Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - The Great Epicenter Host Extravaganza 2021

Episode Date: January 12, 2021

The new year has brought with it a new bull run. This is great news for crypto holders, but at what cost? Will this bring with it a number of negative implications such as regulatory push back and privacy battles? Listen as the five hosts of Epicenter come together for an in-depth chat to share their predictions for the crypto space in 2021.Topics covered in this episode:Each of our hosts share how 2020 went for themIn-depth individual predictions on where things are headed with the current bull marketPublic backlash to the crypto systemRegulatory and tax related implications to cryptoThe battleground of privacyUS regulatory pressure and the effect on the US DollarEpisode links: Omen Prediction Market - Will The Flippening happen in 2021?Brian on TwitterFriederike on TwitterMeher on TwitterSebastien on TwitterSunny on TwitterSponsors: 1inch: Discover the best rates and most efficient swapping routes across leading DEXes. Optimize on gas cost and execute DeFi trades faster with 1inch V2 - https://epicenter.rocks/1inchThis episode is hosted by Sebastien Couture, Brian Fabian Crain, Meher Roy, Sunny Aggarwal & Friederike Ernst. Show notes and listening options: epicenter.tv/374

Hi, I'm Sebastian Quichiro, and you're listening to Epicenter, the podcast where we're going to through crypto founders, builders, and thought leaders. On this show, we dive deep to learn how things work at a technical level, and we fly high to understand visionary concepts and long-term trends. If you like Epicenter, the best way to support us is to leave a review on Apple Podcasts. And if you're on a Mac or iOS device, the easiest way to do that is to go to Epicenter.rocks slash Apple. And if you're new to the show, be sure to subscribe on Apple Podcasts, Spotify, or wherever you listen. Today we have something special for you.

We have a host roundtable discussion where Brian, Frederica, Sunny, Mayor and I are going to reflect on what happened in the last year and also make some predictions about where we think things could go from here. This is something that you guys or listeners have asked us to do more frequently and it's been hard to find the time

to do these hostess. roundtables, but I can promise you one thing, we're going to do them more often. We're going to try to do them once a quarter and if not at least twice a year because we really like doing it. Every time we do these, we have a great time. And this was no exception. So in case you haven't noticed, there's a pretty significant bull run happening right now. As I record this, Bitcoin is somewhere around $40,000 and ether is at about $1,200. So that is going to color a lot of this conversation. And so we're making some price predictions, which is not something we typically do on the show, but we try to make some informed price predictions at least and speculate on where

things could go from here. But to counterbalance that, we're also talking about what all of this fervor could bring in terms of negative attention to crypto and how the system, the traditional finance system, and also governments and nation states, how they could react. to this tremendous amount of enthusiasm around crypto. One of the ways that governments could react is by imposing stricter regulations. We're already seeing this in Europe and also in some form in the U.S. There's also the potential for stricter taxation on crypto assets. So we'll talk about that at length.

Before we go to the interview, I want to tell you a little bit about one inch. 1 inch is my go-to-dex aggregator, and I actually used 1-inch yesterday because I needed to make a little trade. And I was surprised to find out that they had recently done an airdrop and that I was entitled to receive some 1-inch tokens, which I claimed. And they were worth a nice chunk of change. So if you've been using 1-inch and you used that in the last couple of months, you should definitely go to epicenter.orgs slash 1-inch. and have a look and see maybe you've got some maybe you've got a late Christmas gift

there waiting for you. So with that, please enjoy this conversation with all of the epicenter hosts. So the first area that we're going to be discussing today is on the market cap or the price of crypto currently. Unless you haven't noticed

the crypto has been in a pretty significant bull run these last couple weeks. And we have some predictions on where we think things could go from here. Maybe we'll also be interesting to have just anybody, everybody like share a little bit about like how their last year was. Yeah, actually, I'd like to start with that.

That would be good. All right. Let's go ahead, Brian. Yeah, so we wanted to make an episode today to like look back a little bit than last year and, you know, kind of catch up. We've done those a few times in person around conferences. Of course, now with Corona, it's been a long time since we had a conference. And so we're kind of doing it remotely.

And so we want to talk about last year and like all of the things that happened last year. And I guess also especially like our own, the things we did and maybe that kind of impressed us the most. And then talk about this year. And, you know, what's coming up as we're sort of at the beginning of what seems to be like another big and probably crazy bull market. Yeah. I've had a bit of a crazy year. I think, you know, I think someone was asking me about like, there was like something, there was something that like, you know, a couple months ago where like some talk I was panel about like,

you know, what it's been like working through COVID and how it was like your work situation changed during that. And this was back when I was still at tendermint. And, you know, I was like, well, honestly, a lot has changed this year, but a lot of it wasn't from like COVID stuff. It was more just like other stuff that happened. And so, you know, basically for me personally, I left. this is probably like one of the biggest change years for me because I left my first full-time job

that I've ever had. I was at Tendermintment for three years and, you know, working on launching the Cosmos Hub and CosmosisDK and all that. And so I left about back in like June or July. And then from that, I needed like a temporary break from crypto. So I just started doing a bunch of random stuff, you know, working on some web of trust stuff, working on some web of trust stuff, working on some education stuff. I made a Twitter bot of myself. And then, but you know, crypto will always drag you back in.

And so I got dragged back in, of course. And I started working on. So me and my co-founder, Dave, we started working on our validator company called Sica. Still running validators, but also just working on a bunch of more development projects that we're pretty excited for launching in 2021. So last year, for us,

this is a lot of work. on course one was kind of the main focus and I think it has been like it was really great year we started with you know seven people we grew it to around 12 people and there's the whole staking ecosystem is of course like blossomed as well you know with so many networks launching so much like innovation happening around that and it's been kind of like very cool to like help many of these new networks getting off the ground and then we've also done, been doing some work around interoperability. So we did some work on cosmos, kind of a, well, a cosmos substrate bridge.

And then we did some work on other kind of IBC related projects. So we're doing some work on a cello cosmos bridge and we've been exploring like Solana and foroperability. So of course, that's also still there at the beginning where, you know, it's not yet sort of really affecting, you know, it's not, yeah. been used, but I think in this next phase, that's going to become a significant thing as well. And yeah, the only thing missing was, of course, like the in-person team retreat as well, because we always did those every three months, we went somewhere.

And that was, of course, after January 1 year ago, we didn't do any. But now next, I mean, we did them remotely. But now next week, we're doing the first one in person again. are we going all to Dubai. Well, everyone's coming, but about half the company is coming. So that's really excited if I get on the plane again and travel somewhere because I haven't been on a plane for almost a year now. So, you know, I'm working with Brian on Khoros 1.

And most of my year was knee-deep in onboarding some of these networks. And last year was the first year where Khorus felt stable, where I'm no longer worried about the company surviving. It's going to survive for at least the next few years. And it took us three years to get to this psychologically comfortable point. So I feel really happy. I also feel blessed that COVID did not impact our business. In fact, we grew a lot last year. We onboarded to be 10 new networks.

on a personal front something really interesting happened on the regarding my body and physical well-being so in the in the Christmas of 2019 I read this book called

Lifespan by David Sinclair I really recommend all the listeners to read that book so it's a book is essentially about you know like the science of aging and how we may be able to control the aging process itself

and so I I read that book and it was a revelation. And then I did one of these tests which measure your biological age. So how old your body actually is as opposed to your calendar age, which is a number of years you have lived on planet Earth. And it turned out that, you know, like my biological age is 12 years older than my calendar age. So, you know, I'm 32, but biologically I'm like 44. And like this data is kind of outside the normal, like at the complete edge of the normal distribution. So if you gather like 10,000 people, this 12 year difference, I'm probably like I have the greatest difference between my calendar and biological age in a sample of like 10,000 people.

So this was something really odd, I discovered. And it, and this kind of observation sent me down a path of exploring a lot of different things. and so one of the things I've done is like I've done some supplements and I've done a lot of fasting in the in the previous year and what I also discovered on body is like the weight just started dropping off my body so I lost 20 kilos last year without even trying just having made some changes so and I feel much more energetic as well so yeah 2020 brought me some deeper realizations about about the body I inhabit and I feel much more energetic as well so yeah 2020 brought me some deeper realizations about about the body I inhabit and how to run it better.

So yeah, I'm thankful to 2020 for that. Have you done a second test on your biological age now? Has it changed? So I had decided I would do like this regular fasting for a year and the supplements for a year and then do run the test. So hopefully I'll run the test again in February of this year. I'm not expecting my clock to be very different because as far as I can see, we don't know how to influence the clock really well today. And I am skeptical my changes would have done it. But let's see. Brian, you recently switched to carnivoree. How is that going?

I was, I just wanted to kind of like, yeah, jump in because absolutely. Yeah. So I mean, I've also been interested in like diet and fasting for a long time. And I've been on some sort like paleo-ish diet for maybe 10 years. And, you know, probably like many people, you've seen some of this like carnivore, you know, on Twitter, right, there's quite a few sort of Bitcoin carnivores. And so you also saw those. And it just seems like an absurd idea. But then at some point, I decided to actually like learn about it and watch a bunch of

videos on YouTube about it, read some books about it. And yeah, so I tried it out for a while, 2019, and then actually felt really good, but went to kind of eating back normally again. But now I've been basically six months eating 90-ish-percent carnivore, probably. But it feels really amazing. So I highly recommend people

and try it out. I think the biggest difference is I notice is there's no food cravings. You know, you just eat until you fall and then you stop, like you can't really overeat. And the energy is much more stable. So you eat like kind of what does it mean you don't eat actually vegetables and fruits or grains

or you literally just eat meat. Is that it? Well, so I eat meat, eggs. I do eat like I do like some phases where I just eat meat and eggs sometimes I eat some cheese as well and I occasionally eat some fruit

I don't eat any vegetables I mean fruit is just because it like it tastes like I don't notice any it doesn't if I eat like a little bit of like mango or something like that it does I don't notice it negative difference but it's just it's such a different flavor and taste that it's kind of, you know, you miss it.

So Brian's officially a Bitcoin Maximilus now. Yeah, so I had a third kid this year, so I'm still on the fish fingers diet. In terms of, you know, professional stuff, we did a lot of things at NOSIS this year. So we launched the NOSIS DAO. The NOSIS SAVE launched NOSIS SAVE apps. There's $2.5 billion stood in NOSASAS SAVES now. we launched the NOSES protocol, which is a new way of swapping assets that kind of uses the blockiness of blockchain to its advantage. We launched a prediction market framework that a couple of projects have built upon, namely Polly Market and Omen.

We took over open Ethereum, so basically the client that used to be the parity client is now operated. and run by noses. It's called Open Ethereum. Sadly, we didn't get to hold a conference this year. So we were planning to do a DeppCon this year as well. I'm looking forward to getting back to that last year. Other than that, I did a decent amount of yield farming and kind of knee deep in the defy. Yeah, so basically that was more or less my year.

There was a lot going on. And I don't really see a debating at the moment. I'm so happy that the NOSIS prediction markets finally launched, because I used to joke that NOSIS has built half the stuff on Ethereum, except the prediction markets that they were supposed to. But it's like this year they finally, you guys finally launched prediction markets, which is really fun. So basically, prediction markets, as most of you know, is a regulatorily fraud topic. So basically, you don't want to operate an unlicensed prediction market. So basically, we tried to get a license for the longest time. and basically now that we have a license, it's kind of the ground has changed so much that

a couple of fully decentralized projects were actually able to build on the decentralized framework that we had built. So basically we're not operating a licensed prediction market at this point. But it feels super good to actually have this framework out there and have people build on it. And I mean, you can actually launch your own prediction markets on Omen. And I think the user experience is actually way beyond what anyone could have imagined. and interacting with a fully decentralized step would be like in the past. Yeah, like I'm pretty sure I saw like polymarket mentioned in like mainstream news during like

the election this year. And I'm like, wow, that's pretty cool that like. For me, the personal failure is that people don't realize that it's built on noses technology and people go like, oh, but you haven't launched any prediction market. It's like, yeah, but really we have. Yeah, I didn't realize that. I also saw like the headlines about polymarket, prediction markets. I had no idea. This is built on the mnosis.

Yeah, it's a noses stack. So we've, we've, we've, we've, we've built a lot of infrastructure. Cool. Well, I guess I'll go next. Well, this year, it's been, I think it's been a really fascinating year. Lots of really positive things happen. So on the epicenter side, I think for me, it was a year of, in some ways, provoked by COVID is to make epicenter much more leaner as a company. And I think in many ways, we've been able to do that and just have the company run at a much more leaner pace. But what has occupied a lot of my time this year has been working with Aden. We had Simon Perreux, the president, on a couple of months ago. Adon is the Association for the Development of Digital Assets here in France. And that's been extremely positive on a personal level, but also just, you know, the accomplishments that we've been able to achieve there, I think, are like really, really great. So we have like over 50 members now. And what's really encouraging is to see this initiative now go to the EU level, as many of you are aware, I'm sure, our listeners, I mean, there is crypto regulation

coming both in Europe and in the U.S. And at least here in Europe, there isn't or there wasn't sort of unified voice representing the entire crypto space, the entire European crypto industry. And so this initiative aims to fill that void and to have a more unified voice in the, you know, in the face of these regulations that could be quite damaging to innovation in the space. So that's been really great. It's been great to kind of focus my, my time and attention on other things. I've been really enjoying the work that I'm doing there. And, you know, it started off as, you know, the thing that I think I'm, you know, more comfortable in, which is like structuring, you know, all the, all the things in the organization and everything,

all the tools that we're using, but now is moving more and towards advising a lot of the papers that we're writing, bringing my own sort of technical and privacy-minded touch to the position papers that the adjutant is writing. And a lot of this work is also being used for the European initiative. So that's been really great. And I think with COVID, when things started when things started going remote, you know, sometime in March, around that time, it was a really stressful time for me. Like, personally, it was, you know, it was really like, it was driving a lot of anxiety. There was a time there where I was just like a bag of nerves. And especially around the time that we organized, reset everything. But then, you know, then when things in like in the

summertime, kind of cooled off a bit and I was able to go on vacation and like take a breather, that was it helped kind of take some of that some of that pressure off. I've really enjoyed this year being able to spend more time on doing things that I like like playing electronic music for example. So you guys can't see this here. But my desk is full of devices and things that light up and instruments and things like that. So I've been spending a lot of time doing that. And yeah, I'm hoping for 2021. I want to what I'm hoping to do is to be a, a little bit more, because I've got my eggs in different baskets, is to be a little bit more structured and organized and how I spend my time into these different things and sort of like be a little bit more mindful about time spent on different endeavors. Oh, other thing too this year that was really beneficial and I hope to continue doing next year. But also it's challenging in crypto because that's where most of the information comes from. It's like I really turn down the Twitter. I try to go on Twitter as long.

little as possible because that was also, I think, for the like it before we were talking about, like, how much the phone brings anxiety. I think that was one of the things that helped a lot. I actually tried to decide to start going on Twitter more again because I feel like I, so I started like, I started this whole like geography thing because I was like, there's too much crypto stuff on my Twitter. I think that's the thing that I appreciate the most about my Twitter experience is reading your geography tweets. Yeah, yeah. No, this is only, you. Your Twitter bot is amazing. No, not the Twitter bot. The geography tweets. That's something else. No, both.

Yeah, both. I mean both. But the Twitter bot does a lot of geography tweets. Yeah. Yeah. And the Twitter bot is so good that sometimes I don't know whether it's the real Sunny or the Twitter bot. I was thinking of like making the profile.

The profile pictures are different right now. For the Twitter bot, it's my like epicenter, like blocky picture. But I was thinking if I make them the same, it'll really confuse some people. Yeah. So you're going more on Twitter. Yeah. I was, you know, I feel like, I feel like one thing I've like toned down a little bit, I've been a little bit less vocal. And like, I feel like I want to get back to being more vocal. Like, you know, it's like sharing my thoughts and on stuff. Like so I have like, you know, and also just like writing more. So like at the beginning of the year, I was trying to write more like

blog posts and stuff. And I kind of like paused from that. And then I'm, but I'm trying to like get back into that. So I have like, you know, after that. that after the episode we did with Martin on circles. I, like, have this, like, blog posts I've been writing about circles. And, like, and I have a couple more blog posts, like, in the works that I want to, like, publish. And I feel like using Twitter as a good, like, you know, drafting board. Because I think some of my, like, better blog posts actually came from being, like,

Twitter tweet storms that then I, uh, turned into blog posts. And so I don't think I've, like, done those kind of, like, tweet storms in a while. I think, I think what I need to do is. just unfollow everybody and then start again from fresh. I think I just follow the wrong people. Maybe that's the problem. You can also keep following them and press, show me less of this.

Yeah, that also helps perhaps. Maybe you guys need to train me, coach me on my Twitter use. One inch is a decentralized exchange aggregator that sources liquidity from the top dexes and the AMMs to save you money and time on swaps. One inch finds the best possible trading paths across over 20 supported liquidity protocols and splits them up across multiple market depths.

I started using one inch last summer and since then it's become my go-to aggregator. I use it every time I need to make a swap. They recently launched V2, which has a brand new API. It greatly improves their routing algorithm. And my favorite part about the V2 is the new UI. It's super clean and easy to use. These improvements ensure that you get the best rates on your swaps with the lowest possible response time. So the next time you need to make a swap, forget about getting the best rate or optimizing your gas fees.

Make it easy on yourself. Just use one inch. And you can let them know that we sent you by go to epicenter. dot rocks slash one inch. That's one inch. We'd like to thank one inch for their support of the podcast. Yeah, let's dive into these predictions. So we all agreed that the first thing that was on everybody's mind that we would want to talk about is the current bull market.

And so we're going to talk. We're going to give our predictions about where we think the cycle could take us. And I think Mayor and Brian, you guys had some pretty accurate, accurate price predictions. We didn't know about accurate. Precisely. There's an actual number as opposed to like big number go up or something. I'll just like kind of like read them roughly. But, you know, Meher claims that the total aggregate crypto market cap.

will rise 15x, so approach 15 trillion within 2021, followed by a 95% crash at some point in the following years, which is interesting. And then Brian claims that he believes Bitcoin is becoming a recognized asset class and will reach about 350K by the end of the year. And then he added on at the end, Ethereum will reach 15K by the end of the year. So, all right, do, here, we want to like go ahead. and like give the defense of your prediction to start with? This is an irrational market.

It's a mad market. And like prices, I mean, there are no fundamentals in crypto. So prices cannot really go beyond fundamentals. But having lived through like two, two cryptobul markets, one gets an appreciation of how crazy crypto bull markets get. And I think, I personally think this is the 2021 is the big. big one where this bubble will become bigger than what the dot com bubble was in 1999. And why I think this will be bigger than the dot com bubble is that this is the first post

internet technology bubble where the information transmission has been accelerated by the internet and in crypto, the speculator trader market is much, much larger than the dot com market. So this will be a absolutely bigger than the dot com bubble. If you think of the dot-com bubble, that's around 10 trillion when adjusted for inflation. And what I'm claiming here really is that we are going to enter into a bubble that's larger than the dot-com bubble. And then once the bubble bursts, the come down is, yeah, is going to be as drastic as the dot-com bubble. So there, I think the market lost 96% of the value. I think something similar will happen to crypto.

So it's going to be a crazy ride. So what I have is like, you know, do you think this will, you know, you very specifically said the market cap of crypto rather than like any specific coin. So do you think this will come mostly from like new assets or will it come from a price increase of existing assets? Or obviously it will come from some combination. But where do you think most of the value will come from? It has come from a combination. right so I mean I'm saying it's like rising 15x right so Bitcoin will rise but it won't

rise 15x it's going to rise a little less so you know like 9x or 10x Ethereum probably will rise like 15x but then there'll be other coins that will rise 100x 150x and of course there will be completely new coins that will pop out of nowhere and have like 5 billion dollar market caps yeah there'll be a coin that's like three months old and as a multi-billion market cap. All those things are going to happen. And the aggregate market is going to be like 15 times higher. So I don't know how much like value Bitcoin captures versus the other things.

This is interesting actually listening to you because it kind of makes me want to like almost like rethink my prediction. I mean, so I think one of the things that is going on like right now is just that it's becoming like an asset class. where you have these like hedge funds that, you know, are buying, are buying crypto, buying Bitcoin at the moment. And I was listening to this podcast a few days, like a week ago that like kind of really brought this point home where this was some like non-crupto financial markets investment podcast. And, you know, you listen to the conversation and they were talking about the price of gold

and about the price of Bitcoin. And, you know, they said like, oh, gold had rallied less in the last while because Bitcoin had taken market share from gold. you know so this is like the first time that I've heard kind of bitcoin become actually something that's like has a role in kind of the larger financial markets and so I think that's like happening you know and you see all these hedge fund investors that's kind of been like the first wave so now I think and then everyone has to follow right I think it would be in the pension funds like it would just be in kind of I don't know you know what

1%, 2%, 3%, or something of like assets. And so I think you have that. And of course, we didn't have that with the dot-com bubble, right, where you had this because this was just equity. Everyone was owning equity anyway. Or maybe it was, so that's, I think one thing that's going to drive this like very high and going to be like a huge, this almost unstoppable shift. And then I think if you compare it with the dot-com,

bubble, I mean, the interesting thing, of course, is, I mean, you said adjusted for inflation, but, like, is that inflation is probably not, like, the actual inflation of the money supply, right? Because if you look at this gigantic inflation or increase in the total money supply with, you know, COVID and, you know, already financial crisis, and I think this is just going to keep going at a crazy pace, right? If you can adjust for that, and actually, I would think that this crypto bubble should become much larger than the dot-com bubble. Or, you know, at least maybe relatively adjusted to the money supply at the same level, but probably that would be a lot more than $15 trillion.

So it kind of actually makes me re-fing it's like, maybe this is going to be even much more insane than like. Yeah, I mean, I think you're right. I agree that like I feel Bitcoin has actually found like really solid product market fit at this point. Like, I think, I think it's inevitable that Bitcoin, like, replaces digital gold. And I don't know if it's going to be my replaces goal. I don't know if it's my one-year prediction. I think it might take two more, like this cycle plus one more.

But I think Bitcoin will flip in gold within the first, within the next five years, for sure. Yeah. I think, like, in the current macro environment, I think that Bitcoin just really has this, like, product market fit. And it's like, you know, there's this, like, thing in the U.S. where everyone's getting, like, air dropped money. and there's just like crazy inflation or like monetary expansion that's happening. It's like, well, okay, now people have the means and the reason to just go buy Bitcoin. And I've noticed like a lot of like a lot of normal people just like talking about Bitcoin now,

so it's like, you know, it's starting to happen again. On this product market fit idea, one of the things that I found interesting in listening to some of these kind of more general macro finance podcasts is that, that exists. It's really the only exposure that I have to, you know, people in that world. And it's to see how Bitcoin always gets grouped with gold. And the sort of institutional financial markets have clearly put Bitcoin in the, in the store of value use case. Like, no matter what the crypto space says like Bitcoin's use case should be, if it should be payments, it should be whatever. For traditional finance markets, it's, it's clearly, you know, a store of value. And,

I wonder what that means for Bitcoin's future and how the protocol might evolve or how that will drive maybe some technical illusion in the protocol. Yeah. I mean, I always hate this term store value. I feel like it doesn't mean anything. I feel like a better, like more precise term would be something like a macro hedge asset. Like that's what I guess that's what we mean when we say store value. Everything stores value. But I think what it is is like, you know, it's a shelling point game, right?

Where it's like currently everyone just agrees on gold as this shelling point where like if you want to bet against the rest of the economy, you buy gold. And so that acts as a shelling point which naturally then like moves counter to the rest of the economy. And so I think that's like it's just a shelling point game that's going to shift from gold to Bitcoin. And I find these like financial shelling point games really interesting because like one of my friends, he was working at Jane Street in like during the 2016 election. And he was telling me about how like, you know, during the election night, you know, they had a poker, they were playing poker. But on the TV, they have this like two screens open. There was one was the predicted prediction markets and the other was the peso US dollar exchange rate. Because essentially all of Wall Street agreed on that market as the shelling point to play.

their prediction game on who's going to win the election. And so it's like, it's crazy how much of like financial like markets is just like taking like, you know, acting as pseudo prediction markets given the lack of like, you know, actual prediction markets available. So can we then make a prediction about the Bitcoin price on, on, on Nosis built infrastructure? Absolutely. So I was going to do this tonight. So I was actually going to make, I was actually going to set up prediction markets on all of the

things we talk about right now on Omen. We can link to it in the show notes. Speaking of the product market fit, the next prediction I had there was that the flippinging won't happen. I don't think that ETH is going to flip in Bitcoin, at least this cycle, because my opinion is still that Bitcoin has this product market fit and I still don't know the product market fit of ETH as an asset. I'm extremely bullish Ethereum as a platform, and I like build on Ethereum, but I don't quite fully see the role of ETH in the system over time. Yeah, the narrative isn't as coherent. So basically I think there's different narratives as to what Ethereum is.

And yeah, I think that that's easier for Bitcoin because it's kind of, it is a meme in itself, like gold. Yeah, I think for me, I just think the fundamentals of ETH just aren't the same in the sense that like, I think a lot of the premise of ETH comes from like, you know, especially as we see like EIP 1559 and stuff and like, you know, as a switch to proof of steak. It's basically like trying to tie the value of ETH more directly to the product of Ethereum, which is like this like decentralized computer. But the problem for me is that I, I mean, this will get into a topic we'll get into live. later in the in the show. But I don't think decentralized compute is a scarce asset. Like I think that like if we want scalability, we need decentralized compute to become more widely available.

And we're going to see like a massive increase in like layer two and like all sorts of things. And so if decentralized compute is not a scarce commodity, then I don't see why ETH is going to accrue that much value. Yeah, so that's kind of how I see it. The alternative, for my view, though, is I think that there's this narrative that can be played where, you know, Bitcoin is a, another way of thinking of it is it's a fashion statement, right? It's like, if you want to hang out with a certain crowd and you want to, like, show this certain message about yourself about the type of person you are, you buy Bitcoin and you show, you know, like if you're, if you really love eating meat, you buy Bitcoin because it just like fits in with your persona, right? I think, like, ETH has the ability to find that sort of fashion statement where I think Bitcoin is this very, like, techno-pessimistic worldview where it's like, or like, it's like techno-right-wing libertarian fashion statement. While I think Ethereum has the capacity to become a more techno-optimist, like left-wing fashion statement.

And I think that, I think that's like where it might end up going. I love the misuse of the word fashion statement here, by the way. So, Sonny, what do you think about the thesis that Bitcoin will eventually move Ethereum for security reasons? I think that's what happened. The reason I joined Cosmos was to build the application layer for Bitcoin. Bitcoin is going to flow off the Bitcoin blockchain into many, many chains. That was the original reason I joined Cosmos like three years ago.

I mean, I'm... But at that time, I... I also thought Bitcoin was going to be money. I don't think it's going to be money. I think it's going to be the financial asset that we already talked about. So I don't, I really think stable coins are really going to also eat eth slants. Like I think a lot of the premise of ETH was like, hey, it's going to be the money of Ethereum. But I think we're going to see that's not going to be true.

I think stable coins are going to be the money of Ethereum. I agree. I also have my personal price prediction. So it's somewhat in the same vein. but I think out of the top 10 crypto coins by market cap, I think half of those will no longer be in the top 10 by end of year. And the half that I kind of see dropping out, Repo, not even sure why it's still there,

Cardano, stellar chain link, and the most controversial tether, which also has potentially enormous implications for the entire DFI ecosystem and also the use case of crypto as much. because it's the, by market cap, it's by far the largest, the far largest stable coins. So, but I think we'll talk about this later. Do you think USC will take its place? I'm not sure, maybe.

I think something centralized will, for sure, for the moment. So I don't think it's going to be, I don't think it's going to be die or something similarly decentralized. But I think it's one of my, my later prediction. about Facebook and the DM dollar and so on. So I'd save it for later. Well, so one of the predictions I have, which is not contradictory to yours, is I said that Lightcoin will stay in the top 10.

And I brought this off specifically because when we did our host episode two years ago, Brian and I got into a mini debate about this, whether Lightcoin will be in the same position as like five years from then. So it hasn't been five years since then. But it's been two years. And Lycoyne is still number four. on coin market cap. And I am convinced that like coin will not.

Yeah, totally. You've been winning that one so far. Like I said, it's all about shelling point and memes. And and those coin has had like a big rally up. So that that meme is also making some kind of comeback. Yeah. I think this whole like digital silver meme is going to be very hard to kill. And I think it's going to always like continue to be there.

Yeah. Okay, so I can go to them. Maybe we have the next thing, something I wrote, which is basically about like, okay, now you have this huge bubble. And then what happens? What's kind of like the response from the system? And I see kind of a bunch of different stuff. So first of all, now you're going to have these crypto businesses competing with like traditional businesses. And the crypto businesses are going to have like some weird advantages. But also they're just going to be. different and not really fit into the like the way things are done. And so I think one big thing will be like trying to use regulation to like protect the income and industries and to make it like harder for decentralized alternatives to compete. So I think that's going to be one thing. I think we also of course going to see this huge wealth transfer, right, if this happens, right? There's all these crypto people are going to get very rich and like people with other types of assets they're going to like, you know, loose to some extent. And it's going to be very visible, right?

Because a lot of these people are like on Twitter and on Instagram and, you know, you're going to have like the rappers in there and the lambas already. And so I think you have all of that like in your face and then maybe traditional businesses that are coming like more under attack by crypto. So I think this is going to be this backlash. And one avenue where I could see this playing out would be. with like taxes as well, where, you know, the, it's so complicated a lot of this crypto stuff that even if you wanted to like perfectly pay your taxes, it's often not totally clear

what to do. So I could see going after like crypto people for like tax evasion and like, you may be requiring people to like disclose their addresses to the government and then they run like software to look at like all your transactions and kind of so I could see stuff like that happen but I just think there's going to be like you know a real much deeper kind of backlash to try to yeah so can you be a little bit more specific of like what the type of backlash will be it will come mostly from like a government backlash or are you saying they'll also be like a social backlash as well I think there's going to be governance backlash, but kind of driven by, or it will have some public support,

I think, because people will, a lot of people will be alienated by, like, some of the stuff that's going to happen in the crypto space, right? Some people will be inspired and love it, right? But I think there's also going to be big people who are like, oh, this is this anarchist insanity here, this anarchist casino. So we are already seeing some stuff, right? I mean, I think this was also, like this treasury idea that you can't transfer or you know you have to identify when you withdraw from a wallet they have to identify the counterparty and so like how do you deal with smart contracts there right i mean in a way this is like a direct regulatory attack that makes it harder for a smart contract to compete with a traditional business so i think we could see a lot of that and then yeah

i mean imagine if if you're a tax authorities ask you hey look you have to give them like all your crypto adverses. And then you, and then they could like, I've always thought that taxes will be one of the ways that, you know, you can go. I mean, that's how they put out the phone in jail. I'm almost like the taxes. But, but Brian, how do you feel about privacy enhancing technology? Because basically in a way you can actually, you can build or, you know, you can engineer

your way out of this, right? That's, I don't know yet. But I think that's going to be kind of one of the battle lines, right? well, of course people then are going to build more privacy-centric stuff and like some people will use it, others won't. So I think that's going to just become one of these big battlegrounds. And I could see there also being more of a segmentation where you're going to have like, you know, regulated crypto. And then, I mean, we saw that even, I think that just recently that Bitcoin will find for violating sanctions law, even though it's sort of like an unhosted

wallet or it's a multi-sig wallet. So, you know, if you argue is it in a lot. unhosted wallet, hosted wallet. But I think they got some fine because there were some people in Iran or some sanctioned country using it. And so now they're, okay, they have to say, oh, we have to shut this off more, make sure nobody's touching that. And so I could see this sort of segmentation of the industry into a more of regulated and then more of like offshore unregulated part.

I totally agree with this prediction. and it really overlaps with some of my predictions I wanted to bring up later on. And I think that the regulatory aspect, so a couple of things. The taxation aspect, I think, is clear. And at least here in France, we're already seeing some version of that. So when you file your taxes in France, you have to declare all exchange accounts. In fact, you have to declare all foreign financial institutions where you have an account. And so crypto exchanges are usually part of those.

And I could definitely see that the way that government has been forging policy here. I definitely see addresses being one of the things that's required to disclose in the next couple of years. And then just on this idea that part of crypto would be regulated and part may, you know, stay outside of the regulated space, I think the MECA regulation makes it pretty clear that that is what could happen. In the Mika regulations, for example, privacy preserving coins are. are forbidden. And so privacy preserving coordinates can't exist. They simply can't exist in a regulated space. Now, with regard to other coins, other types of use cases like stable coins, etc., there's also some question there about whether or not those could exist in the regulated space.

And if indeed there are some crypto use cases that are regulated and some which are not, there could be sort of this, as you describe it, rather, this separation or what I call like a schism where part of crypto exists in the traditional sort of linked or somehow tied to the traditional finance space. It's regulated. They're on ramps, etc. But part of crypto exists outside of that. And then there's, you know, you can extrapolate from there. Does that mean that there are companies that exist solely in that market and does it create sort of like a sort of shadow economy where there's all kinds of other businesses and activities happening? But that never interfaces or rarely interfaces or where it's very difficult to interface with the traditional finance

space. The shadow side will probably exist in that case, but do you think it will be a big space or no? Because like the current premise of defy is that eventually this stuff is supposed to interface back with like normal people in the real economy, at least in my opinion. But if that, if that door is closed, then do you think that like the shadow side will basically like, you know, go back to like 2013 days. Like, yeah, you can use it for dark net stuff.

but like that's about it. So currently, like, the Wild West of Defi has this, like, at least public state, like, view of, like, hey, eventually this stuff is going to be used by normal people. But if regulation comes and, like, clamps that down, will the Wild West, like, disappear or will it continue to, like, grow despite the... Let me throw the questions back at you. You know, let's assume that Mika goes through as it is today without any modification. I'm not so familiar with the U.S. crypto regulatory proposal.

I've heard that it's a lot more open to innovation, etc. But let's just presume that like stable coins are illegal. Or the stable coins exist outside of the regulated space. Then that means that exchanges won't be able to list them. Then it's really up to interpretation whether or not exchanges can deal with coins that have also interacted on smart contracts. You know, with exchanges be able to. to receive liquidity from coins that have went through like the maker smart contracts, for example, or this sort of thing.

When you say exchanges, you mean centralized exchanges. Yes, centralized exchanges. So basically, in a way, I think this actually comes down to being a philosophical and historical problem. So basically, what good are laws that you can't enforce? Where basically you cannot make sure that a law is abided by. think those are laws that kind of get overturned or repealed by history itself. Well, I mean, the question, though, is, yeah, so like with Dex's and stuff, you can skirt the law.

But I guess my question is, what percent of the population do we think is going to do that? Well, I think it's a very low percent of the population. I think if, like, if these things are meant to be, if the vision for Defi is that defy becomes the underpinnings for finance and where markets are able to operate in things that we already know that already exist like commodities, markets, etc., like just the stock market and all this can exist on defy, at least the way that Mika is worded, it definitely does seem as though they are trying to bring the parts of defy that already resemble and mimic traditional financial markets, things like, you know, securities,

things like electronic money. They want to bring that into traditional finance system. and have that be regulated. But all this other innovative stuff, like all the, all the, the gen stuff definitely exists outside of the regulation. And there's no room for it in the regulation. And so I think that, and I certainly hope so, and that's the work that we're doing with our initiatives,

is that the regulation leaves room for more innovation, but as it's currently drafted, it closes very many doors. So do you think will people be willing to, I guess it's like a cultural thing as well, right? So it'll probably change from like country to country. Like one, obviously the regulation will change country to country, but also just the willingness to break rules probably changes from country to country as well.

But also the acceptability of breaking rules, right? So basically I remember when I was a kid and basically content sharing started and you had Napster and, you know, all of these kind of services. I remember they ran these ads saying you wouldn't download a car. And I know that basically with my generation, this didn't resonate because basically it didn't feel like downloading a song was morally wrong. I mean, look what happened. I mean, people don't really buy entire records anymore. People now pay for streaming services.

And this is how this is monetized through, you know, advertising deals and so on. and arguably interacting with privacy-preserving crypto was way less enforceable than punishing someone for downloading a song or Napster. So I think in a way, the law doesn't stand on its own, but it kind of mimics what people feel is right and what is wrong.

And I think that understanding is just going to change over time. In a way, isn't that actually the music piracy is basically dead now, right? Like, I mean, no one, like, barely anyone pirates music. It's all Spotify. And you can think of that. That is sort of like the, you know, you have the traditional music industry with

their, like, selling CDs. Then you had this, like, this radical thing of, like, piracy. And then you found some synthesis in, like, Spotify. And so, like, maybe that, I mean, wouldn't that be what happens here as well? You have the traditional finance industry. Then you have this, like, crazy defy thing. And then we're going to find, like, some synthesis in, like, regulated defy. Yeah.

I think that's reasonable. And regulated defy will kill piracy just like Spotify killed the music But only if regulated

Defi isn't so heavily sequestrated that you know it doesn't really qualify as the real thing Yeah Just as with dismantling of the

music industry but also like the movie industry to some extent I think that we will come to some some kind of middle

and but you know where where the cursor stands in terms of what that middle looks like, I think is really an unanswered question at the moment. I think like one of the most compelling things for me about defy over traditional finance is the UX of it. I think the U.S. of it is like what's really nice.

And I think you could say the same thing about the piracy. Like I think the UX of like digital streaming is just way better than going to buy CDs. And so if regulated defy can like provide the Ux benefits over traditional finance, but I think it's going to actually follow. You know, through the course of this conversation, I think I've actually been like, I'm very analogizing it to the music industry. I really think that like regulated defy is going to probably like wipe like Wild West defy once it provides the UX features to like normal people.

But only if you have things like stable coins, for instance. I mean, basically and privacy preserving coins and so on. So I feel like if the thing that is then called regulated... I mean, my claim is I don't think normal people care about privacy. I think normal people probably don't care about privacy preserving coins. And stable coins will exist. I mean, depending on how they'll exist, I'll probably be more regulated. Like, you know, maybe it has to be issued by a bank and stuff.

But I think that my claim is that normal people don't care whether it's issued by a bank or by like circle. You know, they just care that is. I don't know the U.X is as nice as like it currently is. I think that's all they care about. And I don't think they care about privacy. But I mean, the user experience is pretty okay right now on defy and it's only going to get better, right? So why would people kind of leave the Wild West to start with? Because the regulation will decrease the U.X of Wild West Defi and make the U.S.

Defi better. Because with the pirating music, you always get those like DMCA complaints every time you pirate them. That's like that sort of, you can think of that as a net. negative UX component, right? And so I'd rather just pay the eight bucks a month to Spotify, get as good of a UX as, or probably better than pirating music. Yeah, I'm just questioning how good the U.S. under my curve would be. Yeah. I mean, on the topic of stablecoins, I think it's worth noting that, at least in Europe, the European Commission is considering crypto euros. And I don't really have well-founded

thoughts on this, but maybe this is something that we can launch into into some debate at some point. But I think that generally there is going to be an opening up of currencies in the future are no longer monopolized by countries and by like central banks, right? So I think here in this rundown, we're talking about like the Facebook Libra initiatives, et cetera. And so I think things like Libra are going to exist and they're going to exist alongside things like a digital euro or crypto euro. And that is a power shift that resembles the power shift that we saw with the music industry and the movie industry, you know, 20 years ago, where highly centralized power in those industries was broken apart and now exists in all these digital startups,

like Spotify, etc. We may see a similar sort of disruption of the power monopolies. around currencies to favor private currencies like the Libra and others. I don't know if this is something you guys have thought about too. I think governments are going to fight tooth and nail to protect their power here, and I think it can be very hard. I'm not saying they're not going to fight. The record labels didn't have power of taxation and a military. Governments do, and the one thing that they care about above all else is to maintain their

like monetary dominance. And I think that like they will fight very hard to prevent someone from trying to disrupt that. I agree with you, Sunny. And I think in the end, they will fail. And I think that's, in retrospect, that's going to be the pervasive paradigm shift of our times. Basically, powers diverted away from nation states and to companies or other collectives. Why do we think this is the case? Like, what are the triggers that's going to make that the case? Like, you know, historically, we've seen a continuous increase in, like, state power. What's going to be the cause of this reversal? I mean, it depends on which scale of history you're looking, right?

I mean, basically, the Roman Empire collapsed and very, you know, state power very much regressed. So I don't think that's not possible anymore. Laws are only good if you can enforce. them. And this is kind of segueing into our regulation part of the conversation. But so basically, this was, this was my one prediction on regulation that I actually alluded to earlier, namely that if you look at the way that the Facebook proposal for Libra has moved. So in the beginning, it was a basket pegged to, basically it was a coin pegged to a basket of different assets. And under US regulatory pressure that has kind of switched to a U.S.

de-backed stable coin, right? So I still think that despite the fact that that is probably the best deal that the U.S. can actually get right now, I think they will still clamp down on this. And I think Facebook will lose in this instance. And I think Facebook is very much on a path to demise anyways. But in its wake, I think we will see a stable coin that is global. and basket-pegged, and that will merge into the mainstream, and that will be set up such that it will not have the same regulatory exposure as Facebook.

And I think this will herald a couple of things, one being the end of the global dominance of the United States, because that is, in essence, based on controlling the supply of, you know, the world's reserve currency. But I think this is also, in the wider sense, it's also going to mean that nation states will become less powerful. And I would actually argue that nation states are at peak power right now. And I think that corporations and possibly later DAOs and other sort of collective schemes

will kind of take that place. I very much agree with that. I think this is like missing partially like the cyclical network effect of the US dollar. Like it seems like your claim here is that the US. power comes from the dominance of the U.S. dollar, which is true, but that also is a feat the other direction as well. The power of the U.S. dollar comes from the power of the U.S. government. Like, the entire petrodollars system is built on that, like, idea of, like, you know, the U.S. military will enforce it. And so, you know, the reason the U.S. dollar is the, like,

global reserve currencies that you needed to pay for oil. And when you stop someone from try to, if you try to pay for oil and something else, the U.S. military will come and invade you. And so it's like, we need to see like what is the, I need to see what the path is to an alternative. Well, one path is the decline in the demand for oil. But I mean, that's one path. I mean, I don't have like specific information. And you have countries like Iran, right, that are basically locked out anyway, you know,

they are going to, you know, they can use something like Bitcoin, right? We saw some news there. And then I think you have other countries, you know, like China, like, which will be a big oil buyer. Like, do they care about, like, protecting the U.S. dollar? I'm not sure. But so China's not going to push, China's going to push the yuan, right? Like, you know, what China is doing right now is they're building, like, they have a viable strategy to building a reserve currency. What they're doing is they're going to every country and, like, saying, hey, we'll fund your ports as long as all imports and exports from here are denominated in R&B.

That's, like, a viable path. Yes, but I mean that actually that puts pressure on the dollar, right? I mean, so basically that fragments the system even more. Yeah, exactly. You're going to have alternatives, right? You can say, oh, we're going to get Yan from China or like you can get like maybe do something with Bitcoin with Iran. And then I think there will be others that are also like like Russia. I'm sure is going to be happy to deal deals like outside of the dollar system.

So I don't think that they're going to, the military is going to be able to sort of like maintain the disturbance of the dollar, I think there is a big shelling point around the dollar, right? Where everyone keeps their accounts on that and there's some liquidity in that. I think that's, of course, going to be more sticky, but in the end, I don't know about the dollar. I would guess it's still some ways away until we are going to see the dollar kind of lose its status. I would guess that's not going to happen in like this bull run, but, you know, maybe like five, ten years now? Maybe I can step in.

Like, when I hear all of you talking, I think I would like to actually someday categorize your predictions into like a framework. So you think of state power, like what does the state want? State doesn't want one thing. It wants multiple things, right? So maybe it wants to preserve its monetary sovereignty over their own population, meaning U.S. government wants their population of transaction U.S. dollar. So that's one thing they want.

The second thing they want is tax collection, which is making tax evasion really hard via crypto. The third thing they want is, which is like preserving the market structure, which is like the SEC wants that if there's a crypto coin, there's no information asymmetry vis-à-vis the crypto coin. So they want to preserve market structure. And then the idea, the fourth thing is,

they want surveillance. Surveillance comes in more from a law enforcement. So it could be that the government wants four things, four major things, so we can identify a different number. Maybe in the future they will get some of these things from crypto, but on the others they will fail to get what they want. So, you know, like you could imagine different futures. There's one future in which the government gets their surveillance capability.

So they're able to surveil everything way, better than area today via crypto, but they lose their monetary power. I mean, the coins being transacted are not US dollars, but they are surveilled really well. That's one kind of future. But the different kind of future is they preserve the monetary sovereignty, but lose their surveillance power. So, you know, like, the future has like different outcomes based on which of these powers is accentuated for the government and which of the powers is weakened for the state. And all of you are like on like different spectrums. terms of some of you are advocating for a particular thing will be strengthened and another

particular thing will be weakened and like that's these are a difference in your predictions. So maybe we can actually like classify your predictions using some model like that. Right. I think that I think that's actually a really good way of putting it. I think personally that for me I think the surveillance is something that will be harder for them to enforce and I think they know that. And I think which is why maintaining the monetary dominance is something that they can do more easily. It's like surveillance is like this hard problem where you have to have like monitor literally everything. But like with monetary dominance, it's not like, it's something you can like kind of enforce not by like needing visibility into the entire thing, but just this like larger thing where you like, I don't know how to describe.

describe it exactly, but yeah, I don't know, maybe someone else can bring it. In a way, you actually have that now, right? I mean, so basically cashes to a large extent not traceable, and you still have monetary dominance as a nation state. So in summary, I think what we can say is that with some amount of certainty is that crypto markets are going to see a pretty significant increase in prices this year. And I think we all welcome that. And but at the same time, the attention that will, that that will bring to crypto may in fact cause the space to regress in terms of its ability to innovate as freely as it has, you know, in the last like three years since the last bull run. Would you say that that's,

would you guys agree that that is sort of the overlying trend that we should expect in the next year? I do think we will see a large amount of regulatory pushback, but I do think, I mean, this is kind of where we disagreed on the episode, right? So whether this will actually mean that a large proportion of the ecosystem will become regulatory compliant or whether there will still be a large unregulated part. And I think the ecosystem will very much rally to avoid being regulated in an overly transgressive way. I mean, if we bring it back to the, just kind of brief, I just want to briefly bring it back to this analogy, if we bring it back to the piracy and like music download example, I mean,

that exists. It still exists in massive scale. There are still, you know, like hundreds of terabytes of day, probably even thousands of terabytes per day of music and movies being downloaded. And that's, despite governments trying to stop it, it just doesn't. doesn't interface with any regulated, with any regulated entities. I don't know how that overlaps to, in the crypto space, but it might be one indication that there can still be a sort of wild west of crypto while a lot of the innovation that's come in the last few years and that will continue to come will be sucked into a regulated space. I mean, it really much, it depends on what the regulated alternative looks like, right?

So basically, if you think back to iTunes where basically you could buy any song for 99 cents, I mean, I don't even know whether that still exists. I haven't seen iTunes in years. So I assume that it kind of was probably discontinued because people didn't like it enough or people, it wasn't appealing enough for people to stop pirating, right? Well, better alternatives came around.

Exactly, because better alternatives came around. And so I think, unless the regulated open finance or defy space is as attractive as the unregulated one, I think it's not going to happen and people are going to find an engineer ways around it. All right, cool. Thanks to all of you. And I think we can all agree that this is. So you guys have, our audience has really, I think over the years, like asked for us to do more of these. And what we've all agreed on here, I think is that we'll try to do these at least once a quarter because you guys like them. And also, like, we think they're really fun.

And we're good guests. Yes, also. So with that, happy New Year to everybody and we'll see you on the Internet. Thank you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud, or wherever you listen to podcasts. And if you have a Google home or Alexa device, you can tell it to listen to the latest episode of the Epicenter podcast.

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