WEBVTT - Weekend Bonus: Crypto IRL, Episode 5, with Tim and Katie 0:00:03.640 --> 0:00:06.760 This is Bloomberg Crypto, a daily Bloomberg I Heard podcast, 0:00:07.120 --> 0:00:10.119 and I'm Stacy Marie Ishmael, Managing editor of Crypto for 0:00:10.160 --> 0:00:29.040 Bloomberg News. Yes, I know it's Saturday, but we're here 0:00:29.040 --> 0:00:32.520 to offer you our listeners a special audio only version 0:00:32.600 --> 0:00:35.640 of a new weekly video series called Crypto. I r L. 0:00:36.200 --> 0:00:39.120 That's I r L Like in Real Life, and it's 0:00:39.159 --> 0:00:42.159 hosted by friends of the show, Katie Greifeld and Tim Stenovic. 0:00:42.479 --> 0:00:45.600 This is episode five. If you want the full video experience, 0:00:45.920 --> 0:00:48.839 head over to Bloomberg dot com slash qt or check 0:00:48.880 --> 0:01:10.080 it out on YouTube. Check this out. What do you think? 0:01:11.240 --> 0:01:14.440 I see by matt Levine? And I feel pretty excited 0:01:14.520 --> 0:01:16.959 right now? Why are you excited? I love Matt Levine 0:01:16.959 --> 0:01:19.440 and I like I really like his brain. I got 0:01:19.480 --> 0:01:23.040 a surprise for you. What's that we got Matt Levine? 0:01:23.240 --> 0:01:25.600 We're gonna be talking to him. That's huge for us 0:01:25.840 --> 0:01:32.960 right now and the audience. Matt Levine, it's good to 0:01:33.000 --> 0:01:35.480 see you, good to be here. We've been really excited 0:01:35.480 --> 0:01:39.000 about doing this. Me too, I guess, so thanks for 0:01:39.000 --> 0:01:46.880 doing this. This. Yeah, this is everything. It's a little 0:01:46.920 --> 0:01:49.400 bit exaggerated because that's single side it's single side, but 0:01:50.200 --> 0:01:53.000 it's big. It's big. I decided I'm going to call 0:01:53.040 --> 0:01:56.360 it a treatise. Is that okay? That is okay? Okay? 0:01:57.120 --> 0:02:01.240 What about a tone? Tone is like a little bit 0:02:01.240 --> 0:02:06.160 insultingly about how it's long, but sure, it's a tone 0:02:04.080 --> 0:02:07.800 it is. Okay, let's talk about how long this is 0:02:08.240 --> 0:02:10.280 and how it should be read, because I found it 0:02:10.960 --> 0:02:13.920 very educational, Like as I was reading it, I felt 0:02:13.960 --> 0:02:15.480 like I was learning. There's a lot of things I 0:02:15.520 --> 0:02:17.520 know about crypto. I'd like to think a lot, but 0:02:17.639 --> 0:02:21.520 I feel like perhaps sort of the fine shading was 0:02:21.600 --> 0:02:25.079 missed out, Like I don't understand necessarily everything I know, 0:02:25.560 --> 0:02:27.480 and this helped to fill in some of the blanks. 0:02:27.480 --> 0:02:31.799 But how should people read this? Is this a textbook? 0:02:32.240 --> 0:02:36.639 Is this an article? Should I read it start to finish? Ideally? No, 0:02:36.800 --> 0:02:39.160 Like I mean, the way that I thought about it 0:02:39.200 --> 0:02:45.320 was that crypto is like big enough as a topic 0:02:45.760 --> 0:02:49.680 to produce, you know, that much paper, but it's like 0:02:49.760 --> 0:02:55.560 relatively a small topic. It's like everything in crypto for 0:02:55.600 --> 0:02:57.800 the most part, has been invented in the last like 0:02:57.800 --> 0:03:00.240 twelve years or so, and so when you can do 0:03:00.400 --> 0:03:06.960 is start from the beginning and kind of um logically 0:03:07.000 --> 0:03:09.720 develop all of the things that exist in crypto today. 0:03:09.880 --> 0:03:13.079 So that's what I tried to do. And it's not 0:03:13.200 --> 0:03:15.080 quite as something, not quite as easy as that, but 0:03:15.120 --> 0:03:16.600 like the idea is that you can sort of start 0:03:16.880 --> 0:03:19.000 if someone's nothing about crypto. You can start by saying, well, 0:03:19.040 --> 0:03:21.160 this is like what bitcoin is, and then you can 0:03:21.200 --> 0:03:24.320 sort of look at bitcoin and say, here are some 0:03:25.360 --> 0:03:28.399 generalizations of that concept. Here are some ways to take 0:03:28.480 --> 0:03:31.200 that in different directions. And that's what I tried to 0:03:31.200 --> 0:03:33.519 do here. So you don't have to get it start 0:03:33.560 --> 0:03:36.520 to finish, because like it sort of branches into different directions. 0:03:36.840 --> 0:03:38.920 But the idea was to kind of start from nothing 0:03:39.200 --> 0:03:42.960 and develop more or less the system of crypto that 0:03:43.040 --> 0:03:49.640 exists today that you have a line pretty early on 0:03:49.880 --> 0:03:52.080 I read the whole thing, but pretty early on keeping 0:03:52.120 --> 0:04:00.200 that I did text him that I was having weird 0:04:00.280 --> 0:04:03.400 deja vu to college, for like, my partner has done 0:04:03.440 --> 0:04:05.960 the reading, but I haven't yet finished the reading. But 0:04:06.240 --> 0:04:08.520 Professor I did finish the reading, and I liked this 0:04:08.600 --> 0:04:12.200 line that I don't have strong feelings for or against crypto. 0:04:12.440 --> 0:04:15.040 I like finance, and I like that you wrote that 0:04:15.240 --> 0:04:18.839 specifically for me. That's what it felt like, because it 0:04:18.920 --> 0:04:24.320 feels like crypto is sort of this market structure experiment 0:04:24.839 --> 0:04:29.480 and launching like an asset class at built in real time. 0:04:29.480 --> 0:04:32.440 And I wasn't around when like Bill Gross was inventing 0:04:32.440 --> 0:04:34.839 bond trading or something like that. Like, I haven't seen 0:04:34.880 --> 0:04:38.600 this before, and it's fun to sort of watch and 0:04:38.680 --> 0:04:41.520 cover and I feel like that's where you're coming from 0:04:41.520 --> 0:04:43.440 in this piece. Yeah, And a lot of people would 0:04:43.440 --> 0:04:46.359 disagree with that, and so no, it's not a financial 0:04:46.520 --> 0:04:49.479 market structure innovation at all. It's building a new web 0:04:49.600 --> 0:04:51.680 or it's you know, it's not about the money, it's 0:04:51.720 --> 0:04:55.760 about the tech or whatever. Right, But you know, I 0:04:55.800 --> 0:04:58.760 have my doubts that that is true to something that. Okay, 0:04:58.880 --> 0:05:02.279 so talking about people leaving trad fy going into crypto 0:05:02.360 --> 0:05:05.080 and how crypto is taking a lot of elements of 0:05:05.080 --> 0:05:09.440 the traditional finance system and just crypto a izing it. 0:05:09.520 --> 0:05:12.960 But I mean, you use the phrase in the piece 0:05:13.279 --> 0:05:16.760 ingesting the traditional finance system. You have tokenized stocks, do 0:05:16.800 --> 0:05:22.599 you have decentralized exchanges? Is that a worthy enough goal 0:05:22.760 --> 0:05:26.279 for crypto? Like can we just say that's enough that 0:05:26.360 --> 0:05:30.280 we've created this parallel system and it works, and that's 0:05:30.279 --> 0:05:33.880 really cool, trouble done enough for what? Right? I mean, 0:05:33.920 --> 0:05:35.440 I think that would be I think that people who 0:05:35.440 --> 0:05:37.240 are like are on Twitter a lot talking about how 0:05:37.279 --> 0:05:38.760 crypto is going to change the world, would be a 0:05:38.760 --> 0:05:42.680 little disappointed if crypto if the end result of crypto 0:05:42.760 --> 0:05:46.039 is making the financial system more efficient. But I also 0:05:46.080 --> 0:05:47.359 think that a lot of people got rich and crypto 0:05:47.480 --> 0:05:49.360 get even richer if that if that worked out right, 0:05:49.560 --> 0:05:52.120 And I also think that, um, you know, the financial 0:05:52.120 --> 0:05:54.720 system is really big, and it supports a lot of 0:05:55.040 --> 0:06:00.679 real economic activity, and I think there are many places 0:06:00.720 --> 0:06:04.159 where it is inefficient, in some places where it is 0:06:05.360 --> 0:06:09.119 you know, dangerous and has you know, a recent history 0:06:09.120 --> 0:06:13.560 of causing catastrophes, and if you improved those places by 0:06:13.600 --> 0:06:15.719 five percent, like that would be like a really meaningful 0:06:15.720 --> 0:06:20.039 contribution to the world. I think that most fair observers 0:06:20.080 --> 0:06:22.320 would say there are some real advantages to the cryptosystem 0:06:22.360 --> 0:06:27.720 in terms of like, um, particularly sort of like speed 0:06:27.760 --> 0:06:30.039 of innovation, and then there's some real disadvantages in terms 0:06:30.040 --> 0:06:33.320 of often speed of innovation and ability to like you know, 0:06:33.600 --> 0:06:38.039 exploit things, and and also like the sort of permissionlessness 0:06:38.040 --> 0:06:41.520 of crypto makes it a little bit more attractive to 0:06:41.960 --> 0:06:46.359 anonymous possibly criminal actors, right, but so there's real problems. 0:06:46.400 --> 0:06:50.520 But like, uh, if you think that it's a better 0:06:50.520 --> 0:06:52.480 way to run a financial system, like having a better 0:06:52.480 --> 0:06:54.479 way to run a financial system is really valuable with 0:06:54.480 --> 0:06:56.840 the giant financial system. And I guess that's my question, 0:06:56.920 --> 0:07:00.599 Like that seems like a pretty respectable fee, like we 0:07:00.680 --> 0:07:05.559 made the system more. Like I think that, like people 0:07:05.560 --> 0:07:08.560 in crypto would say, the way that we trade crypto 0:07:08.720 --> 0:07:11.880 is way better than the way that we trade stocks 0:07:11.960 --> 0:07:14.680 in terms of like anyone can sort of access the 0:07:14.720 --> 0:07:18.000 same exchanges. There's like less of a divide between institutional 0:07:18.000 --> 0:07:20.840 and retail traders. Um, if you want to build something, 0:07:20.880 --> 0:07:22.960 if you want to write a new derivative contract, it's 0:07:22.960 --> 0:07:24.880 sort of like a flatter hierarchy where you don't have 0:07:24.920 --> 0:07:27.040 to like sign up in is the with JP Morgan 0:07:27.600 --> 0:07:33.120 um and and everything just sort of like works on 0:07:33.200 --> 0:07:35.360 settles a bit faster. So I think that people are 0:07:35.440 --> 0:07:39.320 real sort of gung ho about they have built um 0:07:39.480 --> 0:07:42.000 has it ingested you know, the loan market or the 0:07:42.000 --> 0:07:46.920 stock market, like really and like you know, I say 0:07:46.960 --> 0:07:49.040 like that, you know, there's in two thousand seventeen a 0:07:49.080 --> 0:07:51.640 real vogue for banks to say we're gonna move loan 0:07:51.720 --> 0:07:54.160 trade into the blockchain, and like you don't hear that anymore, 0:07:54.400 --> 0:07:56.120 not because they did it. You know, Like there's a 0:07:56.120 --> 0:08:00.840 lot of like kind of the bank action in projects 0:08:00.880 --> 0:08:02.760 that turned out to be kind of vaporware, like are 0:08:02.800 --> 0:08:05.960 always a few years in the future, so I wouldn't 0:08:05.960 --> 0:08:07.560 say it's happened yet. But like I think that the 0:08:07.560 --> 0:08:09.679 crypto people would say that we have a good system 0:08:09.800 --> 0:08:13.200 for trading stuff, and let's trade more stuff on that system. 0:08:13.320 --> 0:08:18.320 And I think that they are having success in persuading 0:08:18.760 --> 0:08:20.600 some people in finance that, in fact, it's a good 0:08:20.600 --> 0:08:24.880 system to trade. This special audio only episode of Crypto 0:08:24.920 --> 0:08:26.760 I r L will be right back with more from 0:08:26.840 --> 0:08:29.720 Katie Greifeld and Tim Stanovic. If you want the full 0:08:29.800 --> 0:08:50.480 video experience, head to Bloomberg dot com slash QT. I 0:08:50.480 --> 0:08:53.640 want to talk about trust because that's a big part 0:08:54.360 --> 0:08:56.400 of crypto and it's a big part of your peace. 0:08:58.720 --> 0:09:00.559 It was pretty fascinated with the id that we live 0:09:00.559 --> 0:09:03.520 in a world where we kind of take trust for granted, 0:09:04.040 --> 0:09:07.800 that when we open up our banking app, the money 0:09:07.800 --> 0:09:12.040 that we see in there is actually ours. There's this 0:09:12.080 --> 0:09:14.480 tension though, because crypto is trying to build out this 0:09:14.559 --> 0:09:17.800 kind of trust list system where everything is verified, but 0:09:17.800 --> 0:09:20.640 at the same time, you do have a lot of well, 0:09:20.679 --> 0:09:22.200 I don't want to say a lot, but you do 0:09:22.400 --> 0:09:26.440 have a handful of bad actors out there who have 0:09:26.679 --> 0:09:29.199 gotten away with at this point taking a lot of 0:09:29.240 --> 0:09:33.679 people's money. It's more than a handful, more than a handfuls. 0:09:34.040 --> 0:09:38.240 It's it's weird. There's so much bad stuff happening in 0:09:38.280 --> 0:09:40.920 a place that's supposed to be more trustworthy than the 0:09:40.920 --> 0:09:44.679 traditional system, isn't. Yeah, I mean, this is the thing 0:09:44.679 --> 0:09:47.840 I talked about a lot. I mean I think that, um, 0:09:48.040 --> 0:09:51.200 one thing I would say is that in traditional finance, 0:09:51.240 --> 0:09:53.000 like you trust that your money is in your bank account, 0:09:53.360 --> 0:09:59.000 and I could probably articulate the sort of mechanisms by 0:09:59.040 --> 0:10:01.720 which that trust is like fair, like it was like 0:10:01.760 --> 0:10:03.800 reasonable to trust the money you rank. You can't be there, 0:10:04.240 --> 0:10:06.880 but I'm not sure that everyone could, because it's the 0:10:06.920 --> 0:10:08.760 thing that you can kind of take for granted, where 0:10:08.760 --> 0:10:10.960 you can say, the banks just give me my money, 0:10:10.960 --> 0:10:14.839 and it's just like empirically trust reliable enough that you 0:10:14.960 --> 0:10:17.920 just go around trusting it. And in some sense what 0:10:17.960 --> 0:10:21.480 you're trusting is not the bank, but like the background 0:10:21.559 --> 0:10:23.880 rules of society. You sort of expect the rule of 0:10:23.960 --> 0:10:26.840 law to work. You expect the government to sort of 0:10:26.840 --> 0:10:29.440 do its job. You expect people to try to comply 0:10:29.520 --> 0:10:31.680 with the law. You expect there to be laws that 0:10:31.760 --> 0:10:33.360 say the bank has to give you your money, right 0:10:33.360 --> 0:10:35.640 Like you don't even you know, like check these things 0:10:35.679 --> 0:10:38.000 off the checklist. You just kind of like go around 0:10:38.000 --> 0:10:41.520 trusting these things. In crypto, there's sort of like two 0:10:42.880 --> 0:10:48.240 different aspects to it. One is that you could verify 0:10:48.320 --> 0:10:51.360 everything or not everything. But like like there are large 0:10:51.360 --> 0:10:54.360 swaths of crypto where everything is kind of verifiable right 0:10:54.559 --> 0:10:58.200 where they are like you know, open source algorithms and 0:10:58.240 --> 0:11:01.959 like verifiable you know, proof of things, and you can 0:11:02.000 --> 0:11:04.439 prove that your bitcoins belong to you on the blockchain, 0:11:04.960 --> 0:11:06.800 and most people don't do that, just the way most 0:11:06.840 --> 0:11:09.920 people don't like sort of read the banking regulations before 0:11:09.920 --> 0:11:12.600 putting their money in the bank. But there is a 0:11:12.679 --> 0:11:15.480 notion that all of those proofs are openly available to 0:11:15.520 --> 0:11:19.000 everyone in a way that isn't really true of traditional banking, 0:11:19.000 --> 0:11:21.480 where like, in traditional banking, like at some level, what 0:11:21.520 --> 0:11:24.160 you're trusting is that a bank examiner has gone into 0:11:24.200 --> 0:11:26.199 your bank and made sure that the money is there, 0:11:26.320 --> 0:11:29.160 that the auditor has audited the financial statements. In crypto, 0:11:29.200 --> 0:11:31.480 everything can be verified by you. You don't do it 0:11:31.520 --> 0:11:34.880 because that would take forever, but like you trust the 0:11:34.920 --> 0:11:37.360 system in a different way. You trust the system in 0:11:37.400 --> 0:11:39.960 a way where you're like, if I had to, I 0:11:39.960 --> 0:11:43.120 could prove everything. Um So I think that's an interesting 0:11:43.160 --> 0:11:46.880 development um And it's like it leads to trust. It 0:11:46.960 --> 0:11:48.960 leads to like people who trust the system rather than 0:11:49.040 --> 0:11:51.240 verifying everything, but it leads to trust from a different 0:11:51.240 --> 0:11:53.480 path than the way we do it in the rest 0:11:53.480 --> 0:11:56.480 of society. So used to banks working that a lot 0:11:56.520 --> 0:12:00.160 of people get into crypto, sometimes just because I want 0:12:00.160 --> 0:12:02.960 to make money, sometimes for philosophical reasons, and they're like, 0:12:03.120 --> 0:12:06.120 they don't like trust, but they're still so used to 0:12:06.160 --> 0:12:10.360 that background principle of trust that they see an ad 0:12:10.400 --> 0:12:12.559 for eight returns on their savings and they're like, well, 0:12:12.600 --> 0:12:14.880 that must be fine, right, Like, how could that go wrong? 0:12:14.920 --> 0:12:17.120 It's advertised on a website and the website looks good. 0:12:17.160 --> 0:12:21.240 Is like, you know, I think there is sometimes an 0:12:21.280 --> 0:12:23.360 attitude of like, someone would have done something about this 0:12:23.440 --> 0:12:26.400 if it was fraud, which is you know, a very 0:12:26.400 --> 0:12:28.600 traditional finance attitude that is really much not the sort 0:12:28.640 --> 0:12:32.240 of like uh like sort of front page attitude of crypto, 0:12:32.400 --> 0:12:35.440 but it seems to have crept back in anyway. And 0:12:35.520 --> 0:12:41.560 so I mean, how how could you possibly do due diligence? Then? 0:12:41.800 --> 0:12:43.560 I mean, because there are you've read about how there's 0:12:44.559 --> 0:12:49.560 incentives like miners, for example, have incentives not to completely 0:12:49.800 --> 0:12:53.400 you know, nuke the whole system because then they lose money. Um. 0:12:54.280 --> 0:12:57.160 But for the average person coming into crypto, like, how 0:12:57.160 --> 0:13:00.120 do you do that due diligence in the apps us 0:13:00.160 --> 0:13:02.440 of trust? I think it's hard, right, I mean I 0:13:02.440 --> 0:13:06.679 think that there are there are people who spend for room. 0:13:06.720 --> 0:13:08.160 It's like a hobby, and you spend a lot of 0:13:08.200 --> 0:13:10.720 time familiarizing yourself with like the code and the algorithms 0:13:10.760 --> 0:13:15.560 and sort of get comfortable that like you can demonstrate 0:13:15.600 --> 0:13:18.520 that most of the stuff works, and then you're often 0:13:18.640 --> 0:13:21.240 using like kind of defy and you're trying to avoid 0:13:22.000 --> 0:13:24.560 like you're aware that you don't want to trust anyone, 0:13:24.600 --> 0:13:27.360 and so you're trying to avoid trusted central counterparties. Right, 0:13:27.400 --> 0:13:29.280 there's a lot of people in crypto who are basically 0:13:29.280 --> 0:13:33.199 trying to minimize their contact with like trusted central counterparties. 0:13:34.080 --> 0:13:35.280 The other way to do it is the way you 0:13:35.320 --> 0:13:37.760 do it in any other business, where like you try 0:13:37.840 --> 0:13:40.600 to find the trust really trusted central counterparties, right, And like, 0:13:41.480 --> 0:13:44.760 you know, crypto is sort of mature enough that you 0:13:44.800 --> 0:13:46.760 know not to advertise like coin Base, but like coin 0:13:46.800 --> 0:13:50.000 Base is a US public company, right, Like I don't 0:13:50.040 --> 0:13:52.320 know that, I don't know how effectively they're regulated. Right, 0:13:52.360 --> 0:13:55.000 it's still early for everyone, right, But like if you're 0:13:55.040 --> 0:13:57.120 a US investor, you might say, I'm going to go 0:13:57.160 --> 0:13:59.480 to the biggest name that's a public company where like 0:14:00.040 --> 0:14:01.839 the guy lives in America and it doesn't want to 0:14:01.880 --> 0:14:04.200 get arrested, you know, And then you know you're hoping 0:14:04.200 --> 0:14:05.960 for the best, but you're what you're doing is trusting 0:14:06.000 --> 0:14:09.240 the same background principles of of like you know, sort 0:14:09.240 --> 0:14:11.360 of the rule of law and society that you trust 0:14:11.400 --> 0:14:15.240 in a bank or any other you know, company. But 0:14:15.440 --> 0:14:19.280 sometimes people who work at publicly traded companies go to jail. 0:14:20.440 --> 0:14:28.840 Oh yeah, there's a reliable You talk about crypto being 0:14:28.840 --> 0:14:32.680 a pretty broad umbrella here, and I feel like that 0:14:33.080 --> 0:14:36.160 we've been talking mostly about the financial uses of crypto, 0:14:36.320 --> 0:14:40.240 but also under that umbrella is web three. Sure, and 0:14:40.520 --> 0:14:42.400 you make the point that you know, there's not a 0:14:42.480 --> 0:14:45.360 lot of ways where crypto touches like the real economy 0:14:45.520 --> 0:14:50.080 or people's lives, but it feels like Web three theoretically 0:14:50.520 --> 0:14:54.160 there's potential there for crypto to actually affect my day 0:14:54.200 --> 0:14:56.680 to day, but you take a pretty skeptical tone to it. 0:14:57.320 --> 0:15:00.720 I think that a lot of the I don't know. 0:15:00.800 --> 0:15:04.040 I just like the use cases that people are excited 0:15:04.040 --> 0:15:06.200 about do not make me excited. You know, it's like 0:15:06.240 --> 0:15:08.160 you can what are those use cases? Well? I mean, 0:15:08.200 --> 0:15:10.640 like I don't want to like parody it too much, 0:15:10.680 --> 0:15:12.880 but like you know, you could like buy a sword 0:15:12.920 --> 0:15:14.960 in a computer game, and you own the sword. You 0:15:14.960 --> 0:15:17.560 can go to a different computer games sword or whatever. 0:15:19.160 --> 0:15:21.480 But does he know, like the stuff you did in college, 0:15:22.360 --> 0:15:25.400 which you like, when did you play with some metaverse 0:15:25.400 --> 0:15:30.000 animal or something? Oh my god, we're talking about medo pats. No. Well, okay, 0:15:30.040 --> 0:15:33.960 so I, for example, to talk about myself the center 0:15:33.960 --> 0:15:36.960 of my own universe. I started playing New Pets when 0:15:37.160 --> 0:15:40.880 I was eleven. I still occasionally interacted the game I 0:15:40.920 --> 0:15:45.280 played a lot in college like that. I don't know 0:15:45.440 --> 0:15:48.800 that was a sort of a metaverse, uh? I couldn't 0:15:48.840 --> 0:15:51.760 imagine that being on the blockchain and more integrated into 0:15:51.840 --> 0:15:56.240 my life and identity. And yeah, I mean there's there's 0:15:58.480 --> 0:16:02.200 like I want in the piece to take that seriously 0:16:02.240 --> 0:16:07.080 because I think that like leaving aside you know, pats 0:16:07.120 --> 0:16:09.240 or any particular thing, Like it is the case that 0:16:09.360 --> 0:16:13.640 in my lifetime, like when I was born, almost none 0:16:13.680 --> 0:16:15.600 of my life occurred on the Internet, and now like 0:16:15.640 --> 0:16:17.280 a lot of my life occurs on the Internet in 0:16:17.320 --> 0:16:22.320 different ways. And so like if you are building if 0:16:22.320 --> 0:16:24.360 you're trying to extract value from building systems from the 0:16:24.440 --> 0:16:27.600 for the Internet, like that's a that's like very broadly speaking, 0:16:27.680 --> 0:16:31.200 like the growth industry, right, and so like if you 0:16:31.240 --> 0:16:33.280 say people are gonna be living more in the metaverse 0:16:34.440 --> 0:16:36.480 in some broadway where they're going to spend more of 0:16:36.480 --> 0:16:41.240 their time online, like twenty years ago, I would have said, 0:16:41.280 --> 0:16:43.640 I don't want to like hang out with my friends 0:16:43.680 --> 0:16:46.720 like by like showing like sending them pictures on a 0:16:46.880 --> 0:16:49.760 social media website. I want to like I have my 0:16:49.880 --> 0:16:51.960 friends in person, and now like I just like people's 0:16:52.000 --> 0:16:54.600 photos and Instagram, you know, Like, um, like this is 0:16:54.640 --> 0:16:56.960 true that like more of life has moved to the 0:16:57.120 --> 0:17:00.040 to like the Internet broadly speaking, and so that it 0:17:00.160 --> 0:17:05.160 is like a place where like the easiest access point 0:17:05.160 --> 0:17:06.960 for crypto to sort of like affect the world is 0:17:06.960 --> 0:17:09.600 like on the Internet. Um, that said, it's not clear 0:17:09.640 --> 0:17:11.840 that it's like easy, right, It's like your newo pets 0:17:11.840 --> 0:17:13.639 weren't on the blockchain. It's not clear that they'd be 0:17:13.640 --> 0:17:16.360 better on the blockchain. So there's still like even if 0:17:16.359 --> 0:17:18.879 you're even if your cases like the betaverse will be 0:17:18.920 --> 0:17:22.000 everything like, that doesn't prove that like crypto is going 0:17:22.160 --> 0:17:23.919 like the blockchain is going to be the sort of 0:17:23.920 --> 0:17:26.960 like underlying engine of the metaverse. Right, is part of 0:17:26.960 --> 0:17:30.119 your skepticism about this Web three label due to the 0:17:30.160 --> 0:17:34.240 fact that there are so many projects associated with Ponzi's. Yeah, 0:17:34.320 --> 0:17:38.159 and I mean this is not the only thing that 0:17:38.200 --> 0:17:42.200 happens in Web three, but like a really important element 0:17:42.280 --> 0:17:48.160 of crypto and like Web three is that a lot 0:17:48.240 --> 0:17:53.520 of projects have their own tokens, and a lot of 0:17:53.520 --> 0:18:00.000 people think very explicitly in terms of token omics, where 0:17:59.800 --> 0:18:02.080 your thought process is not just let me build a 0:18:02.080 --> 0:18:05.760 good product, but it's let me build a product, distribute 0:18:05.800 --> 0:18:11.240 tokens tied to that product to the users of that product, 0:18:11.720 --> 0:18:13.480 and then they'll want the token to go up, and 0:18:13.480 --> 0:18:15.359 so they'll use the product more. And so it is 0:18:15.400 --> 0:18:18.640 hard early on to disentangle what's a good project from 0:18:18.680 --> 0:18:20.199 what is a project that has done a good job 0:18:20.240 --> 0:18:25.000 of hyping its tokens. And ah, it's not just that 0:18:25.080 --> 0:18:28.200 some projects are ponzi's, it's that, like being a ponzi 0:18:28.280 --> 0:18:31.119 is sort of baked into the nature of like a 0:18:31.160 --> 0:18:33.680 lot of what is going on and like this sort 0:18:33.720 --> 0:18:38.280 of like crypto token economy. So with that in mind, 0:18:38.320 --> 0:18:41.760 I mean, obviously the word ponzi has a lot of 0:18:41.800 --> 0:18:44.760 negative connotations, but one thing that I think is fascinating 0:18:44.840 --> 0:18:47.080 metric is that there are people who are like enthusiastically 0:18:47.119 --> 0:18:50.840 embracing that label and they're like, no, no, Ponzi's are 0:18:50.840 --> 0:18:54.639 how we're going to build the last thing. Yeah, well 0:18:54.720 --> 0:18:59.000 maybe it's not a bad thing, right. It's distasteful, and 0:18:59.040 --> 0:19:01.720 it like makes it hard to evaluate projects because like 0:19:01.760 --> 0:19:04.040 you have both the pondsi element and like whatever is 0:19:04.040 --> 0:19:08.439 actually going on. But it's not wrong that like giving 0:19:08.440 --> 0:19:11.879 people economic incentives early on can like traw them to 0:19:12.320 --> 0:19:14.480 projects that turn out to be good, and they can 0:19:14.520 --> 0:19:17.400 make those projects viable. Like I think it's a it's 0:19:17.400 --> 0:19:21.280 a reasonable and like very funny thought to have, and 0:19:21.320 --> 0:19:24.720 that has become sort of like normalized in crypto um. 0:19:24.760 --> 0:19:26.520 If I could have put real money into the neo 0:19:26.640 --> 0:19:29.560 pets Ponzi early on, I absolutely would have out have 0:19:29.600 --> 0:19:32.560 bought all the neo points tokens right and like you know, 0:19:33.600 --> 0:19:37.600 like where Beanie baby is that in like an analytage. 0:19:38.160 --> 0:19:39.760 I would have spent a lot of money on them. 0:19:40.119 --> 0:19:43.399 Luckily I was like four, so I wasn't in control 0:19:43.440 --> 0:19:45.600 of my purse turns. But the problem with that is 0:19:45.640 --> 0:19:48.239 that in order for those to be worth something to you, 0:19:48.760 --> 0:19:50.840 you have to sell them to the next Katie Greifeld, 0:19:51.400 --> 0:19:55.919 Who's you know, the next gullible little girl. This special 0:19:55.960 --> 0:19:58.399 audio only episode of Crypto I r L will be 0:19:58.520 --> 0:20:01.120 right back with more from Katie gray Field and Tim Stanovic. 0:20:01.520 --> 0:20:04.280 If you want the full video experience, head to Bloomberg 0:20:04.359 --> 0:20:25.240 dot com slash qt should talking about regulation, Yeah, I 0:20:25.240 --> 0:20:26.920 feel like there's a lot of different ways we could 0:20:26.920 --> 0:20:28.639 get into it. I was thinking about it when you 0:20:28.680 --> 0:20:31.920 were explaining trust, and I think a big reason that 0:20:32.000 --> 0:20:37.119 we trust banks is because regulators, as you write in 0:20:37.119 --> 0:20:40.040 the piece, like there are people who regulators go inside 0:20:40.040 --> 0:20:45.240 these banks. They know what they're doing. They kick tires 0:20:46.040 --> 0:20:49.439 and search for things and make sure that everything's up 0:20:49.480 --> 0:20:53.199 to snuff. Yeah, I mean that's a somewhat optimistic picture, 0:20:53.240 --> 0:20:57.360 but yeah, that's right basically true, Okay, And that, by 0:20:57.359 --> 0:21:00.800 extension makes it so we trust banks in a way 0:21:00.840 --> 0:21:08.320 that crypto firms aren't necessarily backed up. Yeah, So what's 0:21:08.320 --> 0:21:15.120 missing from the regulatory puzzle here? Everything? Everything? Like right, Like, 0:21:15.520 --> 0:21:18.640 it's very hard because crypto is so like so much 0:21:18.640 --> 0:21:22.200 of cryptos philosophically opposed to regulation in general, So much 0:21:22.240 --> 0:21:24.600 of it is crossed, like like from the get go 0:21:24.720 --> 0:21:28.520 is very cross border, so it's hard to know who 0:21:28.560 --> 0:21:32.640 has jurisdiction um even in the US, Like there are 0:21:32.880 --> 0:21:36.320 sort of these very sterile debates about what crypto tokens are, 0:21:36.359 --> 0:21:39.919 are they are they secure? Like which tokens or securities? 0:21:39.960 --> 0:21:42.600 Is the SEC in charge? Is the CFTC in charge? 0:21:43.960 --> 0:21:46.760 And then like obviously a lot of stuff that happened 0:21:46.840 --> 0:21:51.479 in crypto is a substitute for banking, which is not 0:21:51.600 --> 0:21:54.520 really the SEC or the CFTC. It's it's for banquets 0:21:54.520 --> 0:21:58.240 for like the FED in the SEC, and that's a 0:21:58.359 --> 0:22:00.480 much sort of higher level of regulation, Like that's the 0:22:00.480 --> 0:22:02.639 examiners coming into the bank and making sure that everything 0:22:02.720 --> 0:22:06.199 is is working properly, whereas the SEC is more like, 0:22:06.560 --> 0:22:08.520 if we find some fraud in your financial statements, will 0:22:08.560 --> 0:22:13.280 go after you. Um. And like all of that in 0:22:13.320 --> 0:22:16.760 the US is like incredibly early on, where the SEC 0:22:18.040 --> 0:22:20.399 is jousting for jurisdiction and going after some of the 0:22:20.400 --> 0:22:22.919 most egregious projects and some of the less egregious but 0:22:23.000 --> 0:22:26.960 like more obvious projects um, and bank regulators are putting 0:22:26.960 --> 0:22:29.480 out papers about how stable colins should be regulated like banking, 0:22:29.520 --> 0:22:32.360 but like not really doing it. UM. So it's very 0:22:32.440 --> 0:22:35.679 very early on, and I don't really know where it 0:22:35.800 --> 0:22:37.520 ends up, right, Like I think that a lot of 0:22:37.560 --> 0:22:41.919 people in crypto, like I think that crypto has built 0:22:42.520 --> 0:22:49.600 a system that obviates the need for regulation, where like, ah, 0:22:49.880 --> 0:22:55.520 do you find protocols are trustworthy because you can read 0:22:55.560 --> 0:22:59.800 their code, and if they're not because the code gets hacked, 0:23:00.160 --> 0:23:03.000 that's good because it's like adversarial hardening of the system 0:23:03.040 --> 0:23:06.840 and like eventually they'll get better. Um. And you have 0:23:07.720 --> 0:23:10.760 uh this like openness and censorship resistance of like the 0:23:10.800 --> 0:23:14.320 blockchain that makes it just the better system than a 0:23:14.359 --> 0:23:17.439 system of national regulation. A lot of those people, by 0:23:17.480 --> 0:23:26.240 the way, AH are thinking internationally about regulation and think, like, 0:23:26.720 --> 0:23:30.040