Bankless - 124 - Is Mark Cuban Buying the Bear?

Episode Date: June 22, 2022

Mark Cuban of ABC’s Shark Tank, owner of the Mavs, and seasoned entrepreneur and investor joins us for Round Two of Bankless. Hear what Mark’s been up to since his first Bankless appearance, how he explains crypto to noobs (hint: he doesn’t), what he envisions next for crypto, how long he believes the bear will last and so much more! ------ 📣 NOTIONAL | Real DeFi Yield https://bankless.cc/Notional  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum  ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  🏦 ROCKET POOL | STAKE YOUR ETH https://bankless.cc/RocketPool  👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave  ⚡️ LIDO | LIQUID ETH STAKING https://bankless.cc/lido  🔐 LEDGER | NANO S PLUS WALLET https://bankless.cc/Ledger  ------ Topics Covered: 0:00 Intro 4:50 What Mark’s Been Up To? 6:20 2017 vs. 2022 Cycle Differences 7:10 Mark’s Crypto Interest Development 16:56 How to Explain Crypto to Noobs 20:21 Macro Components to the Bear 26:10 ETH vs. BTC 30:37 Payments 32:51 What’s Next For Crypto? 34:20 How Long Will the Bear Last? 38:50 Where Mark’s the Most Optimistic 45:50 ReFi, Positivity, & Advice ------ Resources: Mark Cuban https://twitter.com/mcuban  1st Appearance on Bankless https://youtu.be/l3ptz8qvZcg  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, how to front run the opportunity. This is Ryan Sean Adams, and I'm here with David Hoffman, and we're here to help you become more bankless. Guys, we got a special episode for you. We just pinged Mark Cuban and said, hey, Mark, do you want to come on the podcast sometime? I know the playoff season is over for the Mavs and you want to talk some crypto. We're in a bear market. And he said, yeah, sure.

Right now. Give me 30 minutes. Right now. Let's do it. And so, we just. jumped on and we did it. And David and I just recorded an episode with Mark Cuban, picked his brain about a number of things, how he feels about the current crypto bear market, how he thinks we're going to recover if we will recover. And where do we end up on the other side, in particular, what he's looking for from an application perspective from crypto. So it was all of Mark Cuban's

thoughts on where we are in this market. And of course, you know, he's been deep down the rabbit hole in some of these protocols, messing around with D5 protocols. You guys heard. in our original episode with him. He's into Axy Infinity in the GameFi market. He's also doing things with carbon credits and Klima Dow. So, like, he is deep in a number of these things. David, what were some of your thoughts going into this episode? Yeah, it's interesting to hear how Mark Cuban thinks about these things.

And you can definitely, like, try and put yourself in Mark Cuban's shoes as like a shark tank investor, right? The external investor. He's coming from this with like a business mind, right? He's got this experience coming from the world of traditional finance. And when he talks about the bear market, you can hear him put it into these terms and ideas that he's familiar with. But then I kind of clicked at me to what he was saying. It's like, oh, you're waiting for like layer ones to like band together and merge because in times of bear markets and times of struggles, things like have mergers and acquisitions.

And so like putting myself into the shoes of Mark Cuban and trying to understand how he thinks about the crypto industry via more traditional routes, I thought it was pretty interesting. And again, from the external investor who's always in the mindset of. utility for the customer, utility for the user, what product am I actually going to go out of my way? And even though crypto is hard, I'm still going to go out of my way to use it. And so it's always a refresher talking to Mark Cuban about the external reference point for how people like Mark Cuban look at crypto and what they see when they take a peek inside of our industry. Guys, we're going to get right to this episode with Mark. But before we do, we want to tell you about these awesome tools to help you go more bankless. requires taking control over your own private keys.

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And also check out the AVE protocol governance forums to see what more than 100,000 Dow members are all robbing about at governance.ave.com. Mark Cuban, we had you on the bankless podcast a little over a year ago, and so much has happened since then. How's it going, my man? Well, like everybody else, I'm getting torched. Yeah, well. It's one big club, absolutely. And so, yeah, we had you on a live stream.

As you were going down the defy rabbit hole, you're into NFTs, you saw the potential. We even learned that you were learning about solidity and doing your own contracts. And so I kind of want to just get a speed run of what you have done since things. So can you like speed run us through the last year of Mark Cuban in crypto? I mean, just a lot of investments, a lot of research, a lot of learning, a lot of losing, a lot of optimism still. But just like everybody else, you know, you learn from all your experiences. You learn or get burned.

And so that's what I've tried to do. I don't have any one thing or two things that really stand out. I mean, I'm still doing well overall, but like everybody else, you know, My Ethereum and my Bitcoin have gone down a little bit. Yeah. So I believe that makes this your first cycle. So congratulations, you get your first cycle badge. I was around in 2017.

But actually, I think this is a lot. There's some similarities, but there's a lot of differences. Sure, yeah. Let's go into that. What do you think are the differences that stand out to you the most? You know, in the ICO craze and the first real push of Bitcoin, that's where you started to get the early interest. But there weren't a lot of mainstream applications.

There were companies trying to do some things with smart contracts. crypto kitties among them and there were a lot of different ICO type approaches, but nothing really was already mainstream. And that was the big difference. It was just about people getting into crypto, not crypto getting into people's lives. Amazing. And I'm wondering, how has your interest developed? Like I kind of alluded to, I remember talking about Euler Beats when you came on and just where you were generally super interested in the way that artists can receive automatic dividends. How have your interest in crypto developed since then? No, I mean, it's just continued, right?

I mean, I think, you know, where I caught a lot of flack early on was, you know, the focus on the utility of whatever it is I was looking at. You know, how was it going to be used? What was the value proposition? And like you just mentioned, what was exciting to me back then with NFTs was the fact that artists could receive royalties. You could create a textbook NFT. You know, we did a lot of things with NFTs with the Mavericks with MAVS collectibles.com. There's just a ton of applications, but there's got to be utility for them. They can't just be about speculation. And I think, when, you know, there's an old thing, everybody's a genius in a bull market. And so when everything was going up, everybody was smart, right? And when everybody's smart, everybody thinks they can do anything and not lose money. And then that obviously changed multiple times, you know, over the past 15, 16 months. And so now, you know, I continue to look for applications, but, you know, it's interesting that, you know, so what's really changed over the past 15 months is, you know, we were looking at defy. There was the defy somewhere, then there was defy, and, you know, but there was really defy on just a couple

of blockchains, right? Mostly Ethereum is where all the action was. And there was a lot of subsidies. Again, it's like, you know, people were approaching crypto and defy in particular, like they did software applications where there were, you know, back in the day, VCs would subsidize apps or applications and offer them for free and knowing that they were losing a boatload of money just to get users. to try it. And we saw that with Defi as well, where on Ave, wherever you went, there were all kinds

of rewards that were just handouts that somebody had to subsidize. And that subsidy was coming from investors. They were coming from misperceived tokenomics or they were coming from just buyers who were just wanted to play the game, just try to go as DGN as they can. And, you know, what we've learned since then, you go to Ave now and you see what the real rate should be. And it's all algorithmically driven without the reward. And once you took out the rewards, the whole perception of defy changed. And I think that's also one of the reasons why defy is kind of survived a little better than CFI has survived. Because CFI's essentialized business has tried to run with rewards more and subsidies more. And that catches up to you real quick. Yeah, sure, of course.

And as the steam in the NFT market has really dried out. And like you've alluded to, the yields have gone down to their very base primitives. Mark, is your conviction on crypto? Shaken? No. Are you going to hang out with us during the bear market? No, it's not at all. It's not shaking at all. I mean, I think this is a good thing.

It's painful to lose the money, right? But it's really, really good because, you know, one of my favorite things is first there's the innovators, then there's the imitators, then there's the idiots. And what's been happening in crypto over the past 18 months, or actually the past six months, I should say, is when something worked on Ethereum, then it went to an L2 of Ethereum. So you saw DFI go from Ethereum. Oh, it's too slow. It's too expensive.

So then you go to an L2 of Ethereum. Well, it's cheaper now. That's a good thing, right? Then it went to another chain. And the same, you know, and then another chain and another chain. It sounds like a song. It sounds like something DJ Colley would do and another chain, and another chain, you know. But what would happen is because blockchain, for the most part, is a zero-sum game.

There's not a whole lot of differences. We can argue the Trilema, right, and the nuanced differences among all of them. And Bitcoin Maxis will argue a whole different. story. But the reality is, if those chains don't get enough volume, they're gone. And because a lot of the competitive aspects of, you know, Ethereum competitive chains are cheaper and faster, you've got to get a whole lot of transactions in order to, in order to survive. And so what they all did, and they all did the same thing, let's go get defy. So they all put together grants and funding and subsidies to go out and get LPs and others that would support, you know, defy on their platform, defy on blockchain X,

you know, fill in the blank. And then they did the same thing with NFTs. We're going to go get the celebrity and we're going to go subsidize it and we're going to put it on our chain. And that's how we're going to get enough traffic and we're going to show off why our chain is better. And then they go through the long list of, you know, blockchain X maxi, you know, things they would say. And what they found out very quickly is that doesn't work. When you're a copycat, even if you have your checklist looks a little bit better, it's really, really hard to get somewhere. And so all that said, we've gotten to the point now where all those chains realize they're in deep shit. You know, there's just no there.

You know, and these are multi-billion dollar cap companies. Now, obviously, the market caps of the companies are convoluted and kind of configured the way you want them based off of your float versus your total allocation or your total mint. but now what are they going to do? And so you're starting to see some of the fissures in these chains that really don't have any traffic and really don't have anywhere to go. And to me, that's just part of the cleansing that's natural. I've said before that this is a lot like the early days of the Internet. And when we went, you know, 94, 95, you know, my company, we started streaming.

We were the first company to do, you know, commercial streaming and this and that. and it was a race because the next thing you know, there are 20 companies, 30 companies, 40 companies trying to do streaming and, you know, 39 of them died or 35 of them died. And you saw the same thing. And then when the 2000 and 2001 hit and the bubble burst, 95% of companies were gone. But the ones that were able to survive are still crushing it today, the Amazon's, et cetera, Google, et cetera, because they had good, valid business models.

And that's what we're going to see right now with crypto. Crypto, you know, has got a lot of things that it can do really, really, really well. But we've seen all the money and brainpower really geared towards defy and NFTs. And for 99% of those apps, it's a waste of brainpower. You know, what's the difference between defy on Ethereum and Polygon and all the others? Not a lot. And maybe just the subsidies. and like we saw with Anchor, you know, those subsidies just, you know, if you don't earn the money,

like we saw with AXI, and I'm an investor in AXI, you know, and I told him, unless you're able to create enough of an economy that you're able to create productivity, meaning you have enough users that you can sell ads and sponsorships and NFTs and earn income from all those things in order to buy the SLPs and the tokens, the AXI tokens, from users, meaning, you know, it's earned to buy them, then you're going to run into problems. And so we went from play to earn being this great thing and you know, and helping people in the Philippines to,

okay, it's barely hanging on and no new play to earn platforms have succeeded that I know of. Do you guys know of any that have worked? Not yet. Axie's been it, man. Yeah, and Axi's got that, if Axi would have gone in and they still can do it,

and I hope they do. And even though I'm an investor, I don't really have that kind of connection with them just to tell them what to do. But, you know, if they're out there selling ads and sponsorships and then taking that money and buying tokens from, you know, the people who are playing to earn so that there's a replenished economy, that works. You know, if I buy one of those NFTs, you take my money, you buy some SLP, et cetera.

You know, like Anchor, they wanted to be able to do loans to pay for the 20 percent, but they just kept on going subsidy, subsidy, subsidy, instead of just saying, okay, at some point, hey, guys, we ain't doing shit for loans. You know, we generated $150. It's like what you pay LPs, you know, on different platforms, right, with their native token. You can pay them in it, but if you got no one to buy them, you know, and that's what this is all about. And that's where a lot of this has failed. There's got to be second order and third order and fourth order demand, particularly for NFTs. That's like with the Mavs.

We used NFTs as a reward for going to a game. You have to actually attend a game and you're only allowed to get one. It's free. You go to the game, your reward is this NFT. And when you have these NFTs, we'll give you discount. We'll do these other things. And if you miss a game, you can buy one from somebody else and collect them. But because we game away for free, there was no expectation that A, B, or C, you know,

I didn't have to worry about whether there was a second order, a third order, a fourth order purchaser in order to make people feel good about what they got when they went to a game. And now when you put out an NFT, unless you're really lucky and you're the board aids or your crypto punks or whatever and there's, you know, hopefully sustainable demand, what are you going to do? You know, you get people excited in your community to buy the NFTs and then what? Yeah, exactly. Okay, so we had an investor on recently who talked about like, you know,

2020 being sort of a high conviction crypto rally. And then seeing similar to what you said, 2021 was a lot of copycats, low conviction rally. It just kind of wasn't there. And it just the whole thing ran out of steam. And I think we understand that because we're in the crypto space. We see it the way you do, Mark. And by the way, I love that you're doing stuff with the Mavs with NFTs.

and smooth love potions, you know what that is in Axi? Like, the level of detail you go to just always blows me away. But how do you explain this to someone who is not in the crypto industry who doesn't see this potential? You don't. You don't. Like back in the day, I'm old enough like, I remember. So we started streaming in early 1995 and we had a local radio station in Dallas.

And I would tell people, look, if you've got your computer and you want to listen to this local radio station and get Dallas sports anywhere in the world, then this is what you have to do. And back then, you had to have a dial-up modem. You had to download a TCIP client. You had to download a client from an ISP service provider. You had to pay your monthly fee to that ISP service provider. Then you had to download the streaming media client.

Then you had to go to AudioNet.com and find your Cubs game or your Dallas Station or whatever. High hassle factor. And I would say that to people. And there we go, you're out of your mind. I'll buy a radio. You know, or I'll buy a TV. what do I need this shit for? And so it wasn't that I would, that didn't work trying to explain out what worked was,

I want to listen to the Cubs game. And I'm in Dallas. And the only way I can listen to the Cubs game was to go through all this hassle. Or I'm at work in Dallas. And I want to listen to KLIF was the first station that stream full time. And I want to listen to Norm Hitskis, who was the big sports broadcast. It still is big sports talk radio guy. And so I don't have a radio or I'm not allowed to have a radio on my desk.

I can't have a TV on my desk. I got my PCs and these cheap little $9 speakers or headphones and I can listen while I work. That was a reason for them to go through the hassle. Crypto is the same thing, right? There's got to be a reason for regular people to want to use an application. It's like, why did you go to the App Store for the first time to download your first app, whether it was on an Android or it was on an iPhone? There had to be a reason.

You could have just used the default applications, but there was something else you wanted to do, whether it was Snapchat or whatever. You know, why are 90% of the apps on your phone unused, but you downloaded them, right? Why do you just use the 10%? Crypto is the exact same way. There is no difference. Why do you use defy? Well, if I want to, you know, get a quick loan and be able to lend money and earn some money,

you know, some money on my deposits, even though it's over collateralized, if I need quick money and I have a credit card against it, I can just transfer it. And it's easy, right? There's a lot of simplification versus dealing with the bank or if you're unbanked. If I need to do even with Lightning, if I'm with Bitcoin and I want to do something with Lightning or tip somebody on Twitter, it's easier that way, maybe not easier compared to Cash App or Venmo, but versus a lot of traditional business approaches. And so there's a reason that you use it.

It's compelling. It's a path to least resistance. That's what we need now for crypto. We don't have enough of that. And so, yeah, at some level, maybe the bear market was coming. no matter what. We got a little ahead of our skis. But also, Mark, there's like this backdrop, man, we've been through spare markets in crypto. You've been through a bare market in crypto, right? People like crypto natives have been through many of these, and they're always painful.

But this one is a little bit different from like a macro economic landscape, right? Like, we got inflation that's 8.6 percent, man. We're headed towards a recession. Like, what does all of this mean? I don't think it really means much in terms of crypto unless there's an application. So we can go both ways. So first of all, all, look at the stock market. It's gotten tech stocks in particular, high growth tech stocks have gotten torched even worse than crypto. Yep. Right. I got tech stocks worked down a whole lot more than my Ethereum or my Bitcoin, bring my polygon, right? They just gotten torched. Why is that? Because it went too high. You know, when interest rates are basically negative and you can get as much capital as you

need, or some people can get as much capital as they need to go out and buy stocks thinking they're going to go up, why wouldn't they? You know, you're borrowing it. Let's, let's be. You know, you're borrowing a, let's say 1%, and do you believe stocks will go up 1%? Sure. So, yeah, it was $50 a year ago, but it's $300 today. So what? You know, everybody's doing it. It keeps on going up. Why would it go down?

Well, you get to the point where it's just too damn high. Just because it's down 80 or 90% doesn't mean it's mispriced today. It may mean that it was mispriced last year. And with a lot of this, that's what it was. But money was so easy and it was so available. that prices went too high. And it may well be that even though we're down, you know, enormously, that we're in the right place in terms of pricing and we're finding the right place. And the problem isn't now. The problem was last year in the easy money. And so to your point in terms of inflation,

you know, I don't necessarily think, well, first, when you talk about inflation with crypto, I always have to remember. There's two worlds of inflation with crypto. There's the real world and there's a Bitcoin Maxiwork. In the real one, people just deal with it, you know, as best you can, even though it's painful. And, you know, I'm old. When I came out of college, the inflation rate was not quite as bad now, but the unemployment rate was more than 10% in this net. And so it was a struggle, just like people are struggling now. And when I say you're old, you're supposed to say, no, you're not.

But the point being that crypto isn't impacted any more or less. anything else, and it's not going to change what people do any more or less, right? Now, I'll say that by if interest rates keep on going up and that's translated into savings accounts that, you know, and all of a sudden you can get a CD, a six-month CD for four or five, six percent or something tax-free for four or five, six percent, that's going to impact people's decisions because you go from, okay, I might be able to make some money in crypto last year, and I can make my 10% on my USC last year, right? And that seemed to be relatively safe or I'm willing to take more risk to, hey, I don't have to

fuck around and I can make 5% on this CD. That will impact the money that comes into crypto and stocks for that matter. Then there's the Bitcoin maxi side of it. With the Bitcoin, oh, you know, Bitcoin, that's a hedge against inflation. Yeah, I don't see that working. You know, I always acknowledge that Bitcoin as it's a. better version of gold. It's a digital version of gold, and I truly believe that. And all the gold maxis think it's a hedge to inflation, yeah, not so much. If that were the case, gold wouldn't be

where of 17,000, 18,000, wherever it's at, it would be 30,000, you know. And so there was a lot of hope that Bitcoin would do this or that. Now, where Bitcoin and gold do offer a hedge is in countries that are not reserved currencies because the world uses the dollar. If you're in, pick a country, right? Sumunda, right? What was the one with Eddie Murphy coming to America? Oh, yeah, yeah, yeah. Pick it on a fake country.

Yeah, picking a fake country, right? And they have hyperinflation. Only Bitcoin or gold is much better. Sure. Because it's going to fluctuate relative to the dollar or let's say the euro and it's going to be stable and it's going to look like a really good hedge against that. Zumundo currency, but then so with the dollar. So, you know, I think the Bitcoin max has got it dead wrong.

And I think part of the challenge for Bitcoin is, you know, even with the Lightning Network improving and becoming more popular, there's not enough utility. But that's the same problem gold has. You know, nobody needs gold jewelry. People like gold jewelry and want it, but they don't need it. And so there's a utility issue with Bitcoin. But that said, like gold, it's a good store value. It's a better store value when you're trying to.

to be diverse in your portfolio. And that's why I own it, you know, because I have no idea where it'll go. I have no idea how low it'll go. But I do know that once there are applications with smart contracts, not on Bitcoin, but across crypto, that regular people use and figure out just like streaming was a better version of getting audio and video than traditional media was. When there's better reason to use crypto applications, that's when it takes off. What do you like better, Mark?

Ether Bitcoin. Which one if you had to pick? If I had to buy one today for a month, I'd probably buy Bitcoin because there's not that push of applications right now. I mean, I'm trying to invest. If you got one that, you know, is a business application that replaces not just FinTech, but let's just say something you do in the office. You know, here's the way we've been doing it.

I use this app all the time and, you know, it has nothing to do with FinTech. It has nothing to do with collectibles. This is just I replace, I'm using smart. contracts on Ethereum or whatever blockchain. And it's made my life a lot more efficient and a lot better. When those start to happen, whichever blockchain they're on, bam, right? Then people start saying, oh, I got to use. It's just like, you know, my 13 year old wants Snapchat.

Bam, we got to have Snapchat. Got to have. When I turn 13, I got to have Snapchat, you know, or got to have Instagram or whatever it is, TikTok. You know, what made people download TikTok? TikTok. Why does every kid use TikTok? It doesn't have to be social media, and I think it'll come from business first, but we need that business application, the decentralized version of QuickBooks, you know, decentralized version of whatever that is a crypto app that is just better. And when that

happens, boom, because then people will start saying, well, if it worked for, I replaced DocuSign as an example, you know, or I've got quickbooks, decentralized quickbooks, which allows me to buy ourselves, or e-commerce even. Like, I did this talk at the University of Chicago, and I, you know, these are MBA students. And I was like, how many of you have used crypto and about half had? I'm like, how many of you have used a wallet, a crypto wallet to buy something? And about half the half did it or core of the people. And I'm like, of those of you who did, wouldn't it be a lot easier if you could just go to an e-commerce site, connect your wallet, buy what you want, click it, sign it, and have a lower transaction fee, and it's just paid like that.

And if you were a vendor, wouldn't it be easier to just sell knowing because you get that cash immediately? And so you could probably sell for less with less friction. Yeah, of course. But nobody's done that yet. You know, we've looked at it with the Mav, you know, but there's so many, everybody tries to go through traditional means to connect your, your e-commerce through BitPay or whatever, through a bank and that just gets convoluted.

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Fast, cheap, secure, and friction-free. Mark, you saw the products that we had as a crypto industry in 2017 and how they basically weren't any products. And then went through a bare market and came out and you know, had the conversations that the industry have had in 2021 or, uh, where in 2017, it was almost basically just Bitcoin that was a household name. In 2021, a lot more things became household names. Ethereum broke into the mine chair, NFTs and DFI broken because we had some semblance of realness, yield in DFI, people like the NFTs, we're starting to break into commerce. And some of the components that you just talked about just now, we did just hear stuff like that announced out of things like Stripe, for example,

Stripe is getting into the world of Web3 crypto payments. It's still so early. Everybody's into crypto payments at some left. Sure. Right. We're all, we're big. We've got to be there. And none of that is original. And none of that is something that if you didn't already, you know, no, you couldn't find. You could already use Lightning Network. You know, there's a dozen different apps you can use to do transfers. You know, it's those things that we go, shit. I could really use that. I got, explain, Mark, you know, someone calls me, explain to me how I make this work.

Because, again, I'll analogize when we started streaming business, I would get the calls all the time. I want to listen to the Cubs game. I had somebody from Microsoft call me and say, how much will it cost us for you to start broadcasting the Nebraska football and basketball games on AudioNet? I'll pay for it all just so me and my friends can listen to the games online in the state of Washington. You know, that's how compelling it was. And so what do you think is going to compel us in the future in the next cycle? When we get through this bear market, what's the next thing that becomes a household name out of crypto?

What are you really looking at right now in this bear market? I don't know yet. I really, really don't. If I did, I would start it. You know, that's when I'm scrambling to find out there's just too much focus, like you said, on payments or defy or NFTs. You know, I'm talking to a company to do NFTs for, and I've talked about this before, for textbook. for college textbooks. Because if you think about it, you take an NFT, you can incorporate a Kindle reader into it.

You take the digital text of the book and you know, you check for the NFT and that unlocks the digital reader if you own the NFT for the textbook. And buying and selling them is going to be a whole lot cheaper than creating selling, shipping, reselling textbooks where the publisher and the author only gets paid once. And so, you know, it's hard for those publisher industries to disrupt themselves. that's not something they're good at, but it's conversations I'm having. That's not going to get everybody to change over, but it certainly could be a start with college kids are all using it, and that's a better way to get textbooks.

People are trying to do social networks. ICP is trying to do it their way, but it's hard because it doesn't benefit you just because it's decentralized or it's crypto. It's got to be better because it's better. One of the differences we've seen in this bear market at least so far is like even though prices are down, the builders are still here. For now. Yeah, for now. Do you think that'll last? Or do you think that, yeah, how long do you think this bear market will last then?

Is this going to be a long, dark winter? No, it lasts until there's a catalyst. And that catalyst is going to be an application or we get so low, people go, fuck it, I'll buy it. I'm almost there. Is that you? Are you there? It's like stocks, right? I look at stocks and I'll look at the market cap. I'm like, you know, is Amazon, I own a bunch of Amazon, but should I buy more Amazon? it's a trillion dollar market cap. That's not a fucking price, right?

There's some other companies where you look at it and they're like, it's a $250 market cap plus some debt now because they borrow cheap. I'm like, if this were being pitched to me as a private company at this valuation on Shark Tank, would I invest in it? And if the answer is yes, I'll buy it. And if you think back, whether it's Bitcoin, Ethereum, Polygon, Matic, ICP, any of them or even the new ones like Ape. And you look at the market caps and you see it's a billion dollar.

plus market cap for $6 billion or $8 billion or $40 billion, you don't look at that and go, that's cheap. Because if you remember back to, you know, D-Fi summer, these things were selling for less than a penny, and their market caps were in the hundreds of millions. And then you look at some things like ALCX and you look at Uniswap or Sushi Swap, rather, and even Uniswap, particularly Sushi Swap, has got like a $250 million market cap. And then you look to say, why is that relatively cheap, right, compared to everything else? because there's no utility there.

You get paid it if you're an LP, but then what? Who's going to buy it from you? What's the reason to buy it from you? And so what happens is it's not so much about the builders yet, but what happens is you'll see a consolidation. You'll see somebody who's market cap. If Cardano, you know, everybody likes to pick on them, including me,

but like they could use what market cap they have or what cash they have and start making acquisitions. And then you take the builders and you start. start consolidating them around, what's the name of their smart contract by Pluto or Pluto or Pluto or whatever? Plutus. Is it Plutus? Plutus, yeah.

Yeah, something like that. See, I was close. But now you start consolidating those developer communities and user communities, and they become a little stronger by doing that type of roll-up. And who knows what's going to happen with near chain? Who knows what's going to happen with polka-dot? You know, but they all have, you know, high expectations. So it's not cheap yet. You're saying crypto's not cheap yet. You want to see it cheaper before Mark's piling back in.

No, it's not cheap yet. And I think, you know, I'd rather get with somebody who says, okay, let's do a roll-up. You know, let's combine a bunch of these who really don't have, you take Zilkwa, you take this, you take that, and you match them all up together and you do a token exchange with do a new token. You close four out of the five blockchains and you pick whichever one you think is best or has the best applications. you allow people to bridge over one time. And now all of a sudden, your user base is 10x. Now, you still have a problem of better applications, right? You still have to have some reason that people want to use that blockchain. But at least you may be able to have a better community to come up with idea.

Because otherwise, you're gone. Are you saying that you're looking perhaps towards a world of like mergers between protocols, so protocols can stay alive? Like, hey, like, we're all down bad. But if we band together, we're going to be able to stick it out. Is that kind of what you see on the horizon in the bear market? That's what happens in every industry. And so, okay, so if we're looking across the sectors, there's so many sectors in crypto.

There's defy, there's NFTs, and you've named a lot of layer ones, and you're also seemingly hot on layer two. Let me change that, David. There aren't a lot of sectors. There are different blockchains with apps that have been written on them using smart contracts. Right. That's it. Yes. Right.

And there's typically just two verticals, defy and NFTs. Well, okay, but there's defy application tokens like Alchemics, right? you named the ALCX token, there's defy apps that exist on chains, but then they're actually the chains itself. And those can be, like, divided into two sectors. Then we also got NFTEs. Right. But like of all the sectors in crypto, like layer twos versus layer ones versus defy tokens versus NFTs, what are you really like optimistic for the most? Do you have an opinion there? Yeah, I mean, look, all of them have potential. That's why they got all this money. If you put together a checklist like they did, all of them have a reason why they think they're better and will succeed.

You know, zero proofs, you know, can encapsulate and it's 256 characters and you just pop it on Ethereum and you get the benefits there. You know, optimistic roll-ups, they've got their way of doing it, right, where you check for fraud and done it, you know, seven days, speed, whatever, right? I can see value for both. Like an optimistic roll-up, if I were going to start a health insurance company that was decentralized so that rather than having somebody approve each application for reimbursement or approve each claim, I would have a third. thousand validators, right? And I forget what they call the people who check for fraud, right? The checkers, right? And all of them would have to put up some money to get their training, but they would get a piece of each claim, right? And so they would earn it. And then the fraud checkers would get rewarded where if, you know, they find fraud, they get the stake from that validator, you know, and you guys

know how that works, right? So that's an application that could work. But that's the application that's going to take five years to develop and $200 million or more to put together in someone, and then on top of that, the money for the insurance claims and the capital that's required there. But that's the type of thing. If you have an application that is specific to the features and capabilities of each of the enhancements, whether it's ZK or whether it's optimistic or whatever, yeah, I'm very bullish, but it's the applications that will make it work. So much of this, the first pass was.

we're going to be faster and cheaper than Ethereum. Well, guess what? When there's not a lot of transactions, Ethereum gets relatively cheap. It's not cheap, but it gets relatively cheap. And you've got Polygon and others who have just added ZKs and added optimistics on top of what they're doing. And so it's just,

there's just a lot of people competing for those builders. And those builders are just coming up with the derivatives of things that are already being done. And when it's only about the checklist. That's the hardest thing to be successful with. You know, it's hard to compete when, you know, that's 7-11. I'm 7-12. Not Web 3, Web 5. I saw this recently. That's a whole other thing, right? Web 3 is confusing. Web 3 should never have been called. Really? You don't like the narratives? No. What narratives do you like? What do you not like? Mark, that hurts.

Ow, my heart. Yeah. I mean, look, Web 2 and Web 1, right? Web 3 makes things like, It's a new internet. It's not a new internet. It's a platform on top of the internet, right? It's a better way to do a lot of different things. And that's what it is. That's why I just call it crypto as opposed to Web 3. And what the fuck's a metaphor?

Or multi. Right? I mean, they've been around forever. You know, second life and all these other ones that are around in the early days of the internet. You know, and anybody can create one. There's no standards for interoperability. There's companies that I invested in that sold real estate against my you know, feedback in metaverses, the worst investment ever.

Do you think that's the problem? Like, did crypto get like too buzzwordy and just like silly? Is that what happened? No, the early days of the internet was the same thing, right? You know, and even before the internet, right, on prodigy and cop, you serve chat rooms on AOL, right? Chat rooms in AOL were the best thing and the worst thing. You know, all these kids went through all these bad things because of chat rooms. Chatroom's just, that's the multiverse

circa 1990, you know, and it's just a bunch of people coming together. You give them an avatar. They don't have to be themselves. But like any community, some people try to dominate, right? And other people try to manipulate. And other people try to monetize. And when people feel left out and don't benefit from them,

they go somewhere else or stop participating altogether. And that's a challenge. Like, I haven't gone on to Central Land a lot. Maybe I'm getting a wrong. But when you go around to Central Land, you see people playing poker and gambling, and that's it. Did I miss something? Yeah, there's not a lot going on in the Metaverse. There's a lot of future potential and hope in kind of property rights in the Metaverse, but there's not.

It's the most ridiculous thing ever because everything is just a click away. Yeah, yeah. You know, you're next door to the Empire State building. Hey, I got my little piece of land next to the Empire State, whatever, right? Okay. Mark, okay, so there are a lot of people in Crypto who are down bad right now. And I don't know if you've ever been down bad. Yeah, truck free.

I've been coming out. Okay, well, tell us about this because it doesn't feel really great. And there's a lot of people sad, I'm depressed, like in just, you know, one of the five stages of grief. Do you have any thoughts for them? I mean, look, I've been broken sleeping on the floor. You know, I've been, I've lost, I've never having $30,000. And a lot of that was, bam, gone. In my company, I had literally $84,000 in the bank and my receptionist stole $82,000 of it.

What? So I get a call from the bank. This is my company, MicroSolutions. $84,000 in the bank. We only have four employees. One of them was a receptionist, and one of her jobs was just to take the accounts, are payables, right? Put them in an envelope, take them to the post office and mail them.

And then answer the phone, yada, yeah, yeah, right? That was her job. I get a call from the bank. Mr. Cuban, yes. We have this young lady who just drove through the drive-in and these checks that she was cash in. She had taken the check and whited out the payee and wrote in her name. And I'm like, you didn't cash them, did you?

Yes, sir. We're a bank. That's what we do. 82 of the $84,000 I had. Gone. Wow. DOA gone. And we had to work with all those vendors.

And it took us well over a year to pay them back just to get back to ground zero with them and break even. And so, look, I've been there. And that fear and agony of what you're going to do next, is off. Mark, a lot of people are questioning their conviction in crypto here. So leave us on a high note. What's something that you're paying attention to?

What's a project that you're bullish on? What's something in the crypto space that still keeps you excited in these dark times? Believe it or not, I still like refi, right? I still like all the stuff with tokens for carbon offsets. And I still buy them. I've gotten rushed with Klima. And that's okay. I actually bought a ton of BCT and this whole thing with Vera blew up.

and I got a whole bunch and it went down from $8 to $1.90 now. And I just burn it, which is my carbon offset for my own personal footprint use. And then I also converted to Klima because of their treasury. And I'm betting, you know, with Klima to me, it's like it's an index of different carbon opportunities. And that's not a standard defy application. Maybe it'll fail miserably. I hope not.

But to me, I used to buy carbon offsets from a broker. And it was a pain in the ass. it was hard right now i go on polygon and when i want to burn more i can buy more bcc and i can just burn it that's my carbon offset it's the easiest way to do it not everybody cares about you know offsetting their carbon footprint i do you know to me that's just a perfect app for it doesn't mean it's going to go up no but my worst cases i've done a tiny part for humanity now people will argue that it's not great carbon offsets you can do better all right fair enough but it works you know and it does what I'm looking for it to do.

And as it gets better, it'll get better over time. So that's one application. Other than that, I mean, literally scouring for business applications. There's another one where we're looking at taking tokens and integrating them into Apple wallet that I just invested in so that I can take a MAVS NFT, it can be put into an Apple wallet, you just scan it, and now it's the ticket for a MAVs game or an event. Like Paul Up is trying to do, but hopefully a little bit simpler and with, you know, things we're already doing.

So, you know, there are things to get excited about. The challenge is and why I'm not just diving in and buying more Ethereum in particular is I don't see that one big breakthrough macro application that like streaming was in the 90s. I think there'll be one. You know, like I said, you know, using optimistic roll-ups, somebody puts together an insurance company, great. You know, somebody, whether it's medical insurance, health insurance or whatever it may be, there will be applications like that because there are. better ways to do it. And I also think here's the positive thing, right? Let's look at decentralization, Dow's, and decentralization, right? We haven't started to see the thrust for companies that are organized around crypto yet. We've seen companies that use crypto to create

applications, but a lot of people downplay decentralization, Dow's, because they're like, what's the point? But the reality is companies can't just start becoming, using the decentralization because they're centralized. You're not going to have a health insurance company all of a sudden offer decentralized insurance, in the example I gave, because they can't adapt their company to that. We're starting to see, and I'm starting to see slowly but surely, companies that are initiated and start off decentralized and integrate their employees, whether it's using Dow's or just tokenomics, but you make it so that the decisions are decentralized so that the utilization is decentralized, you know, using nodes to reduce

costs because anybody who's done anything centralized using AWS for applications, it's expensive as shit, right? And if you're able to create an application that uses the node where somebody can use their PC as a storage facility, kind of like Filecoin or, you know, some of the others, but integrated into apps in less expensive ways, right? I'm just riffing on this, but you get my point, right? Yeah. There are ways that better things can be done using crypto. We're just dipping are chosen. And again, it's not unusual. It's not unusual. You know, companies went public with nothing, nothing and crapped out like that. But the good one stayed. Same with crypto. All these apps, all, you know, these tokens. Stop thinking about, you know, how, I'm trying to think,

you know, all the terminology and all the ridiculous terminology in the crypto world, sir and friend and this and can't write but you know stop thinking about the community and how much community value the community creates because you think that means there's a lot of buyers there stop thinking in terms of the number of buyers start thinking in terms of the utility would you use this on a daily basis yes or no I can find reasons to use defy on a daily basis in some of my businesses. I'm just waiting. If someone had an interface between QuickBooks and, you know, pick a Ave. And that's what I told them to do. I told those guys, I'm like, you know, you need to create an interface with QuickBooks so people can push in their cash and withdraw their cash, where now you're

starting to see applications that will stream USC to pay workers so they're paid in real time. That stuff is cool, right? I can see applications there. But when you're making a decision to buy, Don't invest in a token or NFT because you think there's a community that's going to buy it from you. Invest in it because either you like it as a collectible or because you like the utility and you would use it. If there's an app on crypto that you'll use and not just because you bought the token, right, but because you have a real reason to use, that's what's going to bring crypto back and that's what's going to accelerate it. And that's what's going to crush the hell out of Web 2 when there are applications that are better used. with crypto. And I've got a lot of money that says that's going to happen.

That's it, guys. That's the message from Mark Cuban is the thing that's going to get us out of the crypto bear market is utility. So, Mark, are you going to be spending the bare market just trying things and looking for that utility? Yes, continuously. If you've got, look, if there's something you do at work and you think to yourself, if I wrote a smart contract, I can do it better using crypto, that's what I want to know. If you can go into a company and say, look at all this time and money and process you're wasting. Here's how you do it using crypto, built on smart contracts. Yes.

There you go. That's what I want to know because those are the game changers. You know, trying to come up with the next Instagram because it's decentralized and you're pissed about our Twitter and it's decentralized because you're pissed who they let on or don't let on. You're not going to get a network effect based off of that. It's got to be something that is so compelling that people go, this is great. Kind of like TikTok. Yep.

You know, but even TikTok, people think it came out of nowhere. They spend hundreds of millions of dollars in advertising. just to get it rolling. They bought musically for half a billion dollars. So that wasn't cheap. So it's got to be so, like I started this company, cost plus drugs.com. We went out and we bought generics and we sell them at cost plus 15%. We're already past our two-year projections and we've been doing it for five and a half months. You know how much money we spent on advertising? Oh, wow. Wow. Because we don't need to. If you need a particular drug, right, and we sell it and we're saving you 80%. You know what the first thing you do is? You tell everybody you know who also takes that

drug. And you tell everybody you know that needs cheaper medications, which is everybody to try our site. And when then you realize that we're cheaper, cost plus drugs.com is cheaper than your insurance co-pay for the drugs you have to take. You're telling everybody. You're going on every Facebook group, Twitter, you know, and that's who promotes us. Crypto needs the same thing where it's, again, like streaming. When we started AudioNet, did spend ever a nickel in advertising, ever, because if you wanted that Cubs game or that Cowboys game or that Mavericks game, you know, if you were a fan and you weren't in the local hometown, we were the only way you could get it. So you told everybody. That's what crypto needs. DeFi was like that for a while, right?

And it has this place, but it's kind of stabilized. NFTs are like that in terms that they provide creators, royalties for the creator economy. But we need the business version of that. That's what we need. There we go, guys. That's what we got to look for is utility. By the way, Mark, I want to thank you for cost plus. It's helping a lot of families. And you're right about that, man. I've seen so much goodwill. Like I've read it posts everywhere in the communities, just like this site saved me tons of money. And it helped my family get through a tough time. I appreciate that. Thank you. Yeah. I think we need that in crypto too. But, man, it's always a pleasure to talk with you. And I'm always so impressed at how deep you go in some of these projects. So look forward to touch and base with you sometime during the bear market and come back soon, if you will. Hopefully it will be the start of the bull market and talking about how everything is going straight up. So appreciate it, guys. Always enjoyed the show. All right. Take care.

Bye, Mark.