WEBVTT - Chris McCann on Cryptocurrency in the Real World 0:00:00.760 --> 0:00:03.920 Thanks for downloading making a killing. I'm Bethany McLean, and 0:00:04.000 --> 0:00:06.520 I'm cutting through the noise to reframe the stories you 0:00:06.600 --> 0:00:11.000 know about and uncover the ones you don't know. I'll 0:00:11.039 --> 0:00:15.200 admit it, until very recently, the word fiat mostly meant 0:00:15.280 --> 0:00:18.680 cute little car. Okay, that's not quite fair, But if 0:00:18.680 --> 0:00:21.880 that sentence really resonates with you, you probably think more 0:00:21.920 --> 0:00:25.400 about crypto than I ever did. I remember friends telling 0:00:25.400 --> 0:00:28.080 me years ago that I had to buy bitcoin, but 0:00:28.160 --> 0:00:30.880 it seemed like a fad. There were too many unknowns. 0:00:31.600 --> 0:00:36.279 Fast forward eleven years, Bitcoin is celebrating double digit birthdays, 0:00:36.560 --> 0:00:39.120 at least if you're counting from Halloween two thousand and eight, 0:00:39.200 --> 0:00:43.760 when Satoshi Nakamoto first anonymously released his white paper Bitcoin 0:00:43.880 --> 0:00:47.960 Appeer to peer Electronic Cash System. Now bitcoin is the 0:00:48.000 --> 0:00:52.199 popular poster child or whipping boy for cryptocurrency in general. 0:00:52.760 --> 0:00:56.840 There are still so many unknowns, yet companies and investors 0:00:56.880 --> 0:01:00.800 are flocking to the space, despite so called crypto winters 0:01:01.040 --> 0:01:04.960 when bitcoin prices have crashed. Major global leaders are now 0:01:05.000 --> 0:01:10.199 making significant bets on the space. Starbucks, Microsoft, Visa, Facebook, 0:01:10.360 --> 0:01:13.360 the entire nation of China. Gone are the days of 0:01:13.400 --> 0:01:16.840 cyberpunks and computer science majors being the only ones in 0:01:16.920 --> 0:01:20.840 on the joke. But is it a joke? Digital assets 0:01:20.840 --> 0:01:23.600 are still in their infancy, yet it also feels like 0:01:23.640 --> 0:01:27.480 we're at a tipping point. What happens if cryptocurrencies totally 0:01:27.600 --> 0:01:31.560 upend the real financial markets? Is real? Even the right word? 0:01:32.160 --> 0:01:34.760 Are we in danger of that? I've learned never to 0:01:34.760 --> 0:01:37.399 look at any technology in isolation, and when I look 0:01:37.400 --> 0:01:40.639 at something like cryptocurrency, I think about the radiant effect 0:01:40.720 --> 0:01:43.720 it might have on how we transact in our everyday lives, 0:01:44.080 --> 0:01:46.959 how we value things, what the bigger effect might be 0:01:47.040 --> 0:01:51.520 on capital markets, trade relations, the US dollar. Today I'm 0:01:51.520 --> 0:01:53.720 in a San Francisco studio and my guest today is 0:01:53.800 --> 0:01:56.920 Chris McCann, an investor at proof of Capital, which recently 0:01:56.920 --> 0:01:59.960 announced a fifty million dollar fund to invest in blockchain 0:02:00.280 --> 0:02:03.360 and crypto related companies. I can't think of a better 0:02:03.400 --> 0:02:07.040 person to discuss the future of bitcoin with. Before we 0:02:07.080 --> 0:02:10.600 dive into all things crypto, I want to understand you 0:02:10.720 --> 0:02:12.800 and how you fit into this ecosystem. So tell us 0:02:12.880 --> 0:02:16.120 how did you get interested in crypto? So back in 0:02:16.560 --> 0:02:20.359 early twenty thirteen, I bought my first bitcoin, and the 0:02:20.639 --> 0:02:22.360 way I found out about it was, I guess so 0:02:22.440 --> 0:02:24.520 much to a lot of people in Silicon Valley. It 0:02:24.639 --> 0:02:27.680 was on a sort of random internet thread in hacker 0:02:27.720 --> 0:02:30.280 news if you know what that is. Yeah, And so 0:02:30.440 --> 0:02:32.720 I started looking into it, and then I stumbled upon 0:02:32.880 --> 0:02:35.359 like Silk Road and sort of tour and sort of 0:02:35.400 --> 0:02:37.800 all this stuff. But the thing that sort of fascinated 0:02:37.880 --> 0:02:40.720 me the most was not necessarily the marketplace, where I 0:02:40.760 --> 0:02:43.880 was like, what is this thing? Everybody's paying each other 0:02:43.919 --> 0:02:46.920 and like what is this bitcoin thing? And so it 0:02:47.040 --> 0:02:50.080 just sort of sparked my curiosity, and then I first 0:02:50.080 --> 0:02:52.680 bought a little bit, and then at the time I 0:02:52.720 --> 0:02:55.160 recently enjoined Greylock Partners, which is a more sort of 0:02:55.160 --> 0:02:57.600 traditional venture fund in the space, and so back in 0:02:57.720 --> 0:03:01.960 the twenty fourteen fifteen time frame, invested in Blockstream, Zappo, 0:03:02.040 --> 0:03:04.880 and coin Base, three sort of companies within the bitcoin space. 0:03:04.919 --> 0:03:06.960 And that really forced me to not look at it 0:03:07.000 --> 0:03:09.600 just from a more pure sort of currency angle, but 0:03:09.720 --> 0:03:13.639 more the actual companies, the operators, the developers, and sort 0:03:13.639 --> 0:03:17.080 of more like the overall market landscape, and long story short, 0:03:17.120 --> 0:03:18.720 I just really sort of fell in love with this 0:03:18.800 --> 0:03:21.120 category for a whole bunch of reasons. Yep, and what 0:03:21.240 --> 0:03:23.200 made you say though that this made sense as an 0:03:23.200 --> 0:03:26.760 investment as a startup landscape rather than is just a 0:03:26.840 --> 0:03:30.480 sort of intellectual curiosity. I think bitcoin in sort of 0:03:30.480 --> 0:03:34.639 cryptocurrency as as a whole is actually very very different 0:03:34.680 --> 0:03:39.160 than a traditional investment per se. One of the analogies 0:03:39.200 --> 0:03:41.680 I like to use is imagine if you're in a 0:03:41.720 --> 0:03:45.200 more traditional, you know, investment role, you know, venture capital firm, 0:03:45.240 --> 0:03:47.520 and you're looking at this bitcoin thing, and like, let's 0:03:47.520 --> 0:03:49.680 say you actually, you know, believe in the thesis and 0:03:49.800 --> 0:03:52.400 sort of the overall story. One of your first questions 0:03:52.480 --> 0:03:54.720 might actually be like, Hey, this bitcoin thing is cool. 0:03:55.080 --> 0:03:57.800 Can we have the founder the CEO come and pitch us? Right? 0:03:58.240 --> 0:04:01.040 And no such thing? No such thing. So you're like, okay, 0:04:01.040 --> 0:04:03.040 Like that's a little weird, but I can get over that. 0:04:03.360 --> 0:04:07.680 Can I buy like equity in this company? All right? No? Okay, 0:04:07.680 --> 0:04:12.520 who's on the board? Okay? Fine? I get over all that. 0:04:13.480 --> 0:04:15.160 You know, if I buy some of this bitcoin thing, 0:04:15.320 --> 0:04:20.599 what governance decisions do I get? Who actually controls this thing? Okay? Fine? 0:04:20.600 --> 0:04:23.120 All that? How do I actually store this thing? All 0:04:23.240 --> 0:04:29.039 like very normal traditional questions, But bitcoin is very counter 0:04:29.680 --> 0:04:33.120 to all of that, which again, it's a very simple analogy, 0:04:33.200 --> 0:04:35.760 but I think that's like a That's a major reason 0:04:35.800 --> 0:04:37.360 why I think a lot of people have a lot 0:04:37.360 --> 0:04:39.800 of difficulty with this is you almost sort of have 0:04:39.920 --> 0:04:45.359 to suspend your disbelief to a certain extent and treat 0:04:45.400 --> 0:04:49.200 this as kind of its own net new thing. Back 0:04:49.200 --> 0:04:52.120 then it was much more of a curiosity sake in 0:04:52.279 --> 0:04:54.880 wanting to learn more. But much more over the time 0:04:54.920 --> 0:04:56.680 and sort of have this market developed, and as I 0:04:56.800 --> 0:04:59.120 meant more people in the space, I've become much much 0:04:59.160 --> 0:05:02.360 more convicted that this isn't just a fat or fly 0:05:02.440 --> 0:05:04.520 by night thing like this is a much more real 0:05:05.040 --> 0:05:07.599 market landscape that I don't feel enough people are really 0:05:07.640 --> 0:05:10.080 spending the time and paying attention towards. Is there some 0:05:10.080 --> 0:05:12.320 way in which this grew out of the global financial 0:05:12.320 --> 0:05:14.159 crisis of two thousand and eight and a lack of 0:05:14.160 --> 0:05:16.240 trust in the financial system as it is, and does 0:05:16.279 --> 0:05:19.880 that form part of the founding principles of bitcoin? Or 0:05:19.920 --> 0:05:23.000 am I just reaching actually very much? Is so bitcoin? 0:05:23.040 --> 0:05:25.159 The first initial white paper and the first initial code 0:05:25.160 --> 0:05:28.040 implementation and was launched in two thousand and nine. It 0:05:28.080 --> 0:05:30.719 was actually very much a response to all the stuff 0:05:30.760 --> 0:05:33.679 we were seeing in the global financial system at the time. Again, 0:05:33.760 --> 0:05:36.839 the founder of Stosi, Nakamoto, is unknown, so you know, 0:05:36.960 --> 0:05:39.040 you kind of have to read into the tea leaves 0:05:39.040 --> 0:05:41.239 a little bit and a lot of his public form comments. 0:05:41.279 --> 0:05:44.440 You can't ask him or her directly. And then the 0:05:44.520 --> 0:05:48.680 other interesting thing is actually in the first transaction, so 0:05:48.720 --> 0:05:51.200 they call it like the Genesis transaction when you look 0:05:51.240 --> 0:05:54.200 actually look at like the hex code behind it, embedded 0:05:54.279 --> 0:05:56.160 in that is I think at the time there was 0:05:56.200 --> 0:05:59.720 a newspaper article about some sort of problem with one 0:05:59.760 --> 0:06:02.600 of the central banks in the United Kingdom, so that's 0:06:02.640 --> 0:06:05.080 actually embedded into it. So a lot of people sort 0:06:05.120 --> 0:06:07.520 of again read the tea leaves and say like, hey, 0:06:07.560 --> 0:06:10.280 this is actually a direct kind of correlation to it. 0:06:10.320 --> 0:06:14.800 So there definitely is a large contingency of people that 0:06:14.880 --> 0:06:17.200 just treat this as a more kind of call it 0:06:17.279 --> 0:06:20.680 sound form of money, and they very very much kind 0:06:20.720 --> 0:06:23.520 of buy into this thesas I was like the main 0:06:23.600 --> 0:06:26.480 sort of front and center, call it more like cipher 0:06:26.560 --> 0:06:30.000 punks kind of more people on the next gen sort 0:06:30.000 --> 0:06:32.679 of own financial rails, kind of its own form of currency. 0:06:32.839 --> 0:06:35.240 But now that it's it's a much much bigger market, 0:06:35.279 --> 0:06:38.520 you have much more traditional players from you know, Facebook 0:06:38.520 --> 0:06:40.800 to JP Morgans now even like large parts of the 0:06:40.839 --> 0:06:43.599 Chinese government sort of getting involved in getting involved into 0:06:43.600 --> 0:06:46.599 all this. So I would say the philosophical part is 0:06:46.600 --> 0:06:50.400 still a very important contingency, however, not the only one today. 0:06:50.560 --> 0:06:53.400 And that's such a major migration in a really short 0:06:53.520 --> 0:06:55.880 amount of time. How does that happen? How does it 0:06:55.920 --> 0:06:59.720 go from being this fringe thing celebrated by hackers and 0:06:59.760 --> 0:07:02.680 thebertarians to being very mainstream. How would you chart the 0:07:02.760 --> 0:07:06.040 key moments in that evolution. Yeah, no, it's a really 0:07:06.080 --> 0:07:09.479 good question because, yeah, back in twenty thirteen, like when 0:07:09.480 --> 0:07:12.440 we were looking into a lot of this stuff, nobody 0:07:12.520 --> 0:07:16.560 could have imagined the amount of just interests in development 0:07:16.560 --> 0:07:19.080 in the space today. I think at the time there's 0:07:19.080 --> 0:07:21.679 a lot of people theorizing you maybe at some point 0:07:21.720 --> 0:07:23.880 sort of the central bank governments would treat this more 0:07:23.920 --> 0:07:26.400 seriously and maybe even like buy bitcoin to put on 0:07:26.440 --> 0:07:30.000 balance sheet. But that was such a fringe for sort 0:07:30.040 --> 0:07:32.840 of out there notion. But literally within the span of 0:07:32.880 --> 0:07:35.520 ten years we've actually seen this only been a decade, 0:07:35.520 --> 0:07:39.080 and that's actually pretty remarkable. Yeah, like now you're starting 0:07:39.120 --> 0:07:43.000 to see much more of the larger, legitimate financial institutions, 0:07:43.200 --> 0:07:47.240 technical institutions, and even governments from around the world do 0:07:47.840 --> 0:07:51.320 real serious pilots in the space. Again, a lot of 0:07:51.360 --> 0:07:53.560 the stuff is still experimental and kind of early and 0:07:53.640 --> 0:07:55.880 a little weird, but like you're for the first time, 0:07:55.920 --> 0:07:58.960 you're actually starting to see real institutions treat the space 0:07:59.040 --> 0:08:02.720 as serious, not just like this really weird fringe thing. 0:08:03.120 --> 0:08:06.960 Is the world of crypto a world of competing platforms 0:08:06.960 --> 0:08:10.840 and technologies or is it a world of cooperating platforms 0:08:10.880 --> 0:08:14.960 and technologies. As much as I would love to say cooperating, 0:08:15.160 --> 0:08:17.920 most of the times, it feels more competitive when you 0:08:18.000 --> 0:08:22.800 add in a lot of the more philosophical and I 0:08:22.800 --> 0:08:26.120 almost feel sometimes more religious beliefs into and any one 0:08:26.160 --> 0:08:29.760 of these. Yeah, and definitely, and probably what also compounds 0:08:29.760 --> 0:08:32.840 this thing is you have a lot of these philosophical beliefs, 0:08:32.840 --> 0:08:36.280 but then you also buy whatever your choice of asset is, 0:08:36.520 --> 0:08:38.680 so then you actually really really feel strongly about it 0:08:38.679 --> 0:08:42.360 because your money's on the line. So people almost shoot 0:08:42.400 --> 0:08:46.200 it kind of like a religion sometimes, and you have 0:08:46.720 --> 0:08:50.760 people on very different sort of camps that literally will 0:08:50.800 --> 0:08:54.320 not even listen to an argument or not even you know, 0:08:54.440 --> 0:08:57.840 take other sides or not even be empirical about this. Wow, 0:08:58.559 --> 0:09:02.400 And does the divide generally fall among among uses for it, 0:09:02.440 --> 0:09:05.360 does it fall among sort of strictly technical arguments, or 0:09:05.400 --> 0:09:07.839 does it fall on these philosophical lines like this is 0:09:07.880 --> 0:09:10.040 what bitcoin was supposed to be and how can it 0:09:10.080 --> 0:09:13.520 be corrupted or co opted by the mainstream financial system. 0:09:13.920 --> 0:09:16.360 I'd say it's a little bit of all the above. Okay. 0:09:16.480 --> 0:09:18.559 So in terms of like the bigger camps that are 0:09:18.559 --> 0:09:20.920 out there, you definitely have the people on the bitcoin side, 0:09:21.000 --> 0:09:23.000 you have the people on the ethereum side. There's a 0:09:23.000 --> 0:09:25.800 whole other world of call it more people in the 0:09:25.840 --> 0:09:29.640 traditional financial institutions, you know, mostly in York and Chicago, 0:09:29.920 --> 0:09:31.760 that are trying to take all this stuff and fit 0:09:31.840 --> 0:09:34.720 this into the existing system. Some people in the corrupted 0:09:34.760 --> 0:09:37.920 world love this because it would bring actual more distribution 0:09:37.960 --> 0:09:40.720 and adoption. Some people hate this because this is the 0:09:41.000 --> 0:09:44.520 almost antithesis of Okay, it's anathema right to the original 0:09:44.559 --> 0:09:47.079 founding belief of what they've built this for. And then 0:09:47.120 --> 0:09:50.760 you have another almost separate sidecamp that more like blockchain 0:09:50.800 --> 0:09:56.000 for enterprise applications like supply chains, or like identity networks 0:09:56.200 --> 0:09:58.839 or sort of any of the consortiums or any of 0:09:58.840 --> 0:10:02.400 these kind of things that's like its own separate side view. 0:10:02.440 --> 0:10:05.000 And sometimes a lot of these different camps, a lot 0:10:05.040 --> 0:10:08.400 of them have religious and philosophical debates amongst one another, 0:10:08.640 --> 0:10:10.480 and also to some extent, like a lot of them 0:10:10.480 --> 0:10:13.600 don't even necessarily speak the whole the same language. And 0:10:13.640 --> 0:10:16.600 so a lot of people treat the blockchain or cryptospace 0:10:16.640 --> 0:10:20.000 in general as like this one monolithic thing. But the 0:10:20.080 --> 0:10:22.160 more and more time you spend with the actual people 0:10:22.200 --> 0:10:25.720 building this, it's actually much much much more divided than 0:10:26.120 --> 0:10:28.760 you might think, and the feature is much much much 0:10:28.880 --> 0:10:32.880 less clear than you might think. That's really interesting analogous 0:10:32.920 --> 0:10:34.640 in some ways, at least in the first part of it, 0:10:34.640 --> 0:10:37.400 to the financial system, which seems monolithic to people on 0:10:37.400 --> 0:10:40.800 the outside, but is actually composed of all these warring 0:10:40.840 --> 0:10:44.520 and very differently motivated entities. Right, So in some ways 0:10:44.600 --> 0:10:47.920 there's an analogy there. I guess where does bitcoin fit 0:10:47.960 --> 0:10:49.680 into this, fear? Do you still think of it as 0:10:49.720 --> 0:10:52.840 the critical part of this universe or do you think 0:10:52.840 --> 0:10:54.920 of it as a little corner of the universe that 0:10:54.960 --> 0:10:57.160 has since been eclipsed by all sorts of other more 0:10:57.200 --> 0:11:01.040 interesting developments. Yeah, so before this actually pulled some quick stats. 0:11:01.040 --> 0:11:03.920 So one, if you look at the overall market today, 0:11:04.080 --> 0:11:08.200 bitcoin is still sixty six percent of the total cryptocurrency market. Wow, 0:11:08.320 --> 0:11:11.320 that's bitcoin. So Bitcoin has been dominant, and it's still 0:11:11.480 --> 0:11:14.479 very dominant, and that market share has actually been increasing. 0:11:15.000 --> 0:11:18.360 So bitcoin alone, the asset as a whole, is worth 0:11:18.400 --> 0:11:21.720 one hundred and sixty eight billion dollars. There's three thousand 0:11:21.840 --> 0:11:24.920 to six thousand other tokens out there, depending on sort 0:11:24.920 --> 0:11:27.480 of what you look at, but by and large, bitcoin 0:11:27.559 --> 0:11:31.080 has the most dominant market share. And so again I 0:11:31.080 --> 0:11:34.640 think it's easy to get distracted by a lot of 0:11:34.679 --> 0:11:38.240 the new and emerging and sort of smart contracting, all 0:11:38.240 --> 0:11:40.080 this other stuff out there. But again, just when you 0:11:40.120 --> 0:11:42.960 look kind of empirically at the market, bitcoin is still 0:11:42.960 --> 0:11:45.920 buy and large the biggest one. That's really surprising to me. 0:11:46.400 --> 0:11:48.560 So you've likened to where we are in the crypto 0:11:48.600 --> 0:11:52.120 revolution to the early nineties, mid nineties and the Internet revolution. 0:11:52.200 --> 0:11:54.600 Talk about that a little bit. So about call it 0:11:54.760 --> 0:12:01.000 thirty to forty million people worldwide in total probably have 0:12:01.920 --> 0:12:08.280 store own or whole cryptocurrencies in totality. That's probably a rough, 0:12:08.600 --> 0:12:12.800 rough measure and that number's granted about twenty percent per year, 0:12:13.280 --> 0:12:16.600 again with the caveats of sometimes during the crazy periods 0:12:16.600 --> 0:12:19.640 it grows very very fast. Sometimes it drops much lower, 0:12:19.920 --> 0:12:22.240 but that's kind of a volatility as part of the 0:12:22.320 --> 0:12:24.680 name of the game, right. Yeah, that's kind of a rough, 0:12:24.760 --> 0:12:29.079 summed out estimation on the space. And that's analogous too 0:12:29.160 --> 0:12:31.600 in terms of the number of users and the growth 0:12:31.679 --> 0:12:34.160 rate to the mid nineties Internet. In my post you 0:12:34.200 --> 0:12:36.920 have the second portion, I was trying to plot that again, 0:12:37.280 --> 0:12:39.600 how big is this space currently and how does that 0:12:39.640 --> 0:12:43.800 look like to the Internet landscape. So again with all 0:12:43.880 --> 0:12:46.839 of that assumptions and kind of roughness to it, Yeah, 0:12:46.920 --> 0:12:50.080 we look like we're closer to nineteen ninety two to 0:12:50.200 --> 0:12:53.679 nineteen ninety four, even though we had the crazy run 0:12:53.760 --> 0:12:56.320 up that looked like the dot com. When you actually 0:12:56.320 --> 0:12:59.360 just look at the raw number of people interacting with 0:12:59.400 --> 0:13:02.600 the system, it's still a smaller subset of people. So 0:13:02.640 --> 0:13:05.559 we're still in that early phase, even though for a 0:13:05.640 --> 0:13:07.800 lot of people in the space that might not necessarily 0:13:07.880 --> 0:13:10.440 feel like that. But we're still kind of very much 0:13:10.440 --> 0:13:13.240 in that early adopter phase. We've not really moved over 0:13:13.280 --> 0:13:17.040 to the earlier late majority what are the areas that 0:13:17.080 --> 0:13:20.280 you guys are most excited about. You mentioned all these possibilities. 0:13:20.559 --> 0:13:23.040 What are the things that you're seeing real usage and 0:13:23.080 --> 0:13:25.840 that you're seeing the most opportunity and are the most 0:13:25.840 --> 0:13:29.040 excitement around. Yeah, So from a proof of capital fund standpoint, 0:13:29.040 --> 0:13:32.199 there's three broad areas we tend to gravitate towards. So 0:13:32.240 --> 0:13:35.000 there's one sort of all use cases around fintech and 0:13:35.120 --> 0:13:42.160 financial infrastructure, so think like exchanges, derivatives, wallets, lending, merchants, payments, 0:13:42.240 --> 0:13:44.760 kind of that whole world. It's the use case where 0:13:44.800 --> 0:13:48.280 we see the much more real traction in terms of 0:13:48.320 --> 0:13:50.840 like real volume and real payments, sort of real things 0:13:50.840 --> 0:13:55.199 flowing through. Secondly, which is a slightly unique tess, is 0:13:55.240 --> 0:13:57.199 we actually look at a lot of things on pull 0:13:57.280 --> 0:14:01.800 it the mining side, so mining, mutation, A six hardware, 0:14:02.080 --> 0:14:03.920 These are all the things that actually provide all the 0:14:04.000 --> 0:14:07.800 security guarantees for all the public open blockchains. You see 0:14:08.160 --> 0:14:11.479 most of the sectors tends to be mostly located in Asia, 0:14:11.600 --> 0:14:13.800 so from proof of capital we do about half investments 0:14:13.800 --> 0:14:17.199 half Asia, half US. And then the third category we 0:14:17.520 --> 0:14:21.040 tend to gravitate towards is things on the privacy and 0:14:21.120 --> 0:14:26.360 self sovereignty application side, so not necessarily the new privacy protocols, 0:14:26.360 --> 0:14:29.480 but the things more real people could use. So think 0:14:29.560 --> 0:14:34.440 like VPNs, secure messaging clients. Browser is kind of that 0:14:34.520 --> 0:14:37.280 whole more application side of things. Pause now, and that 0:14:37.320 --> 0:14:40.760 divide between the US and Asia and why that's important. Yeah, 0:14:40.800 --> 0:14:43.960 So this is another thing that's if the asset class 0:14:43.960 --> 0:14:46.440 in the space and the entrepreneurs is very different than 0:14:46.560 --> 0:14:49.000 you know, Web one or Web two. The other biggest 0:14:49.040 --> 0:14:55.200 difference is the geographical dispersion of this. It's not Silicon Valley. Yeah, 0:14:55.240 --> 0:14:57.680 that's the basic answer. But yeah, when you looked at 0:14:57.720 --> 0:15:00.240 a lot of the most significant companies in the Web 0:15:00.280 --> 0:15:03.840 two space, they all were mostly located thirty miles around 0:15:04.040 --> 0:15:06.440 Silicon Valley. Sure there were some pockets and you know 0:15:06.480 --> 0:15:09.720 a few other locations around the US, but a lot 0:15:09.760 --> 0:15:13.320 of the innovation and entrepreneurs and larger companies and everything 0:15:13.360 --> 0:15:17.320 tended to be in this space. Bitcoin and crypto very 0:15:17.400 --> 0:15:21.000 much challenge this notion where when you actually look at 0:15:21.040 --> 0:15:25.160 the entrepreneurs and where people are, Silicon Valley is a hub, 0:15:25.280 --> 0:15:28.280 but not the only one. In fact, I would actually 0:15:28.320 --> 0:15:31.160 very much argue that in this space, Asia actually plays 0:15:31.160 --> 0:15:34.000 a much much more important role because when you actually 0:15:34.000 --> 0:15:37.000 look at a lot of the trading volume and distribution 0:15:37.080 --> 0:15:39.920 and usage of this, it's actually mostly in Asia, not 0:15:40.000 --> 0:15:42.200 so much in the US. So while a lot of 0:15:42.240 --> 0:15:45.040 the technology and protocol developers and that side of the 0:15:45.080 --> 0:15:48.600 world still might be located here or visit here, a 0:15:48.640 --> 0:15:51.680 lot of the real activities actually mostly going on in Asia. 0:15:51.720 --> 0:15:56.920 And why is that? Yeah, another quick, very overgeneralized analogy. 0:15:57.360 --> 0:15:59.800 So one, when you talk about you know, bitcoin and 0:15:59.840 --> 0:16:04.560 all this cryptospace to a developer in Silicon Valley very generalistically, 0:16:05.120 --> 0:16:08.280 most people's reactions are, this is really cool. What can 0:16:08.320 --> 0:16:11.600 I use this for? What applications could I build? How 0:16:11.720 --> 0:16:13.960 is the protocol constructor to tell me about the rules, 0:16:14.000 --> 0:16:17.200 show me the code. When you say this exact same 0:16:17.240 --> 0:16:20.120 story to somebody in call it Hong Kong, let's be 0:16:20.240 --> 0:16:22.520 very general and you say, hey, we have this you 0:16:22.520 --> 0:16:25.480 know new thing. It has an asset, it's like you know, traded, 0:16:25.520 --> 0:16:28.320 it's on all these different exchanges. The purse the over 0:16:28.400 --> 0:16:31.960 generalization person in Hong Kong would say, Okay, that's cool. 0:16:32.000 --> 0:16:35.960 I get it. There's almost no question about what do 0:16:36.000 --> 0:16:39.160 you use it for? Like, what applications can you build? 0:16:39.160 --> 0:16:42.000 They're like, Nope, this is an asset that trades, that 0:16:42.080 --> 0:16:45.000 has a price that is independent of all the other 0:16:45.000 --> 0:16:47.880 things before, and then it's return profile also tends to 0:16:47.880 --> 0:16:51.640 be very discorrelated with everything else, so it doesn't really 0:16:51.640 --> 0:16:54.440 follow equities or debts. It kind of just does its 0:16:54.440 --> 0:16:58.080 own thing. And you know, traders and speculators and quant 0:16:58.120 --> 0:17:01.320 funds and financial people, they totally get that. In are 0:17:01.680 --> 0:17:06.159 just much more inherently natively comfortable with that fact. Are 0:17:06.200 --> 0:17:09.119 there some sort of cultural or personal associations with what 0:17:09.240 --> 0:17:12.200 money is that dictate that? Do you think? Two things? 0:17:13.000 --> 0:17:15.080 I had two other partners, so Edith Young's used to 0:17:15.160 --> 0:17:16.920 be gp AT five unders start ups doing a lot 0:17:16.920 --> 0:17:19.880 of their China and Asia investments. And our third partner's 0:17:19.920 --> 0:17:21.600 name is Phil Chen used to be a gp AT 0:17:21.640 --> 0:17:24.720 Horizon Adventures with le Cushing and Hong Kong. So they're 0:17:24.920 --> 0:17:26.960 much more equipped to like talk about a lot of 0:17:27.000 --> 0:17:30.040 the cultural aspects. But two sort of things that they're 0:17:30.040 --> 0:17:33.320 out there. One is, in general, there tends to be 0:17:33.400 --> 0:17:36.720 a lot less investment products. So in a lot of 0:17:36.720 --> 0:17:40.040 the specific countries, like even in Korea, for example, it 0:17:40.080 --> 0:17:43.600 was actually much harder to get access to the equity markets, 0:17:43.600 --> 0:17:46.080 it was much harder to do a lot of the 0:17:46.160 --> 0:17:48.000 things that people were doing in the US, so there 0:17:48.040 --> 0:17:50.560 was a lot of pent up demand for something new. 0:17:50.680 --> 0:17:53.520 And then maybe a second point is in general, like 0:17:53.640 --> 0:17:56.760 say specifically like mainland China, people there tend to be 0:17:56.920 --> 0:18:02.479 much more comfortable with just purely digital currencies. Like actually, 0:18:02.480 --> 0:18:05.119 when you even look at the primary forms of moving 0:18:05.200 --> 0:18:08.879 money in China is mainly we chat and alipay, and 0:18:08.920 --> 0:18:11.560 in that form, like there is almost no physicality to it. 0:18:11.560 --> 0:18:13.880 It's all on a phone, it's all sens people, it's 0:18:13.880 --> 0:18:16.720 all through QR codes. So if you have something like 0:18:16.720 --> 0:18:19.520 a bitcoin which has no physical form or not, like 0:18:19.600 --> 0:18:24.000 they they're just more inherent inherently. Okay with that that concept, 0:18:24.160 --> 0:18:26.040 I wonder if there's something to it that because the 0:18:26.119 --> 0:18:28.720 US dollar has been the reserve currency of the world, 0:18:28.760 --> 0:18:31.520 that there's something about moving away from that in the 0:18:31.600 --> 0:18:33.840 in the US. There might be some sort of interesting 0:18:34.000 --> 0:18:36.800 cultural underpinning there. But that's just pure speculation. I just 0:18:37.040 --> 0:18:40.199 just just thinking thinking out loud. Have you during your 0:18:40.320 --> 0:18:43.120 your adventures, I'm just going to call them adventures in cryptocurrency, 0:18:43.160 --> 0:18:45.600 has it changed the way you think about what money is? Yes, 0:18:45.720 --> 0:18:50.119 and I've always had a little bit of this h 0:18:50.920 --> 0:18:54.000 bias in me. One thing I actually don't talk about 0:18:54.160 --> 0:18:56.920 all too much. But back in the two thousand and 0:18:57.080 --> 0:18:59.679 seven two thousand and eight time frame, it's so much 0:18:59.760 --> 0:19:02.280 much longer story. But me and are a really close 0:19:02.680 --> 0:19:05.639 college friend of mine, we actually shorted a lot of 0:19:05.680 --> 0:19:08.320 things in the housing in sort of financial space, didn't 0:19:08.320 --> 0:19:09.840 you You could have been a character in the big 0:19:09.880 --> 0:19:13.680 short it was. It was aweso smaller amount. We're much 0:19:13.680 --> 0:19:16.320 poor college students. We didn't raise like a big fund 0:19:16.359 --> 0:19:19.280 or anything. I was. I tended to be a little 0:19:19.280 --> 0:19:23.080 bit more distrustful of that side. But you don't view 0:19:23.119 --> 0:19:26.399 money as this thing that just is that is absolutely solid, 0:19:26.440 --> 0:19:27.840 the way you might have if it hadn't been for 0:19:27.880 --> 0:19:31.320 this experience. Yeah, that's probably fair to say. And again 0:19:31.359 --> 0:19:34.480 when you look at the just going back to to bitcoin, 0:19:35.400 --> 0:19:40.040 what they do, which is a it's a very revolutionary concept, 0:19:40.160 --> 0:19:43.399 but they take all of the preconditions and rules and 0:19:43.440 --> 0:19:45.920 all that and they actually embedded into code and they 0:19:45.920 --> 0:19:48.040 put it open source school you can read it, so 0:19:48.240 --> 0:19:50.840 you don't necessarily have to trust the people who are 0:19:51.119 --> 0:19:53.880 building this or trust the founders. In fact, like the founders, 0:19:53.920 --> 0:19:57.359 SOTOSI is completely unknown. You just read it for yourself 0:19:57.400 --> 0:20:00.520 and you see the fix. The supply sketch schedule of 0:20:00.600 --> 0:20:03.320 bitcoin is fixed. There will only ever be twenty one 0:20:03.600 --> 0:20:07.399 million bitcoin ever minted, and it has a very fixed 0:20:07.440 --> 0:20:10.880 supply schedule that has every like one to two years 0:20:11.000 --> 0:20:14.320 or show depending on the mining schedule, where the issuance 0:20:14.320 --> 0:20:17.120 actually dropped. So all of that has actually known upfront 0:20:17.160 --> 0:20:19.400 from day one. So what happens when the last one 0:20:19.480 --> 0:20:21.800 is from mind? So right now, if you're a part 0:20:21.840 --> 0:20:25.480 of the mining ecosystem, part of your reward comes from 0:20:25.560 --> 0:20:28.040 the It's actually called a coin based reward. That's actually 0:20:28.040 --> 0:20:31.000 where coinbase gets its name from. Oh I didn't realize that. 0:20:31.040 --> 0:20:33.080 So you get a coin based reward, so that's the 0:20:33.160 --> 0:20:36.359 bitcoin that is is minted for you solving a new block, 0:20:36.680 --> 0:20:39.320 and then you get the transaction reward. So those two 0:20:39.359 --> 0:20:42.800 things together that's your revenue so to speak, for for 0:20:42.920 --> 0:20:46.480 mining that block. So when the last bitcoin gets mine, 0:20:46.640 --> 0:20:49.800 instead of having the coin based reward plus the transaction fee, 0:20:49.920 --> 0:20:52.760 there will be no more coin based reward anymore, and 0:20:52.760 --> 0:20:55.840 it'll just have to be purely subsidized by just the 0:20:55.880 --> 0:20:58.719 transaction fees. Okay, so it doesn't cease to exist at 0:20:58.760 --> 0:21:01.560 that point right now? Okay, back to that notion of 0:21:01.560 --> 0:21:03.280 what you believe in and what is money? There is 0:21:03.320 --> 0:21:06.520 a great tweet on Twitter that someone said about gold 0:21:06.640 --> 0:21:09.280 versus bitcoin. What do you believe in old shiny rocks 0:21:09.440 --> 0:21:12.160 or breakthrough in human incentives that enable the new species 0:21:12.200 --> 0:21:15.080