Tech Brew Ride Home - (Bonus) CoinDesk's Brady Dale On Libra and the "Crypto Spring"

Episode Date: June 22, 2019

Well, given the news of the week, I knew we needed to do a deep dive on Libra, so I called up our friend Brady Dale at CoinDesk and we get into it. What do crypto folk think of Libra? Is he surprised by the governmental backlash? And since by the time you hear this, bitcoin might already be back above $10k dollars? Are we out of the crypto winter and into crypto spring? Sponsors: PaintYourLife.com: Text the word TECH to 48-48-48 Rhone.com/ride promocode RIDE at checkout Subscribe to the ad-free premium feed! Learn more about your ad choices. Visit megaphone.fm/adchoices

Own it all. Pay off your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly, big board buck slot machine by aristocrat gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamava's history. Club Serrano members can earn daily instant prizes and secure a spot in the finale May 29th. Don't pass go and own it all.

Only at Yamava, celebrating its 40th anniversary. You win? Details at Yamava.com must be 21-20. Please gamble responsibly. Monopoly is a trademark of Hasbro. Hasbro is not a sponsor of this promotion. Welcome to another weekend bonus episode of the Tech Meme Ride Home. I'm Brian McCullough.

Given the news of the week, I knew we needed to do a deep dive on Libra, so I called up our friend Brady Dale at CoinDesk, and we get into it. What do crypto folk think of Libra? Is he surprised by the governmental backlash? And since by the time you hear this Bitcoin might already be back above $10,000, are we out of the crypto winter and into crypto spring? Basically, the main thing I want to know is what is the broader crypto communities reaction to Libra?

Like, is it positive? Is it like skepticism? Like, what just, I know that's a broad question, but what generally does it feel like crypto people think about this Facebook plan? Yeah, you know, I think it's really, it's mixed. I would argue, and some people might yell at me for this, but I would argue that it's broad positive. So there's some, there's some hardcores out there that are negative about it, but I think in general, crypto sees this as validation and sees it as it's going to be a lot

easier to get customers into other cryptocurrencies if Libra makes its way along. So in general, I think folks are upbeat, even if they're pretty skeptical. I mean, like, you know, notably Naval Ravacant, who a lot of people, in tech pay attention to and people in crypto particularly pay attention to, you know, I opened a story I did with him. He was extremely skeptical. He's like, you know, there's good reasons to lower the cost of international transactions, but there's no particular reason to do that with the blockchain.

I mean, he was profoundly doubtful about the value of Libra. But I think the folks who were running newer currencies or running companies based on this stuff, just see it as a potentially much better on-ramp for them. So they see an opportunity here, even if they're running newer currencies. out love. Right. So I guess, you know, the bullish case if you're in crypto is this is the thing that could potentially make crypto go mainstream. But then at the same time, it does sort of feel like it could be a betrayal of a lot of the core tenets of crypto projects in general, because it is like this big, powerful corporation wanting to come in and basically run a currency.

I mean, that's what all happens, right? Like, every time there's a T come along and go, like, oh, yeah, that was a fine idea. We'll take it. So, yeah, I mean, that is definitely true. No argument. But as long as they're not able to crush the rest of crypto, and particularly the Bitcoin mavens, like the Maxunits out there, really doubt that that's even possible for Facebook to do, even still, unless they can just completely squelge the rest of it,

there's still a good chance that other cryptocurrencies can find space in this new Facebook world regardless. But yeah, we'll see. I definitely don't. Go ahead. I was going to say, I was even hearing whispers that like, you know, because all the sudden bond rates are so low that like maybe that basket of like currencies and things that they would need to prop up this thing, maybe they would even put things like Bitcoin inside that. Have you heard that too? Yeah, I mean, that's the thing. Kyle Tumani at Multi-Coin floated that to me as a possibility. Right. Like basically every international bond is in red territory now.

So if you want a conservative pool of things to back this that come from, you know, national governments that are, you know, you want to make one or two or three percent a year. Like, where do you find that? So you could offset those things, right, with some Bitcoin. I will say that I've been around some folks who are pretty close to this thing. and they sort of laughed at that idea. It's pretty unlikely, but one does have to ask, like, where are they going to get those super conservative,

super reliable sources of that small return when the traditional sources of those things are not looking great these days? All right, clear this up for me, because I've also been seeing this in various places, that Libra is not actually blockchain, it's not actually a cryptocurrency, it's not actually permissionless, it's just kind of like using those buzzwords,

So, like, in a... Well, they don't even claim it's permissionless. I mean, that isn't even a claim. So it's definitely not permissionless. And there's no question about that. Well, explain to me the nuance here where people are saying it's not actually blockchain. Like, why are they saying that?

What's the argument? Well, there's, like, not blocks. I don't know how much this really matters. You know, I mean, there's not blocks. I mean, like, the way it works is, you know, on Bitcoin, like, the unconfirmed transactions build up, and then that makes a specific block, like a group of transactions, they get locked in together and forever are bound together as a unit of time. Whereas on this protocol, the idea is there is a group of unspent transactions, so that sort of

looks like a block. But then once they're all confirmed, there's no block distinction in the record. you know, like the record doesn't say like, oh, you know, these 20 transactions are like this chunk and these 20 or this chunk. There's no concept of a block in it. How much does that matter? I don't know. I mean, there are a bunch of nodes that all have to find consensus on a common record and they, you know, they all look at it and say, yeah, we agree. That feels like enough like a blockchain over to me. They're definitely doing distributed consensus, that's for sure.

It's not permissionless. That's all true. So if it's largely, look, we want this to be payments, we want this to be cross borders, things like this. So like actually talking about actual projects, like, does that mean that things like stellar or ripple are in trouble? Yeah, I think it's real dicey for them. And that's something also that Arianna Simpson, or Samson, sorry, Simpson said in a note to her limited partners, that she shared with us is, you know, she said, I don't think that's a danger to Bitcoin. I think Bitcoin can be fine, but these other companies that are looking at those specific use cases,

it does look dice. Now, I think, I think Ripple XRP, I think they would argue that they're not really looking at, like, cross-order payments or people. They're trying to help, like, big banks do cross-border payments. So, I don't know. We'll see on that one. Stellar is really talking a lot about real remittances. They're talking about a lot of things, though.

And this comes to one of the things which I find interesting, impressive, whatever, what Libra is doing is you see a lot of blockchains come along who say they can be all things to everyone i mean like ios is like that ethereum's kind of like that you know they can solve all the world's problems and Libra is just like we're just about payments man we're about like getting people money that they can really use and that'll obviously include decentralized finance things eventually or just finance like loans and et cetera but but they aren't talking about like you know hosting distributed files or like you know offending YouTube it's just like it's completely focused on payments which i find disciplined and somewhat compelling.

But you're right. Like the, the blockchains that are focused in that space, it does make things look dicey for them if Lever gets off the ground. Let me ask you a really maybe dumb question. But if it's just payments, why does it even need to be crypto? Why does it even need to be blockchain? Yeah. Yeah, that's a great question.

I mean, that's exactly what Naval Rabicon said. It's just like, I don't see what this needs to be on a blockchain. And, you know, very shortly thereafter, one of our reporters, our reporter in China, Wolfie Zhao, you know, checked in and it sort of found evidence from Weech out and AliPay that they were both like, we're not going to do, we're not doing blockchain. We've seen no reason to do it. So I think there's no technical reason why you have to do it. I think maybe being able to tap into this idea of distributed consensus enables Facebook to

really push this idea that this isn't really just Facebook and lots of other people are involved and the more people they can get involved, the less it looks just like Facebook. And so I think maybe that's the idea. Like if it really is distributed across a bunch of big nodes controlled by a bunch of powerful entities, that may help it play better in the world. I don't know, but I do think it is sort of a PR thing. And smart people have said that to me that's the case. So you did have a a really great piece where you ran down some of the various features that seeming. It seems like they did their homework and they, you know, picked best pieces, best practices from all sorts of various other crypto projects.

So can you just run down some of those, like what it pulls from other projects and like even, like what are the things, like, is it trying to do something different like next generationy that like might move crypto generally forward? generation things. So, you know, I'm not a super technical guy, so I only get this stuff on the level that it gets explained well, but it does sort of seem to make sense. A great example of sort of an idea that did seem like it's maybe kind of smart. And probably they stole this from somebody, I don't know who, but, you know, like, on Ethereum, when you create, so Ethereum is the second biggest blockchain in the world. People know it as the smart contract blockchain, meaning that you can create software that sort of runs itself forever. You can have, you know, contracts between people that the code just enforces the rules. So that's what Ethereum's known for. But like if you, for example, on Ethereum, smart contracts have, have the assets and the code in the same, in the same object, you know. So if, if I want to create, so so a big thing people did in the ICO days and I mean, they're still doing it is they would create a token and they would

create rules for the token and that would all exist in the same like smart contract object. What Lieber is doing is they're saying, we think smart contracts are, great idea, but we think the code and the asset should be separate. And if I understand that, what that means is that makes it easy if somebody writes a great smart contract for running some token, you know, because it sounds like you'll be able to create other tokens on this at some point, certainly not immediately, but or create other sorts of object and some other entity wants to create the same thing. They don't, they can just point, they can just create their assets and the assets are called like resources, I think, development and interesting innovation.

And other things that are similar, you know, this is theoretically has on-chain governance. It's talking about on-chain governance. That was Tesla's this big idea. I think that it'll be a little mixed in terms of how it will build from day one with ready to go. It sounds like that's the way they describe it. So, you know, that seems pretty smart. You know, I compared it to, there's this idea of things in it, which is something that I think the idea of. Similarly, that's how this one works.

So if someone puts money in, that will issue new Libra. And if they extracts the out from account, which you can do without condition at any time, the other stable coins work that way too. So that's interesting because there is a fixed cap in the cap. Like Bitcoin has a fixed cap, we'll want it at any one time. Bitcoin Max, let's argue it's a better approach. But this is still interesting.

So, yeah, it has a lot of things that we've seen other places. I don't know if they would necessarily agree with me crediting other places in all the instances. I think the only two platforms they ever mentioned in their technical white paper, it's one that uses zero knowledge proofs to the don't. So that no one has to maintain the whole history of the blockchain because zero knowledge proofs to think that they're doing a bit set up where it's on to the whole history forever, which has been a problem on EOS. A lot of EOS notes are like, it's already built up. And so this is built in such a way where it's not essential.

for any note to hold on to the entire transaction country. Because with different kinds of proofs, you can know that a transaction, that your ledger is accurate, even if you can't, you know, compare, you can't look at all the records back. Have you been surprised by the immediate response from governments? Like, some people have been like, well, duh, like you're literally getting into some of the sovereign power of countries and governments and things like that.

What do you think of the response? far, like where there's actually going to be a G7 thing about it, and like, we're going to have congressional hearings and stuff? Like, do you foresee either various countries like saying, nope, not going to happen in our borders or at least forcing Facebook to make meaningful changes before they let it happen? Yeah, I mean, this is going to be super complicated. But you know, Jerome Powell said that Facebook had come to them, and he was pretty sure they've

gone to basically every significant irregular. regulator out there and talk to them. So I think they did a lot of pre-homework. You know, this is this is a big bold move by Facebook. And, you know, going back to a topic that you've been covering a lot on time you ride home is Facebook's pivot to privacy. You know, I just think Facebook is a giant. I agree with you that the pivot to privacy is real. But if it's real, they need to do something dramatic to create a new, to create a new business model for themselves or at least, you know, add some new lines that business model. And so I think this is that dramatic move. And I think this is a big wild gamble. And there will be tons of pushback.

There'll be tons of fights. But my guess is they're gambling that there will be parts of the world in which people will be like either we're fine with it or they're just not going to resist it that hard because they don't have some strong governments. And Facebook has gambling, they can go into those places, have it start working. And if it goes well, that just makes it easy to expand out. But I think there will be, I think there's a great chance there will be a kind of like very big fights around it. I don't know that's surprising. Okay. So we're kind of dancing around this. And this is asking you to really be speculative. But if it is, what if at the end of the day, this is just Facebook trying to pivot into being a WeChat or an AliPay, one of those Asian-style super apps,

and all of this other stuff about, like, crypto and stuff is just kind of window dressing. I mean, I think it is definitely that. You know, I mean, I think Facebook, WeChat and AliPay to become a super app in the places that it's just window dressing. I don't know. I mean, it seems like I don't see how, it's hard to see another way for Facebook to get money onto the platform,

especially given all the doubts about it without working with a bunch of partners at this point. So, but I do think that that is a giant part of Menlo Park's goal here is that they see WeChat and Alipay doing their business model vastly better than they are. So I want to, in terms of secular, This is a little bit of an aside, but I just want to give this is my big thought about this.

And I think it relates to, so Facebook needs a bunch of partners to make this happen because people are skeptical about them. They need to make it look like there's a lot of people involved. They also just need their help. They need, you know, big powerful institutions to help them get into payments and stuff because they've never been good at that. But one thing I definitely have serious doubt. I'm only giving one of the big arguments of this is it'll eventually go completely permissionless

and, you know, everyone in the world can be a part of validating this blockchain, just like any other big major public blockchain. I'm putting the odds of that ever actually happening at 17%, at least assuming the Lever plan works out, because I just don't see a world in which this actually becomes big and powerful and it's used a lot of places and VSA MasterCard. And they just agreed it's like turnover all this power to the entire world. I just can't envision a scenario in which if Libra works,

it actually ever becomes a truly permissionless open decentralized blockchain. And that just seems... Yeah, it's... You mentioned, like, the payments, like, PayPal, Venmo, Square. Like, they're all on board, a Visa, Massacre. Square is not. Very excitingly, square is not. Oh, interesting.

Okay. Yeah. Okay, but... But, yeah, yeah. It seems to me that those would be the ones that this would kind of eat their lunch, and they're on board. What do you make... Because I talked about this this week, no banks are on board.

Like, first, it's a two-part question. Why are the payment players on board? Is it maybe keep your enemies close or whatever? And why are there no banks on board? I think the payments people are on board because it's a way to hang. So, you know, if cryptocurrency really takes off, if cryptocurrency really becomes the way payments are done in the future, at least they can have been in on sort of one of the biggest beginnings of it

and maybe work out their business models from there. So that's what makes sense to me. In the early days, you know, those guys will be the on-ramp. They'll be the way to take some dollars. And I just think it's a bet for them. It's like better to be in on this new world in some way. But as for the banks, you know, the rumors around that are so wild. Like all the banks are publicly saying Facebook never even talked to them.

You know, we've definitely heard rumors that there are banks who are interested. So switching between currents and his blog, he was like, aren't talking to banks. Before I let you go, I just looked it up right now. The price of Bitcoin is about $150 under $10,000. Should we derive anything meaningful if Bitcoin crosses that $10,000 mark again? Just an arbitrary number. But it is also true. Our guys who watch those moves always point out what the psychological thresholds are, and that is a psychological. There's going to be, as it approaches, if we get over 10,000 again, which, you know, who knows. But if we do, there's going to be a long period of hesitation around 10,000, most likely as sort of a bearish bulls, you know, have their negotiation in the market. And if it does go past it, I mean, that is a stronger, it's a stronger signal, I think, if I understand these markets moving from 9999 to 10,001, then moving from like 990 to 9.

market across the 10,000, that does mean something. That's a positive signal. Well, last time we spoke, it was earlier this year, I feel like it was deep in the crypto winter still. Just in a general basis, are people feeling like the thaw is here, spring is here, are people generally in crypto more bullish than they were six months ago? Yeah, this is definitely, this definitely feels like crypto spring. I mean, when we were, When consensus happened in May, there was a lot of people just talking about how they've been happily building and feel good about the stuff that they've been making. And on some level, you know, crypto winter kind of like let them be left alone to like move

forward. But none of them stopped and a lot more money came into the market. And the fruits of some of those things are starting to come out. We're starting to see the things people are building. So I think folks are excited about that. And then, you know, we see that one of the biggest companies in the entire world has decided to like make a big bet on crypto. So, like, even if they tank, that's, like, really validating. So, and, you know, weirdly, I mean, like, the FCC is starting to, like, really make its moves, which, like, a lot of them are painful.

But at least, like, clarity is coming, you know? So I think there's just a lot of ways in which the crypto is feeling good about its prospects over the next little bit. And I think, yeah, at least if spring isn't here, at least, like, something of a thought seems to be. here.