WEBVTT - A Guide to Navigating the Next Internet Revolution

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<v Speaker 1>You're listening to Bloomberg BusinessWeek with krol Messer and Tim

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<v Speaker 1>Stenebek on Bloomberg Radio.

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<v Speaker 2>Imperfect for this. I was kind of doing some search

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<v Speaker 2>through some Bloomberg stories. Ola Karif and Nate Lanson of

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<v Speaker 2>Bloomberg News.

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<v Speaker 3>They report it.

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<v Speaker 2>They are great in early twenty twenty two about how

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<v Speaker 2>crypto enthusiasts dream not only revolutionizing money, they want to

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<v Speaker 2>reinvent the Worldwide Web as well. Their vision, which goes

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<v Speaker 2>by the name Web three, is a decentralized environment built

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<v Speaker 2>on cryptotechnology, which swarms of independent collaborators take back control

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<v Speaker 2>of the Web from giant tech companies. So it's a

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<v Speaker 2>threatned him to the likes of Meta Potentially platforms Twitter,

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<v Speaker 2>These are the ones that maybe are at risk.

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<v Speaker 1>So with that in mind, there's a new book out

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<v Speaker 1>and it gets into Web three. It's all about quote

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<v Speaker 1>charting the Internet's next economic and cultural frontier. Here to

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<v Speaker 1>talk about his latest book back with us. We're very

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<v Speaker 1>pleased to have Alex Tapscott. He's also the co author

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<v Speaker 1>of Blockchain Revolution and he's the co founder of Blockchain

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<v Speaker 1>Research Institute. He's right here in our Bloomberg Interactive Brokers

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<v Speaker 1>studio Alex, how are you.

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<v Speaker 3>I'm terrific. Thanks for having me.

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<v Speaker 1>It's good to see you again. I'm not trying to

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<v Speaker 1>be rude.

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<v Speaker 2>Okay, you're gonna be harsh.

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<v Speaker 1>I'm going to be harsh right off the bat. The

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<v Speaker 1>kind of joke this year is like, you know, we're

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<v Speaker 1>not talking about Web three or the metaverse anymore. We're

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<v Speaker 1>talking about AI. Right, So why is this the moment

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<v Speaker 1>to write another book about the blockchain and Web three?

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<v Speaker 3>Well, it's true that there are many different technologies that

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<v Speaker 3>all are emerging at the same time. AI is one

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<v Speaker 3>of them, but there are others, you know, blockchain, the

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<v Speaker 3>Internet of things and extended and virtual reality. And the

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<v Speaker 3>thing is these technologies are not separate. They're actually related.

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<v Speaker 3>In the same way that the term internet went from describing,

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<v Speaker 3>you know, one narrow set of technologies to describing new

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<v Speaker 3>business models, new social behavior, and the whole range of technology.

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<v Speaker 3>I actually view the term web three as being the

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<v Speaker 3>term that best captures where we're going, what that's next

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<v Speaker 3>digital age is going on.

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<v Speaker 1>Okay, so before we get to that, you should explain

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<v Speaker 1>Web one and Web two for the uninitiated.

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<v Speaker 3>Yeah, for sure. So Web one basically was a medium

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<v Speaker 3>for the presentation of information on static websites.

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<v Speaker 1>So think like dot coms, So think like the New

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<v Speaker 1>York Times deciding to put their newspaper on the Internet.

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<v Speaker 3>Yeah, exactly like a way that you can access information,

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<v Speaker 3>but you can't interact with it. You can't collaborate, you

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<v Speaker 3>can't post your own content. It's pretty static. It's one way.

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<v Speaker 3>And though it was it was relatively simple, it's still

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<v Speaker 3>revolutionized things because it was this first digital medium for information.

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<v Speaker 3>Web two, which came about around this sort of early

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<v Speaker 3>to mid two thousands, took one leap forward, which is

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<v Speaker 3>the web became social, it became interactive, It became a

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<v Speaker 3>platform for people to communicate and to collaborate online. And

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<v Speaker 3>after Facebook, enter Facebook and the mobile app store, And

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<v Speaker 3>in a way, it also became kind of two point

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<v Speaker 3>five dimensional, right. It went from this thing that we

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<v Speaker 3>accessed on desktop computers to a thing that kind of

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<v Speaker 3>traveled with us in the world. And you know, a

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<v Speaker 3>lot of people in the Web three world are very

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<v Speaker 3>bearish on Web two, and I think that the track

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<v Speaker 3>record is a bit more mixed. So you know, when

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<v Speaker 3>it comes to Web two, it's undeniable that it created

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<v Speaker 3>tons of value you, certainly for shareholders of companies like

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<v Speaker 3>Google and Facebook, but it also expanded internet connectivity to

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<v Speaker 3>billions of people and in a way gave gave a

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<v Speaker 3>voice to sort of marginalize people. People who didn't have

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<v Speaker 3>a voice had a way to publish content and information

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<v Speaker 3>that change, you know.

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<v Speaker 2>Right, we talked about the Arab spring and different things

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<v Speaker 2>as a result of social media.

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<v Speaker 3>So Web three takes us where in your view, Web

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<v Speaker 3>three takes us to a new layer of the web,

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<v Speaker 3>which is what we call the read write own web. So,

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<v Speaker 3>without getting into the technical jargon, the keyword there is own.

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<v Speaker 3>What Web three enables is for people to be able

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<v Speaker 3>to own the asse class of the digital age, to

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<v Speaker 3>own their own data, their own identities, and their own

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<v Speaker 3>digital creations and their own digital goods. And so what

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<v Speaker 3>that means, Like any previous technology, it's going to be

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<v Speaker 3>big for business, but it's also going to in my opinion,

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<v Speaker 3>change culture and society. Why is it big for business, Well,

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<v Speaker 3>it's big for business because blockchains and Web three represent

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<v Speaker 3>sort of the first digital medium for value, a way

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<v Speaker 3>to move value peer to peer without the need for

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<v Speaker 3>an intermediary or a middleman. And so what I think

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<v Speaker 3>that's going.

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<v Speaker 2>To be also says it cuts out a lot of business.

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<v Speaker 3>Too well potentially, But there are always as with any technology, like,

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<v Speaker 3>there are always just as many opportunities for reintermediation as

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<v Speaker 3>there are disintermediation in my in my opinion, and one

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<v Speaker 3>great example of this that we see happening right now

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<v Speaker 3>is in the world of stable coins. So these are

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<v Speaker 3>in the news because PayPal just launched the stable Well

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<v Speaker 3>we can get to that in a second. PayPal just

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<v Speaker 3>launched a stable coin visa is enabling merchant to merchant

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<v Speaker 3>settlements with stable coins, and you know, they had to

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<v Speaker 3>wait to see that this business could grow to the

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<v Speaker 3>point where would impact them. And today, you know, the

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<v Speaker 3>stable coin market is well over one hundred billion dollars

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<v Speaker 3>and companies that issue stable coins make a lot of money,

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<v Speaker 3>and they do it in a relatively boring way which

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<v Speaker 3>would be familiar to any Bloomberg Radio listener, which is

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<v Speaker 3>basically that when someone wants a stable coin, they're usually

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<v Speaker 3>depositing money. They're getting a stable coin, which is this

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<v Speaker 3>digital medium to move money all around the world, and

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<v Speaker 3>then the issuer can just take that money invests at

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<v Speaker 3>risk cree Now in the like Silicon Valley Bank, and now,

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<v Speaker 3>of course they'd be wise to keep a lot of

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<v Speaker 3>that in you know, short term treasuries rather than elongated

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<v Speaker 3>treasuries to avoid duration this match. But they can make

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<v Speaker 3>a lot of money, so you know, in my view,

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<v Speaker 3>like a company like PayPal, which was a pioneer in payments,

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<v Speaker 3>but it's seeing all sorts of outside pressure from like

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<v Speaker 3>Apple and Shopify, now has this very unique opportunity to

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<v Speaker 3>reach into the Web three toolkit, pull out this new

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<v Speaker 3>thing called a token in this case of stable coin,

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<v Speaker 3>and potentially you know, save their business.

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<v Speaker 1>So are they still doing that given that we're still

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<v Speaker 1>in this crypto winter? It seems like interest around this

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<v Speaker 1>has died down so much since we well, I mean,

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<v Speaker 1>stop talking about crypto.

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<v Speaker 3>Yeah. Well, I think that from the outside looking in,

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<v Speaker 3>every technology revolution looks like an overnight success story. The

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<v Speaker 3>reality is that they're usually decades in the making. And AI,

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<v Speaker 3>I think, is a good example of that. You know,

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<v Speaker 3>the first AI.

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<v Speaker 1>Would you consider AI part of Web three?

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<v Speaker 3>I would consider AI technology that's foundational to the Web

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<v Speaker 3>three era. So you know, I think the term Web

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<v Speaker 3>three still mostly comes to the in like blockchain related applications,

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<v Speaker 3>but I think over time, we need a term that's

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<v Speaker 3>going to help us to capture all of these transformations

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<v Speaker 3>that are happening. And I think also what's interesting to

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<v Speaker 3>me about this era that we're in is that people

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<v Speaker 3>think of these all as discrete areas, right, I mean

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<v Speaker 3>even the nature of your question is want I get

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<v Speaker 3>a lot, which is it's not about Web three, it's

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<v Speaker 3>about AI. It's like, well, it can actually be about

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<v Speaker 3>more than one thing at once.

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<v Speaker 2>No, that's fair. I agree, Like evolving innovation technology, they

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<v Speaker 2>tend to kind of crisscross each other. How do you

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<v Speaker 2>though scale it? I mean, right, Web three its foundation

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<v Speaker 2>is being decentralized, so how do you scale that?

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<v Speaker 3>Yeah, it's a great question. So in Web three, I

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<v Speaker 3>think there are missionaries, there are mercenaries, and they're pragmatists.

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<v Speaker 2>How do you know the difference.

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<v Speaker 3>Well, you're looking at a pragm with this right now

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<v Speaker 3>as we speak. So there are people who bring a

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<v Speaker 3>missionary zeal to this, and those people are essential to

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<v Speaker 3>any new thing. And I describe Web three as a

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<v Speaker 3>new frontier. And so when you're on the frontier, missionaries

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<v Speaker 3>are good to help sort of lead the charge because

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<v Speaker 3>they're willing to step into the known. And then there

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<v Speaker 3>are mercenaries that want to take advantage of the new

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<v Speaker 3>new thing and maybe make some money. And when it

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<v Speaker 3>comes to Web three or AI, they'll come in and

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<v Speaker 3>out and you know, we won't hear from them again.

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<v Speaker 3>And then there are pragmatists. In order for Web three

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<v Speaker 3>to reach its potential, I do believe that the underlying

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<v Speaker 3>infrastructure needs to be decentralized. But in the meantime, it's

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<v Speaker 3>okay that there are big companies like PayPal or Amazon

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<v Speaker 3>or MasterCard or even City Bank, which just announced it

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<v Speaker 3>wants to tokenize its client assets stepping into this space.

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<v Speaker 3>If you really think this technology is going to make

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<v Speaker 3>a difference, and then you want to see it in

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<v Speaker 3>the hands of as many people as possible.

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<v Speaker 2>Just like the infrastructure, just kind of move to a

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<v Speaker 2>different model, but it's kind of the same model in

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<v Speaker 2>some way.

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<v Speaker 3>Well, it depends when it comes to you know, the

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<v Speaker 3>like tokens, which is one component of Web three. The

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<v Speaker 3>fact that they're a way for people to move in

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<v Speaker 3>store in businesses. I should add, for people in businesses

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<v Speaker 3>to move in store value peer to peer just by

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<v Speaker 3>its very nature, reduces the need for an intermediary. Now,

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<v Speaker 3>I'm it.

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<v Speaker 2>Would be like me doing Venmo. But I don't have

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<v Speaker 2>to have the bank, right, I can just do it directly.

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<v Speaker 3>Yeah, and you'd be able to do it anywhere around that.

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<v Speaker 2>But I have to have a token to do it.

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<v Speaker 3>Yes, well the token can be a dollar and somebody Okay.

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<v Speaker 3>That's the thing about where we are right now is

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<v Speaker 3>that some of the early versions of these, you know,

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<v Speaker 3>new innovations, are foreign to people. But as the technology matures,

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<v Speaker 3>they're going to find product market fit and and in

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<v Speaker 3>a way, like one of the ironies for me of

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<v Speaker 3>Web three is that one of the first killer apps

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<v Speaker 3>is a US dollars stable coin, which is funny because

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<v Speaker 3>when you think of bitcoin, you think of a technology

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<v Speaker 3>that was supposed to disintermediate banks and reduce the need

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<v Speaker 3>for governments. But the US dollars is one of the

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<v Speaker 3>first killer apps.

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<v Speaker 1>I still think of something like a housing in the

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<v Speaker 1>housing market, like title insurance. Yeah, why does everybody have

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<v Speaker 1>to pay thousands of dollars?

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<v Speaker 2>That makes complete sense. The provenance of a piece of

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<v Speaker 2>art like things like that make completely.

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<v Speaker 1>But like, why are we still in a time period

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<v Speaker 1>where if you buy a new place, you still have

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<v Speaker 1>to pay thousands of dollars rather than this, you know,

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<v Speaker 1>a title being available on the blockchain just in case

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<v Speaker 1>the title doesn't exist, right.

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<v Speaker 3>I completely agree with you. And you know, when it

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<v Speaker 3>comes to those kinds of hard assets, it's a difficult

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<v Speaker 3>problem to solve its. I wish that I could say

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<v Speaker 3>blockchain and web three is going to solve that. The

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<v Speaker 3>reality is that you know, you've got records data about

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<v Speaker 3>who owns what that are stored in you know, the

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<v Speaker 3>records offices of local counties and towns and so forth,

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<v Speaker 3>and so you have to get the data going in

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<v Speaker 3>correct before you can get the outcome correct. But I

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<v Speaker 3>think when it comes to digital assets, and I think

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<v Speaker 3>that digital assets will soon come to represent more assets,

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<v Speaker 3>it's much much easier. And I'll give you just one

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<v Speaker 3>great example which I think fifteen seconds, which shows how

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<v Speaker 3>AI and web three interact. There's a writer strike right

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<v Speaker 3>now going on. We should be able to track the

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<v Speaker 3>IP and who owns it that goes into these large

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<v Speaker 3>language models as a way to ensure creators get paid instantly,

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<v Speaker 3>and there's a way to do.

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<v Speaker 2>That with the companies they work for own it. Now.

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<v Speaker 3>No, in some.

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<v Speaker 2>Cases we're going to have to continue this Okay, so

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<v Speaker 2>enjoyed it. Alex Taps got his new book Web three,

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<v Speaker 2>charting the Internet's next economic and cultural frontier.

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<v Speaker 3>So much more to talk about.