Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe and I'm Tracy at Tracy, I have a question, Um,
Speaker 1: have you ever had negative encounters? Sorry, have you ever
Speaker 1: had negative encounters on Twitter with people with laser eyes
Speaker 1: in their in their profile? Because I'm just curious. Have
Speaker 1: you ever had that? Have you ever experienced it? This
Speaker 1: reminds me of that scene from Mean Girls where they
Speaker 1: say have you been personally victimized by Regina George? And
Speaker 1: everyone raises their hand. Yes, yes, Joe, I have been
Speaker 1: personally victimized by laser eyes on Twitter and toxic bitcoin
Speaker 1: maximalists actually got really bad. Last year. I was tweeting
Speaker 1: a lot about bitcoin, and I actually stopped tweeting a
Speaker 1: lot about bitcoin because of this, which I think is
Speaker 1: to horrible. But last year I tweeted a chart of
Speaker 1: bitcoin falling immediately after the CPI data was released, and
Speaker 1: it came in hotter than expected, and people went absolutely nuts.
Speaker 1: And I mean I could go through some of the
Speaker 1: insults because I saved them for posterity, but they would
Speaker 1: not be suitable for you know, the classy program that
Speaker 1: is all lots well, as you point out, lots of
Speaker 1: people have experienced this. There is certainly, at a very
Speaker 1: minimum a there's a lot of people in like the
Speaker 1: broader crypto space who really resent the media and how
Speaker 1: it's portrayed and all this stuff. But there is certainly
Speaker 1: also a subfaction, most notably the bitcoin maxis, the maximalist,
Speaker 1: the laser eyes, people who only eat steak, people like that.
Speaker 1: We've written about them. But you know, to your point,
Speaker 1: like the inflation narrative, it's kind of totally blown up,
Speaker 1: like you were right, Uh, well, and we have so,
Speaker 1: I mean, we we can just talk about how terrible
Speaker 1: Bitcoin maxi's are for an hour. I would love that.
Speaker 1: But I think this gets to a really important point
Speaker 1: about bitcoin, which is like, is it a cultural movement
Speaker 1: about creating a new type of currency that is outside
Speaker 1: the power or authority of you know, traditional figures like
Speaker 1: governments and central banks, or is it about the underlying
Speaker 1: technology actually enabling you to do something different? And I
Speaker 1: think at the moment you really see crypto split between
Speaker 1: those two camps. Yeah, is it a technology, is it
Speaker 1: a money? Is it a culture? I think, you know,
Speaker 1: it's hard to separate. There is a bitcoin culture, and
Speaker 1: maybe that's the reason this thing that's sort of just
Speaker 1: made up is worth so much. But anyway, we all
Speaker 1: know what we all know the sort of like these questions,
Speaker 1: the bitcoin maxi is what it's like to talk about
Speaker 1: them on Twitter, all that stuff that Big said. Today,
Speaker 1: we're going to be speaking with a long time bitcoin
Speaker 1: er who has now earned the ire of many of
Speaker 1: the same laser eyed plubs that you have. Hey, Hey,
Speaker 1: welcome to the club. Is all is all I can say.
Speaker 1: All right, let's just kick it off. We're gonna be
Speaker 1: speaking with Nick Carter. He's a general partner and Castle
Speaker 1: Island Ventures. Uh and uh, Nick, thank you so much
Speaker 1: for coming on odd lots, Hello, Joe and Tracy. I'm
Speaker 1: honored to be here. This is my favorite podcast. Um,
Speaker 1: I wish it was under more auspicious circumstances. So, Gavin Anderson,
Speaker 1: Mike Hearn, and now Nick Carter, why did you rage
Speaker 1: quit bitcoin? I didn't quit, To be clear, I don't
Speaker 1: think I deserved that comparison because I didn't try and
Speaker 1: change bitcoin in anyway. But yeah, well let's back up,
Speaker 1: because you are I think one of the most prominent
Speaker 1: bitcoin investors bitcoin advocates. I think at one point you
Speaker 1: yourself may have had laser eyes on your Twitter profile,
Speaker 1: longtime investor in bitcoin related companies, and now a bunch
Speaker 1: of them hate you. So what do you back up? Like?
Speaker 1: What do you do? And why are they mad at you? Yeah? Sure, so?
Speaker 1: I mean so I you know, for context, I co
Speaker 1: founded a venture firm that invests in all across the
Speaker 1: crypto industry. This is actually becomes part of the story later.
Speaker 1: You know, I identify as a bitcoin er. I think
Speaker 1: bick when it is important and good, and my work
Speaker 1: over the last five years is focused on really advocating
Speaker 1: for bitcoin and you know, putting my resources to work
Speaker 1: whatever they were in support of bitcoin specifically. And then
Speaker 1: my fund. There is maybe a bit of a contradiction
Speaker 1: there in the eyes of some because my fund, which
Speaker 1: I started with Matt Walsh in invests all across all
Speaker 1: across the crypto industry, primarily sort of crypto financial infrastructure
Speaker 1: we call it, which is pretty you know, boring stuff
Speaker 1: for the most part, basically making this sort of underlying
Speaker 1: plumbing work better and connecting crypto to sort the FIAT
Speaker 1: system and so on. And then that tension finally sort
Speaker 1: of broke. Uh. The last couple of weeks when the bitcoiners,
Speaker 1: I guess realized I don't know, had they never looked
Speaker 1: at my funds website or what, but they kind of
Speaker 1: realized that I don't exclusively invest in bitcoin stuff, and
Speaker 1: kind of a pylon began, and then I took the
Speaker 1: opportunity to clarify. You know, I'm personally a bitcoiner, but
Speaker 1: I'm not like one of the orthodox hardliners. I don't
Speaker 1: think it's immoral to, you know, invest in other blockchains.
Speaker 1: And that kicked off this enormous sort of brew haha,
Speaker 1: which you know, I don't. I think people must be
Speaker 1: extremely bored because I don't see why it's such a
Speaker 1: big deal. To be honest, I have a ton of questions,
Speaker 1: but maybe maybe just to begin with, I would like
Speaker 1: to get your thoughts on why this happened now, Because,
Speaker 1: as you say, you've been investing in a variety of
Speaker 1: crypto ventures for many years. Why do you think the
Speaker 1: outpouring of anger the pylon happened this time around? Well, yeah,
Speaker 1: it's a weird one because anyone that really knows me
Speaker 1: knows that I have made you know, I've been promoting
Speaker 1: my views on all kinds of topics, whether not just
Speaker 1: bitcoin stuff for a while now, whether it's defy or
Speaker 1: stable coins or anything like that, And so they know
Speaker 1: that I'm a pluralist. I mean the company I co founded,
Speaker 1: coin Metrics, you know that's been around since, runs notes
Speaker 1: for dozens and dozens of blockchains. So if you need
Speaker 1: the smallest thing about me, you know that I don't
Speaker 1: just you know, consider it a sin to build on
Speaker 1: other block chains or run other notes. I think, really
Speaker 1: what happened is, you know, obviously by Quin is drawn
Speaker 1: down from whatever sixty nine thousand two, I don't know
Speaker 1: where it is today, exactly twenty thousand people want scapegoats.
Speaker 1: A lot of the sort of core premises of the
Speaker 1: bitcoin ideology have been undone. Frankly, I think there's been
Speaker 1: a real collision with reality, like whether it's the stock
Speaker 1: to flow model having thesis this folk these folk economic ideas.
Speaker 1: For instance, bitcoin always you know, the cycle low is
Speaker 1: always higher than the previous cycle high. You know a
Speaker 1: lot of these concepts, you know, big quin becoming the
Speaker 1: reserve currency within head right, the inflation hedge. I mean
Speaker 1: that it's undelotiniable, that that hasn't really occurred. And so
Speaker 1: a lot of these core premises and ideas were basically
Speaker 1: falsified or you know, like significantly challenged by real world events.
Speaker 1: You know, the like cycle was much smaller in magnitude
Speaker 1: than than prior cycles were, and I think people are
Speaker 1: just really upset and uh kind of on the hunt
Speaker 1: for scapegoats. And then I was sort of the perfect one.
Speaker 1: Previously people have this like perverse like um, you guys
Speaker 1: know that movie like The wicker Man, where you know,
Speaker 1: to ensure the good harvest you have to sort of
Speaker 1: sacrifice someone. Basically you've been sacrificed on the altar of cry.
Speaker 1: So if you look at the previous rage quits, like
Speaker 1: high profile ones, I'm not saying, hi, rage quit, but
Speaker 1: you know, my current are sort of historically at the
Speaker 1: bottoms of previous cycles, and so I think people are
Speaker 1: actually looking for that, looking for Thank you, Nick Carter
Speaker 1: for your service. So you wrote this article or after
Speaker 1: you know, you made the investment and it seemed interesting,
Speaker 1: is uh sort of like related to signing into a
Speaker 1: various services with your ethere and wall and we'll talk
Speaker 1: about that, because I do think that's interesting stuff. People
Speaker 1: freaked out at the investment and then you sort of
Speaker 1: wrote this again, I know you're you're still a bitcoin
Speaker 1: or you didn't divorce, but there's sort of like, you
Speaker 1: know what, there really is this toxic element and you
Speaker 1: point out it's like, you know, there's a lot of
Speaker 1: bitcoin and Tracy brought this up at the beginning, is
Speaker 1: that a culture is that technology. You're like, bitcoin is
Speaker 1: not your like steak dinners that you like hang around with,
Speaker 1: like your fellow laser eyes. But that Big said, like
Speaker 1: I think of you as also to some extent an
Speaker 1: advocate for bitcoin culture, and like you know, like you
Speaker 1: rail against seed oils and do you think that's something
Speaker 1: really bad happened in one and I think you're really
Speaker 1: you know, lifting weight, uh not worshiping false meat Bitcoin
Speaker 1: MAXI adjacent. Do you think like you contributed to this
Speaker 1: idea that in addition to maybe being a money or
Speaker 1: a technology, that there was also like this sort of
Speaker 1: like hardline culture associated with owning the coins. Yeah, I
Speaker 1: mean that culture undeniably exists, whether it's you know, kind
Speaker 1: of a joke, like a lot of the stuff you
Speaker 1: mentioned is like a little silly and you sort of
Speaker 1: like lean into it, and also because it just sort
Speaker 1: of perplexes outsiders and right, that's like kind of the
Speaker 1: point is to you know, build up this edifice. It's
Speaker 1: like sort of not clear if it's ironic or sincere. Right,
Speaker 1: it means it's classic internet culture stuff. Why is that?
Speaker 1: Why is that the point? Though? Because bitcoin, like it's
Speaker 1: all about the network effect. Why would you want to
Speaker 1: alienate good bothsiders? Sorry, yeah, I mean that's a good question.
Speaker 1: I think it's easier to unite against like outside of voices,
Speaker 1: whether it's like mainstream economists or the M s M. Right,
Speaker 1: the dreaded m s M. It's sort of hard to
Speaker 1: penetrate the culture, right if there's this veil of irony
Speaker 1: coding everything, right, it's not clear if they're sincere. And
Speaker 1: so then from the inside you can sort of like
Speaker 1: mock these people when they sort of engage with your
Speaker 1: ideas because it's like they're not part of the joke.
Speaker 1: And I would say that's just like a classic defense tactic.
Speaker 1: And so you sort of embrace, like, you know, deliberately
Speaker 1: absurd ideas to maybe give like air covert to your
Speaker 1: two maybe more serious ones. So what about the idea
Speaker 1: that this sort of like hardline Max Shue culture has
Speaker 1: at least in the past served Bitcoin well during periods
Speaker 1: in which entities were trying to sort of change the code,
Speaker 1: and of course I'm thinking most prominently about the block
Speaker 1: size war in and where there was a a bid
Speaker 1: by some largely more i would say, more corporate influence
Speaker 1: to change the code, to expand bit coins throughput, to
Speaker 1: reduce fees, and I think out of that there was
Speaker 1: this sort of like hard line small block faction that
Speaker 1: held off the change and seemed to be benefit or
Speaker 1: a lot of people think that was the right direction,
Speaker 1: but that this idea that this sort of culture is
Speaker 1: beneficial and necessary, even if in the short term it
Speaker 1: does repel people. Yeah, I I that's a great question.
Speaker 1: I mean, I think if you go back to that
Speaker 1: time and you know, really the block size war started
Speaker 1: a long time ago, maybe even earlier than fourteen, was
Speaker 1: probably the genesis. I would actually say a lot of
Speaker 1: the people that were active participants then are not the
Speaker 1: same participants now. I would say a lot of the
Speaker 1: people that are the so called self you know, toxic
Speaker 1: maxis or like self appointed defenders of the protocol like
Speaker 1: those are actually newer bitcoiners. So like you have to
Speaker 1: understand this churn, and I would say, what they're doing
Speaker 1: is like, and I said this previously, they're doing kind
Speaker 1: of like a sort of cargo cult like reenactment of
Speaker 1: conflicts past. But you know, there's no real conflict right now.
Speaker 1: Nobody's really aggressively trying to change Bitcoin in any sort
Speaker 1: of hostile way. And so the block size war, like
Speaker 1: I I still you know, come down on the same side.
Speaker 1: I would support the small block idea. I think that's
Speaker 1: basically an engineering discussion. And then there was also a
Speaker 1: meta discussion about how should bitcoin be changed, what's the
Speaker 1: most appropriate way to change bitcoin? And it's still clear
Speaker 1: to me that the attempt to add bigger blocks to
Speaker 1: bitcoin was pretty ham fisted and definitely very corporate and
Speaker 1: totally out of step with sort of the actual values
Speaker 1: of the bitcoin the way things had been done beforehand.
Speaker 1: Whereas you know, if you know, and so like a
Speaker 1: lot of people, it's almost like stolen valor a little bit, right,
Speaker 1: It's like, um, it's like you know, someone taking to
Speaker 1: the streets today and like assaulting random people and like
Speaker 1: claiming lineage to you know, like their grandfather who fought
Speaker 1: at Normandy or something like that. Right, it's like they're
Speaker 1: reenacting the conflict from before, like you know, going through
Speaker 1: the same emotions, but there's no real conflict today. I mean,
Speaker 1: nobody's trying to change bitcoin anyway, so it's not clear
Speaker 1: what they're defending bitcoin against. So you know, I think
Speaker 1: there's been a bit of a subtle change there. Really
Speaker 1: simple question, but what's the difference between or can you
Speaker 1: just define toxic bitcoin maximalism, because I think one of
Speaker 1: the things that's been going around about you now that
Speaker 1: you know, um a lot of people are mad at you,
Speaker 1: is this tweet from where you said something to the
Speaker 1: effect of every bitcoin maximalist you've met had been friendly
Speaker 1: and approachable, and now fast forward too and it seems
Speaker 1: like you're saying, oh, no, you know, there's a lot
Speaker 1: of toxicity in the community, so maybe you could just
Speaker 1: give us a definition of what a talk sick bitcoin
Speaker 1: maximalist is versus your run of the mill bitcoin MAXI yeah,
Speaker 1: that I that tweet was true in to be clear, Um,
Speaker 1: maybe I just hadn't met enough or I've only met
Speaker 1: the right ones, but yeah, people were very nice to me.
Speaker 1: I always still knew her to bitcoin back then, so yeah,
Speaker 1: it's I think a lot of the issue here is
Speaker 1: definitional because basically bitcoin maximalism emerged as like an epithet
Speaker 1: that I think fatalic butterrant, actually coined in a kind
Speaker 1: of pejorative sense, like saying bitcoin or bitcoinners were too
Speaker 1: close minded and parochial and that's why he had to
Speaker 1: make ethereum. And so a lot of the hatred for
Speaker 1: the term came from that, I believe, and then some
Speaker 1: people did embrace it though, and so then some bitcoinners
Speaker 1: sort of call themselves maximalists, and the debate now is
Speaker 1: really confused because nobody has their good definition for it,
Speaker 1: even though there are people that call themselves this, and
Speaker 1: there's a whole faction that does. And I think they're
Speaker 1: skating on that you know, ambiguity a little bit to
Speaker 1: try and avoid being pinned down in their beliefs. Um
Speaker 1: So I think it's deliberate that they kind of refused
Speaker 1: to define it. But I'll define in two ways, so
Speaker 1: the soft form and hard form, so kind of like
Speaker 1: reminiscent of the E M H. So soft form bitcoin maximalism.
Speaker 1: And I wouldn't say this is toxic, but I think
Speaker 1: this one's you know, pretty justifiable. Is like, look, bitcoin
Speaker 1: is the only blockchain that's kind of worth building on.
Speaker 1: Blockchain should probably only pertain to moving money around as
Speaker 1: opposed to non monetary use cases. Other crypto assets are tokens.
Speaker 1: They're sort of mostly waste of time, and there's definitely
Speaker 1: a lot of scams out there. Stable coins are probably interesting.
Speaker 1: This is sort of more adjacent, but maybe they should
Speaker 1: reside on Bitcoin is apposed to other blockchains. And then,
Speaker 1: like you're probably also pretty skeptical fractual reserve banking if
Speaker 1: you subscribe to this ideology, and so it's kind of
Speaker 1: like a more modern form of gold buggery, I would say.
Speaker 1: And then you have the hard form, which I would
Speaker 1: say is pretty venomous. Really, Bitcoin is absolutely the only asset,
Speaker 1: certainly within the crypto sphere that is sort of moral
Speaker 1: and good to own, and other assets are deeply sinful.
Speaker 1: And you know, I'm using religious language because I consider
Speaker 1: this to be a secular religion, Like it's a secular
Speaker 1: religion to me. It's very obvious that it is. Now
Speaker 1: they consider all coins is attacks on Bitcoin they've been
Speaker 1: really zero some mindset, whether maybe that's true, maybe it
Speaker 1: is zero some, but they consider all coins is like
Speaker 1: actually a kind of a fiat like a retaliation of
Speaker 1: the central bankers, um and uh. And they think that
Speaker 1: launch conditions are absolutely paramount, so like the origin of
Speaker 1: the blockchain is very important, and if there's an original
Speaker 1: sin like you did an I O or pre mind,
Speaker 1: that can never be undone. And then they think other
Speaker 1: blockchains are literal scams, and they'll be explicit about this.
Speaker 1: There's no other worthy place to build anything other than Bitcoin.
Speaker 1: Anyone building another blockchains is sort of like being deeply misled,
Speaker 1: either being tricked or they're being cynical. Then there's kind
Speaker 1: of two competing views within this hard form camp. One
Speaker 1: is that there's no innovation outside of Bitcoin whatsoever, and
Speaker 1: that it's all kind of artifice and fraud. And then
Speaker 1: the other view is that there is some innovation, but
Speaker 1: it will inevitably collapse back in a bitcoin, and anything
Speaker 1: good that's done anywhere else will collapse. And then there's
Speaker 1: like all kinds of crazy, crazier stuff, which I'm sure
Speaker 1: that both of you have encountered, which is like any
Speaker 1: asset that is used in a monetary context at all
Speaker 1: will collapse into bitcoin when hyperbit qualization occurs. That's you know,
Speaker 1: sable coins are a waste of time because all fiats
Speaker 1: are going to zero probably imminently. And then there's like
Speaker 1: the lunatic fringe stuff like you know, stock to flow
Speaker 1: dynamics being extremely important. You can even make models. These
Speaker 1: people tend to think fractionals are banking is literally fraud
Speaker 1: like literally fraudulent, and uh that you know, other adjacent
Speaker 1: stuff like the hardness of the monetary medium that you're using,
Speaker 1: like influences, like the very nature of society. It's off,
Speaker 1: so like your time preference and the quality of art
Speaker 1: and things and food and things like. Well, I was
Speaker 1: gonna say because all coiners eat seed oils and bitcoiners
Speaker 1: don't write. I mean to be clear, I think there
Speaker 1: actually is a lot of scientific support from my anti
Speaker 1: seed oil view, but we're not gonna so I actually
Speaker 1: I would have a real question about soft form bitcoin maximalism.
Speaker 1: And I think you're in a really good position because
Speaker 1: to answer this, and you're because you're pregnantists, but also
Speaker 1: because your investor in this space. But like, what is
Speaker 1: the state of building on bitcoin? And I guess this
Speaker 1: is something that uh, you know, the first time I
Speaker 1: ever like checked out unit swap and was able to
Speaker 1: like sign in with a wallet, meaning not just setting
Speaker 1: up an account and not the not having I was like,
Speaker 1: oh my god, this is like really cool. Like I
Speaker 1: don't know if it's gonna go anywhere, but just like
Speaker 1: the idea of like being able to click and you're
Speaker 1: like you're in the app, it seemed like extremely cool
Speaker 1: to me. And I know that your new controversial investment
Speaker 1: is kind of related to that, But like, what is
Speaker 1: the state of other stuff like building on bitcoin? Like
Speaker 1: do you see it or people doing it? Doesn't work?
Speaker 1: Could you theoretically build like a unit swap type environment
Speaker 1: on just to be clear, the unit swap sign and
Speaker 1: that's on ethereum right, yeah, yeah, I mean, um, I
Speaker 1: guess there's two ideas here. One is like defy, like
Speaker 1: the composable um infrastructure you would use to do sort
Speaker 1: of swaps on defy. And then there's also the web
Speaker 1: three like sign on with meta mask, so you definitely
Speaker 1: couldn't really, I mean, you can do wallet based sign
Speaker 1: on on Bitcoin with something like ellen off that is doable,
Speaker 1: Like if you're custoding your keys, then you can It
Speaker 1: doesn't matter what blockchain it is. You can definitely use
Speaker 1: that as a log and but defy the more like
Speaker 1: that's just a whole ecosystem that hasn't emerged on bitcoin,
Speaker 1: and I think it'd be really challenging to rebuild all
Speaker 1: of that kind of from scratch on bitcoin a because
Speaker 1: like the underlying programming language is very very limited, and
Speaker 1: then be just because the critical mass is on a
Speaker 1: theorem and that that's kind of five six years of
Speaker 1: development and understanding best practices and building out liquidity and
Speaker 1: things like that. That's one of the things that you know,
Speaker 1: I think it's very valid to be like a bitcoin
Speaker 1: only person. I don't even like the term maximalist. I
Speaker 1: totally hate it in fact um. But you know, we
Speaker 1: invest in plenty of bitcoin only startups like founders that
Speaker 1: are like, I only want to focus on bitcoin. I
Speaker 1: think this is the biggest problem facing the world right now,
Speaker 1: you know, fix the money, fix the world. And uh,
Speaker 1: they're very sincere and we're completely fine with that, right
Speaker 1: And they're building custodial tools for bitcoin, or they're building
Speaker 1: exchanges or brokerage is you know, even like some stuff
Speaker 1: you can refer to a smart contracts. Certainly, Lightning has
Speaker 1: revitalized the developer community in bitcoin. To answer your question, Joe,
Speaker 1: there's definitely a lot of enthusiasm there, but you know,
Speaker 1: bitcoiners and so that's a valid perspective completely. But you know,
Speaker 1: the hardliners, I would say, are totally They have to
Speaker 1: find a way to dismiss what's happening on other block
Speaker 1: chains and and dismiss the fact that Ethereum is charging,
Speaker 1: you know, fifty times more in fees, is earning you know,
Speaker 1: fifty times more in sort of blockchain revenue than Bitcoin is,
Speaker 1: and the critical massive developers and applications and liquidity and tokens,
Speaker 1: if you're into that, it really is elsewhere. And that's
Speaker 1: just a reality the bitcoiners have to confront and and
Speaker 1: many of them are. They have a hard time confronting that.
Speaker 1: I think this is kind of the heart of a
Speaker 1: lot of this disagreement. And Joe, I remember last year
Speaker 1: you wrote a very very long and very good piece
Speaker 1: about the sort of cultural split between Bitcoin and Defy
Speaker 1: and this idea that a lot of Bitcoin supporters or
Speaker 1: maxis really wanted to preserve the blockchain. They didn't want
Speaker 1: to tinker with it, you know, don't change anything. It's
Speaker 1: supposed to be as you know, immutable, timeless store of
Speaker 1: value kind of idea verse is a lot of the
Speaker 1: experimentation going on on DE five. So Nick, I'm curious
Speaker 1: for your your view here, like why is it that
Speaker 1: a lot of stuff seems to be built on other
Speaker 1: types of chains versus Bitcoin, Like what is the hold
Speaker 1: back for Bitcoin use cases? Because again, you know, you
Speaker 1: can argue that there are some use cases and people
Speaker 1: are doing some interesting stuff, but it definitely seems to
Speaker 1: be less than what people are doing with other types
Speaker 1: of technology. Yeah, I mean, there's just this attitude, and
Speaker 1: I think comes down to design philosophy, right. You know,
Speaker 1: from the bitcoin ors engineer mindset, you're very risk averse.
Speaker 1: You want to make sure that the program is truly
Speaker 1: bug free. You want to apply the same standards of
Speaker 1: like maybe nuclear engineering or the kind of software you
Speaker 1: put into plane that really can't fail. You can't have this,
Speaker 1: you know, because you're dealing with you know, people's money.
Speaker 1: That's sort of like the Bitcoin mindset, and and that's
Speaker 1: why bitcoin itself has this kind of soft fork ideology
Speaker 1: where you want everybody to up into changes. You don't
Speaker 1: want changes to be breaking back backwards compatibility with prior
Speaker 1: you know, implementations. It's very deliberate and you know, necessarily slow.
Speaker 1: As a consequence, Bitcoin programming language has this thing called
Speaker 1: bitcoin script, which is very enough fourth i think, and
Speaker 1: it's very limited. And actually most of the sort of
Speaker 1: they're called op codes that would have allowed you to
Speaker 1: do creative things were basically disabled early on because they
Speaker 1: would have also introduced a lot of bugs. And so
Speaker 1: that's sort of like the development mindset, whereas ethereum, you know,
Speaker 1: which is really emblematic of sort of like the alternatives.
Speaker 1: So that's certainly the smart contract focused ones. They took
Speaker 1: a deliberately very different attitude, much more aggressive, much more
Speaker 1: rapid iteration and change, making the bass layer much more
Speaker 1: suitable to build up, you know, rich applications, and they
Speaker 1: also paid dearly for that. I mean, it's much more complex. Overall,
Speaker 1: they're still trying to move to proofastake. There have been many,
Speaker 1: many hacks. I mean, you can just look down the
Speaker 1: leaderboard of any of these defy exploits. There's dozens and
Speaker 1: dozens that are above a hundred million. It's kind of
Speaker 1: the way safety regulations are written in blood, defy programming
Speaker 1: best practices are written in hacks. But you know a
Speaker 1: lot of Etherians will argue that was a good trade off.
Speaker 1: I think there's a synthesis possibility, you know. I think
Speaker 1: Bitcoin maybe did have the right attitude. They focused on
Speaker 1: monetary hardness above all else, and soundness of the protocol
Speaker 1: and security and resistance to hot hacks and inflation bugs
Speaker 1: and things like that, and then other protocols were kind
Speaker 1: of free to experiment, innovate and uh, you know, create
Speaker 1: a substrate that you could use to build interesting kind
Speaker 1: of composable infrastructures. And you would never have been able
Speaker 1: to build modern day defy on bitcoin. That's just the
Speaker 1: reality of it. Um. I don't think it's the end
Speaker 1: of the world. The bitcoin doesn't have that built in.
Speaker 1: I don't think it necessarily needs that. But yeah, I
Speaker 1: think ultimately this whole thing comes down to design philosophy. Yeah.
Speaker 1: I was going to ask how much of a role
Speaker 1: does decentralization play in this, because I've always seen it
Speaker 1: when it comes to Bitcoin as sort of a strength
Speaker 1: and a weakness. So on. On the one hand, if
Speaker 1: you're trying to design a censorship resistant currency, you know,
Speaker 1: something that can sit outside of traditional power structures and
Speaker 1: be relatively safe, then decentralization makes a lot of sense.
Speaker 1: But if you're trying to do something you know, more defy,
Speaker 1: like or build something that people are actually going to use,
Speaker 1: often it ends up being done on something that is
Speaker 1: in some senses centralized, like ethereum, something that maybe has
Speaker 1: a leader who can kind of galvanize a support base
Speaker 1: and lead people in a particular direction. So how do
Speaker 1: you view that aspect of it? Yeah, I mean I
Speaker 1: would say it's it's pretty paramount. Maybe my views have
Speaker 1: evolved a little bit. I would say it's maybe less
Speaker 1: of a binary, you know, decentralized versus holy centralized. I
Speaker 1: probably compare these systems along a number of variables, but
Speaker 1: you know, running in a theorem, note, if you compare
Speaker 1: it to other blockchains, it's actually much more doable because, like, ultimately,
Speaker 1: I would say decentralization is really a function of how
Speaker 1: easy it is to run a node and participate as
Speaker 1: an equal peer on the network. There's a few blockchains
Speaker 1: that it's you know, virtually impossible, and so they sort
Speaker 1: of maxed out the node size in order to put
Speaker 1: push a lot of data through the network per unit time,
Speaker 1: and then you know, other blockchains tried to keep the
Speaker 1: data overhead low and make it really easy to participate
Speaker 1: with Bitcoin being emblematic at that, and so there's like
Speaker 1: a whole whole spectrum. I think maybe you know, bitcoinners,
Speaker 1: some bitcoiners would say, you know, bitcoin made the right decision.
Speaker 1: The idea is for anybody on Earth to be able
Speaker 1: to run a node, maybe even on their smartphone, maybe
Speaker 1: even with weak Internet connection. You know, clearly there's market
Speaker 1: demand for an alternative model where that you're pushing you're
Speaker 1: doing more computation per unit time. Fees are lower because
Speaker 1: you're pushing more data through the system and so there's
Speaker 1: more capacity. But you know, I would say, like you know,
Speaker 1: just looking at a theorem, if you compare it to
Speaker 1: the Bitcoin design philosophy, Bitcoin embraces layered model with initially
Speaker 1: side chains was a big part of the vision, and
Speaker 1: then with Lightning as an L two network, I would
Speaker 1: say Etherum culture is kind of downstream a Bitcoin culture
Speaker 1: in many ways they embrace the layered model too. There's
Speaker 1: many many different L two is being built on a theorem.
Speaker 1: So they're also ended up being more pragmatic in understanding
Speaker 1: that you can't have the notes be arbitually large, so
Speaker 1: that you know, I would say they actually embraced the
Speaker 1: same philosophy at the end of the day. So, you know,
Speaker 1: one of the things that you mentioned in the beginning
Speaker 1: is a lot of like sort of bitcoin stories or
Speaker 1: bitcoin theses have sort of blown up. And the big
Speaker 1: one in two is that we have the highest inflation
Speaker 1: in the US in forty years, and bitcoin has not
Speaker 1: proved to be particularly robust against that. It sort of
Speaker 1: has been moving in line with the stock market. Another
Speaker 1: thing that happened in two that I don't think it's
Speaker 1: as much attention is that is, you know, and my
Speaker 1: one of my interests personally in bitcoin is this idea
Speaker 1: of like censorship resistant money, the idea that I could
Speaker 1: send you or Tracy some money and no third party
Speaker 1: could tell us no, which I think like in a
Speaker 1: time where you know, cash is going away and more
Speaker 1: and more commerce it's conduct online is potentially a very
Speaker 1: powerful thing. But the other thing that happened in is
Speaker 1: we had the Canadian Trucker protests where a bunch of
Speaker 1: the participants and donors lost access or had money frozen,
Speaker 1: lost access to their bank accounts. But it didn't seem like,
Speaker 1: you know, it seemed like, oh, this is a great
Speaker 1: moment for bitcoin and theory, except that I don't think
Speaker 1: like bitcoin was that powerful or that My impression was,
Speaker 1: you know, it's easy for authorities to track the bitcoin
Speaker 1: that were being sent to is like very public. There
Speaker 1: was no particularly great way from as far as I
Speaker 1: could tell, to coordinate donations. I think a lot of
Speaker 1: it just ended up like in the hands of someone
Speaker 1: and hopefully did they got it to the right people,
Speaker 1: like it seemed like that was a failure too, And hey,
Speaker 1: I'm curious, like if you agree and be if like, Okay,
Speaker 1: it's not a great inflation hedge and right now it's
Speaker 1: not really cut out for censorship resistant payments or store
Speaker 1: like what exactly is the case for it? M Yeah,
Speaker 1: that was a sobering moment. I think the Trucker protests
Speaker 1: for a lot of bitcoiners because it basically became clear
Speaker 1: that there was no platform or application that existed that
Speaker 1: could facilitate out funding with bitcoin, and it showed just
Speaker 1: and the tools that were put together we're pretty new,
Speaker 1: they were very analog, and so it's just evidenced kind
Speaker 1: of a lack of I don't know, developer talent or
Speaker 1: enthusiasm or interest for building these things, whereas it There
Speaker 1: are good crowdfunding tools in quote unquote crypto generally, but
Speaker 1: for the most part they don't concern bitcoin. So maybe
Speaker 1: that's kind of a great example because it shows there's
Speaker 1: just less in it for a developer building on bitcoin.
Speaker 1: That's kind of part of the crowding out effect. I
Speaker 1: think that this easy token landscape and here's where I'm
Speaker 1: you know, very sympathetic to the views of bitcoin is right,
Speaker 1: is is there's a landscape. You know, you look at
Speaker 1: your opportunity costs and if you're gonna build something, you
Speaker 1: might as well do it in a tokenized way and
Speaker 1: get your early liquidity, you know, and you can get
Speaker 1: your exit or you know, certainly get some liquidity without
Speaker 1: bringing a company to I p O and you can
Speaker 1: raise money more easily. Maybe you can raise money directly
Speaker 1: from retail. Obviously there's like security you just put you
Speaker 1: just put the money in a box and more money
Speaker 1: comes out of the box with with with crypto, it
Speaker 1: seems pretty great. But in all seriousness, and I'm you know,
Speaker 1: I wanna shift focus a little bit to that you
Speaker 1: do invest in you know, that's the why we're talking
Speaker 1: non bitcoin crypto. But it seems to me like so
Speaker 1: much of what gets built and what has gotten built
Speaker 1: over the last uh this cycle is de facto. I mean,
Speaker 1: there have been a lot of Ponzi schemes or things
Speaker 1: that aren't Ponzi schemes, but the Ponzi economics where mainly
Speaker 1: the only way they approuve value is by more people
Speaker 1: buying in, and then at some point it goes down
Speaker 1: when some people want to sell without actually like any
Speaker 1: real consumer product. And you know, like you've also been
Speaker 1: pretty critical of sort of like vcs in the broader
Speaker 1: crypto space for having uh spent the last several years
Speaker 1: back in Ponzi schemes. Yeah, it's a mess. It's a
Speaker 1: total mess. I mean, you know that it seems like
Speaker 1: a lot of the quote unquote financial innovation that's occurred
Speaker 1: in the broader crypto space has been innovation and creating
Speaker 1: veiled or Ponzi is basically there or things that are
Speaker 1: Ponzi adjacent or have I mean, people talk on ironically
Speaker 1: about Ponzi nomics, and if you look at if you
Speaker 1: look at the field of token economics or quote unquote
Speaker 1: mechanism design, people dress these things up in this whole
Speaker 1: like advisory firms that will help you with your token omics.
Speaker 1: It's just basically like if you look at the actual mechanics,
Speaker 1: it's a lot of it is ponzi. It's like, how
Speaker 1: do you juice returns? How do you tinker with the
Speaker 1: system a little bit too, you know, make the token
Speaker 1: price go up temporarily. Some of the biggest and and
Speaker 1: you know, virtually all of the vcs in the industry
Speaker 1: are investing this stuff. Some of them really do believe
Speaker 1: in the projects, and that's kind of the curious thing
Speaker 1: is you know, they'll like maybe they like convinced themselves.
Speaker 1: Like if you look at the Terra discourse or on Tara,
Speaker 1: a lot of the firm's backing Tara, like they actually,
Speaker 1: you know, some of them got out and some of
Speaker 1: them didn't. Some of them round trip the position because
Speaker 1: they started to believe the research they were putting out
Speaker 1: where they were kind of justifying the Terra mechanics and
Speaker 1: thinking like, hey, maybe this can work. But yeah, like
Speaker 1: you know, I don't know if I care to list them,
Speaker 1: but most of the really hyped sort of consumer applications
Speaker 1: in the crypto space, certainly the ones that involved tokens,
Speaker 1: A lot of them have very specific Ponzi dynamics which
Speaker 1: can be pinpointed um and they're kind of all unwinding. Now, well,
Speaker 1: there was a certain game that was really popular in
Speaker 1: the Philippines and the last year he is like, oh,
Speaker 1: this is providing an economic lifeline, and we had the
Speaker 1: founder I'm talking about actually on it was like you
Speaker 1: had to like buy some and if tease and then
Speaker 1: they fought, and then you got more and still like
Speaker 1: the question was like, yeah, but is the game fund
Speaker 1: to play? Is there anything point here other than just
Speaker 1: like trying to win more tokens? And now the prices
Speaker 1: crashed and it seems like usage is way down, and
Speaker 1: you know, it still seems like basically there's not much
Speaker 1: there as far as I can tell, beyond the idea
Speaker 1: that like you'll play, you're making money, but the game
Speaker 1: isn't that great. Yeah, it's remarkable, it's really astonishing, and
Speaker 1: you know, I'm not wanting to pile on specific projects
Speaker 1: aggressively or or vcs or anything like that, but actually
Speaker 1: was I had some really negative consequences. I mean, it
Speaker 1: was super hyped, and you know, some of the best
Speaker 1: feasts or most reputable venture firms were investing in the
Speaker 1: likes of Axie or Stepan or Tera things that ended
Speaker 1: up having these like genuinely Ponzi like dynamics. Acxie was
Speaker 1: particularly bad because if you looked at where the player
Speaker 1: base was, it was in the Philippines, Cube of Venezuela,
Speaker 1: places where you know, relatively poor population shan and um.
Speaker 1: People had Internet connections and then they could, you know,
Speaker 1: all of a sudden earned by playing this game. But
Speaker 1: it's nobody played the game for the sake of the game.
Speaker 1: They played the game to get the tokens, and of course,
Speaker 1: you know, as the tokens sold off, the game stopped
Speaker 1: being worth playing. There was some really perverse dynamics and
Speaker 1: the Axis situation. I mean, you had sub theme that
Speaker 1: developed where basically Westerners would buy the n f T
Speaker 1: s that would you know, the characters that would make
Speaker 1: you eligible to play the game, and then kind of
Speaker 1: like lease them out to you know, local players and
Speaker 1: say the Philippines. And this was euphemistically called the scholar program.
Speaker 1: In my view, is kind of like a form of
Speaker 1: digital sharecropping. Basically where the you know, the locals playing
Speaker 1: the game earning a couple of bucks a day, didn't
Speaker 1: even own the fruits of their labor. Basically, they were
Speaker 1: literally toiling on behalf of like Westerners that had the
Speaker 1: capitol to buy the assets to play the game. And
Speaker 1: then the worst part is that, you know, all utimately
Speaker 1: some of the some of these like Filipinos, etcetera, like
Speaker 1: got fully bought in. They were persuaded like, yeah, this
Speaker 1: is a great thing, it's a great investment, this gonna
Speaker 1: be my livelihood, quit their jobs in some cases, bought
Speaker 1: the in game property, and then of course it all
Speaker 1: kind of collapsed and like the property values created, and
Speaker 1: so you know, you've got like Western it's all very
Speaker 1: perverse in my view. You have like Western vcs like
Speaker 1: waxing lyrical about like the amazing benefits that uh, you know,
Speaker 1: Axe is bringing to logal places, you know, some of
Speaker 1: the poorer countries in the world, and then like meanwhile,
Speaker 1: the whole thing collapses and a lot of these folks
Speaker 1: inside poor countries are left holding the bag, and so like,
Speaker 1: not only is this just like a Ponzi like system
Speaker 1: that was like pretty obviously going to fail because like
Speaker 1: nobody played the game for any reason other than like
Speaker 1: the token dynamics. It had this like nasty, sort of
Speaker 1: like colonial vibe to it, and I think ended up
Speaker 1: causing a lot of kind of real world damage to
Speaker 1: people that couldn't really afford it. It is very dystopian,
Speaker 1: isn't it, Like these people sort of toiling away on
Speaker 1: their phones in order to get like tokens back to
Speaker 1: rich people in advanced economies. Um, But just on the
Speaker 1: topic of use cases that are not related to ponsionomics,
Speaker 1: like where are those? Because I think the thing that
Speaker 1: makes a lot of people suspicious of crypto as a
Speaker 1: whole is that we've been told now for over a
Speaker 1: decade that this is life changing, world changing technology, but
Speaker 1: it feels like people are still trying to force a
Speaker 1: use case. Like if it was so big, it feels
Speaker 1: like the use cases should come relatively naturally, but they
Speaker 1: don't seem to. And I think something you said in
Speaker 1: your own UM post recently was you know that there
Speaker 1: just aren't enough bitcoin specific companies for you to invest
Speaker 1: in as a VC. And it feels like to some extent,
Speaker 1: like there are a lot of crypto companies out there
Speaker 1: that are fundraising and asking for money, but there are
Speaker 1: a lot of necessarily good ones. So where are those
Speaker 1: good use cases, those good companies, and why does it
Speaker 1: feel like it's taking so long? Yeah, I mean I
Speaker 1: would carve bitcoind bitcoin out here and say, you know,
Speaker 1: think of it as a lodder day. Not to like
Speaker 1: make the pitch to either of you have heard a
Speaker 1: zillion times, but you know, if you think of it
Speaker 1: as a lodder day kind of improved gold with better
Speaker 1: auditability qualities and you know, better self custody and it's
Speaker 1: cheaper to take physical delivery and so on, then you
Speaker 1: don't really need that much adjacent infrastructure or applications around it.
Speaker 1: You need ways for people to store it and hold
Speaker 1: it and transact with it. But that's kind of it,
Speaker 1: and so so it is naturally constrained sort of the
Speaker 1: startup environment for bitcoin. And that's kind of okay. Like
Speaker 1: the bitcoin movement is more about ideology, as you say,
Speaker 1: and it's like I call it a revanchist. I don't
Speaker 1: know if that's how you pronounced that movement to sort
Speaker 1: of like take back what we want ad so to speak,
Speaker 1: you know, in terms of trying to find a way
Speaker 1: to obliquely um regain a gold standard. And so that's
Speaker 1: sort of like the bigcoin movement and there's maybe not
Speaker 1: that much to invest in aside from custody and exchanges
Speaker 1: sort of in the in the broader crypto space, which
Speaker 1: I guess has been rebranded to web three for reasons
Speaker 1: unknown to me, there's definitely a few things which are
Speaker 1: you know, really, I don't know why we call it
Speaker 1: that now, but I'll oblige. Like I am a proponent
Speaker 1: of stable coins, I have been for a long time.
Speaker 1: I think they offer I think Baladi calls them a
Speaker 1: hundred x improvement over FIAT. You know, send an international
Speaker 1: bank choir and then send a stable coin and you'll
Speaker 1: know what I mean. I think there's clear product market
Speaker 1: fit there. They are a way to dollarize the world,
Speaker 1: and there's definitely crypto dollarization occurring out there, especially in
Speaker 1: emerging markets where maybe your local banking system is questionable,
Speaker 1: in your local currencies inflationary or untrustworthy. So that sector alone,
Speaker 1: I don't think he needs any justification. It's sort of
Speaker 1: is very useful today. Obviously there have been failures there,
Speaker 1: but I'm pretty optimistic about the sector, assuming we can
Speaker 1: find a way from a regulatory perspective to treat tokens
Speaker 1: as equity right to sort of bite the bullet and
Speaker 1: acknowledge that tokens are or should be equity most of
Speaker 1: the time in a kind of an explicit way. I
Speaker 1: would say that would be a significant improvement over kind
Speaker 1: of the default. Like right now, if I wanted to,
Speaker 1: you know, start a company and pay someone in equity,
Speaker 1: that would be really difficult to do with, you know,
Speaker 1: like just some you know, pay a user in equity
Speaker 1: for contributing some data or something. That would be very
Speaker 1: challenging to do, probably with traditional structures and tools. If
Speaker 1: you look at yield farming, I don't like the name,
Speaker 1: but that's basically contributing basically protocol equity to market makers
Speaker 1: that are providing liquidity. You can imagine a world where
Speaker 1: you know, Uber is paying its driver as an Uber
Speaker 1: stock um maybe as a kicker on top of their
Speaker 1: normal salary for every mile driven, and you can maybe
Speaker 1: figure out a way to do that with you know,
Speaker 1: regular old equity. But that's kind of why people like tokens.
Speaker 1: Is one reason builders like them, because they just give
Speaker 1: you tons of flexibility in terms of like dolling out
Speaker 1: de facto equity and your thing. So I like that.
Speaker 1: I also like the transparency you get from you know,
Speaker 1: you can go look at any of these DE five
Speaker 1: protocols and see the cash flows rolling in in real time.
Speaker 1: I think that's a big enhancement, a big improvement over
Speaker 1: your quarterly disclosures, right, and so you know, real time
Speaker 1: financial disclosures is really cool and uh, you know, very
Speaker 1: optimistic about that. The startup in question that you know,
Speaker 1: really kicked off the whole hullabaloo was a wallet based
Speaker 1: authentication log in startup. That's another one which which is
Speaker 1: an easy when which is already you know, doesn't really
Speaker 1: need any defending because it just works because basically, if
Speaker 1: you're using a password set of passwords, you're probably using
Speaker 1: a password manager, which means you are a custoding your
Speaker 1: own sort of cryptographic material. This just sort of formalizes that.
Speaker 1: It means you can, you know, hold your own online
Speaker 1: identity self sovereign and instead of allowing Google or Facebook
Speaker 1: to own it or Apple and then, um, you know,
Speaker 1: it's kind of hard to express in words, and I
Speaker 1: guess there's probably been a bit of a failure among
Speaker 1: the vcs that have talked about this, but yeah, the
Speaker 1: ability to log on with your keys, you know, that
Speaker 1: to me is like a critical part of um of
Speaker 1: flattening the Internet topology, of eliminating some of those hierarchies
Speaker 1: that give web two companies so much power and and
Speaker 1: restoring a measure of power back to the users. So yeah,
Speaker 1: I actually think that's a you know, that's another sort
Speaker 1: of key went in here. So I'm actually really into
Speaker 1: the ease of signing in with that type of wallet.
Speaker 1: And both Joe and I have experimented with this. I
Speaker 1: can't remember who who sent us our names as like
Speaker 1: Ethan identity I forget. Yeah, yeah, I feel really bad
Speaker 1: that I've forgotten. Whatever. It's interesting and I can totally
Speaker 1: see the use case for them. Yeah, that's right. I
Speaker 1: think he was preemptively squatted on our son on the
Speaker 1: day that we became It was so that the toxic
Speaker 1: bitcoin maximalist wouldn't take them and do something nefarious with them.
Speaker 1: But anyway, UM, we've experimented with that, and I guess
Speaker 1: my question is, like I can see the use case
Speaker 1: for that, but does it justify the amount of money
Speaker 1: that's flowing into the space, Like is it a big
Speaker 1: enough market to justify some of the valuations that have
Speaker 1: been put on this The justification would be that you
Speaker 1: can actually really architect the whole Internet, and you know,
Speaker 1: maybe that's a little bit questionable. Certainly, the amounts of
Speaker 1: money flowing into crypt oh Web three early stage venture
Speaker 1: in general private equity, I think we all agree are
Speaker 1: probably likely to drive or turns down just based on
Speaker 1: sort of like historical norms, and I think that a
Speaker 1: lot of that has been a rotation. It's just a
Speaker 1: function of sort of like institutional allocators rotating into those
Speaker 1: riskier asset classes. You know, I don't know what the
Speaker 1: right number is in terms of Web three investment, but yeah,
Speaker 1: I mean, like I think if you wanted to tell
Speaker 1: yourself the exciting story, you would say, look, the fan
Speaker 1: companies are the biggest companies in the world, and they've
Speaker 1: built those valuations on the back of, you know, building
Speaker 1: these huge data silos systems that aren't interoperable, that are
Speaker 1: hard to leave, that are very sticky users kind of
Speaker 1: stuck in those systems, and they can't you know, effectively
Speaker 1: like to you know, to take a different analysis, you
Speaker 1: could say these are like digital fiefdoms, you know, whether
Speaker 1: it's Twitter, Facebook, TikTok, whatever, Like the shareholders get all
Speaker 1: the value and the users that do all the work
Speaker 1: get nothing. They're the surfs, you know, toiling away in
Speaker 1: the fields. They don't even own the fruits. They're labor.
Speaker 1: And so then the kind of Web three story is like,
Speaker 1: we're gonna do a kind of a digital form of
Speaker 1: enclosure where we're gonna you know, put up a fence
Speaker 1: and you're actually gonna be able to have your forty
Speaker 1: acres in a mule and uh, you know, really take
Speaker 1: ownership of the digital value you're creating. And that's a
Speaker 1: very appealing story, you know, I I believe it to
Speaker 1: a certain extent. And and so part of the tools
Speaker 1: necessary there are these like decentralized domain system like e
Speaker 1: n S for instance, that's one while it based sign
Speaker 1: on tools where you're self custodying the data that's tied
Speaker 1: to your own identity. The pathway to get there is
Speaker 1: sort of like unclear, I would say, as of yet.
Speaker 1: So maybe it's a timing question whether now is the
Speaker 1: right time to deploy a ton of capital against it.
Speaker 1: But the destination I think is clear, which is taking
Speaker 1: these very centralized, you know silos where you're very exposed
Speaker 1: to what a small handful of people in silicon Valley
Speaker 1: think about the world and the way they want to
Speaker 1: moderate things and uh, you know, completely changing that, putting
Speaker 1: the power back in the hands the users. Maybe the
Speaker 1: users are actually getting ownership in these platforms which is
Speaker 1: commensurate to their contribution. You know, you maybe there's a
Speaker 1: notion of digital property rights which emerges here, but yeah,
Speaker 1: I would say it's still kind of like a bit
Speaker 1: of an unclear vision overall. So when you made your
Speaker 1: recent investment, one of your points that you made is,
Speaker 1: you know, this is an equity investment. This is a company.
Speaker 1: I'm buying private shares in it and hopefully it will
Speaker 1: be worth more. And you made the point is like,
Speaker 1: this is not about getting access to some token. This
Speaker 1: company is not launching some new excrement coin that all
Speaker 1: the I don't know what I say that my understanding
Speaker 1: is in recent years many vcs have In fact, like
Speaker 1: it seems my impression, the way it works is you
Speaker 1: ostensibly make an investment in a company, but then the
Speaker 1: company itself has a big treasury of its own coin,
Speaker 1: and either you know, the ideas that coin goes up
Speaker 1: in value and so therefore the equity and the company
Speaker 1: that holds those coins gives up a lot in value
Speaker 1: and then the vcs or maybe the vcs get a
Speaker 1: direct allocation of the coins. But then they also have
Speaker 1: like a incentive to like pump the pump the network
Speaker 1: or pump the coins to the public. And these are
Speaker 1: like on publicly. These are like publicly traded stock in
Speaker 1: many cases, except not regulated. And also I get the
Speaker 1: impression there's like a huge gap between what some of
Speaker 1: these private rounds were and then where they immediately trade
Speaker 1: once the tokens are listed on binance or f t
Speaker 1: X or coin base or something like that. What's your
Speaker 1: view on what happened over the last couple of years,
Speaker 1: and what's your view on sort of like vcs doing
Speaker 1: token investments. Yeah, I mean, uh, you know this one
Speaker 1: in particular, this company question they I don't believe they
Speaker 1: have any intention to create a token, and but you what,
Speaker 1: it's very common and when you're making any equity investment,
Speaker 1: the most common model is that is safe with a
Speaker 1: token warrant. So even if there is no token, it
Speaker 1: just gives it gives the investors the ability to you know,
Speaker 1: exercise that option if a token does emerge. And basically
Speaker 1: you know, most vcs will pressure their investees into creating
Speaker 1: a token, even if it's spurious merit less has no purpose,
Speaker 1: right because token valuations are just a function of the
Speaker 1: hype for the most part that the team is able
Speaker 1: to generate around it. They're not really grounded and very
Speaker 1: much Now in some cases, you know, there's kind of
Speaker 1: actually an interesting tug at war that's going to develop
Speaker 1: here between token holders and shareholders. When you have these,
Speaker 1: you basically have a shadow cap table, so you have
Speaker 1: you know, the shareholders in the business and then you
Speaker 1: have the token holders, and they're not necessarily the same,
Speaker 1: especially if the token has been trading or you know,
Speaker 1: there's a yield farming program or something like that. It
Speaker 1: doesn't really make sense to have two cat tables, right,
Speaker 1: It's like, oh, here's the equity and here's the junior equity.
Speaker 1: Like why And then even weirder if you have a
Speaker 1: token that's accruing some revenue from the protocol or smart
Speaker 1: contracts that the team has built, right, And there's a
Speaker 1: lot of these things that accrue tons of revenue, right,
Speaker 1: and so you know, I think it's smarter to just
Speaker 1: be a straightforward company with a standard business model, or
Speaker 1: if you're going to go to the token route not
Speaker 1: to have the corporate equity, you know, kind of fighting
Speaker 1: against the token holders and and we're gonna find there
Speaker 1: will be a ton of debates here, especially with some
Speaker 1: of these larger crypto companies that have both a token
Speaker 1: and they have equity. What we're gonna find is there
Speaker 1: will be fight here and the shareholders will probably prevail
Speaker 1: because ultimately the token holders have a claimand nothing, which
Speaker 1: is kind of the problem with the token. It's it's
Speaker 1: pretty perverse, but you don't really have a claim at all,
Speaker 1: and you know, when push comes to shove, I wouldn't
Speaker 1: want to be a token at the moment. Like the
Speaker 1: Unit swap token holders don't really have any either control
Speaker 1: or claim or anything but that to can just trade
Speaker 1: it a lot. At one point it was really valuable. Yeah,
Speaker 1: it's Uni Swap as the poster child for this, because
Speaker 1: it's kind of the company that you want. I think
Speaker 1: it's called Uni Swap Labs. That's the kind it's that's
Speaker 1: the thing you want ownership over. The Uni swap token
Speaker 1: has and it's not clear what the claim is. There's
Speaker 1: no real formal claim on anything aside from quote unquote governance,
Speaker 1: which is not even clear the token holders control governance
Speaker 1: either for that matter. So yeah, I think what would
Speaker 1: be a better situation is if maybe we got some
Speaker 1: legislative development which said, Okay, look tokens, we're gonna harmonize
Speaker 1: tokens with securities laws, and you have to do these
Speaker 1: kinds of disclosures and you can't lie about the disclosures either.
Speaker 1: Maybe the tokens are or on chain business models are
Speaker 1: more amenable to real ton disclosures too, so maybe it's
Speaker 1: a boon for those regulators, but you'd have also to
Speaker 1: tie that to sort of insider trading and asymmetries and
Speaker 1: things like that. I think actually the European legislation that
Speaker 1: just amount MICAH has some interesting templates that maybe US
Speaker 1: regulators could follow. But I think that would be the
Speaker 1: best outcome, because otherwise it's just going to be this nasty,
Speaker 1: drawn out all these sequence of battles between token holders
Speaker 1: and shareholders. Basically the shareholders are gonna win, and anybody
Speaker 1: that bought the token thinking that they're getting a claim
Speaker 1: on the you know, cash flows occurring to the protocol
Speaker 1: or whatever, uh, they're going to be mistaken in that.
Speaker 1: So I want to go back to Twitter abuse. And
Speaker 1: you know, I mentioned in the intro that last year
Speaker 1: one of one of my worst experiences with it was
Speaker 1: this tweet about bitcoin after the CPI numbers came out. Joe,
Speaker 1: you also tweeted the same chart on that same day,
Speaker 1: and I actually I I screenshot at this for posterity
Speaker 1: because I'm really into data analysis obviously. So my tweet
Speaker 1: got sixty one replies. Your tweet of the same chart
Speaker 1: got twenty seven reply. None of them were ad hominem attacks,
Speaker 1: nothing sexist, nothing racist, or you know, like personally insulting.
Speaker 1: So I I guess my question is, like Nick, when
Speaker 1: it comes to bitcoin maximalism, like it feels like a
Speaker 1: part of it is I'm thinking how to characterize it.
Speaker 1: But you know, it feels like women bear the brunt
Speaker 1: of a lot of criticism from a lot of bitcoin bros.
Speaker 1: And they're almost all guys. Can you explain that aspect
Speaker 1: to us and like what needs to change in order
Speaker 1: to bring more women into crypto, because it does feel
Speaker 1: to me like, if this is about creating a network,
Speaker 1: leaving out half the population seems like a mistake. Yeah,
Speaker 1: and and it's very uncomfortable terrain. And I don't think
Speaker 1: many bitcoiners want to reckon with this, but there is
Speaker 1: an identitarian element to this whole philosophy, culture, religion, whatever
Speaker 1: you want to call it. And yeah, the hardline or
Speaker 1: bitcoin maxie types are basically homogeneous of you know, their
Speaker 1: male for the most part white. You know, they are
Speaker 1: all kind of think and act the same. And uh,
Speaker 1: you know, it's really nasty strains in there. That's just
Speaker 1: a fact, you know, not just against women. There's a
Speaker 1: big anti Semitic strain in there, which is evident if
Speaker 1: you look onto the surface any movement that makes it
Speaker 1: it's hard like certain conspiracy theories about finance or central bankers,
Speaker 1: like it's just a couple of degrees away. We all
Speaker 1: we all know where that goes. Yeah, And like I
Speaker 1: try to be pretty nice online, I've sort of maybe
Speaker 1: patchy track record there, I think, Tracy, I think I
Speaker 1: probably actually you probably look along the replies you'll see
Speaker 1: me and yes, you have, you have been filed on
Speaker 1: to me. I will just point that out. But I
Speaker 1: do think I totally acknowledge that. I don't think I
Speaker 1: ever said anything too on toward. But yeah, I look,
Speaker 1: this is why I think it's important to draw a
Speaker 1: line with you know, and disassociate myself from from this community,
Speaker 1: not a bitcoin er. It's like, I just think you
Speaker 1: don't Bickoin doesn't have to be a religion, it doesn't
Speaker 1: have to be a lifestyle. It doesn't have to be
Speaker 1: something that is hyper emotional and causes you to lash
Speaker 1: out at anyone, whether it's journalists or you know, Paul Kirgman.
Speaker 1: I mean, frankly, he probably deserves some of the ire,
Speaker 1: but um, you know, it doesn't have to be. It
Speaker 1: doesn't have to be this nasty, nasty movement based on
Speaker 1: ad hominems. You're not defending bitcoin from anything, You're just
Speaker 1: making it look incredibly insular and resistant outsiders. Now, I
Speaker 1: think bitcoin is gonna be fine. Right, Like Bitcoin's good idea.
Speaker 1: It kind of works just fine, whether or not there's
Speaker 1: armies of like cyber Hornet, toxy Max, he's quote unquote
Speaker 1: defending the protocol or anything like that. Bitcoin is pretty
Speaker 1: indifferent to that. It's indifferent to sort of me defecting
Speaker 1: from hard line bitcoinism. It's indifferent to all that stuff.
Speaker 1: I think it's just sort of the economics that are
Speaker 1: ultimately persuasive. But yeah, I don't know. I I think, um,
Speaker 1: this is why I'm I'm trying to defect from. And
Speaker 1: to be clear, I never consider myself a maximalist. But yeah,
Speaker 1: this is why I think it's important for a movement
Speaker 1: of like call them bitcoin secular risks to emerge rationalists
Speaker 1: as secularist people that believe in bitcoin but are also
Speaker 1: open minded. They believe in facts the world of reality,
Speaker 1: and acknowledge that there's development and other block chains, that
Speaker 1: it's not deeply sinful to build elsewhere too, transact elsewhere right,
Speaker 1: that you don't need to tie these like fringe beliefs
Speaker 1: and acts to a monetary and technical project. Nick, I
Speaker 1: remember years ago, I don't know, maybe like twenty nine
Speaker 1: or something years ago on TV I asked you if
Speaker 1: the having was a myth or whether it's priced, and
Speaker 1: you said it was, and You're like, yeah, it doesn't
Speaker 1: really make any sense. And so the early seeds of
Speaker 1: you going soft were evident even back. And but Nick,
Speaker 1: it was it was great to have you on odd
Speaker 1: loads is a conversation I wanted to make happen for
Speaker 1: a long time. So I really appreciate you, really really
Speaker 1: appreciate you coming on Thanks Joe, Thanks Tracy, Thanks Nick.
Speaker 1: I found this conversation very cathartic, very good things about
Speaker 1: the bear market. All right, Thanks Nick. I like that conversation.
Speaker 1: You know, I've always, even during his more Maxi period, Maxie,
Speaker 1: I've always thought Nick was like a bitcoin realist as
Speaker 1: opposed to a religionist, even during the more extreme thing.
Speaker 1: And I think he is pretty realistic still about like
Speaker 1: the pluses and minuses of all of it. Well, so
Speaker 1: I question here's what I think. I think it all
Speaker 1: boils down to whether or not you think bitcoin is
Speaker 1: a technology play or a cultural play. And I do
Speaker 1: question nixt statement at the end about bitcoin doesn't have
Speaker 1: to be a religion, because if it doesn't have these
Speaker 1: certain connotations attached to it, then all you're left with
Speaker 1: is the actual technology, and I think there's still a
Speaker 1: question mark over how useful that actually is. Now. If
Speaker 1: you're going to treat it as you know, something like gold,
Speaker 1: which to me is much more of a cultural thing
Speaker 1: that's about gold's position in society, then like you cannot
Speaker 1: divorce it from the way people feel about it. This
Speaker 1: is a really well put I actually I completely agree.
Speaker 1: Like on some level it's like why does a bitcoin
Speaker 1: have value? So it's like on Thethereum or on these
Speaker 1: other chains, you can actually sort of like explain pretty
Speaker 1: crisply why it has value. Like I can transfer dollar
Speaker 1: denominated stable points very easily to you on ethereum and
Speaker 1: you sort of like pay the ethereum holder is for
Speaker 1: the service of conducting that transaction for us. There's no
Speaker 1: faith involved with that, there's no But why it is
Speaker 1: a bitcoin? Why is it worth something and not nothing?
Speaker 1: Is sort of like this really difficult question to answer
Speaker 1: with respect to bitcoin, And I do think there's a
Speaker 1: large faith element and even and this is something I've
Speaker 1: always thought interesting, like even gold. Why did gold take off?
Speaker 1: In part, like one of some of the early mythology
Speaker 1: was like gold doesn't tarnish, and so the ancients said, like, oh,
Speaker 1: this must be a divine metal because it's unlike everything
Speaker 1: else that exists on earth. Gold doesn't have this sort
Speaker 1: of u uh, it doesn't degrade over time. It's divine
Speaker 1: and something like that. So I do feel like even
Speaker 1: if even just sort of like a reincarnated gold. But
Speaker 1: how do you how do you separate how do you
Speaker 1: separate it from the culture and religion? So I agree.
Speaker 1: I agree, Like it's hard to know what bitcoin is
Speaker 1: if there's no culture, right and even today we talk
Speaker 1: about you know, gold bugs, which obviously connotes like a
Speaker 1: certain portion of society and a certain belief system. And
Speaker 1: because of that, gold still has like a role in
Speaker 1: traditional financial assets. Also thought nixt point about like sort
Speaker 1: of the bitcoin laser eyes as kind of I don't know,
Speaker 1: maybe LARPing is the right word, or stolen valor where
Speaker 1: like there were one point these sort of like big
Speaker 1: conflicts with the history of bitcoin, and people are trying
Speaker 1: to change the protocol, but that's gone and you know,
Speaker 1: now that's not a big thing. People have moved on.
Speaker 1: If you don't like bitcoin, you can like build some
Speaker 1: other chain. And so it feels like there's this desire
Speaker 1: to continuous state of conflict or perceived threats, like all
Speaker 1: the central bankers or after Jamie Diamond is after us whatever.
Speaker 1: It's like, no, they're probably like they don't know they're not,
Speaker 1: but that's sort of like they that they have to
Speaker 1: maintain that like permanent state of siege mentality to keep
Speaker 1: it right. I mean, I would be happy if we
Speaker 1: could just go I don't want to go back, but
Speaker 1: if we could just have a situation where you can
Speaker 1: have a conversation about the strengths and the weaknesses a
Speaker 1: bitcoin without someone screaming at you. You know this is
Speaker 1: fund or have fun staying poor or just like insulting
Speaker 1: the way you love. Well, now we can say that
Speaker 1: to them. We can it have fun staying part Yeah,
Speaker 1: now that big plant has lost so much money. This
Speaker 1: is a cathartic episode. All right, shall we leave it there?
Speaker 1: Let's leave it there. This has been another episode of
Speaker 1: the All Thoughts podcast. I'm Tracy Alloway. You can follow
Speaker 1: me on Twitter at Tracy Alloway and I'm Joe Why
Speaker 1: Isn't Thal? You can follow me on Twitter at the Stalwark.
Speaker 1: You can follow our guests Nick Carter on Twitter. He's
Speaker 1: Nick Double Underscore Carter. You can follow our producer Carmen
Speaker 1: Rodriguez at Carmen Armine and check out all of the
Speaker 1: Bloomberg podcasts onto the handle at podcasts. Thanks for listening
Speaker 1: year to