On The Brink with Castle Island - Bruce Fenton (Chainstone Labs) on the paradox of governance tokens (EP.139)

Episode Date: October 19, 2020

Bruce Fenton, founder of the Satoshi Roundtable and Chainstone Labs, joins the show to talk security tokens and tokens-which-are-securities. In this episode: About Bruce's company Chainstone labs How the Bitcoin Roundtable is intertwined with Bitcoin history and the blocksize debate Coinbase's ongoing rapprochement with Bitcoiners Why longevity is so difficult in the crypto industry Are we living in the most historically aggressive period in terms of regulatory oversight into the industry? What Bruce makes of Heath Tarbert's comments on Ethereum Continuing uncertainty about the status of Ripple's XRP – and what possible outcomes look like The prospects for token S1s and a genuine standard of disclosure for new issuances Why trying to avoid securities laws causes token issuers to create subpar instruments How much control do governance tokens really give tokenholders? Why Bitcoin isn't sufficient to resist the state alone – and what tools are part of that toolkit Why the US should consider disrupting itself with regards to managing the world's financial system Why some people like security tokens for the wrong reasons The logistical advantages of tokenizing a security How security tokens could open up mid-size businesses which don't have access to capital markets

Hello and welcome back to On the Rink with Castle Island. Today on the show, we sit down with Bruce Fenton. He's very well known in the industry, of course, as the founder of the Satoshi Roundtable, a yearly event which is inextricably intertwined with the history of Bitcoin. Bruce is also the founder of Chainstone Labs, and he has had a long career in the securities industry and understands it intimately, not just in terms of the plumbing and how clearance and settlement works for an equity security, but also the spirit of securities laws and what kind of instruments these really are and how they fit with crypto markets.

This is a wide-ranging conversation. We cover disclosure standards, how much control governance tokens really give you and whether there are paradoxes there. And fundamentally why trying to avoid securities laws causes token issuers to create subpar instruments. And lastly, we talk about Bruce's pitch for security tokens, why some people like them for the wrong reasons, and what the advantages really are of tokenizing a security. I always have a ton of fun talking to Bruce. This is a great one. We cover a lot of ground.

Let's dive right into it. Brought down by bad mortgage investments, Lehman, which has 25,000 employees, will be liquidated. The federal government loans American International Group, AIG, $85 billion. This is a different kind of market, and the Fed is asleep. The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. Havingman has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing.

You print a couple trillion dollars and all of a sudden people start to worry. So out of this worry, we have something called the Bitcoin. Bruce Fenton, thank you for coming on. It's maybe overdue for having you on the brink. Either way, welcome to the show. Thanks for having me. Great to be here with you. We've been rehearsing for this by doing a little clubhouse talks.

but now this is the real deal. You know, this is... Nice. We're rendering it permanent. For the listeners, Bruce has these good weekly chats on Clubhouse about crypto. It's kind of like a podcast, but they don't get recorded. So I figured we would record it. And here we are.

Perfect. Excellent. So I know a lot of people in the crypto industry know you on account of the Satoshi are on table and you don't a lot of things, but maybe the more immediately addressable thing would be talking about Chainstone Labs, what that is and kind of what it aspires to be. So Chainstone is basically an investment and advisory company that's focused on the convergence of distributed ledger technology and traditional assets, particularly security. So we're really interested in anything that's building on those two things. So if it's

something that's a way for Bitcoin to be used as settlement for securities or if it's some way that securities are going to be put on blockchains or, you know, something like decentralized exchanges. But everything we do is kind of under the regulated environment. I'm very much a cypherpunk and very kind of minimalist government person, but our plans as a business are very much built with the belief that these regulations are here to stay, whether you like it or not. And so we're very compliance focused as well.

And you also own a broker-dealer, correct? Yeah, so Chainstone owns Atlantic Financial, which is a registered investment advisor. It owns Watchdog Capital, which is an SEC registered broker-dealer and FINRA member. And it also owns the Satoshi Roundtable, which you mentioned, which is a leading industry event. That's right. We're quite proud. And unfortunately, did not occur this year, right? Well, we did have it, actually, because we were at the very beginning of the year before COVID.

So we didn't have to cancel. We were lucky. And then next year, we're probably going to have to modify it a bit for next year just because there's still a lot of uncertainty. The Satoshi Roundtable is kind of associated with, I feel like there's always some new, you know, like drama that comes out of there. Not to put it in a pejorative, but I feel like there have been some like pivotal conversations that have happened there, which are now like memorialized in Bitcoin history or something. Yeah, it sort of is. I mean, it's been in it, it's in its seventh year. So year two was really well known because I think what happened is Adam Back was going to come

and there was this big debate about the block size and he tagged Brian Armstrong and said, hey, why don't you come and we'll talk about it? So then once those two were discussing it, it sort of became the, as an organizer, I wasn't actually super psyched because it was supposed to be kind of a happy, fun thing. I ended up everybody arguing. But it was sort of historic. I mean, that was like the last hurrah of the block size debate. and you had all of these people, you know, Roger Veer and Gavin Andrieson and Adam Back and, you know, core developers and all these other people who probably haven't spoken since who were sort of in the same room.

And that's one of the things we're proud of. We brought together, I mean, just this year we had Adam back and Justin's son in the same photo. And we've had a lot of, you know, William Shatner and Ron Paul and Vitalik and Brian Armstrong, you know, all kinds of cool people have attended. And I think we've tried to be really big tent and welcoming to everybody. which isn't always popular. Yeah, I know. It's always kind of funny seeing like the fallout from the Satoshi Roundtable or something, but that doesn't seem to deter you.

I seem to remember, like, did Brian Armstrong write a blog after the second Satoshi Roundtable? Like what happened at the Satoshi Roundtable? And that's kind of, that's one of the key pieces of literature in the block size war. I guess technically he was on the losing side, although he's still with a, still a Bitcoiner, you know. Yeah. And he's doing pretty well from the startup guy that I first met in Miami, looking for his first three million.

He's doing good. I wish I would have bought into that one. Yeah, they're worth a shade more than that now. I mean, I guess I won't touch on the political stuff out of prudence. But I will say, I have been very impressed by some of Coinbase's decisions lately, sponsoring core devs. That's great. And they recently, just today, they released a transparency report saying what federal agencies they give data to and what kind of request they get for data. So they are, they have, it seems to me that Coinbase is making a deliberate move to, to have a rapprochement

with kind of the Bitcoiners, which I appreciate. Yeah, I think so. And I think they get a lot of flack from Bitcoiners and I understand the reasons. But I think, I think it's also important to note that, you know, they've brought on a lot of people. The fact that it's been an easy, reliable, and so far pretty much, you know, scam-free and hack-free platform. I mean, that's given some stability. There's a lot of people who, you know, they don't know who you or I are. They can't name a single-core developer.

They don't care about the intricacies that we care about. But, you know, they're dentists and doctors who go and grab a Coinbase account and buy $100,000 worth of Bitcoin. And there's now a lot of people like that. So I think Coinbase should get some credit. The other thing that I always give credit for, you know, I'm sort of in awe of anybody who builds in this space. This space is brutally, brutally hard.

I mean, it's hard just to survive, just to make it five, six, seven years without being embroiled in some sort of scam or losing everything or, you know, taking some other kind of beating is impressive. But to actually build a business in this environment is extraordinary. And so, you know, I'm kind of in awe of, you know, Jesse and Brian. and any of the other CEOs, CZ, anybody who's built a really large, successful business in this space. Yeah, you really take your lumps being a crypto entrepreneur. You know, like, it's so easy to be on the losing side of some, like, critical battle about coins and protocols

or end up somehow associated with something insolubrious or a hack or something. The more, the longer I, you know, I've been, I guess, professionally active in the industry for maybe four-ish years now, But I've come to appreciate that more and more. I just see so many people washing out, getting disillusioned, you know, blowing up on leverage, anything like that. It's actually quite hard to make a career in this industry. I think you're absolutely right. Yeah, for sure. And we see people from, you know, the kind of, you know, Roundtable 1 seven years ago.

And there's people who have risen and fallen and rised again. I mean, there's people who are kind of on top of the industry. And a lot of, you know, this is, you know, it's all public stuff. if somebody wants to go and dig and figure out who was who. But there's people who had huge volume of, you know, they were giant miners or they had exchanges that had, you know, big market share. And they just, you know, you make one misstep in this space and you can get crushed a little bit over leveraged or the timing on your mining or, you know, certain different investments

and things like that. Getting on the wrong side of the regulators, you know, all of these things can just can instantly end not just the business or the career. So to avoid those missteps and build a multi-billion dollar business with millions of customers, it's quite an achievement. And they said in that blog post today, 38 million customers. 38 million. Wow.

I mean, I think Fidelity has something like 60 million. I mean, like these are real big boy numbers in terms of being a brokerage. Yeah. Wow. Yeah. Amazing. On that same note about exchanges, I mean, just in the last month, we've had Bitmex kind of getting kneecapped, although they're still sort of limping along.

Today, OKCoin, CEO gets arrested. Not clear if that's related to the exchange or not. I mean, to me, this seems like the most aggressive period maybe ever in terms of regulators actually cracking down on exchanges. I don't know if that's your feeling. You've been involved in the industry forever. Does it seem like the most kind of pro-regulation period

in the history of crypto right now? Yeah, I think so. I think they've started, they went from the low-hanging fruit to the, you know, two-bit scammers to the bigger companies, to the serious allegations of fraud. Now they've moved up the chain to like principal exchanges, kind of, you know, looking at the big picture type of stuff, long-term enforcement actions where they're investigating for a year, two years, maybe more in some cases. It seems like it's part of the maturing of the industry. You know, it's not something that's just thought of as a passing scam that they're going to, you know, make a small case about some scammer who robs 500,000.

I mean, I think they're viewing this as, you know, these are big enterprises with billions of dollars at stake and they're, you know, they're taking it quite seriously. So, yeah, it is a pretty strict time for regulation. But it's also a time when there's probably more things that are legal or pretty clearly legal than we've had before. I remember the days when people didn't know if Bitcoin was legal. A lot of people were like, you can't own that. That's going to be illegal. And that was a common objection in the early days. They're like, yeah, sure, go ahead and hold it until they tell you it's a felony to hold it.

And then it won't matter if it's on your own. Trezor, paper wallet back then. People today don't really appreciate that. there was a time of genuine uncertainty as to the legality of Bitcoin, whether you could make a transfer, whether mining was money transmission, whether running a node was money transmission, you know, was FinCEN going to come after you in the dead of night, you know, where Bitcoiners going to get 6102'd? Still might happen. That still might happen. Yeah. Yeah, there has been a lot of legal de-risking. I was actually reflecting on that, listening to the CFTC chairman,

Heath Tarbert, talking effusively about Ethereum. I don't know if you caught that. Yeah, I saw that. How about that? I mean, he's like, I think he might like Ethereum more than me. I mean, you know, like, he was really praising it. Yeah. And the, you know, the CFTC said in 2019, In fact, I was in the room for this speech, Heath Tarbert said, we believe Ethereum is a commodity, and we invite the private sector to produce derivatives, venues, to trade it, you know, regulated derivatives markets. And that happened. Lo and behold, they appeared. But so far, those are the only two crypto assets that they've really unambiguously declared to be commodities.

And so you have others like Ripple that are sort of waiting in the wings. It's like kind of asking when is it going to be my turn kind of thing. Might be a long time for Ripple. I don't know. I've seen them complaining about it a lot recently. Yeah. And they had their recent article that Brad Garlinghouse wrote about how they were talking about maybe even leaving the country. Yeah.

My speculation is that they would like to get an EOS type of deal that says, you know, maybe you didn't offer this correctly under the rule. and therefore you're getting a fine. However, by now we feel that the XRP itself is separate enough from the company called Ripple that it's not a security. And that might be a win-win for everybody, you know. Yeah, and EOS deal would be probably best case for them, I think. But the interesting thing is, you know, like Ethereum started with the Ethereum Foundation and then, you know, day one, Ethereum Foundation basically controlled everything.

And then over time, there were a lot more stakeholders that kind of appeared. and the funding from the Ethereum Foundation didn't matter as much. So that's like a totally plausible story about how you get decentralization, not just of the network itself, but of like the decision-making capacity in terms of development and how funding is allocated and how decisions are made generally. I haven't really seen that with Ripple. I don't know. I mean, are there any other major stakeholders in the Ripple network aside from effectively

Ripple last? I mean, if they wanted to change something about the protocol, presumably they could, right? For sure. And also, is there anybody significant in the ecosystem that they haven't directly funded or indirectly funded? I mean, it's a pretty close-knit system. Right. I mean, the thing in there that might work for their favor is that the bar of sort of what we call decentralized by crypto terms versus what, you know, the SEC thinks of as decentralized. I mean, it may be sufficient to just, you know, not have the ability to file quarterly earnings reports and have a treasury and have a CFO and a CEO and this kind of thing, which they can do for the, you know, the currency, they can make it. And I, you know, I don't know too much about Ripple, but I guess the way it works now, it's, you know, pretty open source. But, but yeah, I mean, I think you're right. The structure of sort of control, you can make the same argument about EOS with 20, I think 21 nodes, basically.

that it's certainly not centralized by like Bitcoin standards. But it may be a fair thing to say, well, this isn't, it's not, this isn't a corporation. You can't file a, because one of the arguments you can make if you're a coin and they say, or a security, say, well, if we don't have the ability to file a, you know, an annual report, because there is nobody, nobody with official role, like, like Monero or, you know, Lightcoin. You know, light coin, there isn't anybody with an official role. You know, Charlie made some software and gave it away. that doesn't put him on the hook, you know, some sort of permanent legal thing where he has to have responsibility.

And any foundation or anything, that's independent of the code. The code's basically a Bitcoin fork. So its consensus rules are based on mining. And, you know, certainly influential people can influence what miners choose. But that is decentralized. That just means Charlie or anybody else has a voice. They don't have control. And if Charlie said something crazy, he would immediately lose credibility.

Yeah. And, you know, if Andreas came along and started talking about Lykoin all the time and put his entire, you know, reputation behind it, he could probably push through a change, you know, just as easily as Charlie could. Yeah. So it's a great point. You know, there's no one to do disclosure. There's no one to sit down and file a quarterly report for some of these community-driven projects. that kind of rankles me with regards to the more corporate or, you know, centralized ones, at least in terms of these kind of key decision points around supply and, you know, the token economics. Because, I mean, Filecoin would be a great example. They had some disclosures, you know, the sum disclosures about the trajectory of the coin. But if you dig into it, it's very hard to get anything like the equivalent of an S-1. Right. And that's what I'm always looking for. I mean, if I'm, I'm not a public markets investor, but if I were, I would be reading, ravenously reading the public disclosures. As a private markets investor, you know, there's a lot of information that we ask for from, from, you know, potential portfolio companies and diligence, a huge amount of information. But then with tokens, they have an incentive to be untransparent because they want to portray it, the token teams, they want to portray. They want to portray.

like they're not in control and there's no one to give disclosures. But of course, there are people that can give those material disclosures most of the time. You know, most coins are not like Minera light coin. Like mostly, there is like an entity standing behind them. And their incentive is to, to portray it like, you know, they don't want to discuss the drivers of the valuation of the coin because they don't want it to be considered a security. And so we have this really horrible situation where it's like an environment of informational poverty. and, you know, investors can't get some tools to make good decisions. Yeah, yeah, it's a real shame that there's been so much work to avoid the securities regulation

that we've really ended up with bad quality. People were in such a rush to move forward that they, you know, around 2017, a lot of people went into lawyers and they say, hey, I want to do a thing and make a bunch of money. And the lawyer said, well, you want to make sure it's not a security. And they say, okay, great, how much do I have to pay to make it not a security? So they just did all this, you know, engineering to try and make things not fall under the definition. And the problem with that is that splits, you know, takes out all of the useful terms. You know, as soon as you say something like, hey, you own equity in this business.

And for 10% of the market cap, you own 10% of the business and you'll be entitled to 10% of the voting. You know, that's clearly definitely a security. So you strip out all of those things, say, okay, it's not an investment contract. It doesn't rely on this. then you end up with something that it's harder to make a case of why it's a good investment. Yeah, that's the great paradox of these tokens, is that things that make them investable are the things. That's the spirit of the law that makes them securities.

And as you say, if you pull that out, then it's probably not a great investment, or at least it's very ambiguous. Then you're just relying on these winks and nudges from the issuing team. You're trying to figure out what they're going to do, but you don't have any codified contractual rights. relative to them. I mean, it's kind of like if you look at BNB, great example, BNB token holders didn't really know what they're getting. And they have to like read between the lines, trying to figure out what CZ means. So the white paper said one thing and then it turns out they were doing another thing and then they changed the white paper, which is the craziest thing

I've ever heard of. I mean, imagine unilaterally amending a shareholders agreement. Right. Or you're just like unilaterally amending your, you know, incorporation documents. And it's like, yeah, this isn't a Delaware C Corp anymore. It's an LLC. Oh, and by the way, that like mandatory dividend we had that's gone. And the board of directors is now just one person. And actually, you know, we're not a software company.

We're an agricultural, you know, we're a farm now or something. I mean, it's like it's just that level of insanity. You can't go and change a white paper. The white paper free B&B stipulated what, you know, the token mechanics were. And they changed it. Yeah. I mean, they literally rewrote it. Yeah, that's the thing when, you know, these tokens all sound great until the plan deviates.

And when you have money at stake, 100% of the time the plan is going to deviate at some point. There's going to be a disagreement. There's going to be partners or founders who get in a fight. There's going to be a major stakeholder or shareholder or employer. employee who disagrees with the direction with one or more board members or executives or whatever. That's just inevitable. And in corporate governance for public equities, for example, we have 400 years of history to figure that out.

Like, oh, okay. I mean, there's whole law firms that specialize on here's what you do if your board is in a dispute. And here's what happens if the CFO fails to certify whatever and blah, blah, blah. I mean, there's just tons and tons of law, case law and expertise on this kind of thing. And with a token that's sort of trying to on the surface look like that and mimic that, it appears, you know, you can call it governance, but it's not really governance unless it's backed by those sort of legal terms that say, yes, your governance means something. You have, you know, teeth behind it. You have legal rights that say, you know, otherwise governance, it's just like a participation sticker, you know, like those I voted things. You know, it doesn't really mean anything. So this is the meat and potatoes of what I wanted to discuss, Bruce.

What is the deal of these governance tokens? I mean, what are you getting when you buy a governance token? Do the on-chain votes matter, or is it more a function of who coordinates the votes? Or does it really not matter because the token issuing teams probably still can coordinate a majority to vote in their favor, regardless? So the thing, and I can't make a good case because I have a, I can't make a good case because I haven't found anybody to make a good case for me yet. So if you have any defy champions that are listening and they want to have a friendly discussion about this, I'd love to have somebody, you know, really explains, you know, their side of it. But every time I've had this conversation,

it goes something like, I ask a question that you just asked to say, you know, what is the value? You say, oh, governance. Well, what's that? Oh, you can vote? And I'm, I'm like, well, can you vote on anything that means anything? Like who the board is, who runs it, you vote yourself dividend. Yeah. And then you get a dance around, which is usually fueled by lawyers. Like, well, not exactly. You know, it's like you said, the wink, wink, wink, nudge, nudge. But if you don't have those real legal rights, if you show me a piece of paper, or if you just, pretend we didn't have any laws at all, we were just in an end cap society.

And we're sitting down saying what's a good, what's a really good governance token? And we just, with no regard to law, we just wrote that. I guarantee you, if you bring that into a lawyer, the lawyer's going to look at that in one second, say, oh, that's a security. Because all the good stuff, like you said, all the good stuff, it's, you know, it's part of the definition. A lot of people don't understand that this is sort of a definitional driven thing. It's like the definition of chocolate or, you know, I've used the analogy of marijuana dispensaries. It's like you can go and go to New York and say, no, this isn't marijuana. It's a vitamin. That's just not going to work. You know, it's a federal law. It's the definition is the definition. And that's what a lot of people are trying to do. they're trying. Now, you can go and have something that isn't marijuana, and then it's not marijuana. So you're not going to have that price premium, but you also will avoid the regulation. So it's sort of like, even if people feel that the, and I use that example, because the majority of people these days tend to feel that that's a law that should be changed, and we have a lot of

states moving towards legal dispensaries. But you still can't just do it or change the definition. And that's the thing with these securities definition. The definition of a security is very, very broad. It's stock bond, evidence of indebtedness, debenture, investment contract, investment contract has its own subsets, its whole how we test and everything else. So pretty much anything, and this has been going on for decades and decades before crypto came along, any kind of structure that people tried to create, the law wanted to be broad enough that captured it. And the spirit and intent of the law is basically to say, hey, you're raising money for people on an investment. we're going to call that a thing named a security, and that thing named security is going to have

a mess of rules on how you offer it and how you disclose. And that's pretty much the way the law has been for 85 years, and I don't really see that changing. They may make some aspects of it looser, but really you're going to probably fall under that definition. So what you have with these governance tokens is people kind of calling it governance, but if it's real governance and you have real power and you have the kind of power that a shareholder would have, then it's going to be a security. And that's actually good. There may be good tokens. Most of them, unfortunately, have tried to take a shortcut and say, well, we don't want to do that. That's a lot of paperwork and legal work. Let's figure out this clever or smoke and mirrors structure where our lawyers will

strip those terms out or divorce us enough from it that there's an arm's length and it's not a security. But, you know, like I say, by then, you've stripped out anything that made the thing, you know, appealing to begin with. I think my test to ascertain whether the governance rights if token holders are genuine would be something like, is there a vote that the token holders could make that would massively disempower the offering entity to the benefit of token holders, you know? So could they overpower the corporation backing this thing? to their own benefit and to the detriment of the corporation. And if the answer is yes, then, okay, maybe they do have real governance after all.

But I've never seen that. I mean, I guess we might have to wait for an activist kind of situation to develop. Yeah. I mean, can they oust the founder? Right. You know, can you, I mean, Steve Jobs got ousted from Apple because that was real governance. Oh, yeah. And you wouldn't have thought that could happen.

I mean, if Steve Jobs was an ICO person, you'd say, wow. I mean, he was the vitalic of, you know, of Apple. You know, if it's surprising that he got ousted. But that's what real shareholder rights are and real governance rights. Oh, yeah. And also the terms, like you alluded to earlier, you know, the terms on these things are kind of bizarre. They're not the kind of terms that you would have because you don't have that accountability. With real governance comes real accountability.

So you don't have these situations where somebody creates an idea, throws it on the market, and then instantly they're vested on, you know, in some cases some, you know, majority, huge, huge stake in the thing. So they're kind of accelerating their, you know, their payout. I mean, and there's people who've walked, you know, they started a project, raised money. Three months later, they cash in and walk away. And that doesn't happen or shouldn't happen in the public markets because you have, you know, better governance that prevents those kind of things.

And you'd think the vesting would be one of the things which you could so easily encode because it's a simple formula-driven thing. I mean, and, you know, I guess to the industry's credit, vesting is a more popular idea these days. But it hasn't always been. And I remember seeing a paper. I don't remember which one exactly, which said, we looked at claims of vesting in white papers,

and then we looked at the code, and something like 30% of the time it just wasn't written into the contract on change. Yeah, greed is a powerful motivator. And, you know, I've seen it now three generations of these kind of waves. And it is a powerful motivator. I mean, you know, anybody in the space, unless they're already independently wealthy or just don't care about money, I mean, could look at it and say, wow, I'm kind of smart.

I could team up with a few people and make $30 million by doing, you know, some, I mean, you could have done that. It wouldn't have been too, too hard to make a bunch of money on a, you know, if you have a good name in the space or something on the, you know, some of these defy tokens, But I do believe it's a shortcut, and I think that a lot of those people will pay later. Although I said that last time, and someone was still living large on the, you know, hundreds of thousands of F that they raised. So, you know, I don't know.

Some of them are billionaires now. So, yeah. There's a point where you, you know, I mean, I don't think as a financial advisor, I could say that the Ripple folks did the wrong thing. I mean, if I would have advised them whatever seven years ago, I probably would have said, it's an illegal securities offering, don't do it. And would that have been the right advice or the wrong advice? I don't think so.

It doesn't look like they're going to jail. I mean, jail isn't worth any amount of money. But if you make $4 billion and you pay a $100 million fine, maybe it is. And that's kind of a twist. And I think the regulators are sort of looking at that too. So it wouldn't surprise me if you do see some jail time or some harsher fines for some of these more egregious. I'm not talking about Ripple in particular, and I don't think they're in that category. But, you know, some of the other, you know, projects, I think that you will have regulators come down on quite hard, like Bitmax they already have.

Yeah. I mean, if you can make enough money such that you can fund a very well-heeled nice office on K Street and D.C. devoted to lobby and Congress, that might be the point at which you are able to bail yourself out of any sticky situation. Yeah. And it can be multi-pronged, too. You can have regulators on your board and, you know, super, there are super, super, super attorneys who are like, you know, U.S. attorneys and they go into private practice. And you can have these people who, you know, they're really well connected. They know the system.

They hired half of the people who would be prosecuting you. So they can have sort of off the record, you know, conversations with their former employees and say, hey, I'm representing so-and-so now, you know, what is your thinking? And they can they can sort of steer these investigations in a way that, you know, I mean, their counterpart may say, hey, we're kind of ticked at your client. We're going after them. And they can maybe steer that a right way, you know, or beneficial way to the client. So there's a lot of things you can do with a lot of money. And if you make a few billion, you definitely, you're not untouchable, though.

There's a lot of people who think they are. And we've seen that that's not the case, probably not in any country in the world. And you can probably get overconfident just as easily as you can help yourself. Yeah, and in Russia being a billionaire is kind of more reliability than anything. Yeah, for sure. I used to work in Saudi Arabia, and I met all these wealthy people who were super, super well-connected, and anybody would have traded places with them, and then one day a whole bunch of them got arrested. It was kind of an unexpected thing.

So, you know, you never know what your situation is. Was that when the kind of royals like imprisoned a bunch of wealth? Sions, like hotels and stuff for a while? Yeah. Yeah, a few years ago, there were about 400 people, very wealthy people, prominent people were arrested. And I wouldn't have predicted that. I was an expert on that country before.

I lived there and worked there, and I met many of these people. So, you know, you just never know what's going to happen. And then some of them turned out okay. You know, they were in for a little while and they got out, they paid a fine or whatever, and they're fine now too. So, but it, but it, but it does emphasize that it's a dangerous world out there with a lot of uncertainty. None of these people, I'm sure, expected that. And people wouldn't expect it here in the U.S. either.

It's interesting. I mean, you know, you think, you think about how we're, you know, trying to make our wealth untouchable by, you know, effectively offshoring it into the cloud, putting it in Bitcoin. And so in theory, it can't be exposed to, you know, the whims of our central bank are overlords and so on. But in practice, you're still instantiated in meat space. And if the ruling party wants to imprison you

in a hotel for six months until you pay a bribe or something, there's not a lot you can do about that. Yeah. Yeah, it's an interesting thing. You know, at the end of the day, might is surprisingly common in our civilized world. You know, a lot of times things come down to who has

the physical power to grab you and, you know, tie you up or cage you. And, uh, and that's the only thing that, um, you know, I try and stay away from politics. I just really don't like politics at all. But the only thing that, that keeps me somewhat interested is just this, this lesson that my friend from Iraq told me. He said that his family was all of the, the academics and the philosophers and, uh, you know, Iraq was, was a, they had the highest literacy rate in the world at one point. So you had all these, you know, it's just this, this, this, this. cultural place and everybody kind of said you know no no I'm above politics I'm above business I you know we finally made it I can be an intellectual now and I

can think about philosophy well then what happens Saddam comes along so the one thing that keeps me you know as much as I don't like politics the one thing that keeps me you know thinking about it is that you know some some thug can come along and you do have sort of a responsibility to kind of like be aware of that because otherwise you'll get you know you could end up like like the intellectuals under Saddam's reign who just got locked up. And that's one of the benefits of Bitcoin is that it's a bit harder to seize. I mean, they can still lock you up,

but at least they can't get the money quite as easily as they can with some of the old school methods. As they say, you may not be interested in politics, but politics is interested in you. Exactly, yes. But that's precisely it. Some people describe Bitcoin as this silver bullet for resisting oligarchs and so on, but it's just one tool in the toolkit.

It's a very powerful tool, and it's great that it exists. But it's not sufficient on its own. I mean, sovereignty goes much deeper than that. And there's a lot of other kind of complementary tools that we need to work on. I mean, you know, encrypted messaging is a very obvious part of that toolkit. I would say something like 3D printing guns, even something as simple as that, is another asymmetric tool which restores power to individuals versus the stick. But, yeah, Bitcoin is a key linchpin, but not the only one.

We need somebody to figure out of 3D printed ammo. That's a startup we can invest in, right? Yeah, that's a good question. I always see that, you know, in the discussions around 3D printed guns, like how do you create barrels, for instance, you know? I guess there's ways to make machine barrels at home. And then ammo, again, it's not clear how easy it is to actually manufacture ammo. Yeah, it's progress.

though. And there's alternatives like there's pneumatic guns that are 50 caliber. I mean, they're just as powerful as regular. You can't shoot them fully auto, but there's a lot of interesting things that could come along that technology can adapt. Guns haven't changed much. I mean, the 1911 came out in 1911. It kind of stands for a reason. Exactly the same gun as the modern SIGs and the Beretta that came before the SIGs. You know, that was the sidearm of the military all the way through the 80s and 90s and still is in some cases. Then the Beretta came along. Now it's the SIG. pretty much the same gun.

The SIG and the 1911 aren't that different. And, you know, so you have like 100 years. You haven't changed. It's not like the SIG is something that, you know, like an iPhone. You know, it's very, very similar technology. So we may have some ways to go on, you know, bringing things to the next level with, with some, there's interesting non-lethal technology and pneumatics and stuff like that that could combine with 3D printing.

But absolutely, those kinds of pieces of technology, they all are part of the, the cyphepunk sort of vision, I guess, of how we can use technology to make our world a little bit more free and a little bit more private. And just costlier for a would-be authoritarian state or, you know, entity to suppress individuals, basically. I mean, it makes me think of the, in particular the gun debate around 3D printed gun, like CAD files or whatever, you know, distributing effectively codes or strings of numbers. You know, those strings of numbers are now illegal, you know, in a bunch of states.

Right. Literally just coordinates. That's literally all it is, is coordinates, you know, for a machine to follow a CNC mill or something. It makes me think of the first crypto wars, you know. I mean, I wasn't really around for them. I guess in the 80s or was the 90s. I mean, you'll be more familiar with this. Or PGP?

Yeah, exactly. Yeah. when when PGP was considered a munition and and then you know people like Adam back you know cheekily printed on t-shirts and eventually the weight of information the portability of information was just overpowering and that reality is bent the the state to its will basically absolutely and when you put things into writing I think that's so powerful because it's one thing for somebody say I'm going to ban encryption that could be used by the drug dealers and the bad guys, that may sound appealing to some. But if you say, I'm going to ban words on a piece of paper

because I don't like those words or how they can be used, that's going to get a lot less sympathy. So I think that that same argument for the PGP and encryption, that's a great argument for Bitcoin. There was, the mayor of Plattsburgh, when I was working as a volunteer with the Bitcoin Foundation, the mayor of Plattsburgh, New York, they had some silly status deal that they had a power advantage because they're near the hydropower and there's some sort of scamy weird deal with the town. And because of that, they have very cheap power. So because of that, some smart entrepreneur came in and set up a huge Bitcoin mine. And then the statists were like, oh, boy, we didn't intend that.

So they tried to outlaw Bitcoin mining. And I wrote a letter. And so I looked at the law. And the law said, I said, first of all, you know, the important thing that seems so overlooked that a lot of people don't do Whenever there's a law, look at the actual law and what the text says. So I look at the thing and look at the definitions. And the definition. So I say, all right, what is this?

What is this? How am I going to challenge this? What is this law? So the law says, you know, Bitcoin mining is illegal. And I say, all right, how do you define mining? It says three or more rigs attached, whatever, blah, blah, blah. So I figured out that by that definition, if I strung three blackberries together, I would be in violation. So I wrote a letter to the mayor and I said I have three nodes.

I carry them around. I use my own power. It's my own solar power. I'm going to be staying in your days in hotel. And one of them has the Bitcoin and one of them has my own poetry on a blockchain. And then I forget with the other one, Ravencoin or something. And I said, I think it was Ethereum Bitcoin and Ravencoin. And I said, and I've embedded poetry because I like this poetry and I want to read it in my own hotel.

Am I going to be in violation of your rules? And I would like to know if you plan on prosecuting me. And unsurprisingly, I don't respond because they don't want to. That's the last thing they want because they know full well that I'm trying to antagonize them. I'm going to go in there and I'm going to file a free speech lawsuit if they try and prevent me. And I'm going to go to a judge and I'll say, Your Honor, I was trying to read my poetry on my own power supply in my own room. And they don't like it. So at the very least, they're probably going to have to change their definition of mining and go after some other legal angle of why they think they have that authority to negotiate it.

But they don't have the authority, in my opinion, to regulate any kind of speech. So I'm always ready to fight if somebody comes along with something trying to say, you can't run this particular software. And I think when in situations like these, we're talking about fundamentally conveying information, whether it pertains to cryptography or to cryptocurrency or coordinates for manufacturing a firearm. And the toolkit, the kind of mental toolkit regulators have is so under-equipped to deal with that. and it's like it's like a hobby almost it's entertaining to watch the dance because you know policymakers will try and you know reckon with these things in some sort of antiquated way and try and write laws that capture them and then you just get people pointing out the fundamentally we're talking about just strings of information here which are open source and non-proprietary

and they can spread like wildfire so there's almost not that much you can do about it I know and And that's the great thing about the activist community up here in New Hampshire. There's a lot of people that I've learned a lot from because that's sort of their mode, you know, their mode is they just challenge these things. Even non-crypto things, even things outside of what you're talking about, but the same general idea of just you're making it uncomfortable for the regulators. It's very easy to say, you know, here's this well-meaning law that we're passing because whatever, save the children. But it's a lot harder when somebody comes and says, no, no, no, no, no. There's a piece of that I disagree with. And what are you willing to do?

Are you willing to shoot me over it? Because this particular, and there's almost always something that you can find in there that, you know, you can have a use that is protected. You know, when they say you have to use, you know, this kind of certain use of this technology or another, you know, throw the Bible on there. And then, you know, if they ban a piece of technology, throw the Bible on there and then go and say, okay, now I want to read the Bible. Is that going to be banned? And then they're going to have a harder fight. And it's much harder when you put it in those kind of terms. And that's a great thing about some of the activists, like, especially around here, where they'll just continually fight these things.

And it keeps the legislators and the enforcers a bit more honest about it because otherwise they would just, you know, randomly pass anything they want. You know, they'd just say you can't, you can't have any of this stuff. But that's not the way laws work in a civilized society. Yeah. And, you know, to be clear, I'm not against the notion of a state existing by any means. But I do find much of the regulation of obviously the financial sector to be extremely overbearing. And my pitch, a pitch I've been trying to develop and kind of make is, hey, look, the U.S. is actually really well positioned to underwrite public blockchains and cryptocurrency because those are neutral technologies. They don't really discriminate.

And they work in favor of protecting private property. You know, they define private keys as private property, and they're kind of pro-freedom, pro-privacy, pro-individual technologies. And those are pretty American values. And the odds are that there's no other major world power which has those values and is willing to underwrite those technologies. So we might as well be the ones to do it, even if it means disrupting our payments monopoly or, you know, our control over the financials is.

through Swift, et cetera. That's kind of my pitch. I don't know if it's catching on, though. I like it. I hadn't really heard that. That's a great way to look at it. You know, every country's goal should be to outgrow its own fiat, you know. The United States has matured to a point where we're free enough.

We don't, why the heck do we need, what do we need fia for? This is America. We're free country. We don't need a bunch of people in big, fancy offices. Sell those damn offices. That Fed building is worth at least $100 million. Put that thing on auction, make it into Airbnbs or something, and fire all these clowns that our tax dollars are paying.

Give us back the money. And we don't need bureaucrats. We don't need Pelosi and Trump to tell us what money is. And they're not even telling us money. It's people who died 200 years ago. We already can figure out money. Somebody created a better way. And we can use that.

We don't need them. There's a gleaming Federal Reserve building in the middle of Boston here. Actually, it's right, it joins, you probably see it. I don't know if you ever been to the Fidelity offices here in Boston. Oh, yeah, for sure. I live down there, remember. Oh, yeah. So I'm a local. So you know the one I'm talking about. And when I worked at Fidelity, my office looked out right across the street on this white Fed Federal Reserve building. I mean, it's the site of the Boston Fed. They even have Fed police. They have police cruisers, which are labeled Federal Reserve Police, which I just always thought was the funniest thing.

Yeah, they got their own. Yeah, those those, those, those cats are making, you know, 90 grand a year for a job that should be 15 bucks an hour. You know, it's a security guard. And they're sitting like, you know, as if they're guarding money in there, you know, like it's like it's got gold. I think there was gold in the, in the, in the, in right around there. I think there was a building in the 60s. The Boston Trust Co is right there. And I think they used to actually have like real Federal Reserve gold. But I don't think they. had any like real money there for certainly you know your lifetime or probably my lifetime it always cracked me up because it's a heavily militarized building if you walk around it i mean there's ballards

you can't really get close to it it's like really strong tight security i'm always kind of chuckling to myself like what are they guarding like the laptop where you know uh i don't whoever it is that the boston fed presses you know the enter button to like print dollars yeah they're afraid somebody's to sneak in and print two trillion. It's like, oops, they already did that. They don't need to sneak in. What worse thing could they do than the Fed already does on their own? Exactly. But it was always struck me as just, I don't know what the feeling was exactly this exquisite juxtaposition, working at Fidelity, working on Bitcoin, you know, one of the largest asset manager is trying to steer them in the direction of Bitcoin. And then I'd look out across the street,

see the Federal Reserve doing whatever it is they do over there. I still don't know exactly. One thing I wanted to return to actually was security tokens. So we talked about tokens which happen to be securities, kind of de facto securities, and maybe why they should be explicit securities and why that makes sense. Talk to me about actual security tokens, which are issued under kind of the current established securities frameworks. I mean, we were talking a little bit before the call, you're saying some people who don't like them don't like them for the wrong reasons. Some people who like them also like them from the wrong reasons. So tell me a little bit about that. Yeah. So under this kind of belief that I have that we talked about a minute ago, which is

sort of that this definition is very broad and therefore most good instruments that, especially ones that we recognize like equity and bonds and investment contracts, those are going to fall under the definition. So if you want good stuff to trade, it's going to be a security. So you have to comply with the laws. So then if you're going to be a token, it, you know, that you want to do a fundraise on, it should be a security. So the interesting thing is, is understanding, to answer this question that you asked, is understanding what what it does and doesn't do and what people misunderstand who are fans of it, they think that somehow being a security token makes it worth more. And that couldn't be more wrong.

What makes a security have value is the terms of the security. And the terms are just basically a piece of paper that say what it is, as you well know, because you do that all day in private markets. But same thing, public markets, private markets. A security is a security. It's a piece of paper, some terms that say what it is. So if it says, here's a special super duper extra voting share that the board of Apple says has super voting power 10 times more than other shares and it's limited and here's you know we're doing

100,000 shares well that clearly clearly has value there's just no question that has value um and making it a token or not doesn't really add to the value or take away from the value so you know people kind of getting hyped up who don't really understand economics that well think like things that are tokens have value just because they're tokens uh so that's been a lot of a hype and some of the unfortunate hype about securities tokens. The good news is most of the real scammers haven't done securities tokens because it's like a lot of extra work. So there has been some low quality projects and there will continue to be. I've mentioned this many times. But overall, it's just a different structure. So what it does do, and this is the thing that even people who are fans of it

don't get, and also the people who dislike it, particularly a lot of of my Bitcoin friends who just don't get it, although they're coming, more of them are coming around with these projects like RGB and Liquid and other things that are exposing more sort of Bitcoin maximalists and others who maybe weren't fans of securities tokens before to, you know, be more open to them. And what it does do is just one of the few use, good uses of a blockchain, in my opinion, is it's really just a ledger, you know, it's a ledger that says who owns what. And it's a type of ledger that's more expensive and harder to run. And in exchange for that being more expensive and harder to run and less efficient in some ways, you can have it more

decentralized. So you don't have to trust one party. You can trust sort of a crowd. And that's the way I look at what a blockchain is. And so that, you know, a lot of things, you know, I always joke about putting dog training on the blockchain. There's a lot of things like, oh, we're going to put food and IBM has their ad. Like, we're going to put diamonds on the blockchain. So there's no more blood diamonds. I don't know. Some of these things may work, may not work. But I think that in the case of ledgers, the interesting thing with securities is a lot of people don't understand where the ledger is and how it's run. They assume that the company has it because that's the way it works for startups with a cap table. But that's not the way it works in the public markets. Apple doesn't

have the ledger that says who owns what. And neither does Charles Schwab or Fidelity. If you have a Fidelity account and you own Apple, they have their ledger. They know how many Fidelity accounts have it, but they don't communicate with Apple. They sure as heck don't communicate with Schwab. Schwab, you know, Schwab calls up Fidelity to say, hey, I see a ACAT transfer coming in from your account. How do we know these shares are real? Fidelity doesn't sit there and say, oh, hi, Schwab, let me get the ledger for you.

Here's our whole client list. No, they don't even communicate with each other. That's, so who is the ledger? Do they go to Apple? No. It's all done by a central group called the DTCC, and through this big process in Europe, it's Euroclear. And there's this whole big, complex thing with who actually.

owns it, they're pledged to CD and co and all this other thing. But basically, because Schwab and Fidelity and Merrill don't trust each other and because the issuers can't manage those databases and don't want to, I mean, Apple doesn't want to be dealing with millions of transactions a day running a ledger that they don't run. They have to trust a third party. And that's what they've been doing since the 60s once the volume became too difficult. I mean, even then, back before then, you had kind of transfer agents. They'd have literal books like big fat books. And they'd reconcile them at the end of the day or the end of the week with all the brokers. But that just became impossible.

They used to physically move the certificates around. And they still kind of do. They move them through PGP on these centralized ultra-secure databases. I mean, it's trillion's a dollar. So it's a very serious business. And it's not easily fixed. And it's already centralized. And there are limits to the centralization, which is why it takes days and days and

days to transfer securities between, you know, between Schwab and Fidelity. Yeah. Clearing houses were actual clearing. houses, like buildings, where, you know, both for shares and for things like checks. Have you ever seen a certificate? Did you ever see a certificate? You probably never have seen a certificate. It was the very beginning of my career was the last certificates that I ever saw. I bet you never saw a certificate in fidelity, did you? No, nowhere to be found. Yeah, I don't know. I don't think I've even seen a certificate for 20 years. In terms of the merit of tokenizing a security,

So you'd say the principal advantage is it's kind of a fair ledger of record that many parties can mutually trust to host it on a blockchain. Right. And with that comes some advantages with how you can move it, because you know what's true. And if you have something pegged to, I use the Bitcoin blockchain as an example a lot because that everybody kind of agrees that that's a real blockchain that's, you know, secure. Not everybody agrees on Ethereum or whatever. But anyway, if you take Bitcoin or another chain and you say this is a statement of truth that Nick really has this 100 shares and he's moved it to Bruce or from this address to this address, we can see those addresses and see that that's a pretty good statement that can be relied on.

So because of that, it enables us to move things in a little bit less, you know, frictiony way. I can move a light coin from me to you over the phone. We could do it right while we're talking here and you'd get it in a minute. And we could just as easily send it to somebody in Taiwan. You can't do that with securities. Even though I'm a broker and you're a financial professional, I can't send you shares of Apple. I mean, it would take 10 days, minimum.

Can you imagine if we tried to finally settle a share of Apple between the two of us? Especially like actual ownership? I mean, I'm literally own a broker dealer and I don't think I could figure it out. We have all the tools to maybe potential, maybe we should try and do it and then chronicle the experience. Yeah, well, you can create. I mean, so we can create something outside of the other system. I mean, we can create, and I've even done a couple samples of this. Chainstone itself is tokenized and we only have one investor.

So we sent it, we sent 3.6 million shares at a dollar a share to our investor. and we did it live on YouTube. And he got him on the phone, Medici Ventures. And, you know, they say, now that's, I mean, the reality of that is that that's, it's pretty basic technology because it's a pretty centralized ledger anyway. I mean, it's only one investor. So we really do have a cat table. And that's not a security token in the sense that it's never, it's never moved again

other than that one investor. And by the way, anybody listening, you know, you have a significant amount of new regulatory obligations if you do go and move something around. You know, if it's the way we did it was a special way, so don't copy what we did it. But if we wanted to go to the next step and we wanted our investor to sell their shares in the secondary market or we want to do a secondary offering, that's when it gets really interesting because then we could move things around. And you can also take more granular issues.

You know, right now, you as a firm, it's a serious thing for you to take on an investment because you have to have scale. But if it was much easier for people to just say, oh, yeah, you know, Judy's idea sounds pretty cool. I'll throw $200 towards that or I'll throw $5,000 and make it easy. So that you, especially if you could do it through like a public, I mean, I'd love it if you could go into your fidelity account. And instead of having 20,000 mutual funds and 1,000 stocks, you had 50,000 or 100,000 stocks. You could be like, oh, yeah, my cousin told me about this really great restaurant or, you know, this dry cleaner chain. in Arizona is just cranking it because they have some magical, you know, growth formula.

I'm going to invest in that, whatever it is. You can have all kinds of interesting things with people doing rolling funds that specialize in ultra-specific areas, you know, little funds that invests in startups and, you know, things that just diversify away from sort of the conventional, because there's trillions of dollars that's locked up in businesses, not just small businesses, but small and mid-sized businesses that just don't trade. And so that would be cool if those equity owners, the owners and founders of those businesses didn't have to worry about running the ledger, you could kind of move things around and you just, you just issue some stock and you get a check and then it trades

kind of like a publicly traded company. You know, Apple doesn't worry about who owns their stock as far as a logistics thing. You know, they care about serving shareholders, but they don't worry about the logistics of moving these things around. So that's one thing that the tokens would off. Yeah, one thing I think maybe capital markets could learn from defy, I can't believe I just said that as a preamble, would be, you know, I thought the liquidity mining idea, which is obviously just a form of synthetic mining, where instead of you're substituting capital for electricity, liquidity, liquidity mining to me was very, very interesting because it involved distributing, admittedly dubious share of ownership in a protocol or project, in extreme.

for your contribution to that pool of liquidity, to the exchange, et cetera. Now, you can imagine generalizing that to a network-driven company with lots of users that are stakeholders, and then maybe you want to align incentives, you want to reward those stakeholders with effectively equity in the network that they're building. So, you know, the classic example would be Uber giving tiny fractions of shares for every mile driven by their drivers, you know, to compensate them in a slightly better way than maybe just old dollars. You know, and that's kind of too difficult. I mean, I guess you could do that in theory as a public company, but certainly not as a private company. you couldn't have a big retail shareholder base like that. Yeah, I'm hoping, and it will take a while because there's a lot of regulatory and technical

challenges to do that, but we're getting closer. You know, broker dealers can now sell a fractional piece of a share. When I started my career, you couldn't even buy an odd lot. Like, you kind of had to have 100 shares, you know. So if you didn't have enough money to buy 100, I mean, Berkshire Hathaway was an exception. They'd let you do like 10 shares. But, you know, the traders kind of looked at you weird if you did an odd lot and they weren't, you weren't guaranteed to even have it executed. And now you can buy a fractional, you can buy five bucks worth of Microsoft stock.

And so there's some different things that are making investors and the issuers get a little closer. And I think that would be great. You know, people who own stock will notice that you never get any, you know, communications other than the proxy statements. If you own Facebook stock, you don't have Zuckerberg on your inbox every day saying, hey, our stock's doing well. Here's a new thing we're working on. Buy some more. And there's some regulatory reasons for that.

But a lot of it is just they don't really know who you are. And there's several layers in between investors and owners. And I'd like to see that collapsed down on both the small businesses so that even your local restaurant will have maybe 20, you know, maybe instead of a family owning 100% of it, The family owns 80% and the community owns 20%. Yeah. There's a lot of powerful things like that, particularly with the missions of the different businesses and the way that they work.

You can have more social-driven businesses. And a lot of things aren't the next great venture capital story that's going to do a 10x. They're the largest paper supply company in Nebraska that's been doing consistent revenue growth for 30 years. It's a great business. It's not something that Andresen's going to invest in, but it doesn't mean that it's not, You know, I know a company that, I mean, you know, as a financial advisor, I've served all kinds of interesting companies. They make swimming pool liners and headphones and, you know, ball-bearing grease and boring stuff like

that, but their businesses doing millions and millions in revenue. I know tons of entrepreneurs who run these businesses doing, you know, 30 million in revenue and they make grease or something like that. And I think that more of that value should be unlocked. You know, those are good old school stable value stocks. and they're just too small to be publicly traded. But if we could have tokens, make it so more people could share ownership. And for the big companies like the apples and the Facebooks,

if they were closer to their shareholders, I think that's just great. It gets people more interested. They care more about the business. In the case of small businesses like restaurants, you have more stakeholders who, you know, even if I owned a thousand bucks worth of shares in a local restaurant, for one thing, I'd love to do that.

Even though it's not part of my major portfolio, I'd like to just, I think it would be kind of cool. And for another thing, you better believe I'm going to buy all our catering and all our events and everything. If I own even a tiny bit of shares, that's the restaurant I'm going to support. And I think that kind of, you know, sharing and having more stakeholders and shareholders is a really powerful thing that making these ledgers work better can lead to. Yeah, and I would say that's one thing where the crypto industry shines relative to the

traditional financial industry is just creativity, especially where they're going to. about to incentive alignment. I mean, you look at some of these exchange tokens and however questionable they may be in terms of a governance standpoint or actually the actual legal entitlements that you get when you buy them, you're buying kind of a seat at the exchange, you're buying a discount on fees, you're buying all number of things. It kind of reminds me of that situation with Ford a while back. I don't know if you're familiar with this, where if you own enough shares of Ford, you could actually get the effectively the employee discount if you bought a new truck. Oh really? I did not know that. That's fascinating. It was a joint security token and then there were kind of utility token mechanics

layered on top of it. I mean the whole thing was virtually impossible to actually instrumentalize like you know you had to prove you on the share you had to send faxes you know it was this whole thing you'd use notaries you could do that more efficiently with actual token security that exist in token format. You can really prove your ownership. There's much less intermediation. And indeed, that's what we've seen from the token issuers of the world. You see stuff like I&X, which is an entitlement to certain cash flows. And it's also a seat at the exchange. I mean, you can bundle these things together and really change the nature of equity relationship with a company. It's not just a financial relationship. You can become more of a stakeholder,

or a really direct stakeholder. And that's the kind of thing that I think is really interesting. Yeah, that's a great way to look at it. That is very exciting. I want to dig up that article or some journalists went ahead and tried to actually get the discount

on the Ford truck. Yeah, I mean, that's so well suited for crypto. And like you said, you know, these kind of crypto is really good at incentivizing communities and it can be a tool for building communities. There's something cool about owning a token, as we've seen from NFTs.

You know, even if you know, you don't have rights in it. People like that. There's kind of an excitement. You know, it's cool. I mean, I'm big on valueless tokens. I don't know if you, you know, I made a paper called the thumbs up token. And it's a one line white paper. It says, here's 10 million thumbs up tokens. They don't do anything. And that's, that was my white paper. But I gave away, or no, I think it was 10 billion. And I think I gave away half a billion and then I got tired. And that's, but somebody, somebody who I gave a bunch of them gave a whole bunch to other people. So, It was just kind of an experiment, but I love like, you know, value, even a valueless token can be kind of fun.

But when you combine it with something with real value, like equity, I mean, then it can be really powerful. And crypto is particularly well suited for building communities and, like you say, verifying that you really own the shares. And how cool would it be if you have a wallet and in your wallet is your Bitcoin and your Ether and your Ford stock and your Apple stock and some Tesla and maybe a couple funds? And your couple NFTs, some art or maybe rare art or scam art or whatever. you bought and it's all in there. And then Zuckerberg can send you a message to your wallet because he knows you're a shareholder. And maybe a competing broker would do. The brokers would hate this, but wouldn't it be neat if you could, because right now you can spam an F address. If you see somebody that has 10,000 F, you can spam them. Yeah. You know, if you had 10,000 shares of Ford,

maybe the users could have the option of accepting or not accepting things. So you could get not, not just a Ford discount. Maybe Chevy will give you a discount. Say, hey, you own a bunch of Ford C. We'll give you a discount. There's all kinds of clever things that can be done, but you can't do that right now because there's just layers of intermediaries. When you own a stock at Schwab, you own a claim that Schwab has, and then Schwab has a claim on CD and Co, and then CD and C.D and Co. And then C.D. and Co. has a claim on DTCC and then C.D. And so it's, in cases where these things have actually had to go to court, it's really hard to, even proved who actually has the stock.

It's nothing close to it like a crypto token where you really hold that. And you know, I mean, securities were pretty cool in the old days when they were a piece of paper because you had a piece of paper and it was worth something. There's a bearer, you know, closer to a bearer instrument. There's drawbacks with bearer instruments. But there's definitely something cool about an actual self-contained token that doesn't need these layers of, you know, bureaucracy with CD and Co and DTCC and claims on claims on claims and transfer agents and brokers and clearing firms and all this. other stuff, you just have it and you own it. I mean, just like when you buy Monaro at your Cracken Exchange, you buy Monero and you got it and you put it in your wallet and it's yours, period. And that would be really cool if you had that for securities.

Isn't it cool that we've come full circle from bearer instruments all the way back to bearer instruments? And that's what powers this whole industry. Even if security tokens themselves wouldn't be, they're not necessarily bearer in the truest sense. A lot of them are kind of still paper certificates. Bruce, we've had you on for a while over an hour now. I want to thank you for coming on. This has been really fun. Where can, I know you have a vibrant online presence, where's the number one place people can reach you? I would normally say Twitter, but I'm a little cautious to Twitter lately. So I got to do more on my Bruce Fenton.com, but I'm on either of those. And like you said,

we're doing the clubhouses. So, so that's fun too. But I'm always a big fan of your stuff. I'm always impressed by the quality of your writing and you have a, a wide, old soul in the way that you speak and the way that you think about things. I appreciate it. Thanks for coming on. All right. Have a good one. Thanks again, Bruce.