 --> 00:17:34,080
in any other industry, right?

299
00:17:34,080 --> 00:17:38,400
So well, let me ask you this.

300
00:17:38,400 --> 00:17:45,280
You said you're kind of not so bullish as an investor.

301
00:17:45,280 --> 00:17:48,960
I'm saying the path forward for Ethereum is not super clear, especially with the current

302
00:17:48,960 --> 00:17:50,800
sentiment, right?

303
00:17:50,800 --> 00:17:54,360
Pushing people to layer twos.

304
00:17:54,360 --> 00:17:59,440
You're obviously, and we'll get into it, you're obviously not into Bitcoin as it currently

305
00:17:59,440 --> 00:18:00,440
exists.

306
00:18:00,440 --> 00:18:01,440
We should talk about that as well.

307
00:18:01,440 --> 00:18:02,440
I'll be very curious.

308
00:18:02,440 --> 00:18:03,880
Which I do want to talk about.

309
00:18:03,880 --> 00:18:10,760
But I do want to know if those two are basically not the ultimate freedom path, right?

310
00:18:10,760 --> 00:18:16,440
If those two are not the best path for freedom, what's the best path for free for freedom?

311
00:18:16,440 --> 00:18:19,320
Are you at the point where it's just like crypto is not going to get us there?

312
00:18:19,320 --> 00:18:21,520
Oh no, I'm still a believer.

313
00:18:21,520 --> 00:18:24,360
I'm definitely still a believer in cryptocurrency.

314
00:18:24,360 --> 00:18:25,840
And no, it was unfortunate.

315
00:18:25,840 --> 00:18:27,960
If you say Solana, I'm going to shoot you.

316
00:18:27,960 --> 00:18:29,680
We'll get to that.

317
00:18:29,680 --> 00:18:32,360
But I'll add some nuance to it.

318
00:18:32,360 --> 00:18:35,440
That's a good one.

319
00:18:35,440 --> 00:18:43,200
So look, I think for me, I've been a supporter of Ethereum since it was launched in 2015.

320
00:18:43,200 --> 00:18:45,180
I think it was.

321
00:18:45,180 --> 00:18:48,800
Even mining it in the first week, I had a small mining farm at the time and I even had

322
00:18:48,800 --> 00:18:52,240
all my GPUX ready to mine it.

323
00:18:52,240 --> 00:18:55,480
Giant pain in the ass because it was all like command line.

324
00:18:55,480 --> 00:18:57,000
I had to compile code.

325
00:18:57,000 --> 00:19:04,080
Because when I first started teaching myself how to use Linux, it wasn't very usable on

326
00:19:04,080 --> 00:19:05,080
launch, let's just say that.

327
00:19:05,080 --> 00:19:10,480
But I've been a big supporter of it because they promised to scale through sharding and

328
00:19:10,480 --> 00:19:13,760
there's a bunch of other specific aspects I like about it.

329
00:19:13,760 --> 00:19:15,800
I actually do like the economic design.

330
00:19:15,800 --> 00:19:21,280
I do like proof of stake, which we should talk about later a bit more as well.

331
00:19:21,280 --> 00:19:27,840
So for me to see Ethereum pivot away from layer one scaling and from my perspective,

332
00:19:27,840 --> 00:19:32,180
really Bitcoin history is kind of repeating itself in Ethereum now.

333
00:19:32,180 --> 00:19:35,240
If you think about it, that to me was a big disappointment.

334
00:19:35,240 --> 00:19:41,840
And then that made me look less optimistically towards Ethereum's future.

335
00:19:41,840 --> 00:19:46,760
I do think it will continue to be a dominant blockchain for a very long time because the

336
00:19:46,760 --> 00:19:50,260
network effects are very sticky in cryptocurrency.

337
00:19:50,260 --> 00:19:54,800
And I think Bitcoin is a testament to that as well.

338
00:19:54,800 --> 00:20:00,560
But I think long run, if Ethereum stays on its current course and really fails to meet

339
00:20:00,560 --> 00:20:06,120
demand on its layer one, then I think competitors really have a really good shot at overtaking

340
00:20:06,120 --> 00:20:10,080
it in the future or actually will overtake it in the future.

341
00:20:10,080 --> 00:20:12,920
So I'm still hoping Ethereum can change.

342
00:20:12,920 --> 00:20:16,840
I'm putting out a message saying, hey, this is what Ethereum needs to do to get out of

343
00:20:16,840 --> 00:20:20,560
this hole, but people are not necessarily going to listen to me.

344
00:20:20,560 --> 00:20:23,720
And I'm a big critic of how Ethereum governance works.

345
00:20:23,720 --> 00:20:28,440
I think we disagree on the solution to that since I'm a fan of on-chain governance as

346
00:20:28,440 --> 00:20:30,640
a solution to a lot of these problems.

347
00:20:30,640 --> 00:20:34,820
But I actually think the governance in Ethereum is actually very similar to the governance

348
00:20:34,820 --> 00:20:35,820
in Bitcoin.

349
00:20:35,820 --> 00:20:36,820
I think that's problematic.

350
00:20:36,820 --> 00:20:42,720
I think when you have highly centralized decision making and it's a bit of a wild card in terms

351
00:20:42,720 --> 00:20:44,200
of predicting where that will go.

352
00:20:44,200 --> 00:20:48,680
Yeah, that makes me more doubtful about Ethereum more long term.

353
00:20:48,680 --> 00:20:54,120
That's why I become more interested in competing layer ones.

354
00:20:54,120 --> 00:20:59,680
And now to go back to your question, it was difficult to be a critic of BTC, the largest

355
00:20:59,680 --> 00:21:04,040
cryptocurrency in the entire ecosystem since 2017.

356
00:21:04,040 --> 00:21:07,920
And it was a lot more controversial to take that position back then.

357
00:21:07,920 --> 00:21:13,440
And now having to also be a critic of the second largest cryptocurrency, that's not

358
00:21:13,440 --> 00:21:15,160
necessarily something I wanted to do.

359
00:21:15,160 --> 00:21:20,440
That just does make my life more difficult.

360
00:21:20,440 --> 00:21:27,160
I really felt an allegiance and I had a community there and they still host me at conferences

361
00:21:27,160 --> 00:21:31,520
and things like that.

362
00:21:31,520 --> 00:21:35,800
It's not something I wanted to do, but it's something I felt I had to do.

363
00:21:35,800 --> 00:21:42,600
I'm looking at more alternative L1s now because if I don't see Ethereum going where I think

364
00:21:42,600 --> 00:21:49,600
it should be, then I'll find my perfect cryptocurrency somewhere else.

365
00:21:49,600 --> 00:21:52,760
Even if it means trading away some decentralization?

366
00:21:52,760 --> 00:21:54,040
No.

367
00:21:54,040 --> 00:21:59,280
Because any other L1 you're talking about, unless you're talking about certain privacy

368
00:21:59,280 --> 00:22:03,680
coins or something like that, but or Litecoin or Doge, is that where you're going?

369
00:22:03,680 --> 00:22:05,160
No, not Litecoin or Doge.

370
00:22:05,160 --> 00:22:06,160
Okay.

371
00:22:06,160 --> 00:22:07,160
All right.

372
00:22:07,160 --> 00:22:08,160
You want smart contracts, right?

373
00:22:08,160 --> 00:22:09,160
I want smart contracts.

374
00:22:09,160 --> 00:22:10,160
Yeah, exactly.

375
00:22:10,160 --> 00:22:15,040
So, are smart contracts is sort of a must have for freedom or are you thinking more from

376
00:22:15,040 --> 00:22:16,760
a business point of view?

377
00:22:16,760 --> 00:22:17,760
Both.

378
00:22:17,760 --> 00:22:18,760
Both.

379
00:22:18,760 --> 00:22:22,240
So, from my perspective, I think that well, first of all, I think the goal of cryptocurrency

380
00:22:22,240 --> 00:22:27,840
is to create good money and I believe that good decentralized money and I believe good

381
00:22:27,840 --> 00:22:32,400
decentralized money also needs good decentralized finance to support it.

382
00:22:32,400 --> 00:22:36,800
Because otherwise, everyone just ends up putting it in centralized financial institutions and

383
00:22:36,800 --> 00:22:37,800
then what's the point?

384
00:22:37,800 --> 00:22:40,080
Well, I mean, there's still major advantages to it.

385
00:22:40,080 --> 00:22:43,880
Don't get me wrong, but I feel like there's more to add there.

386
00:22:43,880 --> 00:22:50,640
And I think that in the developed world, at least, using cryptocurrency as a form of money,

387
00:22:50,640 --> 00:22:54,840
I think it's very difficult to convince people to do that.

388
00:22:54,840 --> 00:23:02,640
So I've started to see DeFi being more like this stepping stone towards adoption as money

389
00:23:02,640 --> 00:23:03,760
as well.

390
00:23:03,760 --> 00:23:08,240
And I just think that through DeFi and a lot of the related applications, I think there

391
00:23:08,240 --> 00:23:15,960
is potential for greater adoption there and usage, which then drives fees and drives demand

392
00:23:15,960 --> 00:23:16,960
and etc.

393
00:23:16,960 --> 00:23:17,960
etc.

394
00:23:17,960 --> 00:23:21,240
And we have a virtuous cycle there.

395
00:23:21,240 --> 00:23:24,600
So that's why I think DeFi is a necessary component.

396
00:23:24,600 --> 00:23:28,080
Just to be competitive in the market and that's the business component.

397
00:23:28,080 --> 00:23:34,400
You can collect more fees and you have higher security than you can pay for more shards.

398
00:23:34,400 --> 00:23:43,720
Yeah, what are some of the decentralized parts of DeFi that you like and that you think are

399
00:23:43,720 --> 00:23:47,640
sufficiently decentralized?

400
00:23:47,640 --> 00:23:48,640
Let's pick them apart.

401
00:23:48,640 --> 00:23:52,520
Honestly, I don't think anything is really sufficiently decentralized at this point or

402
00:23:52,520 --> 00:23:54,800
maybe, but I'm not sure.

403
00:23:54,800 --> 00:23:56,880
Even Bitcoin and Ethereum.

404
00:23:56,880 --> 00:24:01,600
I think more practical decentralization comes at greater scale.

405
00:24:01,600 --> 00:24:07,960
But in terms of, let's say, technical decentralization, there are projects out there that burn their

406
00:24:07,960 --> 00:24:09,200
admin keys.

407
00:24:09,200 --> 00:24:11,720
So Uniswap has no admin key.

408
00:24:11,720 --> 00:24:13,200
Let me think.

409
00:24:13,200 --> 00:24:15,720
What are some other examples?

410
00:24:15,720 --> 00:24:18,280
Maker has no admin key.

411
00:24:18,280 --> 00:24:19,280
Has that burned?

412
00:24:19,280 --> 00:24:24,960
Augur is a little bit defunct right now, but had no admin key.

413
00:24:24,960 --> 00:24:29,320
Whenever you have these contracts where everyone has to migrate to the next contract, that's

414
00:24:29,320 --> 00:24:34,120
not ideal in my view because then you have to launch an entire new smart contract and

415
00:24:34,120 --> 00:24:39,280
ask people, please move over to the next one because you literally can't change the rules.

416
00:24:39,280 --> 00:24:41,400
I think that does qualify.

417
00:24:41,400 --> 00:24:45,360
That's maybe in the minority, but I think that does exist.

418
00:24:45,360 --> 00:24:47,760
It's not the case that all smart contracts are bad.

419
00:24:47,760 --> 00:24:53,120
I remember in the Bitcoin community, in the early days, things like decentralized exchanges

420
00:24:53,120 --> 00:24:56,560
were one of the big ambitions of Bitcoin.

421
00:24:56,560 --> 00:24:59,320
It's like, yeah, we can build a decentralized exchange over Bitcoin.

422
00:24:59,320 --> 00:25:00,320
That was one of the dreams.

423
00:25:00,320 --> 00:25:01,320
Where's that gone?

424
00:25:01,320 --> 00:25:02,320
Yeah, yeah.

425
00:25:02,320 --> 00:25:10,720
I mean, I guess one of my biggest issues with DeFi though, as we currently know it, is that

426
00:25:10,720 --> 00:25:13,760
it wouldn't be possible without Chainlink.

427
00:25:13,760 --> 00:25:22,040
And Chainlink has the same problem as Polygon with regard to having that multi-sig that

428
00:25:22,040 --> 00:25:25,880
can nuke the whole thing.

429
00:25:25,880 --> 00:25:30,800
I initially got interested in DeFi because I thought it was going to fulfill that promise

430
00:25:30,800 --> 00:25:32,900
that you were just talking about that.

431
00:25:32,900 --> 00:25:35,440
We have decentralized money.

432
00:25:35,440 --> 00:25:40,360
Now we need decentralized financial services for that decentralized money.

433
00:25:40,360 --> 00:25:44,520
We shouldn't have to use that decentralized money on centralized exchanges only.

434
00:25:44,520 --> 00:25:46,000
I get that.

435
00:25:46,000 --> 00:25:49,000
And that's why I was initially attracted to DeFi.

436
00:25:49,000 --> 00:25:53,400
But initially with DeFi, that's how it was advertised.

437
00:25:53,400 --> 00:25:57,160
It was advertised as trying to solve that problem.

438
00:25:57,160 --> 00:26:02,320
But then just like every other project in the space, over time, and in this case it

439
00:26:02,320 --> 00:26:07,080
was really over a year or less, incentives changed.

440
00:26:07,080 --> 00:26:11,600
And the incentive became how do we provide a return to these VCs who came in and decided

441
00:26:11,600 --> 00:26:17,360
that they needed a return through a token or through all these other ways that they

442
00:26:17,360 --> 00:26:19,800
have to make money in DeFi.

443
00:26:19,800 --> 00:26:26,360
And it became about just building things that were just decentralized enough to pass.

444
00:26:26,360 --> 00:26:33,160
And using centralized price feeds from Chainlink and basically taking shortcuts wherever necessary

445
00:26:33,160 --> 00:26:37,320
to get a product to market now because we don't have years to wait.

446
00:26:37,320 --> 00:26:40,000
We have to get a product out the door now.

447
00:26:40,000 --> 00:26:44,500
And by the way, we need to do all this before regulators realize what the hell we're doing

448
00:26:44,500 --> 00:26:47,040
because by that point it'll be far too late.

449
00:26:47,040 --> 00:26:49,020
They're going to nuke the whole industry.

450
00:26:49,020 --> 00:26:55,760
So we have to buy 2023, have a token out, airdrop, come up with this cool way to create

451
00:26:55,760 --> 00:27:05,040
this new investment opportunity by airdropping and then dumping on people's heads.

452
00:27:05,040 --> 00:27:08,600
All this stuff which is regulated in traditional markets.

453
00:27:08,600 --> 00:27:14,800
But really it just became this mess.

454
00:27:14,800 --> 00:27:19,040
To me, it almost killed the whole idea.

455
00:27:19,040 --> 00:27:24,160
I think that if we're going to see real DeFi anytime soon, it's going to start from scratch.

456
00:27:24,160 --> 00:27:31,600
What we've already done has been a complete disaster with regards to freedom.

457
00:27:31,600 --> 00:27:34,000
So it's more to separate.

458
00:27:34,000 --> 00:27:36,640
I'm not talking about building a great investment.

459
00:27:36,640 --> 00:27:40,880
I'm not talking about building a great portfolio or I'm not talking about is this going to

460
00:27:40,880 --> 00:27:43,800
help increase in value over the next five years.

461
00:27:43,800 --> 00:27:45,280
I don't care about that.

462
00:27:45,280 --> 00:27:49,160
What I care about is, is it going to help me be a freer person?

463
00:27:49,160 --> 00:27:53,120
Is it going to help me not have to trust people with my money?

464
00:27:53,120 --> 00:27:56,120
Is it going to help me have a plan B if I need it?

465
00:27:56,120 --> 00:27:57,520
That's the kind of stuff I'm talking about.

466
00:27:57,520 --> 00:28:00,640
I think that's the kind of stuff you're talking about too.

467
00:28:00,640 --> 00:28:03,040
And you're not wrong with everything you said there.

468
00:28:03,040 --> 00:28:09,360
The Chainlink admin key can mess with the price freeze and totally tank what is this?

469
00:28:09,360 --> 00:28:10,880
Several billion dollar market.

470
00:28:10,880 --> 00:28:11,880
It's crazy.

471
00:28:11,880 --> 00:28:12,880
Oh yeah.

472
00:28:12,880 --> 00:28:13,880
At least 10.

473
00:28:13,880 --> 00:28:14,880
Yeah.

474
00:28:14,880 --> 00:28:18,680
But I think it's important to also distinguish a few things.

475
00:28:18,680 --> 00:28:22,600
So I mean, we can see the good amongst the bad as well a little bit more.

476
00:28:22,600 --> 00:28:32,560
So if I take the Uniswap, for example, the price on that AMM, that's not affected by

477
00:28:32,560 --> 00:28:34,680
the Chainlink Oracle.

478
00:28:34,680 --> 00:28:37,320
And the Chainlink Oracle can't steal funds.

479
00:28:37,320 --> 00:28:38,320
Not directly.

480
00:28:38,320 --> 00:28:39,320
Right.

481
00:28:39,320 --> 00:28:40,320
Exactly.

482
00:28:40,320 --> 00:28:44,480
Indirectly, arguably, maybe through arbitrage and manipulating other price feeds.

483
00:28:44,480 --> 00:28:45,480
Who knows?

484
00:28:45,480 --> 00:28:47,240
It's an edge case.

485
00:28:47,240 --> 00:28:53,960
But I would say if we zoom in, then we can say, okay, this is a real application where

486
00:28:53,960 --> 00:28:59,940
someone can exchange their cryptocurrency on an exchange with high liquidity without

487
00:28:59,940 --> 00:29:02,720
a third trusted party.

488
00:29:02,720 --> 00:29:07,840
And sure, there's a bunch of landmines on the way there and it's not exactly the most

489
00:29:07,840 --> 00:29:09,360
user-friendly thing in the world.

490
00:29:09,360 --> 00:29:11,160
But those cases do exist.

491
00:29:11,160 --> 00:29:15,120
And that to me is that kind of glimmer of hope, you know, of like, wow, we can actually

492
00:29:15,120 --> 00:29:16,120
do this.

493
00:29:16,120 --> 00:29:18,560
And I think that's proof of that.

494
00:29:18,560 --> 00:29:21,480
Whether it's going to be on Ethereum or the next thing.

495
00:29:21,480 --> 00:29:23,680
That's wonderful.

496
00:29:23,680 --> 00:29:32,040
I think Uniswap is an interesting case though, because we've seen three versions and a fourth

497
00:29:32,040 --> 00:29:34,160
version proposed.

498
00:29:34,160 --> 00:29:35,160
Or the fourth one is up.

499
00:29:35,160 --> 00:29:36,160
I don't even know anymore.

500
00:29:36,160 --> 00:29:37,360
I've lost track.

501
00:29:37,360 --> 00:29:45,760
But each one has been decentralized and you've had to migrate from one to the other if you

502
00:29:45,760 --> 00:29:48,680
wanted to use the newest one.

503
00:29:48,680 --> 00:29:50,600
And we've seen people doing it.

504
00:29:50,600 --> 00:29:51,880
You referenced this before.

505
00:29:51,880 --> 00:29:57,920
We've seen people doing it almost like you upgrade your iPhone sometimes.

506
00:29:57,920 --> 00:30:01,160
It's like, okay, we're going to move to the new one.

507
00:30:01,160 --> 00:30:05,160
Version three created some drama just because it was so difficult to use.

508
00:30:05,160 --> 00:30:10,720
But I think that where it gets kind of tricky with this stuff, and I've been thinking about

509
00:30:10,720 --> 00:30:16,200
this more lately, and this applies to the Bitcoin debates too, and Ethereum debate,

510
00:30:16,200 --> 00:30:23,640
all the debates, is thinking about the external stuff, the stuff that you can't see on chain.

511
00:30:23,640 --> 00:30:28,800
And so from the on chain point of view, Uniswap is decentralized, unstoppable.

512
00:30:28,800 --> 00:30:33,200
You can't turn it off.

513
00:30:33,200 --> 00:30:37,240
There's no regulator that could come in and say, we have to turn off Uniswap version one.

514
00:30:37,240 --> 00:30:38,240
It's still there.

515
00:30:38,240 --> 00:30:39,240
It's always going to be there.

516
00:30:39,240 --> 00:30:40,240
Nobody's using it.

517
00:30:40,240 --> 00:30:42,520
Or very few are using it at this point.

518
00:30:42,520 --> 00:30:44,560
It still exists.

519
00:30:44,560 --> 00:30:50,400
But what Uniswap has gotten good at, and Uniswap, by the way, the company, has grown quite a

520
00:30:50,400 --> 00:30:59,200
bit and has hired people that are former Federal Reserve people, former people that have been

521
00:30:59,200 --> 00:31:09,680
on presidential staffs and worked in the White House, regulators and former SEC or CFTC officers.

522
00:31:09,680 --> 00:31:13,000
It's become this spook operational.

523
00:31:13,000 --> 00:31:16,160
They also created this white listed pool.

524
00:31:16,160 --> 00:31:17,160
Did you see that as well?

525
00:31:17,160 --> 00:31:21,800
Where they created only, you have to do KYC and AML to get in the pool and then all the

526
00:31:21,800 --> 00:31:23,680
institutionals can kind of trade with each other there.

527
00:31:23,680 --> 00:31:24,680
Oh, okay.

528
00:31:24,680 --> 00:31:25,680
Yeah.

529
00:31:25,680 --> 00:31:26,680
I mean, that's what version four is for.

530
00:31:26,680 --> 00:31:33,920
Version four was specifically created to allow total flexibility with how you allow access

531
00:31:33,920 --> 00:31:38,040
to these pools with what they call hooks.

532
00:31:38,040 --> 00:31:44,920
It's building my case here for the fact that, yeah, we can, there's a million decentralized

533
00:31:44,920 --> 00:31:49,720
ideas that have been built and that nobody's used.

534
00:31:49,720 --> 00:31:52,320
And then there's others that have kind of caught on.

535
00:31:52,320 --> 00:31:56,360
But at the end of the day, isn't it just money that talks?

536
00:31:56,360 --> 00:32:01,880
We've seen principles just destroyed by large amounts of money over and over and over.

537
00:32:01,880 --> 00:32:02,880
Right?

538
00:32:02,880 --> 00:32:04,360
So, okay, we figured out Uniswap works.

539
00:32:04,360 --> 00:32:05,360
Cool.

540
00:32:05,360 --> 00:32:06,640
The math is awesome, et cetera.

541
00:32:06,640 --> 00:32:08,120
Hayden is brilliant.

542
00:32:08,120 --> 00:32:12,360
But then it's like, okay, all these VCs come in, all this billions of dollars comes in.

543
00:32:12,360 --> 00:32:16,480
Next thing you know, we're sort of slowly going down this slippery slope towards this

544
00:32:16,480 --> 00:32:19,460
regulated, captured KYC Uniswap.

545
00:32:19,460 --> 00:32:24,800
So why should I have hoped that any of this could ever catch on in a decentralized way?

546
00:32:24,800 --> 00:32:34,440
So I think for me, I actually really believe in the utility of this technology.

547
00:32:34,440 --> 00:32:40,840
And what that also means is that it works because of greed in many ways.

548
00:32:40,840 --> 00:32:47,360
So I'm coupling and sure, I find a lot of what's, I'm not a VC, I'm a value investor

549
00:32:47,360 --> 00:32:48,360
myself.

550
00:32:48,360 --> 00:32:52,600
I invest in tokens for long term and that's why I do fundamental research.

551
00:32:52,600 --> 00:32:56,400
And sure, I find a lot of the things that happen in the VC world, not all of it, but

552
00:32:56,400 --> 00:32:59,840
some of it, especially in the crypto world, it's very distasteful.

553
00:32:59,840 --> 00:33:03,240
What's happening there and the kind of games that are being played.

554
00:33:03,240 --> 00:33:05,440
Certainly.

555
00:33:05,440 --> 00:33:12,120
But at the same time, one of the reasons I think that I really came to believe in cryptocurrency

556
00:33:12,120 --> 00:33:18,800
is I think before I saw cryptocurrency, I really looked at democracy as kind of this

557
00:33:18,800 --> 00:33:21,480
dysfunctional system.

558
00:33:21,480 --> 00:33:24,160
And sure, it's the best system we have.

559
00:33:24,160 --> 00:33:28,240
And as I think Winston Churchill said this in particular, he said that democracy is the

560
00:33:28,240 --> 00:33:29,560
best of the worst system.

561
00:33:29,560 --> 00:33:31,420
It's kind of the best that we have.

562
00:33:31,420 --> 00:33:32,760
So that's what we go with.

563
00:33:32,760 --> 00:33:33,760
But I saw a lot of-

564
00:33:33,760 --> 00:33:37,280
Not sure I completely agree with that, but okay.

565
00:33:37,280 --> 00:33:38,280
Maybe we'll come back to that.

566
00:33:38,280 --> 00:33:39,280
That'd be fun.

567
00:33:39,280 --> 00:33:44,760
I'm using a broad definition of democracy here though.

568
00:33:44,760 --> 00:33:51,040
And the idea though is that one of the reasons that democracy is dysfunctional is that, and

569
00:33:51,040 --> 00:33:54,840
one of the reasons it's dysfunctional is that because it requires a very highly enlightened

570
00:33:54,840 --> 00:33:57,840
population for it to really function.

571
00:33:57,840 --> 00:34:01,900
People have to really mean well and they have to be virtuous and they have to be informed.

572
00:34:01,900 --> 00:34:07,000
And then only then, and usually it tends to break down at larger scales because then you

573
00:34:07,000 --> 00:34:09,840
can't really reflect the will of the people too well either.

574
00:34:09,840 --> 00:34:14,400
I have a background in political philosophy if I didn't come across yet with this little

575
00:34:14,400 --> 00:34:15,400
rant.

576
00:34:15,400 --> 00:34:16,400
I like it.

577
00:34:16,400 --> 00:34:17,400
Yeah.

578
00:34:17,400 --> 00:34:18,400
I like this kind of conversation.

579
00:34:18,400 --> 00:34:20,660
No, no, that's great.

580
00:34:20,660 --> 00:34:23,000
But then cryptocurrency came along for me.

581
00:34:23,000 --> 00:34:26,920
And something that I saw in cryptocurrency is that actually, no, people don't need to

582
00:34:26,920 --> 00:34:29,760
be very enlightened.

583
00:34:29,760 --> 00:34:31,840
People don't need to mean well.

584
00:34:31,840 --> 00:34:34,280
You're not dependent upon that.

585
00:34:34,280 --> 00:34:37,480
It works because people follow their own incentives.

586
00:34:37,480 --> 00:34:44,360
In that sense, it's kind of this idea of the black hand of the market and bringing about

587
00:34:44,360 --> 00:34:47,760
positive outcomes basically in the longer run.

588
00:34:47,760 --> 00:34:51,560
Of course, there's going to be negative externalities along the way and so forth.

589
00:34:51,560 --> 00:34:56,640
But for me, what it therefore fixes is that, okay, you actually have a system that works

590
00:34:56,640 --> 00:35:02,060
despite of people's greed or actually it works because of people's greed or selfishness

591
00:35:02,060 --> 00:35:05,360
or self-interest, I should say.

592
00:35:05,360 --> 00:35:09,640
And what it does is that it align those incentives and then it creates this public good.

593
00:35:09,640 --> 00:35:14,360
And I think for me, that also that's why cryptocurrency works.

594
00:35:14,360 --> 00:35:18,880
So that's why I'm not too disparaged when I see people following their own self-interest

595
00:35:18,880 --> 00:35:19,880
unethically even.

596
00:35:19,880 --> 00:35:25,400
So I'm like, okay, well, at least cryptocurrency still works under those circumstances.

597
00:35:25,400 --> 00:35:31,840
As in the American founders said, it still works even when there's monsters in charge.

598
00:35:31,840 --> 00:35:34,200
So it's like that's kind of the idea.

599
00:35:34,200 --> 00:35:40,160
Well, no one's in charge obviously, but it's a bit of a misquote.

600
00:35:40,160 --> 00:35:45,520
Now this is a super interesting area to think about because this is exactly where my head's

601
00:35:45,520 --> 00:35:48,680
been at for a while now.

602
00:35:48,680 --> 00:35:52,080
First of all, with regard to the US, are you in the US?

603
00:35:52,080 --> 00:35:53,080
I'm not actually.

604
00:35:53,080 --> 00:35:57,720
I'm based in the Netherlands and Europe.

605
00:35:57,720 --> 00:36:06,280
So one of the reasons I got attracted to Bitcoin was because since I learned about the constitution

606
00:36:06,280 --> 00:36:10,960
of the US and how it works and why it was set up the way it was set up, I saw Bitcoin

607
00:36:10,960 --> 00:36:18,400
as sort of almost a parallel, a very similar idea where it's like, let's create these

608
00:36:18,400 --> 00:36:21,920
rails for a system to run on.

609
00:36:21,920 --> 00:36:26,280
And it doesn't rely on the honesty of people, like you just said.

610
00:36:26,280 --> 00:36:32,320
It doesn't rely on good people running the show because we take into consideration that

611
00:36:32,320 --> 00:36:37,240
there's no such thing as like a good tyrant.

612
00:36:37,240 --> 00:36:41,960
Once people gain power, we have to assume they're going to get corrupted, not because

613
00:36:41,960 --> 00:36:45,440
they're bad people, but because that's just the way humans are.

614
00:36:45,440 --> 00:36:51,320
We have to acknowledge that humans are fallible, messed up, and there's no human that can be

615
00:36:51,320 --> 00:36:56,200
trusted 100% with the fate of the world or country.

616
00:36:56,200 --> 00:36:58,200
Power crops, absolutely.

617
00:36:58,200 --> 00:36:59,880
Right, exactly.

618
00:36:59,880 --> 00:37:04,960
So that's a big reason I got attracted to Bitcoin.

619
00:37:04,960 --> 00:37:11,520
And now look at where the US is now.

620
00:37:11,520 --> 00:37:18,960
We have stopped enforcing the Bill of Rights on a lot of different issues, especially the

621
00:37:18,960 --> 00:37:28,120
Fourth Amendment, which is supposed to protect our right to privacy, our right to not search,

622
00:37:28,120 --> 00:37:31,480
to not have to reveal all of the details of our life.

623
00:37:31,480 --> 00:37:34,280
That's violated every minute of every day.

624
00:37:34,280 --> 00:37:39,520
Then you talk about freedom of speech, religion, et cetera, and all this other stuff that people

625
00:37:39,520 --> 00:37:43,000
want to attack and are attacking with the government.

626
00:37:43,000 --> 00:37:49,440
And we see the Tenth Amendment, which says that anything that is not, any power that's

627
00:37:49,440 --> 00:37:56,400
not specifically in the Constitution says to be given to the federal government belongs

628
00:37:56,400 --> 00:37:57,560
to the states.

629
00:37:57,560 --> 00:37:58,560
That's completely forgotten.

630
00:37:58,560 --> 00:38:02,160
Like if you say that now, bring it up, it's laughed at.

631
00:38:02,160 --> 00:38:07,200
So we've gotten to a point where the Constitution is almost becoming like people want it to

632
00:38:07,200 --> 00:38:12,720
be a relic, people want it to be ignored in a lot of cases, change the meanings of things.

633
00:38:12,720 --> 00:38:17,900
Now it was created with the best technology available at the time.

634
00:38:17,900 --> 00:38:22,880
If there was the technology we have today back in the late 1700s, it might have been

635
00:38:22,880 --> 00:38:25,280
a different story.

636
00:38:25,280 --> 00:38:27,320
But that was the best that we had back then.

637
00:38:27,320 --> 00:38:33,320
Now with Bitcoin, we have a lot of the same issues I feel like that are coming up.

638
00:38:33,320 --> 00:38:37,760
And not with Bitcoin, with every cryptocurrency, Ethereum too, especially Ethereum.

639
00:38:37,760 --> 00:38:44,980
In that people like to think of these things like they're a universe.

640
00:38:44,980 --> 00:38:50,040
People like to think of Bitcoin like it's a universe that is unto itself.

641
00:38:50,040 --> 00:38:53,800
As long as the technology works and does what it does, then we're fine.

642
00:38:53,800 --> 00:38:57,920
But the reality of it is that it's almost like I've been thinking of it like a planet

643
00:38:57,920 --> 00:39:02,040
and there's all these comets and asteroids that are going to be coming at it, hitting

644
00:39:02,040 --> 00:39:03,040
it.

645
00:39:03,040 --> 00:39:06,200
And one of those comets could be the government.

646
00:39:06,200 --> 00:39:07,720
One of those comets could be BlackRock.

647
00:39:07,720 --> 00:39:10,640
One of those comets could be this or that or the other thing.

648
00:39:10,640 --> 00:39:13,240
And it just takes one to strike and to blow the thing up.

649
00:39:13,240 --> 00:39:18,400
There's all these externalities that are attacking these things all the time that have nothing

650
00:39:18,400 --> 00:39:19,400
to do.

651
00:39:19,400 --> 00:39:25,320
You can't see any of it on chain and you can't see any of it maybe in the governance system.

652
00:39:25,320 --> 00:39:31,800
But coming from the outside, with Ethereum, it's 100% regulators, governments having an

653
00:39:31,800 --> 00:39:36,600
influence on the VCs who are having an influence on the developers and on the development of

654
00:39:36,600 --> 00:39:38,080
the applications on Ethereum.

655
00:39:38,080 --> 00:39:42,520
And on the layer 2s, there's a reason the layer 2s all have multi-sig and it's not just

656
00:39:42,520 --> 00:39:43,780
the fixed bugs.

657
00:39:43,780 --> 00:39:46,160
It's because they want to stay compliant.

658
00:39:46,160 --> 00:39:49,840
And so there's all this stuff going on that's external.

659
00:39:49,840 --> 00:39:56,200
So that's been top of mind for me and I'm not sure how I can ever come to terms with

660
00:39:56,200 --> 00:39:58,240
that not being an issue.

661
00:39:58,240 --> 00:40:04,120
How do you create a form of a Bitcoin or something like that that's not susceptible to people

662
00:40:04,120 --> 00:40:11,200
with lots of guns and people who can weaponize the media against you and people who could

663
00:40:11,200 --> 00:40:15,600
turn the majority of the population on you?

664
00:40:15,600 --> 00:40:17,720
How does Bitcoin exist in a world like that?

665
00:40:17,720 --> 00:40:21,860
I think the answer has always been, grow it so large that no single party can take it

666
00:40:21,860 --> 00:40:22,860
down.

667
00:40:22,860 --> 00:40:25,000
That's all you can do.

668
00:40:25,000 --> 00:40:26,000
Yeah.

669
00:40:26,000 --> 00:40:27,000
So it's like a race.

670
00:40:27,000 --> 00:40:31,440
We have to make this thing succeed before the powers that be have an opportunity to

671
00:40:31,440 --> 00:40:32,640
squash it.

672
00:40:32,640 --> 00:40:35,240
But I think I'm a little bit more optimistic than you.

673
00:40:35,240 --> 00:40:40,640
I think we're already past the point of no return at this stage.

674
00:40:40,640 --> 00:40:47,660
And actually, I'm a student of American history as well and I do also love a lot of the ideas

675
00:40:47,660 --> 00:40:49,840
presented in the US Constitution.

676
00:40:49,840 --> 00:40:53,440
This might be a bit of a controversial take, but I think out of all the places you could

677
00:40:53,440 --> 00:40:57,880
live in the world, certain US states are probably still some of the freest places you could

678
00:40:57,880 --> 00:40:58,880
be.

679
00:40:58,880 --> 00:41:01,800
And also because of the US Constitution, it still holds some weight.

680
00:41:01,800 --> 00:41:04,320
And I know nothing is perfect.

681
00:41:04,320 --> 00:41:08,560
No, we're clinging by a thread, man.

682
00:41:08,560 --> 00:41:11,960
I'm in Florida, so I know all about it.

683
00:41:11,960 --> 00:41:12,960
Yeah.

684
00:41:12,960 --> 00:41:15,040
Anyway, we're still doing okay down here.

685
00:41:15,040 --> 00:41:19,440
And I'm really curious to understand your perspective on Bitcoin because that's one

686
00:41:19,440 --> 00:41:21,500
of the big areas where we differ.

687
00:41:21,500 --> 00:41:26,360
And you're thinking about how can we avoid this type of capture from occurring?

688
00:41:26,360 --> 00:41:32,900
And I find it curious how you see all of these problems in Ethereum, right?

689
00:41:32,900 --> 00:41:35,240
And you're not entirely wrong.

690
00:41:35,240 --> 00:41:39,560
But don't you see the same problems in Bitcoin as well?

691
00:41:39,560 --> 00:41:45,760
Well lately, the past few months, I've been turning into a little bit with regard to,

692
00:41:45,760 --> 00:41:46,760
you know what?

693
00:41:46,760 --> 00:41:47,760
It's since I podcast.

694
00:41:47,760 --> 00:41:51,860
Well, I was already thinking about stuff and I did a podcast with Jameson Lopp and we started

695
00:41:51,860 --> 00:41:57,920
talking about mining and we started talking about some of the threats.

696
00:41:57,920 --> 00:42:04,080
And I'd already been thinking about, I keep using BlackRock as an example, but it's not

697
00:42:04,080 --> 00:42:07,920
the only example, but it's just such a good example that resonates with people.

698
00:42:07,920 --> 00:42:13,280
And you know better than anybody that you need a good catchy example to get your tweet

699
00:42:13,280 --> 00:42:16,120
out there with a get it a lot of likes, right?

700
00:42:16,120 --> 00:42:19,080
So you get that sweet Elon money, right?

701
00:42:19,080 --> 00:42:21,360
But just kidding.

702
00:42:21,360 --> 00:42:22,360
You know what?

703
00:42:22,360 --> 00:42:30,320
And by the way, sidetrack, people blast me and probably you too for outrageous tweets

704
00:42:30,320 --> 00:42:34,600
and just trying to get people all crazy, you know, using incendiary language.

705
00:42:34,600 --> 00:42:35,960
We're both guilty.

706
00:42:35,960 --> 00:42:37,320
It's Twitter, man.

707
00:42:37,320 --> 00:42:41,400
That's how you get people to pay attention.

708
00:42:41,400 --> 00:42:46,160
If I wasn't such a dick with a lot of this stuff, nobody would care.

709
00:42:46,160 --> 00:42:48,920
There's a lot of people saying the stuff I'm saying and the stuff you're saying.

710
00:42:48,920 --> 00:42:52,360
There's a lot of people saying it, but they're just like little mice, right?

711
00:42:52,360 --> 00:42:53,360
They're like, nobody listens.

712
00:42:53,360 --> 00:42:57,480
If you have a positive message, you want people to actually hear it, right?

713
00:42:57,480 --> 00:42:58,480
Right.

714
00:42:58,480 --> 00:43:00,720
Whether it's positive or negative, whatever it is.

715
00:43:00,720 --> 00:43:04,000
I enjoy the challenge of like writing something viral.

716
00:43:04,000 --> 00:43:07,880
There's a nuance in the language that I enjoy, you know?

717
00:43:07,880 --> 00:43:08,880
Yeah.

718
00:43:08,880 --> 00:43:09,880
Yeah, it's fun.

719
00:43:09,880 --> 00:43:10,880
Yeah.

720
00:43:10,880 --> 00:43:14,320
Hey, my history too has been in marketing.

721
00:43:14,320 --> 00:43:15,920
I did marketing for sports.

722
00:43:15,920 --> 00:43:22,360
I spent a number of years with the UFC ultimate fighting, doing marketing, writing copy, promoting

723
00:43:22,360 --> 00:43:23,420
fights.

724
00:43:23,420 --> 00:43:29,480
So it's in my background to draw on people's emotions, to get them to think about something

725
00:43:29,480 --> 00:43:31,120
or to get them to do something.

726
00:43:31,120 --> 00:43:33,400
I like your content as well.

727
00:43:33,400 --> 00:43:35,720
Anyway, we have that in common.

728
00:43:35,720 --> 00:43:36,720
Yeah.

729
00:43:36,720 --> 00:43:37,720
Right.

730
00:43:37,720 --> 00:43:38,720
Yeah.

731
00:43:38,720 --> 00:43:43,680
But for Bitcoin, I'm all about criticizing areas that I see as weak because I think that

732
00:43:43,680 --> 00:43:47,320
that's the only way we can get them stronger.

733
00:43:47,320 --> 00:43:49,120
So I have a number of concerns.

734
00:43:49,120 --> 00:43:56,280
So I'll show you what for me is my biggest concern besides maybe the long term.

735
00:43:56,280 --> 00:43:57,280
Okay.

736
00:43:57,280 --> 00:44:00,360
Maybe not including the stuff of the security model.

737
00:44:00,360 --> 00:44:01,360
Maybe we'll get into that later.

738
00:44:01,360 --> 00:44:02,360
Okay.

739
00:44:02,360 --> 00:44:03,360
That's a big concern.

740
00:44:03,360 --> 00:44:05,320
But actually my biggest concern is actually governance.

741
00:44:05,320 --> 00:44:10,240
And that's what makes me so concerned that it won't fix things in time basically because

742
00:44:10,240 --> 00:44:12,240
the governance is dysfunctional.

743
00:44:12,240 --> 00:44:19,560
So I've thought a lot about when changes to Bitcoin happen, right?

744
00:44:19,560 --> 00:44:21,280
What is the governance process?

745
00:44:21,280 --> 00:44:26,680
What is actually the decision making process in practice?

746
00:44:26,680 --> 00:44:29,240
Not some idealized version.

747
00:44:29,240 --> 00:44:33,760
What is actually the real politic of it?

748
00:44:33,760 --> 00:44:38,740
How many people does it take to get together in a room and all agree on something?

749
00:44:38,740 --> 00:44:41,800
And if they then come out with a publicly, does it actually happen?

750
00:44:41,800 --> 00:44:47,120
Even if it might be controversial or can they block things, right?

751
00:44:47,120 --> 00:44:54,240
So for me, like doing that type of an analysis on Bitcoin, I'm extremely concerned about

752
00:44:54,240 --> 00:44:55,240
the state of governance.

753
00:44:55,240 --> 00:45:00,120
And that's, I think for me, what a lot of the block size debates were about as well.

754
00:45:00,120 --> 00:45:06,000
And I was on the quote unquote losing side of that, let's say.

755
00:45:06,000 --> 00:45:12,400
But I think this idea that there's only one implementation, one client implementation,

756
00:45:12,400 --> 00:45:15,440
one dominant one at least that's calling all of the shots.

757
00:45:15,440 --> 00:45:20,080
And you have a literal lead maintainer who has the final say over code changes.

758
00:45:20,080 --> 00:45:27,380
And you have this whole culture kind of propping up the supremacy of these developers.

759
00:45:27,380 --> 00:45:31,440
I think that's a major problem because that concentrates power in the hands of a very

760
00:45:31,440 --> 00:45:38,040
few people, which is then very easy to then capture and corrupt and pervert.

761
00:45:38,040 --> 00:45:41,760
And it's subject to all of these external powers now.

762
00:45:41,760 --> 00:45:48,520
And that's where I also, I'll just go straight for the major points here.

763
00:45:48,520 --> 00:45:50,320
I see a major conflict of interest.

764
00:45:50,320 --> 00:45:56,960
The same I see in Ethereum, by the way, where say a lot of the Bitcoin developers are being

765
00:45:56,960 --> 00:46:04,560
paid or have shares in companies such as Blockstream and what's the other one?

766
00:46:04,560 --> 00:46:06,360
Oh man, I forgot the name.

767
00:46:06,360 --> 00:46:11,440
But there's a few companies like that that are funding developers.

768
00:46:11,440 --> 00:46:15,680
And these companies can have a conflict of interest, for instance, favoring layer two

769
00:46:15,680 --> 00:46:20,040
scaling over layer one scaling, for instance.

770
00:46:20,040 --> 00:46:24,520
And also there was this great, did you read the CIA report that happened a year ago?

771
00:46:24,520 --> 00:46:28,640
The CIA put this thing that was sponsored by the CIA.

772
00:46:28,640 --> 00:46:35,280
And basically they said the way to say take over a cryptocurrency or disrupt it is to

773
00:46:35,280 --> 00:46:38,400
target the core developers.

774
00:46:38,400 --> 00:46:39,400
And I think they're right.

775
00:46:39,400 --> 00:46:41,900
I think that's such a key pain point.

776
00:46:41,900 --> 00:46:48,680
And even if the developers are honest, they could also just be making wrong decisions

777
00:46:48,680 --> 00:46:54,160
because the governance process is not conducive to actually creating the best decisions.

778
00:46:54,160 --> 00:46:56,880
So that's like a more optimistic scenario as opposed to being captured.

779
00:46:56,880 --> 00:47:01,560
But that to me is one of my biggest concerns around Bitcoin.

780
00:47:01,560 --> 00:47:05,800
And part of the reason I'm an advocate for systems of on-chain governance to kind of

781
00:47:05,800 --> 00:47:11,320
mitigate those problems and add the checks and balances and add the restrictions to governance,

782
00:47:11,320 --> 00:47:16,560
which I think mirroring the US Constitution in so many ways and that idea of a republic

783
00:47:16,560 --> 00:47:19,640
is you're limiting power, you're dividing power.

784
00:47:19,640 --> 00:47:26,200
And if you formalize it, then instead of the rulers being in the shadows, you kind of bring

785
00:47:26,200 --> 00:47:28,120
it out into the open.

786
00:47:28,120 --> 00:47:31,360
And I think that's a better way to do things.

787
00:47:31,360 --> 00:47:40,040
Yeah, it's an interesting dichotomy in how to think about these projects.

788
00:47:40,040 --> 00:47:51,960
I think that one of the things I like about Bitcoin is that it is more of an organic...

789
00:47:51,960 --> 00:47:58,280
People think of it as immutable and as it is what it is, it's never going to change.

790
00:47:58,280 --> 00:48:01,680
But the reality of it is that it is a...

791
00:48:01,680 --> 00:48:04,200
First and foremost, it's a brand.

792
00:48:04,200 --> 00:48:05,760
Bitcoin is a brand.

793
00:48:05,760 --> 00:48:12,880
And the brand is... whatever the Bitcoin brand points at is what most people are going to

794
00:48:12,880 --> 00:48:14,800
think is Bitcoin.

795
00:48:14,800 --> 00:48:20,320
So when Bitcoin Cash happened, it lost the battle for the brand, as much as Roger Ver

796
00:48:20,320 --> 00:48:21,320
tried.

797
00:48:21,320 --> 00:48:23,360
He lost the battle for the brand.

798
00:48:23,360 --> 00:48:27,680
And it was decided by a lot of the big powers that you were talking about.

799
00:48:27,680 --> 00:48:31,240
But more importantly, it was decided by public opinion.

800
00:48:31,240 --> 00:48:35,480
And public opinion was swayed in a certain way, but what we have today became Bitcoin.

801
00:48:35,480 --> 00:48:38,160
I'm not sure if that's entirely true.

802
00:48:38,160 --> 00:48:40,720
The public opinion piece.

803
00:48:40,720 --> 00:48:46,840
That the split, that the result of the split was purely the result of an egalitarian public

804
00:48:46,840 --> 00:48:47,880
opinion.

805
00:48:47,880 --> 00:48:51,000
I think there was a lot more politics going on than that.

806
00:48:51,000 --> 00:48:54,640
I think that censorship had a lot to do with the outcome.

807
00:48:54,640 --> 00:49:01,040
I think that the exchanges actually named one side of the ticker BTC also had a lot

808
00:49:01,040 --> 00:49:02,520
to do with it.

809
00:49:02,520 --> 00:49:10,080
And I think for a lot of the polls that were taken and for a lot of the ecosystem and industry,

810
00:49:10,080 --> 00:49:14,640
most major parties were supporting an increase in the block size and the developers got to

811
00:49:14,640 --> 00:49:17,400
do the thing that they wanted to do instead.

812
00:49:17,400 --> 00:49:22,240
So that to me was an example of, oh, these developers actually have too much power.

813
00:49:22,240 --> 00:49:24,440
And from my view, also doing the wrong thing.

814
00:49:24,440 --> 00:49:26,240
I'm not sure.

815
00:49:26,240 --> 00:49:30,840
We might disagree on that one in particular.

816
00:49:30,840 --> 00:49:37,160
Well regardless of which side you agree with, I think my point is that Bitcoin is sort of

817
00:49:37,160 --> 00:49:42,000
this flowing thing that goes through these forks in the river and ultimately goes down

818
00:49:42,000 --> 00:49:43,840
one of these paths.

819
00:49:43,840 --> 00:49:48,800
And then it's up to the individuals involved if they want to participate with that, endorse

820
00:49:48,800 --> 00:49:54,800
it, go off in a different way, try to get adoption with a different technology.

821
00:49:54,800 --> 00:50:00,440
As opposed to formalize on-chain governance, which sort of treats the project as more of

822
00:50:00,440 --> 00:50:04,000
like this is the project and a hundred years is still going to be the project.

823
00:50:04,000 --> 00:50:07,640
We're going to go through iterations that governance is going to choose.

824
00:50:07,640 --> 00:50:11,480
And so I'm not saying one's right or wrong, but I'm saying like they're almost two different

825
00:50:11,480 --> 00:50:16,080
concepts for a path forward for a cryptocurrency like this.

826
00:50:16,080 --> 00:50:23,640
So you seem to be leaning more towards this system of we need to figure out on-chain governance,

827
00:50:23,640 --> 00:50:26,320
how it's going to work, participants, et cetera.

828
00:50:26,320 --> 00:50:31,400
And then we need to sort of steer that ship, navigate these waters and try to keep out

829
00:50:31,400 --> 00:50:34,600
the big money, keep out the big governance and stuff like that.

830
00:50:34,600 --> 00:50:35,600
No, no, no.

831
00:50:35,600 --> 00:50:39,400
We need governance so that it can resist the corruption of big money.

832
00:50:39,400 --> 00:50:40,400
Okay.

833
00:50:40,400 --> 00:50:43,360
I mean, how does...

834
00:50:43,360 --> 00:50:48,140
See, that's something that that's where I start to get concerned because big money seems

835
00:50:48,140 --> 00:50:49,800
to corrupt everything.

836
00:50:49,800 --> 00:50:52,920
So if you can't keep big money out of a system like Bitcoin, how do you keep it out of another?

837
00:50:52,920 --> 00:50:57,200
I should rephrase that, to harness the greed and corruption of big money.

838
00:50:57,200 --> 00:50:58,200
To harness.

839
00:50:58,200 --> 00:50:59,200
So you like proof of stake.

840
00:50:59,200 --> 00:51:00,200
Yeah.

841
00:51:00,200 --> 00:51:01,200
Yeah, sure.

842
00:51:01,200 --> 00:51:02,200
Because that clearly aligns those incentives.

843
00:51:02,200 --> 00:51:07,880
I mean, proof of work basically works on the same principles, just pros and cons to each.

844
00:51:07,880 --> 00:51:11,120
I think more of the pros land on the stake.

845
00:51:11,120 --> 00:51:12,120
But we're actually...

846
00:51:12,120 --> 00:51:15,480
Let's not move on from the previous subject just yet.

847
00:51:15,480 --> 00:51:19,320
This is becoming quite interesting.

848
00:51:19,320 --> 00:51:30,120
Because in my view, that's why we need the governance is to kind of keep the system away

849
00:51:30,120 --> 00:51:31,840
from corruption.

850
00:51:31,840 --> 00:51:36,680
It's because if you don't have that, what you end up with in practice is a very few

851
00:51:36,680 --> 00:51:39,000
people making all of the decision.

852
00:51:39,000 --> 00:51:44,240
And I think that is very much goes against the ethos of cryptocurrency.

853
00:51:44,240 --> 00:51:50,400
Because I think that's practically what ends up happening behind the scenes.

854
00:51:50,400 --> 00:51:52,520
How do you think they're making those decisions?

855
00:51:52,520 --> 00:51:57,120
I completely understand and I actually share a lot of the concerns about what are the incentives

856
00:51:57,120 --> 00:51:59,640
for these developers, who's paying them.

857
00:51:59,640 --> 00:52:06,040
I look at like Luke Dash Jr. getting paid to do work on BIP 300, getting paid by Layer

858
00:52:06,040 --> 00:52:10,760
2 Labs, who's out there the biggest proponent for BIP 300.

859
00:52:10,760 --> 00:52:14,920
And he's publicly said he doesn't even philosophically align with it.

860
00:52:14,920 --> 00:52:16,480
He's just doing the work he's paid to do.

861
00:52:16,480 --> 00:52:18,160
And he has this influence and access.

862
00:52:18,160 --> 00:52:20,160
Luke Dash Jr. doesn't philosophically align with a lot of things.

863
00:52:20,160 --> 00:52:21,160
He's just one example of...

864
00:52:21,160 --> 00:52:25,600
I don't want to pick on him, but he's a good example of somebody with influence and access

865
00:52:25,600 --> 00:52:29,840
getting paid to use that influence and access.

866
00:52:29,840 --> 00:52:31,680
And almost just via hired gun.

867
00:52:31,680 --> 00:52:34,520
So where was I going with that?

868
00:52:34,520 --> 00:52:35,520
I forgot.

869
00:52:35,520 --> 00:52:39,960
Yeah, the conflict of interests of developers.

870
00:52:39,960 --> 00:52:42,040
So I get concerned about that too.

871
00:52:42,040 --> 00:52:43,040
Yeah.

872
00:52:43,040 --> 00:52:48,560
But I forgot where I was actually heading with that whole line of thought.

873
00:52:48,560 --> 00:52:49,560
That's okay.

874
00:52:49,560 --> 00:52:53,560
No, because the way it looks like, right, is you have this GitHub.

875
00:52:53,560 --> 00:52:58,160
And you have, I think in the case of Bitcoin now, it's five people who have like a veto

876
00:52:58,160 --> 00:52:59,800
power, I believe it is.

877
00:52:59,800 --> 00:53:01,440
Those are the maintainers.

878
00:53:01,440 --> 00:53:05,800
And then you have the lead maintainer who basically has a final say of the system.

879
00:53:05,800 --> 00:53:11,080
And what they claim is they say this is a perfect meritocracy.

880
00:53:11,080 --> 00:53:15,400
And this is this beautiful, organic, emergent behavior that comes from where the best ideas

881
00:53:15,400 --> 00:53:17,120
always win.

882
00:53:17,120 --> 00:53:18,120
That is the claim.

883
00:53:18,120 --> 00:53:24,700
But I think in reality, like we said, power crops and absolute power crops, absolutely.

884
00:53:24,700 --> 00:53:29,480
They kick out developers that don't agree with them and then claim consensus.

885
00:53:29,480 --> 00:53:32,780
I don't think that that is truly a meritocracy.

886
00:53:32,780 --> 00:53:37,040
And I think there's a lot of conflicts of interest, and I think that's just far too

887
00:53:37,040 --> 00:53:39,240
centralized as a system.

888
00:53:39,240 --> 00:53:45,880
And I think that's resulted in bad decision making in my view, such as not scaling the

889
00:53:45,880 --> 00:53:53,160
blockchain up to reasonable levels, as was always intended by the founder.

890
00:53:53,160 --> 00:53:57,320
I'm really curious on your view on that actually, since we're touching on it now.

891
00:53:57,320 --> 00:54:00,840
Wouldn't you support say a moderate increase, say eight megabyte blocks?

892
00:54:00,840 --> 00:54:03,120
It would bring so much more utility.

893
00:54:03,120 --> 00:54:06,400
I mean, like 32 megabyte blocks, right?

894
00:54:06,400 --> 00:54:12,800
You can still verify that on a Raspberry Pi, right?

895
00:54:12,800 --> 00:54:16,840
If you just add some code optimizations for that, you can still verify that on a Raspberry

896
00:54:16,840 --> 00:54:17,840
Pi.

897
00:54:17,840 --> 00:54:24,200
32 megabytes, and then you have the scale of a freaking PayPal.

898
00:54:24,200 --> 00:54:27,000
And now you can truly use Bitcoin as money.

899
00:54:27,000 --> 00:54:31,080
And now it's like this empowering thing that people actually have direct access to with

900
00:54:31,080 --> 00:54:32,240
low fees.

901
00:54:32,240 --> 00:54:35,080
And you solve the security dilemma.

902
00:54:35,080 --> 00:54:36,640
I will say, I think that-

903
00:54:36,640 --> 00:54:39,080
Isn't that just a no brainer?

904
00:54:39,080 --> 00:54:44,440
Knowing what I know now after having watched Ethereum try to scale with layer twos and

905
00:54:44,440 --> 00:54:48,600
watching the Lightning Network struggle.

906
00:54:48,600 --> 00:54:55,640
Knowing what I know now, and I wasn't like a vocal advocate for either side really at

907
00:54:55,640 --> 00:54:58,720
the time, but it does make sense.

908
00:54:58,720 --> 00:55:03,000
At the same time, I am in the process right now of syncing a node and it's taken me a

909
00:55:03,000 --> 00:55:06,320
solid week.

910
00:55:06,320 --> 00:55:15,480
I can see both sides, but I do agree that the decision there went in a certain way because

911
00:55:15,480 --> 00:55:16,480
of money.

912
00:55:16,480 --> 00:55:19,360
There were closed door meetings.

913
00:55:19,360 --> 00:55:22,320
We weren't at privy to all that information, all those conversations.

914
00:55:22,320 --> 00:55:25,760
We know there was the New York stuff going on and whatever else.

915
00:55:25,760 --> 00:55:30,240
It's like 200 million plus funding for Blockstream.

916
00:55:30,240 --> 00:55:31,240
Yeah.

917
00:55:31,240 --> 00:55:37,560
But what do you think was the motivation for that outcome?

918
00:55:37,560 --> 00:55:39,240
Why did they want that to go that way?

919
00:55:39,240 --> 00:55:43,360
I'm hesitant to know what's in other people's minds.

920
00:55:43,360 --> 00:55:44,720
I can say, look, there was a-

921
00:55:44,720 --> 00:55:46,600
It must have been a business decision.

922
00:55:46,600 --> 00:55:47,600
Right.

923
00:55:47,600 --> 00:55:50,120
Clearly there's a conflicts of interest.

924
00:55:50,120 --> 00:55:58,640
I think Adam Back, Greg Maxwell, a lot of these folks have shares in Blockstream and

925
00:55:58,640 --> 00:56:04,120
they raise a lot of money for VC funding and Blockstream's promises to build L2 solutions

926
00:56:04,120 --> 00:56:10,880
for profit and that clearly benefits from not scaling the layout basically.

927
00:56:10,880 --> 00:56:16,640
I can't say with 100% certainty that they had this type of perverse intent, right?

928
00:56:16,640 --> 00:56:19,960
But I think it's highly problematic that it's there in the first place.

929
00:56:19,960 --> 00:56:26,240
They could truly believe in the ethos that they promote or maybe they were biased a bit

930
00:56:26,240 --> 00:56:29,240
in that true belief, but I can't say.

931
00:56:29,240 --> 00:56:36,120
But either way, I think it's wrong because it completely destroys what Bitcoin was actually

932
00:56:36,120 --> 00:56:37,320
meant to do.

933
00:56:37,320 --> 00:56:42,280
I think Satoshi, I think we can agree, was very clear on this about what the intent was

934
00:56:42,280 --> 00:56:47,360
of Bitcoin in the white paper, in his writing extensively.

935
00:56:47,360 --> 00:56:53,280
I think for me, that was really a pivot away from the social contract, which to me really

936
00:56:53,280 --> 00:56:55,480
flies in the face of what Bitcoin was supposed to be.

937
00:56:55,480 --> 00:56:58,120
It's not supposed to pivot away from the social contract.

938
00:56:58,120 --> 00:57:02,840
Now I'm like, wow, so blockchain, that can happen?

939
00:57:02,840 --> 00:57:07,720
That's why now I'm like, okay, this is just a major systemic failure in governance.

940
00:57:07,720 --> 00:57:11,300
This is why I'm trying to find solutions to that.

941
00:57:11,300 --> 00:57:15,800
How can we design a blockchain in such a way to avoid these problems from reoccurring?

942
00:57:15,800 --> 00:57:19,440
Because the same thing is happening to Ethereum now.

943
00:57:19,440 --> 00:57:21,920
How do we avoid that from repeating?

944
00:57:21,920 --> 00:57:22,920
Yeah.

945
00:57:22,920 --> 00:57:23,920
Yeah.

946
00:57:23,920 --> 00:57:29,880
If there's one thing I've learned over the last three, four years, it's that the money

947
00:57:29,880 --> 00:57:37,320
is always going to come down on the side of scaling because there's more opportunity for

948
00:57:37,320 --> 00:57:38,320
profit.

949
00:57:38,320 --> 00:57:42,800
There's more opportunity to build a business around scaling solution than there is around

950
00:57:42,800 --> 00:57:46,200
having native solutions on the layer one.

951
00:57:46,200 --> 00:57:49,200
No, no, but the layer one can scale in my view.

952
00:57:49,200 --> 00:57:54,560
So I'm saying like, yeah, but there's less profit potential for third parties, for venture

953
00:57:54,560 --> 00:57:57,920
capitalists, et cetera.

954
00:57:57,920 --> 00:58:01,720
If you have that kind of a solution and that creates this perverse incentives because they

955
00:58:01,720 --> 00:58:06,840
can't rein seek on the layer one, they can on the layer twos that they might build out.

956
00:58:06,840 --> 00:58:12,200
And this is why just so I'm also offering some solutions while critiquing.

957
00:58:12,200 --> 00:58:15,640
This is actually where I think like treasury systems, blockchain treasury systems come

958
00:58:15,640 --> 00:58:16,640
in.

959
00:58:16,640 --> 00:58:21,080
Because if you say take 10% of the block reward, you put that in a treasury, you then have

960
00:58:21,080 --> 00:58:23,720
a proposal system with like decentralized voting, right?

961
00:58:23,720 --> 00:58:29,520
There's going to be a lot of inefficiency, I know, but at least that creates a L1 bias

962
00:58:29,520 --> 00:58:35,000
source of funding, which can counteract the influence of this kind of perverse incentive

963
00:58:35,000 --> 00:58:36,940
that we're identifying.

964
00:58:36,940 --> 00:58:42,520
This is why I've been a supporter of that type of design, things like Dash, Decree,

965
00:58:42,520 --> 00:58:46,120
Tezos have implemented this and more.

966
00:58:46,120 --> 00:58:48,120
Not Ethereum, unfortunately.

967
00:58:48,120 --> 00:58:49,120
Yeah.

968
00:58:49,120 --> 00:58:54,720
Ethereum, you know, in my opinion is far worse off in this regard than Bitcoin.

969
00:58:54,720 --> 00:58:57,120
Oh, well, here I disagree with you, right?

970
00:58:57,120 --> 00:58:58,720
Because if we're talking about...

971
00:58:58,720 --> 00:58:59,720
I'll tell you why.

972
00:58:59,720 --> 00:59:00,880
I'll also tell you why.

973
00:59:00,880 --> 00:59:05,240
You can stop.

974
00:59:05,240 --> 00:59:10,320
Because well, okay, DeFi had a lot to do with this.

975
00:59:10,320 --> 00:59:17,800
DeFi had a chance to be built on top of decentralized stables like Dai, you know, and others that

976
00:59:17,800 --> 00:59:21,800
could have existed but didn't because they didn't see the reason to.

977
00:59:21,800 --> 00:59:29,040
Instead it was built on the back of Tether, of USDC, of Paxos and whatever else.

978
00:59:29,040 --> 00:59:34,000
And at this point, you know, we're still talking about Ethereum is interesting because of DeFi,

979
00:59:34,000 --> 00:59:35,000
right?

980
00:59:35,000 --> 00:59:36,000
Ethereum is interesting.

981
00:59:36,000 --> 00:59:37,000
Sure.

982
00:59:37,000 --> 00:59:40,280
That's why Ethereum is at 1800, whatever, or no, where's Ethereum?

983
00:59:40,280 --> 00:59:41,280
I don't even know.

984
00:59:41,280 --> 00:59:42,520
I don't look at prices that much.

985
00:59:42,520 --> 00:59:48,040
But the reason Ethereum is interesting is because of DeFi and because of that innovation

986
00:59:48,040 --> 00:59:50,820
and because of all the VC investment.

987
00:59:50,820 --> 00:59:58,080
The problem though is that they've developed this ecosystem that has to all move together,

988
00:59:58,080 --> 00:59:59,080
right?

989
00:59:59,080 --> 01:00:06,800
There can not be disagreement within that $10 to $20 billion ecosystem, including USDC,

990
01:00:06,800 --> 01:00:12,800
Circle, including Tether, including Chainlink, including anybody else who's involved and

991
01:00:12,800 --> 01:00:15,140
reliant on those organizations.

992
01:00:15,140 --> 01:00:19,200
They all have to move along together or else the thing starts to fall apart because they're

993
01:00:19,200 --> 01:00:21,280
all intertwined, right?

994
01:00:21,280 --> 01:00:22,860
Because of the way the tech works.

995
01:00:22,860 --> 01:00:29,760
So if a hard fork is proposed and Circle likes it, but Aave doesn't like it, Aave is going

996
01:00:29,760 --> 01:00:34,280
to go with Circle because their whole shit's going to fall apart if they don't all stick

997
01:00:34,280 --> 01:00:35,280
together.

998
01:00:35,280 --> 01:00:39,380
We saw this already, which nobody really paid attention to, but it was a really interesting

999
01:00:39,380 --> 01:00:45,520
case study with the proof of stake fork because the proof of work chain is still there.

1000
01:00:45,520 --> 01:00:49,160
It's still being mined actually, which is funny.

1001
01:00:49,160 --> 01:00:55,120
And all the DeFi stuff that was on the, you know, everything that was on the chain pre-fork

1002
01:00:55,120 --> 01:00:59,960
went along on the proof of work chain too, except USDC wasn't honoring tokens, Tether

1003
01:00:59,960 --> 01:01:03,340
wasn't honoring, nobody's honoring any of those tokens, but Aave was still there with

1004
01:01:03,340 --> 01:01:04,620
all the balances.

1005
01:01:04,620 --> 01:01:07,920
They had Compound still there, Uniswap still there, everything's still there, and everything

1006
01:01:07,920 --> 01:01:09,720
just imploded like instantly, right?

1007
01:01:09,720 --> 01:01:13,960
Everything's getting liquidated, everything's getting, it's like a complete shit show because

1008
01:01:13,960 --> 01:01:16,040
the tokens aren't being honored anymore.

1009
01:01:16,040 --> 01:01:18,920
You know, none of it is redeemable.

1010
01:01:18,920 --> 01:01:26,240
So those organizations overtly control the future of Ethereum.

1011
01:01:26,240 --> 01:01:30,080
If Circle doesn't like a fork and doesn't go, nobody's going.

1012
01:01:30,080 --> 01:01:33,200
If Tether doesn't like a fork and doesn't go, nobody's going.

1013
01:01:33,200 --> 01:01:39,080
So that as a put, those are direct vested interests that are controlling the future

1014
01:01:39,080 --> 01:01:41,840
of Ethereum, whether or not they're paying off the devs.

1015
01:01:41,840 --> 01:01:43,640
They don't have to have any involvement with that.

1016
01:01:43,640 --> 01:01:47,800
If the devs do something that they don't like, the devs are going to stop doing it, right?

1017
01:01:47,800 --> 01:01:52,360
And it's very clear as opposed to Bitcoin, which I hear and I understand what you're

1018
01:01:52,360 --> 01:01:54,760
saying about Bitcoin, but it's a little bit hazier.

1019
01:01:54,760 --> 01:01:59,560
It's not quite as obvious, which may be worse, maybe more dangerous, but it's less of a direct

1020
01:01:59,560 --> 01:02:01,480
threat, I think, in the near future.

1021
01:02:01,480 --> 01:02:04,920
No, and I think you have a point.

1022
01:02:04,920 --> 01:02:08,360
Actually, I think there are potentially perverse incentives there.

1023
01:02:08,360 --> 01:02:12,120
Though I did think making Ethereum harder to fork, I thought you would actually like

1024
01:02:12,120 --> 01:02:14,240
that as opposed to not like that.

1025
01:02:14,240 --> 01:02:15,240
That's okay.

1026
01:02:15,240 --> 01:02:16,640
How did they make it?

1027
01:02:16,640 --> 01:02:17,960
Oh, you mean because of that?

1028
01:02:17,960 --> 01:02:22,800
Yeah, well, you have to sit down in a room with Circle, Tether, and all these guys.

1029
01:02:22,800 --> 01:02:27,600
But I suppose one of the reasons I'm less concerned over this than you are, and I definitely

1030
01:02:27,600 --> 01:02:31,120
acknowledge that there can definitely be some perverse effects there.

1031
01:02:31,120 --> 01:02:36,020
And yes, it does make it more difficult to have this kind of forked governance.

1032
01:02:36,020 --> 01:02:43,880
But I think from my perspective, I think that splitting a chain, that type of governance,

1033
01:02:43,880 --> 01:02:46,420
that's like the nuclear option, in my view.

1034
01:02:46,420 --> 01:02:50,520
That's what you do when everything else has fell apart and you're just so far ideological

1035
01:02:50,520 --> 01:02:55,240
apart and everything else has failed that then you press the big red button.

1036
01:02:55,240 --> 01:03:02,920
I think that should be the very, very last thing in a long line of processes to fix things.

1037
01:03:02,920 --> 01:03:08,520
This is why, in my view, it's like, okay, well, yes, it does make it more difficult

1038
01:03:08,520 --> 01:03:20,480
to fork, but I would rather see an internal decision-making process where more diverse

1039
01:03:20,480 --> 01:03:25,640
voices can be heard and that is more inclusive.

1040
01:03:25,640 --> 01:03:31,320
And ultimately, of course, as an on-chain governance, it's tied to actual incentives

1041
01:03:31,320 --> 01:03:33,720
through stakeholder-based voting.

1042
01:03:33,720 --> 01:03:38,680
For some reason, as in proof of work, you can actually do something similar with the

1043
01:03:38,680 --> 01:03:40,960
miners.

1044
01:03:40,960 --> 01:03:44,920
I think that to me means also...

1045
01:03:44,920 --> 01:03:50,320
And that goes on to my next point because one of my major concerns really is this kind

1046
01:03:50,320 --> 01:03:53,320
of centralization in the development.

1047
01:03:53,320 --> 01:03:56,600
In the case of Ethereum, there's a very big difference between Ethereum and Bitcoin in

1048
01:03:56,600 --> 01:03:57,960
that regard.

1049
01:03:57,960 --> 01:04:04,600
And there is actually multiple dominant client implementations in Ethereum.

1050
01:04:04,600 --> 01:04:07,120
So it's not just a single dictatorship.

1051
01:04:07,120 --> 01:04:12,640
It's like several dictatorships that kind of have to negotiate with each other, which

1052
01:04:12,640 --> 01:04:16,600
I think is better because it's just another step removed from having that sort of extreme

1053
01:04:16,600 --> 01:04:19,040
centralization.

1054
01:04:19,040 --> 01:04:20,120
And I think that's...

1055
01:04:20,120 --> 01:04:23,440
And I think because I'm more interested in preventing...

1056
01:04:23,440 --> 01:04:28,840
I think if a governance mechanism keeps forking, keeps splitting, I think that's extremely

1057
01:04:28,840 --> 01:04:29,960
destructive.

1058
01:04:29,960 --> 01:04:35,760
That's one of the reasons I stopped believing in Bitcoin Cash, let's say, because I'm like,

1059
01:04:35,760 --> 01:04:38,080
wow, okay, this is actually systemic.

1060
01:04:38,080 --> 01:04:39,080
It's still happening.

1061
01:04:39,080 --> 01:04:45,280
You had the BSV fork and then you had the E-cash fork and it was just a disaster in

1062
01:04:45,280 --> 01:04:47,240
that regard.

1063
01:04:47,240 --> 01:04:49,700
And I don't think Bitcoin is really that different.

1064
01:04:49,700 --> 01:04:53,160
It's essentially the same design as Bitcoin Cash.

1065
01:04:53,160 --> 01:04:57,680
The only difference was the bigger block size limit and it's more optimized because core

1066
01:04:57,680 --> 01:05:00,440
developers are not optimizing for that.

1067
01:05:00,440 --> 01:05:03,200
There's a consequence of that too.

1068
01:05:03,200 --> 01:05:12,480
So I think for me, if I identify as a lack of client diversity, extreme centralization

1069
01:05:12,480 --> 01:05:17,680
of power in clients, if I identify that as a problem, then obviously I'm going to see

1070
01:05:17,680 --> 01:05:23,480
Ethereum actually being better in that regard because it has multiple client implementations.

1071
01:05:23,480 --> 01:05:27,360
The culture supports that and it went through a lot of effort from the early days to actually

1072
01:05:27,360 --> 01:05:29,320
make sure it was done that way.

1073
01:05:29,320 --> 01:05:34,360
Just like the core developers made a lot of effort to push out any alternative clients

1074
01:05:34,360 --> 01:05:36,080
during the block size debates.

1075
01:05:36,080 --> 01:05:39,800
Because it wasn't always that way in the case of Bitcoin.

1076
01:05:39,800 --> 01:05:40,800
Yeah.

1077
01:05:40,800 --> 01:05:42,800
So that's a lot to unpack.

1078
01:05:42,800 --> 01:05:46,160
I should have given you a bit more breaks in between there.

1079
01:05:46,160 --> 01:05:52,800
Well, I want to like on a grander scale, proof of stake versus proof of work.

1080
01:05:52,800 --> 01:05:58,160
And I'm specific to Ethereum and Bitcoin is fine.

1081
01:05:58,160 --> 01:06:07,280
In my view, the switch over to proof of stake for Ethereum, you mentioned that you like

1082
01:06:07,280 --> 01:06:10,480
it as a form of governance and it makes more sense to you than proof of work.

1083
01:06:10,480 --> 01:06:14,240
It's an efficient consensus algorithm as well.

1084
01:06:14,240 --> 01:06:15,240
What do you dislike about it?

1085
01:06:15,240 --> 01:06:16,240
I'm really, really curious.

1086
01:06:16,240 --> 01:06:24,840
Well, my concern is that one of the things about proof of work that I appreciate is the

1087
01:06:24,840 --> 01:06:31,840
friction that's created between the incentives of miners versus the incentives of other ecosystem

1088
01:06:31,840 --> 01:06:32,840
participants.

1089
01:06:32,840 --> 01:06:38,040
Which, you know, it sort of goes back to that constitution comparison where you've got competing

1090
01:06:38,040 --> 01:06:41,000
incentives which adds friction.

1091
01:06:41,000 --> 01:06:43,000
It's like a division of power.

1092
01:06:43,000 --> 01:06:46,960
Right, it makes it harder to affect change.

1093
01:06:46,960 --> 01:06:49,920
And a lot of people point to that and say that's bad.

1094
01:06:49,920 --> 01:06:50,920
That's a bug, right?

1095
01:06:50,920 --> 01:06:53,360
I point to that and say that's good.

1096
01:06:53,360 --> 01:06:58,820
Because I think that making it more difficult to implement changes is a positive feature

1097
01:06:58,820 --> 01:06:59,820
of a system.

1098
01:06:59,820 --> 01:07:03,280
No, actually, I actually agree.

1099
01:07:03,280 --> 01:07:10,360
With regard to Ethereum and proof of stake, my big concern now is that validators' incentives

1100
01:07:10,360 --> 01:07:13,560
are directly aligned with pretty much everybody else.

1101
01:07:13,560 --> 01:07:19,080
Everybody's incentives are aligned to grow the value of Ethereum, to grow to, you know,

1102
01:07:19,080 --> 01:07:26,800
and not just the token value, but to keep it in compliance.

1103
01:07:26,800 --> 01:07:33,440
Because you can't have a strong ETH token if it's not in compliance with the law.

1104
01:07:33,440 --> 01:07:40,680
And I think that longer term, it's going to be easier.

1105
01:07:40,680 --> 01:07:45,920
No, because Bitcoin is almost defining the law.

1106
01:07:45,920 --> 01:07:50,560
I think that Bitcoin pre-existed a lot of the scrutiny.

1107
01:07:50,560 --> 01:07:53,080
Because it's the reason, I mean, look, if Bitcoin could be stopped.

1108
01:07:53,080 --> 01:07:55,360
That sounds like a double standard to me.

1109
01:07:55,360 --> 01:07:58,440
No, let me explain.

1110
01:07:58,440 --> 01:08:02,080
Bitcoin developed in silence.

1111
01:08:02,080 --> 01:08:08,160
Bitcoin sort of, if Bitcoin wasn't released in 2009 and had like that five, six, seven

1112
01:08:08,160 --> 01:08:11,040
years to bubble up before anybody in government cared.

1113
01:08:11,040 --> 01:08:14,200
I mean, it was only like two years ago, three years ago, when we're sitting here saying,

1114
01:08:14,200 --> 01:08:17,640
like, imagine the day when they say Bitcoin in Congress.

1115
01:08:17,640 --> 01:08:19,200
Imagine the day when the president says Bitcoin.

1116
01:08:19,200 --> 01:08:23,140
You know, it's like it had a long time to mature.

1117
01:08:23,140 --> 01:08:25,640
And by the time they figured it out, it was too late.

1118
01:08:25,640 --> 01:08:29,120
Okay, so isn't that true for the whole industry?

1119
01:08:29,120 --> 01:08:35,120
No, all of the things that make Bitcoin valuable were created in the first five years, I would

1120
01:08:35,120 --> 01:08:40,040
say, like the decentralization level, the immutability, etc.

1121
01:08:40,040 --> 01:08:45,800
With Ethereum, like I said before, everything valuable about Ethereum is being created now.

1122
01:08:45,800 --> 01:08:53,540
With Web3, with smart contracts, with DeFi, that ecosystem is seeking compliance.

1123
01:08:53,540 --> 01:08:56,720
Because without compliance, it has zero value.

1124
01:08:56,720 --> 01:08:59,720
So proof of stake makes it easier.

1125
01:08:59,720 --> 01:09:03,320
And all the stuff Italic's now pitching with enshrining, you know, all this stuff in the

1126
01:09:03,320 --> 01:09:06,800
protocols opposed to building on top of it.

1127
01:09:06,800 --> 01:09:12,480
It's all pointing towards a road toward compliance, you know, which limits freedom, which points

1128
01:09:12,480 --> 01:09:16,360
to a blockchain that's ultimately going to be government friendly.

1129
01:09:16,360 --> 01:09:19,840
Incentives being aligned between validators and the rest of the ecosystem makes it, is

1130
01:09:19,840 --> 01:09:25,560
going to long term make it easier for Ethereum to go in a direction that's anti-freedom.

1131
01:09:25,560 --> 01:09:28,640
I'll push back on that for a few reasons.

1132
01:09:28,640 --> 01:09:32,200
And I also want to just kind of loop it back to what we're saying earlier as well.

1133
01:09:32,200 --> 01:09:37,600
So there's two reasons, primarily, if I really simplify things, two reasons why I think that

1134
01:09:37,600 --> 01:09:39,200
proof of stake is superior.

1135
01:09:39,200 --> 01:09:42,960
So one is governance and the other one is just from an efficiency consensus algorithm

1136
01:09:42,960 --> 01:09:43,960
point of view.

1137
01:09:43,960 --> 01:09:48,040
Okay, so on the governance side, you know, during the block size debates, I think there

1138
01:09:48,040 --> 01:09:52,800
was a lot of theories and I myself included, you know, wrote some thesis about this as

1139
01:09:52,800 --> 01:09:59,520
well that, you know, that what role do the miners play in governance?

1140
01:09:59,520 --> 01:10:02,720
And I think that was a very important question.

1141
01:10:02,720 --> 01:10:06,600
And I think in the end, when it came to this kind of decision making, I don't feel like

1142
01:10:06,600 --> 01:10:10,360
the miners had much of a say in governance because the majority of miners actually wanted

1143
01:10:10,360 --> 01:10:12,080
a block size increase, right?

1144
01:10:12,080 --> 01:10:16,560
And the developers, you know, went along and did what they wanted to do anyway.

1145
01:10:16,560 --> 01:10:20,520
So I think for me, the miners were too weak.

1146
01:10:20,520 --> 01:10:24,480
And you know, they're the one party that has like a proof of positive incentive because

1147
01:10:24,480 --> 01:10:25,480
of proof of work.

1148
01:10:25,480 --> 01:10:30,600
Like they're the one party that really should be a very strong factor, let's say.

1149
01:10:30,600 --> 01:10:35,760
If you say, I wrote something called the theory on governance, the free stage model, where

1150
01:10:35,760 --> 01:10:41,680
I argue that there's free primary groups and that is like a checks and balance system.

1151
01:10:41,680 --> 01:10:45,240
But I think in the end, what ended up happening is the miners ended up being very weak on

1152
01:10:45,240 --> 01:10:46,240
that front.

1153
01:10:46,240 --> 01:10:50,480
And I think one of the reasons for that and one of the ways that proof of stake is potentially

1154
01:10:50,480 --> 01:10:54,560
different, experiment still needs to play out its course.

1155
01:10:54,560 --> 01:11:03,200
But is that I think that miners tend to have a too short term of a incentive.

1156
01:11:03,200 --> 01:11:08,720
So for instance, they're going to prioritize short term decision making over long term

1157
01:11:08,720 --> 01:11:12,240
decision making because they don't want to rock the boat because they tend to be very

1158
01:11:12,240 --> 01:11:13,380
mercenary.

1159
01:11:13,380 --> 01:11:17,360
They tend to think about things in terms of three to five year timeframes in terms of

1160
01:11:17,360 --> 01:11:20,280
electricity contracts and hardware.

1161
01:11:20,280 --> 01:11:27,360
So I feel like as I think if they're preferencing such a short term decision making over long

1162
01:11:27,360 --> 01:11:32,840
term decision making, then that to me explains, I think, why they didn't play a stronger

1163
01:11:32,840 --> 01:11:36,200
role in this.

1164
01:11:36,200 --> 01:11:39,920
And I think that miners ultimately, I think they're because they're so mercenary, they

1165
01:11:39,920 --> 01:11:42,080
just follow the market.

1166
01:11:42,080 --> 01:11:45,480
They're not really making decisions.

1167
01:11:45,480 --> 01:11:50,080
And I think one of the differences in proof of stake and Ethereum doesn't have this

1168
01:11:50,080 --> 01:11:51,080
by the way.

1169
01:11:51,080 --> 01:11:56,320
But I think something I do advocate for is you have very long lock in periods.

1170
01:11:56,320 --> 01:12:00,440
The longer you lock it in for the more the reward and that way you can actually skew

1171
01:12:00,440 --> 01:12:04,000
a system more towards long term decision making.

1172
01:12:04,000 --> 01:12:07,520
And I think that's something that's possible with proof of stake that's not possible for

1173
01:12:07,520 --> 01:12:08,520
proof work.

1174
01:12:08,520 --> 01:12:11,360
Okay, so that's the governance angle.

1175
01:12:11,360 --> 01:12:17,400
From a consensus algorithm design angle, I see a system that's simply more efficient.

1176
01:12:17,400 --> 01:12:21,500
And if you look at how difficult is it to attack a system, I look at something like

1177
01:12:21,500 --> 01:12:23,960
what is the cost to attack the system.

1178
01:12:23,960 --> 01:12:29,000
For the same amount of money, you have a system that's actually more secure.

1179
01:12:29,000 --> 01:12:33,020
And what that means is that you can balance that differently, but you can have more security

1180
01:12:33,020 --> 01:12:39,240
or you can actually have a system that's more economically sound because you can be burning

1181
01:12:39,240 --> 01:12:44,200
more and you don't need to generate as much inflation for things like maintaining the

1182
01:12:44,200 --> 01:12:45,980
security budget.

1183
01:12:45,980 --> 01:12:51,640
So there's a bunch of advantages there that I think by civil orders of magnitude, I actually

1184
01:12:51,640 --> 01:12:54,640
think proof of stake is actually more secure.

1185
01:12:54,640 --> 01:12:59,420
If you think about potential attack scenarios in terms of how much money would an attacker

1186
01:12:59,420 --> 01:13:01,480
have to put in to actually attack the system.

1187
01:13:01,480 --> 01:13:05,560
And there's a lot of devil in the details here in terms of working out that scenario,

1188
01:13:05,560 --> 01:13:07,080
but that's basically what I'm arguing.

1189
01:13:07,080 --> 01:13:11,160
So I'm saying, okay, it's more secure, has the potential for more sound economics and

1190
01:13:11,160 --> 01:13:12,920
it's a better governance mechanism.

1191
01:13:12,920 --> 01:13:19,400
And just to me, it just seems to achieve those purposes better than proof of work does.

1192
01:13:19,400 --> 01:13:25,320
That's kind of what I was alluding to before with it being potentially a feature, not a

1193
01:13:25,320 --> 01:13:26,320
bug.

1194
01:13:26,320 --> 01:13:30,480
And again, go back, think about the constitution.

1195
01:13:30,480 --> 01:13:33,880
It could be said that there's competing time horizons within that as well.

1196
01:13:33,880 --> 01:13:38,440
You think about Supreme Court's there for life, president's there for four years, senators

1197
01:13:38,440 --> 01:13:39,440
there for six years.

1198
01:13:39,440 --> 01:13:42,000
The Supreme Court is a perfect example of that, right?

1199
01:13:42,000 --> 01:13:46,400
That's where you quote unquote enforce a long lock-in period to ensure long-term decision

1200
01:13:46,400 --> 01:13:51,200
making and eliminating external pressures potentially as well.

1201
01:13:51,200 --> 01:13:52,600
So Supreme Court's the validators?

1202
01:13:52,600 --> 01:13:54,320
Is that what you're saying?

1203
01:13:54,320 --> 01:13:57,040
If they lock in their stake for long enough, yeah, that's how.

1204
01:13:57,040 --> 01:14:01,140
Hail the new Supreme Court.

1205
01:14:01,140 --> 01:14:07,620
But I guess what I was getting to is, is it really a bug to have a branch of government

1206
01:14:07,620 --> 01:14:17,040
or whatever you want to call it, that is acting as a competing incentive system, a competing

1207
01:14:17,040 --> 01:14:23,280
time horizon, doesn't match up exactly with other participants of the ecosystem?

1208
01:14:23,280 --> 01:14:30,240
Or is it better, not thinking, security is almost critical, obviously, but it's a separate

1209
01:14:30,240 --> 01:14:32,560
issue from the governance aspect.

1210
01:14:32,560 --> 01:14:36,160
And I agree, minors are typically not vocal governance participants.

1211
01:14:36,160 --> 01:14:37,280
Exactly.

1212
01:14:37,280 --> 01:14:40,760
Which was evidenced with Ethereum's fork, right?

1213
01:14:40,760 --> 01:14:44,360
Minors had no power over that fork.

1214
01:14:44,360 --> 01:14:47,840
So as much as they might have wanted to.

1215
01:14:47,840 --> 01:14:51,120
So they lost their living and they knew they were going to lose it.

1216
01:14:51,120 --> 01:14:57,360
They knew they were going to lose all the benefits of being an Ethereum miner.

1217
01:14:57,360 --> 01:15:01,280
But most of them probably weren't too vocal about it because they saw other opportunities

1218
01:15:01,280 --> 01:15:02,920
to be mercenaries on other chains.

1219
01:15:02,920 --> 01:15:05,000
I see where you're heading with this.

1220
01:15:05,000 --> 01:15:09,380
And like you're right, it could be a feature if the system was balanced out with another

1221
01:15:09,380 --> 01:15:11,920
party that had long-term incentives.

1222
01:15:11,920 --> 01:15:13,880
And I don't think that's actually the case.

1223
01:15:13,880 --> 01:15:18,040
That's where I see a problem with Bitcoin's design.

1224
01:15:18,040 --> 01:15:22,440
So what you're saying is nobody in the Bitcoin ecosystem is thinking long-term?

1225
01:15:22,440 --> 01:15:24,640
No, no, of course I'm not saying that.

1226
01:15:24,640 --> 01:15:26,960
There's plenty of people that are thinking long-term.

1227
01:15:26,960 --> 01:15:30,840
I think you, I'm not sure how much you've talked about the security budget and things

1228
01:15:30,840 --> 01:15:36,320
like that, but I know Eric Wall and Paul Stork.

1229
01:15:36,320 --> 01:15:40,600
There's a lot of Bitcoiners that I respect that have actually been very vocal about the

1230
01:15:40,600 --> 01:15:41,760
shortcomings of it.

1231
01:15:41,760 --> 01:15:47,480
No, I think the problem is that the people in charge are not, well, I think there being

1232
01:15:47,480 --> 01:15:50,380
people in charge is a problem in of itself.

1233
01:15:50,380 --> 01:15:56,100
And then an extension of that is that they're not doing what needs to be done to prevent

1234
01:15:56,100 --> 01:15:59,540
potential disaster in Bitcoin's design.

1235
01:15:59,540 --> 01:16:03,840
Maybe that's a good segue to talk about long-term security and why I think that more inflation

1236
01:16:03,840 --> 01:16:10,120
will be introduced when the security budget runs out in 7 to 11 years from now.

1237
01:16:10,120 --> 01:16:13,760
Yes, 7 to 11 years from now.

1238
01:16:13,760 --> 01:16:16,240
The security budget runs out in 7 to 11 years?

1239
01:16:16,240 --> 01:16:17,560
Five to nine years from now.

1240
01:16:17,560 --> 01:16:19,040
Sorry, I'll revise that.

1241
01:16:19,040 --> 01:16:20,040
Yeah.

1242
01:16:20,040 --> 01:16:23,560
Yeah, because I mean, so originally, right?

1243
01:16:23,560 --> 01:16:25,800
You mean it just goes, yeah, go ahead.

1244
01:16:25,800 --> 01:16:32,200
So originally, the original design of Bitcoin was you have a very large number of transactions,

1245
01:16:32,200 --> 01:16:33,760
each paying a small fee.

1246
01:16:33,760 --> 01:16:38,280
This has utility, this has purpose, therefore, this is a sustainable security model.

1247
01:16:38,280 --> 01:16:42,920
And it's like sustained fees as well if you have a high underlying usage and a decent

1248
01:16:42,920 --> 01:16:44,160
amount of capacity.

1249
01:16:44,160 --> 01:16:46,860
That was how Bitcoin was originally designed.

1250
01:16:46,860 --> 01:16:51,400
And the inflation in Bitcoin really should be seen as like this bootstrapping mechanism

1251
01:16:51,400 --> 01:16:55,120
to fund security until fees can actually take over.

1252
01:16:55,120 --> 01:16:58,720
Because the halvening are exponential, right?

1253
01:16:58,720 --> 01:17:03,840
So if you think about how exponential functions work, it can't just keep doubling every

1254
01:17:03,840 --> 01:17:04,840
four years.

1255
01:17:04,840 --> 01:17:08,480
Very quickly, you start running into territory that's just like...

1256
01:17:08,480 --> 01:17:12,400
And the reason why I say that is because in order for the security budget to remain the

1257
01:17:12,400 --> 01:17:14,840
same, the price has to...

1258
01:17:14,840 --> 01:17:18,520
And if there aren't additional fees, then the price has to double in order to maintain

1259
01:17:18,520 --> 01:17:22,720
that same security budget, what is being paid out to the miners, right?

1260
01:17:22,720 --> 01:17:26,600
So every four years that halves, that means the security budget is halving.

1261
01:17:26,600 --> 01:17:32,440
And I don't see a way that Bitcoin is going to be able to have sustainable high fees,

1262
01:17:32,440 --> 01:17:37,280
which would be in the tune if you want to just have today's security, which potentially

1263
01:17:37,280 --> 01:17:38,560
could be lower than today.

1264
01:17:38,560 --> 01:17:43,640
But for today's security needs to be around $60 to $80 per transaction.

1265
01:17:43,640 --> 01:17:48,000
And I just don't think that that's really something that's going to happen in a competitive

1266
01:17:48,000 --> 01:17:52,160
market, at least not sustained because of the way the fee market works.

1267
01:17:52,160 --> 01:17:54,280
You kind of have these fee spikes.

1268
01:17:54,280 --> 01:17:55,280
But the way...

1269
01:17:55,280 --> 01:17:57,480
I mean, the fee spikes alone are not going to be enough.

1270
01:17:57,480 --> 01:18:03,080
So basically, if you pay less to the miners, the security, the cost to attack the system,

1271
01:18:03,080 --> 01:18:07,960
as I mentioned before, drops lower and lower until it actually becomes profitable to attack

1272
01:18:07,960 --> 01:18:15,000
through things like double spends, through 51% attacks on things like exchanges.

1273
01:18:15,000 --> 01:18:19,080
And that's when censorship can also occur, it becomes very vulnerable to censorship.

1274
01:18:19,080 --> 01:18:21,040
And this is how it ties back into all these things, right?

1275
01:18:21,040 --> 01:18:26,720
And I'm saying if Ethereum's economic model is more secure, it's paying out more for security,

1276
01:18:26,720 --> 01:18:29,220
that means it's more censorship resistant, right?

1277
01:18:29,220 --> 01:18:33,260
That means it's harder for any single one party to come along and take it over.

1278
01:18:33,260 --> 01:18:37,040
If the security budget for Bitcoin is 10 million, right?

1279
01:18:37,040 --> 01:18:42,040
A state actor can literally take over the system for like 8 million or something, probably

1280
01:18:42,040 --> 01:18:44,080
a bit more like 16 million or something.

1281
01:18:44,080 --> 01:18:47,000
But still, that's too low of a number, right?

1282
01:18:47,000 --> 01:18:49,160
That's a huge problem.

1283
01:18:49,160 --> 01:18:52,360
That's a huge existential threat to Bitcoin's existence.

1284
01:18:52,360 --> 01:18:57,600
And I think that for me, the solution was always attract real use cases, utility that

1285
01:18:57,600 --> 01:19:02,960
creates fees, then it becomes sustainable, then you can have your supply cap, right?

1286
01:19:02,960 --> 01:19:07,200
But I think instead, the core developers were really like, no, we will not increase the

1287
01:19:07,200 --> 01:19:11,520
block size limits and they'd rather increase the inflation over that.

1288
01:19:11,520 --> 01:19:16,080
And people like Peter Todd have been publicly talking about this, that in order to remain

1289
01:19:16,080 --> 01:19:20,600
secure, inflation has to be increased.

1290
01:19:20,600 --> 01:19:27,560
And that to me, it just goes against one of the few advantages that I think people cite

1291
01:19:27,560 --> 01:19:29,080
for Bitcoin.

1292
01:19:29,080 --> 01:19:33,720
And I think that's terrible.

1293
01:19:33,720 --> 01:19:35,480
To add inflation would be terrible?

1294
01:19:35,480 --> 01:19:36,480
Yeah.

1295
01:19:36,480 --> 01:19:39,800
I mean, it might be the best solution, but that's terrible, right?

1296
01:19:39,800 --> 01:19:42,080
I mean, if it pivoted now...

1297
01:19:42,080 --> 01:19:44,400
It's terrible today, right?

1298
01:19:44,400 --> 01:19:45,800
But if it's your only option...

1299
01:19:45,800 --> 01:19:46,800
Sure.

1300
01:19:46,800 --> 01:19:50,680
But I mean, that's a terrible outcome, in my view, if there were better outcomes.

1301
01:19:50,680 --> 01:19:57,520
I mean, if it started attracting usage now, if it pivoted its narrative now, if it increased

1302
01:19:57,520 --> 01:20:00,640
the block size now, there's a chance it won't have to do that.

1303
01:20:00,640 --> 01:20:02,220
But I don't see that happening.

1304
01:20:02,220 --> 01:20:06,880
If I look at who's in charge, who's making the decisions, what kind of resistance would

1305
01:20:06,880 --> 01:20:08,080
there be to that sort of change?

1306
01:20:08,080 --> 01:20:14,720
And if I try to calculate what is the probability of change before the security budget runs

1307
01:20:14,720 --> 01:20:18,040
out, yeah, that's a huge problem.

1308
01:20:18,040 --> 01:20:22,600
And that's something that I've been shouting off the rooftops.

1309
01:20:22,600 --> 01:20:30,240
One of the things that I just want to call out is you mentioned that you said it's harder

1310
01:20:30,240 --> 01:20:36,800
to change Ethereum and make it into add censorship to it because of its proof of state structure.

1311
01:20:36,800 --> 01:20:40,280
Well, that's depending on how much is securing the system.

1312
01:20:40,280 --> 01:20:42,280
Right, right.

1313
01:20:42,280 --> 01:20:47,920
The one caveat I want to add there, just because it is somewhere that I get hung up philosophically,

1314
01:20:47,920 --> 01:20:53,120
is what I said before of thinking of the externalities, not just what's happening on chain, but the

1315
01:20:53,120 --> 01:21:00,680
externalities and the side effects, the unintended consequences of having a fully aligned ecosystem

1316
01:21:00,680 --> 01:21:07,240
that's fully aligned as far as the incentive of driving up the value of the token.

1317
01:21:07,240 --> 01:21:08,720
And when you have that kind of...

1318
01:21:08,720 --> 01:21:13,480
My view is still a good motivation generally, but there are definitely negative externalities.

1319
01:21:13,480 --> 01:21:14,480
I agree.

1320
01:21:14,480 --> 01:21:15,480
So continue.

1321
01:21:15,480 --> 01:21:16,480
Right.

1322
01:21:16,480 --> 01:21:19,800
And one of them is the fact, and I think we're seeing it already, the fact that there's a

1323
01:21:19,800 --> 01:21:27,400
high incentive to become and to stay compliant, to not be working...

1324
01:21:27,400 --> 01:21:30,200
Well, let me back up.

1325
01:21:30,200 --> 01:21:33,600
Specifically for Ethereum, because of what it's building with DeFi, because of what its

1326
01:21:33,600 --> 01:21:40,840
aspirations are, which are to be sort of the base layer of programmable money in the future.

1327
01:21:40,840 --> 01:21:48,960
So the aspirations of the validators who are heavily backed by VC, who are centralized

1328
01:21:48,960 --> 01:21:51,640
entities themselves, right?

1329
01:21:51,640 --> 01:21:54,440
They don't want to have this pirate kind of system.

1330
01:21:54,440 --> 01:21:56,880
They don't want to be Monero where they're getting banned everywhere.

1331
01:21:56,880 --> 01:21:58,880
And miners and developers also backed by VCs.

1332
01:21:58,880 --> 01:21:59,880
Yeah.

1333
01:21:59,880 --> 01:22:00,880
And so developers are.

1334
01:22:00,880 --> 01:22:01,880
Yes, they are.

1335
01:22:01,880 --> 01:22:05,840
So like, is that different?

1336
01:22:05,840 --> 01:22:08,920
It's different in that they don't...

1337
01:22:08,920 --> 01:22:14,240
Are you honestly pointing to Bitcoin as having the same level of alignment philosophically

1338
01:22:14,240 --> 01:22:15,760
between those parties?

1339
01:22:15,760 --> 01:22:16,760
Because they don't, right?

1340
01:22:16,760 --> 01:22:17,760
Alignment.

1341
01:22:17,760 --> 01:22:18,760
Oh, that's another question entirely.

1342
01:22:18,760 --> 01:22:19,760
I was talking about the...

1343
01:22:19,760 --> 01:22:21,280
I mean, they're both backed by VCs.

1344
01:22:21,280 --> 01:22:25,240
Ethereum clearly has more VC investment, but I think that's because there's more utility

1345
01:22:25,240 --> 01:22:26,240
there.

1346
01:22:26,240 --> 01:22:31,080
But I do think it's somewhat of a mischaracterization, even with all of my critique of Ethereum.

1347
01:22:31,080 --> 01:22:35,480
I think it's a bit of a mischaracterization to say that they want compliance.

1348
01:22:35,480 --> 01:22:38,200
I mean, the narrative is clearly one of decentralization.

1349
01:22:38,200 --> 01:22:41,400
I mean, that's what motivates the community.

1350
01:22:41,400 --> 01:22:46,320
And I disagree that the incentives necessarily line up to just embrace compliance on like

1351
01:22:46,320 --> 01:22:51,560
a native L1 level, which would ruin a blockchain and would make me more concerned for Bitcoin

1352
01:22:51,560 --> 01:22:56,400
actually because they have the same fundamental design in terms of its core aspects, right?

1353
01:22:56,400 --> 01:22:58,480
That would even be possible.

1354
01:22:58,480 --> 01:23:03,360
No, I think that decentralization is actually what makes it valuable.

1355
01:23:03,360 --> 01:23:07,280
So it's like once you add compliance and you just ruin it, then you're just back to Web

1356
01:23:07,280 --> 01:23:08,280
2 again.

1357
01:23:08,280 --> 01:23:09,280
And then like, what's the point?

1358
01:23:09,280 --> 01:23:13,280
It's an exercise in futility, just like a bait and switch.

1359
01:23:13,280 --> 01:23:18,320
So I think even if that were to happen in Ethereum, which I doubt, but even if I just

1360
01:23:18,320 --> 01:23:23,200
entertain that thought, like just for the matter of argument, I think in the long run,

1361
01:23:23,200 --> 01:23:29,000
a decentralized blockchain that can offer a lot of utility, I think that will still be

1362
01:23:29,000 --> 01:23:33,800
far more competitive in the market and it'll be far more attractive in the long run.

1363
01:23:33,800 --> 01:23:34,800
So yeah, that's right.

1364
01:23:34,800 --> 01:23:38,840
But we know there's certain things that the government, that US government, that the European

1365
01:23:38,840 --> 01:23:42,120
government and other powerful governments won't accept.

1366
01:23:42,120 --> 01:23:53,120
And they won't accept a blockchain that has the capability of changing in a way that will

1367
01:23:53,120 --> 01:23:59,560
eliminate privacy from the government that'll be able to comply with KYC AML.

1368
01:23:59,560 --> 01:24:00,560
The governments...

1369
01:24:00,560 --> 01:24:01,560
Go ahead, sorry.

1370
01:24:01,560 --> 01:24:02,560
Sorry, just...

1371
01:24:02,560 --> 01:24:09,680
Well, if the governments see a way to achieve those end games, which they do with Ethereum

1372
01:24:09,680 --> 01:24:14,920
already, because of the alignment of incentives, particularly of validators and the big money

1373
01:24:14,920 --> 01:24:19,960
behind it, the external money, if they see a way to get in, they'll get in.

1374
01:24:19,960 --> 01:24:24,360
And they may see that with Bitcoin too, but it's a less direct route.

1375
01:24:24,360 --> 01:24:29,600
I think with Bitcoin, ultimately the attack will come in the form of a fork and attempt

1376
01:24:29,600 --> 01:24:31,640
to hijack the brand.

1377
01:24:31,640 --> 01:24:35,360
I think they could easily fork Bitcoin to proof of stake and convince the dummies of

1378
01:24:35,360 --> 01:24:36,800
the world that they're in a fork with Bitcoin now.

1379
01:24:36,800 --> 01:24:39,400
In about five to nine years from now.

1380
01:24:39,400 --> 01:24:43,280
If the security budget runs out, that creates the perfect storm for that sort of thing to

1381
01:24:43,280 --> 01:24:44,280
happen.

1382
01:24:44,280 --> 01:24:45,280
Right.

1383
01:24:45,280 --> 01:24:46,280
Yeah.

1384
01:24:46,280 --> 01:24:49,100
So I mean, it's like, at that point, that's what I was saying before.

1385
01:24:49,100 --> 01:24:51,600
So much of Bitcoin is psychological and we know it.

1386
01:24:51,600 --> 01:24:53,760
The brand is what it is.

1387
01:24:53,760 --> 01:24:58,040
Now, the people like us who actually understand the tech, we're a very small percentage of

1388
01:24:58,040 --> 01:24:59,040
the world.

1389
01:24:59,040 --> 01:25:04,120
We're a single digit percent of the world, tiny percent, but everybody's heard of Bitcoin

1390
01:25:04,120 --> 01:25:05,120
by now.

1391
01:25:05,120 --> 01:25:09,760
So when the other 98% of the world is told, okay, now this is Bitcoin, and anybody who

1392
01:25:09,760 --> 01:25:14,480
tells you differently is a criminal, you don't think that 98% is just going to just go along

1393
01:25:14,480 --> 01:25:15,480
with it.

1394
01:25:15,480 --> 01:25:16,880
They don't know what proof of stake is or proof of fork is.

1395
01:25:16,880 --> 01:25:22,000
You have a point if you think about Bitcoin as like this purely speculative store of value.

1396
01:25:22,000 --> 01:25:25,720
If you think that's going to be the most valuable thing on earth, then sure, then you're correct.

1397
01:25:25,720 --> 01:25:27,580
But that's not what I believe.

1398
01:25:27,580 --> 01:25:31,300
I think that the utility of blockchain is far more valuable.

1399
01:25:31,300 --> 01:25:34,260
And part of the utility is the removal of middlemen.

1400
01:25:34,260 --> 01:25:36,500
That's what makes it so efficient.

1401
01:25:36,500 --> 01:25:42,440
That's how we can actually create better products, better money, because no one is in control.

1402
01:25:42,440 --> 01:25:45,560
So I think in the long run, I think that's going to win.

1403
01:25:45,560 --> 01:25:48,720
That's why I believe in cryptocurrency.

1404
01:25:48,720 --> 01:25:53,360
I think at my heart, I'm still a bit of an optimist.

1405
01:25:53,360 --> 01:25:58,960
I mean, sure, there are futures where what you're saying plays out.

1406
01:25:58,960 --> 01:26:02,180
Our governments become more totalitarian.

1407
01:26:02,180 --> 01:26:04,800
And then I think what you're saying is true for China.

1408
01:26:04,800 --> 01:26:08,740
I think authoritarian governments, generally speaking, are just going to be completely

1409
01:26:08,740 --> 01:26:12,120
incompatible with the ethos of decentralized blockchains.

1410
01:26:12,120 --> 01:26:16,400
It's just not going to work out at all.

1411
01:26:16,400 --> 01:26:24,160
So I think places where you still have freedom of speech, or at least a part of it, places

1412
01:26:24,160 --> 01:26:32,600
where you still have property rights, I think these places can still be accepting of cryptocurrency.

1413
01:26:32,600 --> 01:26:41,900
And I'm maybe not as pessimistic as you are about regulators coming down and banning everything

1414
01:26:41,900 --> 01:26:48,160
I suppose I'm a bit more optimistic in terms of that future.

1415
01:26:48,160 --> 01:26:54,340
We just need to explain to them that, no, no, you don't apply the same regulations because

1416
01:26:54,340 --> 01:27:01,960
there is no intermediary that you need to protect the user from.

1417
01:27:01,960 --> 01:27:03,760
I think that's it's fundamentally true.

1418
01:27:03,760 --> 01:27:04,760
Well, that's not true, though.

1419
01:27:04,760 --> 01:27:05,760
Sorry?

1420
01:27:05,760 --> 01:27:10,640
But it's not true as long as we've got DAOs and multisig and chain links.

1421
01:27:10,640 --> 01:27:15,400
So hey, if the regulator goes after these things with admin keys, you know what the

1422
01:27:15,400 --> 01:27:16,400
regulator is doing?

1423
01:27:16,400 --> 01:27:21,880
The regulator is actually supporting decentralization, which I find wonderfully ironic.

1424
01:27:21,880 --> 01:27:26,080
So those things, the things with admin keys, sure.

1425
01:27:26,080 --> 01:27:32,460
Actually, I'm conflicted because the libertarian in me doesn't want more government interference.

1426
01:27:32,460 --> 01:27:36,820
But on the other hand, I'm like, if they do that, then they are technically protecting

1427
01:27:36,820 --> 01:27:39,880
people and they're supporting the cause of decentralization.

1428
01:27:39,880 --> 01:27:43,200
So I think I'm allowed to be conflicted about this particular case.

1429
01:27:43,200 --> 01:27:47,080
But you know, they won't be able to go after is the truly decentralized projects.

1430
01:27:47,080 --> 01:27:49,080
And they do still exist.

1431
01:27:49,080 --> 01:27:50,560
And then people do still have the option.

1432
01:27:50,560 --> 01:27:51,560
But that's not how it's playing out.

1433
01:27:51,560 --> 01:27:52,560
Here's how it's playing out.

1434
01:27:52,560 --> 01:27:53,560
No, but it is though.

1435
01:27:53,560 --> 01:27:57,160
Because you do still, I know most people are going to use the wrong thing, right?

1436
01:27:57,160 --> 01:27:58,760
Especially in the early days.

1437
01:27:58,760 --> 01:28:00,480
So I'm with you on that.

1438
01:28:00,480 --> 01:28:01,760
But those options still exist.

1439
01:28:01,760 --> 01:28:09,720
I can purchase cryptocurrency anonymously and obscure my IP and I can run it through

1440
01:28:09,720 --> 01:28:12,240
a little cash if you want to violate sanctions.

1441
01:28:12,240 --> 01:28:17,920
Yeah, I mean, but I won't be able to send that money back to my bank account, right?

1442
01:28:17,920 --> 01:28:20,440
Without identifying the source, I'll be able to do a lot of things with it.

1443
01:28:20,440 --> 01:28:21,440
But I can.

1444
01:28:21,440 --> 01:28:23,120
But here's what's actually happening.

1445
01:28:23,120 --> 01:28:28,040
What's actually happening is that the polygons of the world and the layer twos of the world

1446
01:28:28,040 --> 01:28:32,800
and the DeFi apps that have multi SIGs of the world, they are they're not just going

1447
01:28:32,800 --> 01:28:35,440
to get shut down by the government.

1448
01:28:35,440 --> 01:28:40,120
They're keeping access to be able to change stuff so that they can comply.

1449
01:28:40,120 --> 01:28:41,640
And there's negotiations going on.

1450
01:28:41,640 --> 01:28:45,560
They're negotiating with the government on what these laws and regulations are going

1451
01:28:45,560 --> 01:28:46,560
to look like.

1452
01:28:46,560 --> 01:28:51,720
And the government is not, you know, SEC is a different story, but there's other regulators

1453
01:28:51,720 --> 01:28:56,320
that and Congress people, you know, if you look at these hearings that are going on,

1454
01:28:56,320 --> 01:29:02,880
that are being lobbied to change laws, you know, and so the compliance is going to happen,

1455
01:29:02,880 --> 01:29:05,400
but it's going to be with a new set of laws.

1456
01:29:05,400 --> 01:29:09,520
And it's going to be a trade off between what the government wants and what they can get

1457
01:29:09,520 --> 01:29:11,360
out of these protocols.

1458
01:29:11,360 --> 01:29:14,040
So we're not talking about just shut down, right?

1459
01:29:14,040 --> 01:29:20,440
We're talking about the worst case scenario, I think, which is these mutated forms of it's

1460
01:29:20,440 --> 01:29:25,640
more decentralized than what we have now, but it's still giving up so much of what we

1461
01:29:25,640 --> 01:29:27,920
thought we were going to get out of crypto.

1462
01:29:27,920 --> 01:29:31,600
You know, and so that's really the worst case to me.

1463
01:29:31,600 --> 01:29:35,240
And that's why I think Ethereum is heading down that path.

1464
01:29:35,240 --> 01:29:36,240
Yeah.

1465
01:29:36,240 --> 01:29:44,320
I mean, I mean, and this is why also I've become such a critic of the layer two.

1466
01:29:44,320 --> 01:29:51,120
Because it worsens the user experience, it actually increases the need for custodians

1467
01:29:51,120 --> 01:29:55,720
actually pushing people into the centralized service and custodians.

1468
01:29:55,720 --> 01:30:00,760
But what I don't under entirely where I've maybe we we differ a bit is that I mean, they

1469
01:30:00,760 --> 01:30:03,360
go after these protocols of admin keys.

1470
01:30:03,360 --> 01:30:07,080
And so so what?

1471
01:30:07,080 --> 01:30:09,240
You know, we still have our decentralized options.

1472
01:30:09,240 --> 01:30:14,480
And sure, we're going to be out there promoting that everyone should use them.

1473
01:30:14,480 --> 01:30:15,480
What decentralized options?

1474
01:30:15,480 --> 01:30:17,480
What are you talking about on Ethereum?

1475
01:30:17,480 --> 01:30:18,480
Yeah.

1476
01:30:18,480 --> 01:30:19,480
Yeah.

1477
01:30:19,480 --> 01:30:20,480
No, for instance, you're talking about Uniswap.

1478
01:30:20,480 --> 01:30:26,960
Okay, say I anonymize my coins through Railgun, which is an anonymity protocol.

1479
01:30:26,960 --> 01:30:27,960
Right.

1480
01:30:27,960 --> 01:30:31,000
And I run that through Uniswap to swap my coins.

1481
01:30:31,000 --> 01:30:32,000
Right.

1482
01:30:32,000 --> 01:30:33,000
Then I run it.

1483
01:30:33,000 --> 01:30:35,600
And then I run it into Aave.

1484
01:30:35,600 --> 01:30:36,600
Right.

1485
01:30:36,600 --> 01:30:37,600
For all.

1486
01:30:37,600 --> 01:30:38,600
And if I.

1487
01:30:38,600 --> 01:30:42,600
Well, you'll be banned from Uniswap because Uniswap's now got hooks, which allows everybody

1488
01:30:42,600 --> 01:30:43,600
to create these.

1489
01:30:43,600 --> 01:30:44,600
But I'll use Uniswap version free.

1490
01:30:44,600 --> 01:30:45,600
Right.

1491
01:30:45,600 --> 01:30:46,600
That doesn't have the hooks.

1492
01:30:46,600 --> 01:30:49,280
Well, there's not going to be any liquidity there.

1493
01:30:49,280 --> 01:30:50,640
You're not going to be easy to target.

1494
01:30:50,640 --> 01:30:51,640
Okay.

1495
01:30:51,640 --> 01:30:52,640
Well, then I'm going to get good rates.

1496
01:30:52,640 --> 01:30:53,640
But then I'll use a different.

1497
01:30:53,640 --> 01:30:54,640
You know, it's like.

1498
01:30:54,640 --> 01:30:55,640
No, no.

1499
01:30:55,640 --> 01:30:56,640
Sure.

1500
01:30:56,640 --> 01:30:57,640
I'll be hampered.

1501
01:30:57,640 --> 01:30:58,640
You're going to be a pirate.

1502
01:30:58,640 --> 01:30:59,640
Sure.

1503
01:30:59,640 --> 01:31:00,640
You'll be a pirate.

1504
01:31:00,640 --> 01:31:01,640
I get it.

1505
01:31:01,640 --> 01:31:02,640
You know, because that's that's the world we live in.

1506
01:31:02,640 --> 01:31:03,640
Right.

1507
01:31:03,640 --> 01:31:06,280
And I and I and I agree with you.

1508
01:31:06,280 --> 01:31:07,280
And I agree with you.

1509
01:31:07,280 --> 01:31:08,280
We should have more freedom.

1510
01:31:08,280 --> 01:31:09,280
Right.

1511
01:31:09,280 --> 01:31:10,280
I actually agree with you.

1512
01:31:10,280 --> 01:31:11,280
And I want that.

1513
01:31:11,280 --> 01:31:12,280
Right.

1514
01:31:12,280 --> 01:31:15,680
But let's not throw out the baby with the bathwater here.

1515
01:31:15,680 --> 01:31:16,680
Right.

1516
01:31:16,680 --> 01:31:22,000
If someone really needs this, if some revolutionary somewhere really needs this, it's still there.

1517
01:31:22,000 --> 01:31:26,520
And I think that's that's technically correct, even though it's not as good as the mainstream

1518
01:31:26,520 --> 01:31:27,520
thing.

1519
01:31:27,520 --> 01:31:28,520
It's there.

1520
01:31:28,520 --> 01:31:36,320
But the the problem is that the admin key driven projects, the VCs that are behind them are

1521
01:31:36,320 --> 01:31:41,680
actively trying to make the stuff that you like illegal.

1522
01:31:41,680 --> 01:31:47,560
They're actively trying to say like like if someone is they're out there paying to pay

1523
01:31:47,560 --> 01:31:49,040
enough Congress people.

1524
01:31:49,040 --> 01:31:53,760
But how do you stop someone from for like an anon from someone that has proper upset?

1525
01:31:53,760 --> 01:31:58,520
How do you stop them from like interacting with these smart contracts, the ones that

1526
01:31:58,520 --> 01:31:59,800
don't have admin keys, right?

1527
01:31:59,800 --> 01:32:01,560
The ones that don't have these things?

1528
01:32:01,560 --> 01:32:03,480
How do you stop you can't stop exactly.

1529
01:32:03,480 --> 01:32:05,880
But it's not about some some pirate anon.

1530
01:32:05,880 --> 01:32:06,920
That's exactly my point.

1531
01:32:06,920 --> 01:32:08,480
You can't stop loving guy.

1532
01:32:08,480 --> 01:32:09,480
Right.

1533
01:32:09,480 --> 01:32:10,480
That's my point.

1534
01:32:10,480 --> 01:32:11,480
Right.

1535
01:32:11,480 --> 01:32:14,480
You can't you can stop them from effectively using it if there's no equity.

1536
01:32:14,480 --> 01:32:16,400
That's that's that's a good thing.

1537
01:32:16,400 --> 01:32:17,400
Right.

1538
01:32:17,400 --> 01:32:21,100
That someone can just have the freedom to do that and nobody can stop them.

1539
01:32:21,100 --> 01:32:22,100
You have to agree.

1540
01:32:22,100 --> 01:32:24,480
That's a good thing.

1541
01:32:24,480 --> 01:32:26,120
It's a good thing until it's illegal.

1542
01:32:26,120 --> 01:32:28,320
And if they catch you doing it, it's still a good thing.

1543
01:32:28,320 --> 01:32:32,720
Even if it's illegal, they're making it illegal is what's bad about that scenario.

1544
01:32:32,720 --> 01:32:33,720
Right.

1545
01:32:33,720 --> 01:32:34,720
Yeah.

1546
01:32:34,720 --> 01:32:36,220
But that's what DeFi is doing.

1547
01:32:36,220 --> 01:32:37,220
That's what the that's my point.

1548
01:32:37,220 --> 01:32:40,760
What's the regulator reason that they're doing this illegal not DeFi itself?

1549
01:32:40,760 --> 01:32:41,760
No, no.

1550
01:32:41,760 --> 01:32:44,400
See, that's where there's confusion.

1551
01:32:44,400 --> 01:32:49,520
And it's the hardest thing to communicate about this space is that there are huge organizations,

1552
01:32:49,520 --> 01:32:58,560
huge VCs, you know, even DeFi developers themselves are out there lobbying for laws, regulations

1553
01:32:58,560 --> 01:33:03,960
that would hamper competition that would keep them in their prime spots, that would make

1554
01:33:03,960 --> 01:33:08,200
competition that doesn't comply with the rules that they're agreeing to be beholden to.

1555
01:33:08,200 --> 01:33:11,520
I have to point out Bitcoiners are guilty of this too, right.

1556
01:33:11,520 --> 01:33:18,280
In regards to some Bitcoiners at least calling for regulations to their competitors.

1557
01:33:18,280 --> 01:33:19,280
Right.

1558
01:33:19,280 --> 01:33:20,280
Yeah.

1559
01:33:20,280 --> 01:33:21,280
Yeah.

1560
01:33:21,280 --> 01:33:25,320
I mean, sure, there's organizations behind Bitcoin industry organizations too.

1561
01:33:25,320 --> 01:33:28,960
But specifically with regard to Ethereum, we're talking about banking.

1562
01:33:28,960 --> 01:33:33,720
You know, we're talking about stuff that's going to affect how CBDCs are rolled out.

1563
01:33:33,720 --> 01:33:38,520
We're talking about a whole different level of possible damage, you know, and we're talking

1564
01:33:38,520 --> 01:33:43,120
about a whole different level of damage to privacy, I think, you know, with regard to

1565
01:33:43,120 --> 01:33:45,560
especially with what's on Ethereum, but beyond that.

1566
01:33:45,560 --> 01:33:50,040
Because it sounds like we're disagreeing, right, but we're not actually disagreeing

1567
01:33:50,040 --> 01:33:51,040
with each other.

1568
01:33:51,040 --> 01:33:53,120
I would like like, what are we actually disagreeing on here?

1569
01:33:53,120 --> 01:33:55,520
Like it sounds like we are, but I think we're in agreement.

1570
01:33:55,520 --> 01:33:56,920
I'm just more optimistic.

1571
01:33:56,920 --> 01:34:04,760
I think that you where I think the point of disagreement is, is on the approach to an

1572
01:34:04,760 --> 01:34:07,920
optimism around DeFi on Ethereum.

1573
01:34:07,920 --> 01:34:16,240
I don't see a path forward for DeFi on Ethereum that doesn't involve compliance and compliance

1574
01:34:16,240 --> 01:34:21,720
that ultimately creates precedents that hurts the rest of the crypto industry with regard

1575
01:34:21,720 --> 01:34:24,160
to promises of freedom and privacy.

1576
01:34:24,160 --> 01:34:28,080
Would it be any different if the DeFi was over Bitcoin?

1577
01:34:28,080 --> 01:34:33,400
Like if we just had that functionality, wouldn't things just play out exactly the same?

1578
01:34:33,400 --> 01:34:35,800
It's a good question.

1579
01:34:35,800 --> 01:34:39,360
I think it depends how it was built, what kind of layer it was built on.

1580
01:34:39,360 --> 01:34:43,720
You know, I think with like we have RSK, which has smart contract functionality.

1581
01:34:43,720 --> 01:34:45,560
That's a perfect example of things.

1582
01:34:45,560 --> 01:34:49,680
I mean, that's a federated system, right, RSK.

1583
01:34:49,680 --> 01:34:55,160
I think I think all the pretty much almost all of the L2 solutions and or DeFi Bitcoin

1584
01:34:55,160 --> 01:34:56,600
are L2 solutions.

1585
01:34:56,600 --> 01:35:01,080
But like hypothetically, if it had native DeFi, like programmability built in, just

1586
01:35:01,080 --> 01:35:03,920
pure hypothetical, like I think it would play out the same.

1587
01:35:03,920 --> 01:35:07,040
Well, this is my concern with BIP 300.

1588
01:35:07,040 --> 01:35:14,480
You know, is that could we end up seeing the and I haven't been able to I want to do a

1589
01:35:14,480 --> 01:35:20,960
whole separate podcast about this, you know, because part of my concern goes beyond anything

1590
01:35:20,960 --> 01:35:24,680
technical and beyond anything that that is written in a white paper or anything like

1591
01:35:24,680 --> 01:35:25,680
that.

1592
01:35:25,680 --> 01:35:27,460
It's about longer term.

1593
01:35:27,460 --> 01:35:31,400
How is this going to bring in big money that's going to try to corrupt the integrity of the

1594
01:35:31,400 --> 01:35:32,400
base layer?

1595
01:35:32,400 --> 01:35:35,600
Yeah, and I, I get that.

1596
01:35:35,600 --> 01:35:39,400
Basically the way that it works is it doesn't change the base layer, right?

1597
01:35:39,400 --> 01:35:42,040
It just everything can work as it always has.

1598
01:35:42,040 --> 01:35:43,720
It just adds new functionality.

1599
01:35:43,720 --> 01:35:44,720
Miners won't know any difference.

1600
01:35:44,720 --> 01:35:45,720
It just gonna look like regular.

1601
01:35:45,720 --> 01:35:47,120
I believe it's merged mind.

1602
01:35:47,120 --> 01:35:50,880
So miners do need to watch the the drive chain.

1603
01:35:50,880 --> 01:35:52,440
But but yes, it is.

1604
01:35:52,440 --> 01:35:53,440
It is a layer two.

1605
01:35:53,440 --> 01:35:54,960
So layer one continues as is.

1606
01:35:54,960 --> 01:35:56,440
Sorry, continue.

1607
01:35:56,440 --> 01:35:57,440
Right.

1608
01:35:57,440 --> 01:36:01,720
And there could be hundreds of these drive chains, you know, and all doing different

1609
01:36:01,720 --> 01:36:03,320
things.

1610
01:36:03,320 --> 01:36:08,640
What I don't fully understand yet is what kind of unintended consequences could that

1611
01:36:08,640 --> 01:36:14,240
have politically, you know, with this amorphous governance system that you nicely described,

1612
01:36:14,240 --> 01:36:20,160
you know, like like what, you know, corruption with developers, like all that other stuff.

1613
01:36:20,160 --> 01:36:24,120
Like I haven't heard that fully vetted out, you know, and that's the part that I get concerned

1614
01:36:24,120 --> 01:36:25,120
about.

1615
01:36:25,120 --> 01:36:26,120
So I don't know the answer.

1616
01:36:26,120 --> 01:36:29,960
Yeah, no, I don't know the answer to that either.

1617
01:36:29,960 --> 01:36:33,080
But I think we have to give it our best shot.

1618
01:36:33,080 --> 01:36:37,600
You know, like I tend to be optimistic, but it doesn't necessarily change my course of

1619
01:36:37,600 --> 01:36:40,560
action because I'm still going to advocate for decentralization.

1620
01:36:40,560 --> 01:36:44,160
I'm still going to call out centralization where I see it.

1621
01:36:44,160 --> 01:36:45,160
Right.

1622
01:36:45,160 --> 01:36:46,160
It's it's still.

1623
01:36:46,160 --> 01:36:50,600
Yeah, that's that's where I think, you know, that's what really matters.

1624
01:36:50,600 --> 01:36:51,600
Right.

1625
01:36:51,600 --> 01:36:53,440
And, you know, the world can go either way.

1626
01:36:53,440 --> 01:36:54,440
Right.

1627
01:36:54,440 --> 01:36:59,320
Like this, this factors outside of our control that could sway the world one way or another.

1628
01:36:59,320 --> 01:37:05,840
You know, I think as long as I'm doing my best.

1629
01:37:05,840 --> 01:37:09,800
In terms of pushing things in a better direction, I think that's that's what matters.

1630
01:37:09,800 --> 01:37:11,800
And I mean, I mean, ultimately, I'm curious.

1631
01:37:11,800 --> 01:37:15,320
It just it comes across.

1632
01:37:15,320 --> 01:37:16,320
Almost pessimistic.

1633
01:37:16,320 --> 01:37:18,200
You still think we're going to win, right?

1634
01:37:18,200 --> 01:37:19,640
At the end of this long road.

1635
01:37:19,640 --> 01:37:25,400
Well, I was just thinking that when you were saying what you were just saying, I think

1636
01:37:25,400 --> 01:37:29,760
that is our biggest difference in approach is that you come at it from an optimistic

1637
01:37:29,760 --> 01:37:30,760
point of view.

1638
01:37:30,760 --> 01:37:37,880
And I come at it from the point of view that that I believe people, humans are inherently

1639
01:37:37,880 --> 01:37:41,600
greedy and inherently fallible.

1640
01:37:41,600 --> 01:37:46,840
And that money in our in our today's mutated, we don't live in a capitalist society.

1641
01:37:46,840 --> 01:37:52,560
We live in like this mutated form of capitalism that's, you know, crossed over with socialism

1642
01:37:52,560 --> 01:37:56,360
and all this other stuff, you know, crony capitalism.

1643
01:37:56,360 --> 01:38:02,120
I think that in this mutated economic world we live in, there's there's dangers everywhere.

1644
01:38:02,120 --> 01:38:07,880
And it makes it very, very unlikely that we're going to be able to achieve what we want to

1645
01:38:07,880 --> 01:38:08,880
achieve.

1646
01:38:08,880 --> 01:38:13,040
And I think that the only way we can do it is by coming at it from a completely adversarial

1647
01:38:13,040 --> 01:38:18,680
approach and assume that every human involved is going to mess up at some point.

1648
01:38:18,680 --> 01:38:23,360
You know, and I think that the only hope that we have is to assume the worst in people and

1649
01:38:23,360 --> 01:38:30,040
to try to use technology to avert it, to avert those those, you know, bad intentions that

1650
01:38:30,040 --> 01:38:32,240
people just have it in their in their core.

1651
01:38:32,240 --> 01:38:33,240
Yes.

1652
01:38:33,240 --> 01:38:34,400
I think that's the difference in how we approach.

1653
01:38:34,400 --> 01:38:38,880
Yeah, no, I think I think I think you're right about that.

1654
01:38:38,880 --> 01:38:42,640
It's but I'm sorry.

1655
01:38:42,640 --> 01:38:43,640
I've corrupted you.

1656
01:38:43,640 --> 01:38:44,640
No, yeah.

1657
01:38:44,640 --> 01:38:50,400
I think I think on another hand, I think it's it's we have to we have to do the best we

1658
01:38:50,400 --> 01:38:57,040
can, you know, and and I think ultimately, ultimately, I do think cryptocurrency will

1659
01:38:57,040 --> 01:38:58,040
succeed.

1660
01:38:58,040 --> 01:39:02,840
And and I think also I think one thing that that differentiates our our different viewpoints

1661
01:39:02,840 --> 01:39:06,120
here is that it's about how we're prioritizing threats.

1662
01:39:06,120 --> 01:39:11,600
It seems to me like for you, some of the biggest threats to cryptocurrency are external.

1663
01:39:11,600 --> 01:39:15,980
And actually, in my view, and this is related to a lot of the work I've done around governance.

1664
01:39:15,980 --> 01:39:19,400
In my view, I think the biggest threat to cryptocurrency is actually internal.

1665
01:39:19,400 --> 01:39:24,360
I think we're like our own worst enemy in so many ways.

1666
01:39:24,360 --> 01:39:30,440
Like it's it's like it's it's the corruption that happens from within or the susceptibility,

1667
01:39:30,440 --> 01:39:35,280
I think, you know, for corruption, I think is is one of is like the biggest threat to

1668
01:39:35,280 --> 01:39:36,280
me.

1669
01:39:36,280 --> 01:39:41,560
Like, actually, I'm fairly optimistic, you know, when it comes to the regulatory side

1670
01:39:41,560 --> 01:39:42,560
of things.

1671
01:39:42,560 --> 01:39:46,000
I mean, there's going to be ups and downs and tug of war is going to go back and forth

1672
01:39:46,000 --> 01:39:47,560
and the pendulum is going to swing.

1673
01:39:47,560 --> 01:39:50,320
But I think I'm more optimistic on that front than you are.

1674
01:39:50,320 --> 01:39:56,160
But I'm I'm far more concerned about being our own worst enemy in that and that it's

1675
01:39:56,160 --> 01:40:00,040
it's it's it's our own internal systems of governments that are actually the biggest

1676
01:40:00,040 --> 01:40:01,040
threat.

1677
01:40:01,040 --> 01:40:05,200
And we'll I think, in my view, continue to delay mass adoption, unfortunately, because

1678
01:40:05,200 --> 01:40:08,480
of just wrong choices being made.

1679
01:40:08,480 --> 01:40:10,520
It's a consequence.

1680
01:40:10,520 --> 01:40:12,160
Yeah, I agree with you.

1681
01:40:12,160 --> 01:40:13,600
I agree on a lot of that.

1682
01:40:13,600 --> 01:40:19,440
I think actually the biggest threats come probably right at the edge, the edge between

1683
01:40:19,440 --> 01:40:20,940
internal and external.

1684
01:40:20,940 --> 01:40:25,440
You know, and it's when the external forces find their way through weak defenses.

1685
01:40:25,440 --> 01:40:27,400
You know, that's where it starts to get.

1686
01:40:27,400 --> 01:40:28,560
That's where the two viewpoints combined.

1687
01:40:28,560 --> 01:40:30,200
I've seen a lot of that already.

1688
01:40:30,200 --> 01:40:31,400
Yeah, exactly.

1689
01:40:31,400 --> 01:40:35,320
But well, listen, man, this has been a great chat.

1690
01:40:35,320 --> 01:40:36,320
We've gone way over time.

1691
01:40:36,320 --> 01:40:37,320
I enjoyed this.

1692
01:40:37,320 --> 01:40:42,560
This was and we're probably pushing the limits of anybody who's still listening.

1693
01:40:42,560 --> 01:40:45,800
So we'll but we should do it again sometime.

1694
01:40:45,800 --> 01:40:46,800
I think it's great.

1695
01:40:46,800 --> 01:40:47,800
I love chatting.

1696
01:40:47,800 --> 01:40:48,800
We only got through half of my list.

1697
01:40:48,800 --> 01:40:51,120
I want to talk to you about privacy.

1698
01:40:51,120 --> 01:40:54,360
I want to talk to you about a bunch of privacy.

1699
01:40:54,360 --> 01:40:58,920
We barely let me just shove that.

1700
01:40:58,920 --> 01:41:03,600
But yeah, yeah, we'll definitely we'll definitely do it again.

1701
01:41:03,600 --> 01:41:04,600
But thanks for spending all this time.

1702
01:41:04,600 --> 01:41:05,600
It was a pleasure.

1703
01:41:05,600 --> 01:41:06,600
And yeah.

1704
01:41:06,600 --> 01:41:10,320
And again, I really admire the work you've been doing as well.

1705
01:41:10,320 --> 01:41:16,840
So just just keep up and we're going to keep crusading for decentralization and freedom.

1706
01:41:16,840 --> 01:41:19,640
And you know, that's that's what matters.

1707
01:41:19,640 --> 01:41:20,640
Thank you so much for it.

1708
01:41:20,640 --> 01:41:40,700
It sure does.