The Breakdown - How We Future Now - Live With Kathleen Breitman, Caitlin Long and More

Episode Date: May 13, 2020

There is a shared sense that the world has shifted. Now begins the messy work of figuring out what it means for the future we’re headed into.  This live episode of The Breakdown podcast with NLW features four conversations about how the future is shifting before our very eyes.  How We Game and Entertain Now - featuring Kathleen Breitman, co-founder of Tezos and founder of blockchain game studio Coase How We Identity Now - featuring Muneeb Ali, CEO of Blockstack  How We Bank Now - featuring Caitlin Long, founder and CEO of Avanti Financial Group  How We Event Now - featuring CoinDesk’s Joon Ian Wong

Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond. This episode is sponsored by ArisX.com, the Stellar Development Foundation, and Grayscale Digital Large Cap Fund. The Breakdown is produced and distributed by CoinDesk. Here's your host, NLW. Welcome back to The Breakdown. It is Tuesday, May 12th, and today we have something a little bit different and very cool. At 8 a.m. Eastern time, I helped wrap Consensus distributed a 24-hour virtual event with a live episode of The Breakdown. The theme was how we future now. It is all about things that are shifting around us in the context of COVID-19, but maybe in just the world at large. And so we had four different guests over the course of an hour talking about different domains in which the future

was shifting. We started with how we game and entertain now with a conversation with Kathleen Bratman. Kathleen was a co-founder at Tezos and is now working on Coase, which is an organization focused on digital and collectible card games. Their first game is called Emergence and has Magic the Gathering Hall of Famers working on it. And we talk about what blockchain can do to help game designers design entire ecosystems and economic systems around their games. Next up, we talk to Munib Ali, the CEO of Blockstack, about identity and really about what it means to have true digital ownership over the networks that you participate in and the networks of content that you build. So that was the second clip. On the third segment, we talked to Caitlin Long about how we bank now

and what it means to try to build a bank for a new era in which maybe we prioritize different things. Caitlin Long is founding something called Avanti, which is a bank that can actually custody crypto assets, but doesn't take title to them. So there's 100% proof of reserves at any given time. They can't lend out those assets unless it's you authorizing a direct lend to a specific person. So basically, they are a very kind of old world in some ways version of what a bank might be. Finally, we talked to June Ian Wong, who is one of the lead producers of this event, of Consensus Distributed, about how we event now and about why events are, in some ways, proxy for the shared consensus that we need around money systems, around economic systems.

It's a really cool, very varied set of conversations. It was super fun to do live. CoinDesks Consensus has events throughout the week. There's something like 112 different sessions that you can go check out, from the technical to a focus on markets that'll be going throughout the week. You just have to go to their page and go to the events tab, and then you can sign up and register for free for all this. So a really, really cool set of content for you there.

And I was glad to be a part of it. I was glad to help them wrap it up. So anyways, guys, that's going to be the episode for today. I hope you enjoy all of these guests. And we will be back tomorrow with another episode of The Breakdown. Until then, be safe and take care of each other. Peace. Welcome back to Consensus Distributed and welcome back to The Breakdown.

For those of you who are new, who are fresh, The Breakdown is a daily podcast by me, Nathania Whittemore at NLW on Twitter. That is all about how the world and the economy is changing. Today we're going to talk about something that I think is on so many people's mind, which is where the world we're headed into next is going. We've had this kind of pivotal inflection moment around COVID-19, around the economic shutdowns that has made us question a lot of things that we thought were sacrosanct, were fixed, we're going to be the same way they were forever. And so what we're going to do on this show is explore what the future looks like across a number of different dimensions. We're going to talk about identity and how the relationship between citizen information and government's works. We're going to talk about banking and the fundamental way in which people can interact with their money.

We're going to talk about events, right? This experience that we've all been part of and how coming together might look different in the future. But we're going to start with something that has been particularly important during this time of quarantine, how we game and entertain now. And to do that, I'm joined by Kathleen Bratman. Kathleen Brayman was a founder at Tazos and is now leading a very cool startup focused on bringing blockchain gaming to reality. Kathleen, thanks for hanging out. Thanks for having me and thanks for the gracious introduction. Sure.

Okay. So let's start with the context and how you got from point A to point B. You built a base layer protocol and decided for your next act to focus on a blockchain game studio. What was it about games or the particular type of game that you're building that seemed like such a good fit for the blockchain? Well, thanks for asking. And yeah, no one does any of these things alone. But I do get credit for co-founding the TISO blockchain, which launched back in 2018. You know, once the network and the prevailing blockchain kind of got its sea legs in terms of seeing an ecosystem system build around it, I began to think like, hey, you know, what's the coolest application?

that I think could be built, that would be expedient and kind of testing out the virtues of a cryptocurrency. And I think that smart contracts in particular do one thing really, really well, they help people coordinate, and they can facilitate better secondaries markets. And so I wanted to kind of test that thesis out. And I thought that the most broken, fully digitized economy would be in gaming. which tend to have like sort of natural areas where people converge and try to coordinate themselves, which sounds like a traditional economy, but has the benefit of not having to interact with the quote-unquote real world and, you know, had this night tight digital loop.

It's funny because one of the largest contributors to the Tessus Foundation's 2017 fundraiser was actually a gaming company. And so I had a little bit of a head start in the sense that I was familiar with some of the working feces that this company had. when they started to look at a public blockchain as the source of, you know, potentially addressing some of the ills in their native economy. But I wasn't super convinced. So I did a little bit of an informal survey of my own, and I looked at the different types of games that exist, and I thought that collectible card games in their digital format suffered the most from, I guess, the break between how people understand their analog economies and games. and their digitized models.

So at Coase, I like to say that we're not necessarily a gaming studio, but we really focus more on facilitating better secondaries markets. And the way we've decided to choose that is through the production of an original collectible card game. That we're also looking at other aspects of collectible models and trying to create better secondaries markets from them using smart contracts. So it's a bunch of interesting follow-up questions. But for people who aren't familiar, let's take it back to collectible card games because

there's precedent. And a lot of what I just heard from you is that this has to do with trying to bring into digital parallel, the analog experience, right? And so the history of collectible card games has this interesting kind of two-part function where on the one hand, there's players who get these cards and they play games with them and they make decks with them and they do all that stuff. But then there are these markets that form. around them. And in fact, the markets have been a lot of how people have gotten interested in this

domain, right? NPR doing series about the Black Lotus and Magic the Gathering. So I guess one of the things that's really interesting to me listening to you speak is that the logic for blockchain-based gaming has been kind of argued on a couple different levels. People have talked about both true digital ownership of goods and they've talked about this idea of making easier secondary markets. So maybe you could speak to, it sounds like for you, the secondary markets piece is really important, but maybe that implicates the first part, true digital ownership by definition. Could you speak a little bit to kind of why that secondary market piece is such an important part of the thesis for games on the blockchain?

Yeah, absolutely. And that's a very astute summation of a lot of the ideas that I've had. Yeah, no, basically with traditional collectible card games, such as Magic the Gathering being the most famous and the most notable. You know, typically in their analog versions, people are like 50-50. You have this notion of like battle and, you know, actually playing the game. And then almost equally you'll find if you go to a magic convention or something like this, people are just really into collecting the cards and being able to trade and barter with people

and kind of make friends to some extent. Like I think really what's striving this at the end of the day is the community around it. You know, Fortnite now has 350 million players, which is in. insane and, you know, 3.2 billion hours played in April alone. You know, people don't just come for the game itself. They also come to be with their friends. They come to show off. They come to express themselves. And I think, you know, one consistent line between Tezos and my thesis around Coast has been that if you empower people to kind of be able to make their own lot and to express themselves with using, you know, sort of the mechanisms and the incentives that you give

them, like, you really do wind up getting an impassioned group of folks. And so, yeah, to your point, you know, there's two axes of this. There's, like, the notion of actually owning a card, which a blockchain only allows you to do and allows you kind of port from one place to another. One really cool thing that we can do with our game is, you know, publish an SDK and have you run alternative, you know, rules engines, right, and explore the same way that you could with a physical asset. The other aspect of this is better coordination. And typically where digital, a pleasurable card games have struggled

is in making people feel like they've become smarter for putting money into the game or for buying a card because they typically can't trade these assets in a very, I guess, seamless fashion, but a blockchain might allow you to do that better. And using smart contracts, for example, to facilitate a secondaries market,

for these assets makes it a lot easier and programmatically liquided in the model that we proposed for our first game emergence. So it's really interesting. I'm going to out myself as a geek here. Obviously, you and I have talked about this in the past. And I started playing Magic in 1994 when I was 10 years old and took a very long break, but then came back to it later in life. And I've always been interested in the resilience, the resonance, the long-term growth, right? This is a game that's lasted now for 27 years or longer, which is really unheard of in a lot of game dimensions. And one of the things that's fascinating, if you look at historical antecedents in that

ecosystem, is the way in which the simple fact of it being this card game, right, with physical things, is that the community of people around it have invented a huge number of the most important parts of the ecosystem now, right? Wizards of the Coast, which is the company that publishes Magic, has said numerous times that one of the formats, so there's multiple ways to play Magic the Gathering, and one of the formats that is most popular, perhaps the most popular, is called Commander, which was invented by judges and later became kind of pretty much one of the biggest moneymakers for this company. The problem is that when you move from the offline ecosystem where the rules are inherently

kind of open to you doing whatever you want, to the closed ecosystem of an online game, all that creativity goes out the window. And so one of the things that it sounds like to me listening to you is that you're almost trying to use some of the features of blockchain to build the capacity for people to design the system, to reinvent the system, to reimagine the system into the actual rules of the ecosystem. Is that accurate? Oh, yeah, absolutely. You're picking up exactly what I'm putting down. So, yeah, I think it comes from one thing that Hasbro does really, really well in the context of that. of the gathering. It has a tremendous amount of humility towards the people who constitute its core demographic. Like it has a lot of reference for its end users. And they've really preserved the match of the gathering brand by listening to the community and working largely in tandem with them. And so, you know, Hasbro gets the benefit of being able to publish new

cards and to kind of add to this ecosystem, you know, facilitate tournaments and so forth. But they listen just as much as they write. And with the benefit of having, you know, this analog format is that they've picked up some really good tricks. They haven't been able to, I think, thread some of the needles when they've gone to digital formats by facilitating the same creativity. You know, maybe if they went to a blockchain, they would find that a little easier. But yes, the idea has been to allow, you know, to basically work really hard on creating original and compelling cards and, you know, cool stuff about the game in general. Obviously, I have a lot of faith in my co-founders who know far more about this than I do. But the main concession that we

want to make and the main relationship we want to have with people who play the game is to facilitate the type of creativity and self-expression that magic and other CCGs were able to do seamlessly in the physical world, but to add on better economics through the use of a public blockchain to coordinate with the second part of this, which is the facilitation of moving assets around in the game. So just for briefly, I think, for people who are listening who are just thinking about this for the first time, what does it mean? How does a blockchain mediate for real asset ownership and how does that allow for

formal secondary markets to develop. Because I think that's a mission point, right? Like, what's different about a card in one of your games versus a card in Magic the Gathering online or Heartstone, for example? Oh, yeah, sure. So basically, I suppose when these games were digitized or brought to the four, they did so using a sort of free-to-play model. You know, basically you would grind and complete tasks

in order to earn credit towards, towards purchasing assets in this game. Largely, the publishers of these games have restricted the movement of these assets once they are seized or purchased or whatever in the game. And so consequently, you have a massive tax on any sort of creativity.

You have a strong incentive to be very conservative in how you express yourself with these, I suppose, strategies because you can't opt in and out of a card as easily because there's really no secondary use market or if there is one, it's taxed, you know, they were at order of like 70% on the, you know, value of the card from when it was purchased.

Got it. So with your game, basically, you officially make it, you make it easier for people to actually, that once they get a card, it's their asset, they can do whatever they want with it. And that's sort of not just enabled, but supported or encouraged. Yeah.

What's more, we also have, you know, an auction and rental model. that is tied to a token bonding curve, right? So we also use this sort of novel piece of technology that's been proposed from thinkers largely in the Ethereum community to have sort of like programmatic liquidity. So basically you can buy a card for 20 bucks and you can theoretically sell it back for like 1995

or whatever we programmatically decide for it to be. But the idea is you don't feel dumb for having kind of put put your stake into like one card or another, you know, you have the assurance that you can kind of experiment and move around freely. And we think that that's really going to be appealing and actually addressing a huge problem in the digital space for these types of games. Well, it's interesting. So bonding curves are one of these constructs that people hear about, and it seems kind of like the peak of theoretical but not applicable to the real world or maybe like a solution in search of a problem. But when we spoke previously, one of your co-founders,

V. Maslowitz, who's a magic hall of famer and is widely known as one of the most interesting thinkers in the history of the game, had basically come to a structure, something like a token bonding curve without knowing that that was what it was called, right? Yes, Zvi is a genius. And so no one is surprised that he would independently come up with all these ideas in any more in the beautiful space that is his mind, which is pure and brilliant as it is. But, But yeah, Zvi is not just a professional magic. The Gathering player, he also actually has a background in financial economics. And so what I really like about Zvi's background is,

if you're going to be introducing a marketplace into some place that typically hasn't had a free marketplace, you need a sort of way of thinking that's very adversarial. And Nathanely would know more than most people who are probably tuning into this. That's V is sort of famous in magic circles for being just a ferocious competitor and thinking 15 steps ahead of everyone else who's around him. So I feel like I'm in good hands on the design of the economic model and system. Though obviously the proof will be in the pudding, you know, once we hopefully launch. Okay, so let's do them out a little bit.

You mentioned Fortnite. You mentioned community happening. How have you seen COVID-19 in these economic shutdowns shifted or accelerated our conversations around gaming and entertainment and community and what it all means? Yeah, I mean, you know, the sad part is that, you know, many people are stuck at home. A lot of people are, I guess, looking into ways to preoccupy themselves that are wholesome and nice and kind of take away from the dreariness that is the world right now. And so at least in the context of paying attention to collectible card games as a genre,

there's been a bit of a resurgence in tabletop games and these types of formats. And so I suppose it ties back to community. It ties back to like feeling human again. And I think gaming has always been like a social network in some ways if you're part of something sufficiently big and interesting. But what's nice about the internet is it can give you a reprieve from the rather depressing situation that we're all facing right now. And it gives you something to talk about other than fake news articles on Facebook or whatever

people do on social network these days. Well, it's interesting, too, because even going back right from the beginning, when you're talking about the design of this game, which your first game is called emergence, right? I don't think we even mention that. It really is you're designing an entire ecosystem, right? You're designing an entire economy that happens to be anchored by a set of assets, a set of cards, and a set of rules that dictate gameplay. but you really have to think about the design of the whole ecosystem.

And it reminds me of how one of the things that we've seen is Fortnite, for example, moving into this variety of other different experiences, right? So, Fortnite ceases to be just a game, you know, a Battle Royale game, and instead becomes a whole set of things where you can take your avatar, you can take your character into this virtual space, into this shared virtual space, and do interesting things, right? And so we've seen concerts, we saw marshmallow before the crisis, we saw Travis Scott during it,

But now I think that they just, didn't they just release a new world, I think, or a new plane? I'm not actually that super familiar with Fortnite and how it's organized, but they introduce an area that's not for guns at all, right? It's for literally like hanging out. And I just wonder how much this time is going to provide kind of the accelerant for people to think about these virtual spaces in a different way. Yeah, yeah. You know, I explicitly didn't want to get involved in anything that was sort of an RPG because

effectively you're running a movie studio. And I just don't have enough money on hand to play that game. So obviously it appeals to a certain demographic. In some ways, it's more widely appealing than collectible card games, which have a pretty high tax upfront in understanding how to play. But if you do, you get sufficient depth and, I suppose, user engagement at some level. But yeah, no, I think sort of breaking this down and giving people a forum where they can have the sort of clutch of experiences that we, you know, a few generations back would often have through kind of television and more traditional means is kind of like the 21st century, you know, watching the man, you know, walk in the moon type of thing that everyone can kind of reference together and having these like shared experience. is like, you know, the massive Travis Scott concert in Fortnite, right?

And it's kind of nice that we're able to have that as a society again. So by way of wrapping up, just kind of one more ponderous question, I guess. What's one thing, when you look at the reality of entertainment or gaming in the time of these COVID-19 shutdowns, what's one thing that you think will go away, maybe retreat and go back to normal, some experience that people have or some way that people are acting? and what's one thing that's a more permanent change about how we think about entertainment or gaming? That's a great question,

and I wish I had more conviction in my answer, but I guess I'll just kind of back into the more milk-toast observation that I think people didn't think of games as social networks as much anymore because there are basically social networks like Twitter and Facebook that have come to the four of the last few years. I think games are kind of a unique opportunity to bring back a more wholesome version where, you know, your interactions aren't solely expressing your opinion. It's also like going through problems together.

And I think that can be quite nice. And I do hope there's more of that because I think it's more family-friendly, for starters. And it also kind of reflects the reality that we're all in this together. And I think now more than ever, we're acutely aware of how dependent we are on our neighbors and sort of communities to keep ourselves safe and to, protect people who are more vulnerable. And it's kind of nice that gaming can be part of a more positive story, whereas I think culturally over the last few years it's gotten a pretty bad rap.

Yeah, it is interesting to see this big shift from, you know, again, going back to those early days when my parents were seeing stories about magic being satanic to this very different place that gaming has in the world. Kathleen, where can people find? I don't think that. because that just makes me more appealing to 13-year-old voice. I know. Seriously, it's like you guys don't know. This is like the best branding that you could possibly have.

For people who want to learn, what's one thing that people should know about Emergence itself, about the game? And for people who want to actually experience this, where can they go for updates and to pay attention? Oh, yeah. Please sign up for our mailing list at Emergence.g. As in good game. And if you want to learn more about the philosophy behind it, so forth, you can visit our main company website, which is c-oa.s-e. So, Coase and the economist, Ronald. So thank you very much for giving the opportunity to plug it.

I feel like a bad CEO for not even mentioning the name of the game several minutes into the interview, but I'm learning, I'm iterating, trying my best. Thank you for being here, Kathleen. We'll talk to you soon. Thanks so much. Take care. All right. So from the world of gaming and entertainment to a world which is in some ways overlapping, because I think identity overlaps with everything. Our conversation about identity has to do with, as I mentioned, everything from gaming and who we are in these sort of avatars we create to much more kind of pertinent social issues like contact tracing and how we validate to the government that we are not corona carrying. So now we have an interesting conversation with Munib Ali. Munib is the

CEO of Blockstack and a very wide-ranging thinker. Muneb, thanks so much for being here. Thanks for having me. So nominally, we'll start with identity. I'm sure that we'll go way off the beaten path. But let's start on the biggest level. I know you have to structurally think about this in your work with Blockstack, but for someone who isn't used to thinking about identity as a discipline or as an entire area,

How does identity or the construction of identity play into our daily lives? Yeah, so I think in a very broad sense, the way I think about it is our lives are becoming more and more dependent on the internet. Like imagine even during the virus crisis, everyone's kind of like sitting at home and realizing that they can do most of their work online. They can even like hang out with people or Zoom or something like that. And I think one thing people haven't really realized is you don't have the same sense of who you are or what kind of assets you own on the internet versus the physical world. In the physical world, you'll have your ID card in your wallet and you can pull it out whenever you need to or you can own a house. You can kind of like keep all of your belongings in it. And we haven't reached that level of maturity in the digital world.

And I think we're getting there. And that's where blockchains play a big role because they really introduce at a fundamental level property rights. And I think you just had that conversation with Kathleen about gaming and how gaming assets can be defined using blockchains. And I think you can make it even broader than that. The internet assets in general would be defined through these blockchain. and identity is a big part of it, because you first need to kind of define who you are before you start owning other things online. Yes, I think this idea, this property rights piece is, it's interesting, the conversation

around identity, especially for folks who just start to think about it, it seems super abstract, right? It seems like this set of things that you haven't really thought about, but then they're also so intrinsic, so obvious, right? So you brought up the concept of property rights. And so the idea of a property right, like if you own something, well, who is the you that owns that thing? That's what the kind of identity mechanism is.

That's what you were bringing up in the context of blockchains. Outside of gaming digital assets, what are the other types of digital assets where those property rights matter? And how does blockchain solve for that? Yeah, I think some of these examples are like right in front of us, but it takes a little while to realize that. Let's take Naval, for example, right? Naval, the handle on Twitter. I mean, in some ways, it's an internet property. it's very valuable.

It might be worth a lot more than, you know, other distribution channels or even brands that exist on the internet. But right now, like, it's basically just a entry in a database on Twitter somewhere. And it's entirely possible for someone like Naval or others to directly be owners of their own assets. And they are going, these such assets are going to become more and more important, even from an economic perspective, right? Like more and more people are now making a living online, right?

So if you're, it's a little bit like, you know, when people realize that they could rent out their house on Airbnb and start making money of it. Now convert that into something digital. Like let's say you have a skill online or you have a reputation online or you're trying to monetize your attention. And all of these things will be linked back to your, your, identity and who you are. And those things, there would be like real dollar values on some of these things because these are your real assets, right? The private keys that owns a username like Naval, there's a real dollar value to that internet asset. Well, so the Naval example is a really interesting one because we've come up in this paradigm

where basically when Web 2 came about, when social networks came about, we were kind of sharecroppers on someone else's. digital property, right? We were allowed to accumulate audience on the basis of having interesting things to say or figuring out the rules of the system in terms of what was, you know, the algorithm was going to promote, but we were allowed to use that territory, right? The audience that we built so long as we continued to play by that set of rules and so long as the system or the kind of the property holders didn't actually change what they wanted the system to be. This has led to issues around, you know, or questions of deplatforming and all these sort of things, where we realize

that we're actually just kind of renting the space that we have. And the interesting paradigm shift that is, I think, the potential that gets a lot of folks in blockchain exciting is Naval has the followers that he has because they're uniquely interested in his insights. And it would be a shame for all of a sudden all those people, all of that energy to just dissipate into thin air because of a seemingly arbitrary decision on the part of the platform. What if you could design something different? Now, the way that I think most people have tackled that question right now, I think you see it in the shift to email, right? This radical shift to holding email lists, which can be easily exported to CSVs. But, you know, you've seen experiments, I'm sure, on Blockstack

and through other protocols. Do you think that it's possible that we actually have these kind of this different type of social networks, different types of social channels where you actually own the audience that you build or at least the distribution channel to those audiences. Yeah, I think this is a very important point. Anyone who is basically a content producer online, they realize the importance of distribution channels, right? I think Twitter recently did a very small experiment where they slowed down the distribution rate of tweets.

That's, I think, my guess that that's what they did. So what would happen is that you're actually getting less impressions. early on. And it felt a little bit like, you know, someone has muted you, right? Like you, you might have like 50,000 followers, but only 500 people are even seeing your message in the, in the initial hours or so. And I think there was a reaction to it. And moments like these, they make you feel as if, like, you have no control over your own content and your own distribution. And in my case, like, you know, I'm, I just like randomly blab on Twitter or sometime I post about blog stack, but for some people, like, that's their livelihood.

Like, their content creators on YouTube or, you know, they have these distribution channels where their monthly salary actually comes from those distribution channels. And if you cut them off, it's a very devastating situation for them. And I think that, this is a fundamental issue where we're moving more and more in the direction of like digitized lives, more and more people are information workers, and at the same time, we're missing this fundamental layer of owning your own distribution channels, basically having the similar structure to what exists in the physical world in many ways, it's not really there. I think the analogy would be that we are all kind of like, you know, there's some feudal lords

and we all kind of like work for them. And at the whim of someone, they can take something away from us or kind of like re-dispute it somewhere else. And it makes everyone feel uneasy. So I think people do have understanding of what the base problem is. They can feel it in their gut. But they don't see a practical, easy solution to any of these things, right? Because starting social networks or starting any sort of a large movement is a little bit of a network effect. I'm pretty sure that most people on crypto-twitter, they have really.

realize at a fundamental level, like what kind of problems we're talking about, but we haven't seen a crypto Twitter emerge because everyone just wants to be where everybody else is. And I think somehow there could be some clever hacks around these initial network effects problems. Like for example, you could potentially just extend the Twitter protocol in a decentralized way, so you can bootstrap the existing system to be able to launch something else. And I think there might be some interesting experiments, even on top of Blockstack, that we might see in the coming months.

Yeah, it's interesting. The first wave of answers to this problem, I think, theorize that you could use tokens to overcome that initial period, right? The bootstrap problem. I mean, this is what Chris Dixon was writing about in 2017. And it turns out, problematically, that tokens were so good at being a financial asset, that it's not even necessarily that they wouldn't have done that as well, but they were so tradable, so instantly liquid, so powerful in that context, that it kind of subsumed

that other bootstrapping probability or possibility. Maybe just to kind of wrap up, how do you think has COVID-19 impacted how we think about these problems, how we think about identity? Do you think either on the side of there's going to be new things included into our identity profiles, such as test results from COVID-19 tests

as we want to enter buildings, or on the other hand, just an awareness of the problems of, you know, that maybe in certain cases were the frogs in the pot with boiling water when it relates to how much information we share about ourselves? Yeah, so I think I'll separate the two. One is more about the virus crisis itself. And I think my worry here is that if you look at history, a lot of times, it's the times of crisis where certain kind of like fundamental rights are taken away from people, never to really come back. Right. And this might be one of those things where, you know, if governments want to really track all of the citizens, and even like large tech companies are stepping up to help them, and it becomes very hard to argue against that,

hey, wait a minute, what about my privacy? Right. Like, it becomes a very tricky argument. But once you go down that road, and once those systems are in place where, you know, there is full-on surveillance happening, initially for good intentions, I worry a lot that if you're not thoughtful about some of these solutions,

the same systems can later on be used, to basically build a surveillance state almost around the citizens and take away some of our freedoms, right? But it's a very tricky topic. So my hope here really is that we can be thoughtful about the kind of solutions that are being implemented, especially around, because there could be like all sorts of burner IDs, right? Like I'm willing to share certain information about myself over a certain time period without really attaching it to who I am. And also, like, instead of coming up with these large data sets

that are sitting with a large tech company or a large government, it could be something where this data is actually distributed and it mostly stays with the users and is used more on an as-needed basis. And I think the time to think about those solutions is kind of like now. And on the other side, I think what you're asking is, I guess, more on the what's the impact on society, given that everyone has been forced to stay at home and just interact with the rest of the world through computers.

I do think that it's a fundamental shift because it's a cultural shift, right? And I think cultural shifts are the hardest, but once they happen, it basically just unlocks a new type of behavior and a new type of thinking, and it will make a primary mark in my view, right? For example, like, I'm a tech geek, right? I spend so much time in front of computers anyway, But during COVID, I'm actually for the first time paying attention to what my home setup is like. Should I get a better recording equipment or how much time am I actually spending online

and what kind of different distribution channels are there for even getting some of the educational information about Blockstack or other places out? I don't think it really hit that hard earlier when we were mostly in the mindset of like, hey, we're going to office and we are kind of like putting it. our heads down and doing work that way. Yeah, I think that conscientiousness and understanding the context that we operate in is hopefully something that's rising right now. So, Munib, thank you so much for sharing your insights today. Really appreciate you being here. Absolutely, always happy to be part of the consensus. Thanks, Meneb. All right. So we've now talked about gaming,

entertainment, identity, the state of social networks and deep platforming. And after the break, we are back with a topic that is top of mind for many in the crypto world, many in the Bitcoin world, what the future of banking and money services look like. So stick around. Support for this podcast and this message come from Eris X. With ArisX, you can trade spot and regulated futures on cryptocurrencies through a licensed U.S.-based exchange. ArisX believes in fair access for all. Sign up today to take advantage of zero fees and learn more at ArisX.com slash consensus. This episode is also sponsored by the Stellar Foundation.

The Stellar Network connects your business to the global financial infrastructure, whether you're looking to power a payment application or issue digital assets like stable coins or digital dollars. Stellar is easy to learn and fast implement. Start your journey today at Stellar.org slash coin desk. Our final sponsor is Grayscale Digital Large Cap Fund. In times like these, diversification is key. Consider gray scale digital large cap fund, ticker symbol GDLC. It's the only publicly traded investment product that offers,

diversified exposure to large cap digital currencies, all from your brokerage account. For more information, visit grayscale.co slash coin desk. That's g-r-a-y-scale.cow slash coin desk. Everyone is trying to build the banks of the future. And by everyone, I mean everyone. Tech companies are trying to build the banks of the future. Crypto companies are trying to build the banks of the future. Today's banks are trying to build the banks of the future. But for one new Bitcoin and digital asset bank, the question goes far beyond the digital experience that I think is the end of a lot of those conversations. I'm joined by Caitlin Long, a 22-year Wall Street veteran and founder and CEO of Avanti.

Caitlin, thanks for hanging out. Hey, good morning, good afternoon, good evening, wherever you are in the world. It's nice to be with you. Man, it's, I was thinking back. The last time we talked was the day that you announced Avanti, which I think was February 24th. And I remember because it was a Monday and it was the first day that markets in the U.S. even recognize that COVID-19 was going to be a thing, even though people like you had been talking about it

since the end of January and talking about, you know, what the potential might mean. But we'll get to that, but let's come back to Avanti first. What is Avanti? Why did it feel important to focus on this to start a new type of financial institution? Well, first of all, Avanti is in the process of applying.

So we are not yet a bank, but we will be applying for a bank license. And that's what's new and day. different. It will be the first truly natively crypto industry owned bank that will be serving exclusively the crypto industry. And it will be a chartered bank, if we, assuming we do get our charter with a Fedmaster account. That's, the real aha of this is that there are no banks in the U.S. that are allowed to custody crypto assets because they're being blocked. by their existing regulators, and the exchanges and custodians that do custody crypto assets

do not have direct access to the Fed. So here's the aha. It is not possible to do delivery versus payment, atomic swap, et cetera, against a digital asset and a dollar, but Avanti will be able to bring that to the U.S. market for the first time, assuming we get our charter. Yeah, so it's really interesting. Like I said at the top of this, you know, everyone's trying to realize. invent banks and somewhere or another. But I think a lot of those things have to do with simplifying

user experiences, right? Trying to kind of cater to the most basic kind of day-in-day-out functions where you guys are kind of designing from the ground up for a new type of ecosystem, a new type of asset. And I know that one of the things that makes you different is that you and Avanti and the state of Wyoming where you're based have a pretty different set of beliefs about issues like property rights and reserves than today's financial institutions. Can you speak a little bit to just how you actually think differently, what the different belief set is, even beyond just the assets themselves? Well, it's a belief set that is consistent with the core philosophy of crypto that individuals should be able to have a direct property right in their financial assets.

It doesn't exist in traditional financial assets today. And Wyoming law was, we created this special purpose depository institution, which is a new type of bank charter. It's a narrow charter that allows the bank to accept deposits but not to lend. So it's essentially a bank that is a payment services institution, and it is therefore able to both provide custody services and payment services within the same legal entity, so you don't have to settle those two legs of the trade sequentially, which is exactly what happens now.

Even those that are claiming there's direct settlement of the payment, there's still not direct settlement of a payment because you still have the counterparty risk that the bank might fail. And so this philosophy of property rights is really important. And it's ensconced in the Wyoming law. We will be able, assuming we get our charter, to offer custody services on a legal term that's called a bailment. It doesn't exist today. But when you store a Bitcoin at an exchange or at a custodian, you don't actually own the Bitcoin. It's an I-O-U.

But what's going to happen in Wyoming when the Speedy Banks, the so-called Speedy Bank, special purpose depository institutions open their doors, is that we will actually have the ability to have the same legal regime as a coat check or a valet parking regime where I'm giving up temporary possession of my property, but it's not. I'm not giving title to the custodian. Right now, you're giving legal title when you hold your exchange, your coins at an exchange or a custodian. They're not only in possession of the private keys,

but they also have the legal title. We're making the distinction that those two things are not necessarily the same thing. You can like a valet parking arrangement or a co-check, a handover temporary possession, but not actually ownership. And as a result, when you put your coins into a third party custodian, you actually still retain the legal title. And all they are doing is just being a money warehouse for you, just providing a service. They're not a counterparty. And if they go bankrupt, you're not stuck in a nasty, long, drawn-out bankruptcy process.

That's a huge difference from what exists today. It doesn't exist in the market today. It's really fascinating. I think that it's almost easy to be reductive about something like this in the sense of it being like, oh, cool, it's a crypto-native bank. It works on top of crypto in a way that's very different. But I think that in some ways, if you watch kind of the larger macro conversation about how the economy is structured, the conversation that people are starting to have more and more, which is a conversation that's very, very fluent for the Bitcoin world, but not so much for other areas, is the conversation about the fundamental nature of, the system as inflationary versus deflationary. So Jeff Booth recently wrote a book called The Price of Tomorrow, which is all about moving to a deflationary system that reward savings rather than disincentivized

savings. And in some ways, the crypto community, the Bitcoin community that is the hodlers are at the vanguard of that shift where they've invested in an asset that is meant to grow in value over time to reward savings rather than be something that to participate in the economic system, you just have to lend it out, relend it, and get further lines of credit. And in some ways, it feels like Avanti is maybe the first native institution to that different way of looking at the economy in general. Yes, I think so, first of all, I want to clarify, we're not a crypto bank. That phrase is easy to use, but the services that we are providing on our balance sheet

are exclusively U.S. dollars. We are allowed to custody crypto through the trust powers of the bank. That may sound like a distinction without a difference, but to, regulators, it's a big deal. So I don't use that phrase crypto bank. We are a bank serving the crypto industry that can provide custody services off our balance sheet. But to answer your question, yes, we are as a bank that's not lending. We're obviously not what a lot of folks think as a normal bank. And again, we don't have our charter yet, but the Wyoming Speedy Banks in general, These are banks that have full access to deposit taking capabilities in the way that money transmitters or trust companies do not have in the United States.

But we cannot make loans. And as a result, everything on the Speedy Bank's balance sheets is 100% backed by definition. The dollar deposit liabilities are 100% backed, required to be 100% backed. under the law by either deposits directly at the Fed or treasury bonds or other so-called risk-free assets. And then even in the trust business, lending is permitted by the statute, but rehab application is not permitted. That's where so many of the games are being played. And frankly, I've been pretty critical of the existing infrastructure in the crypto industry because we have no clue whether any of the exchange. or custodians are solvent.

I think the ones that actually do come into Wyoming will be making quite a statement when they come in because if they can comply with that requirement, then that'll tell you that they're actually, well, at least another indicator among many potential types of indicia that the exchange or custodian is solvent. But right now you really don't have any of them.

None of them are audited. None of them are publishing proof of reserves, and none of them are subject to legal regimes that require 100% reserves. And even, you know, in the state of New York, where a lot of the regulated ones have trust companies, there is no requirement not to re-hypothecate assets. In Wyoming, there's an explicit requirement that the Speedy Banks cannot re-hypothecate assets. They can lend, but you can't relend the same collateral a second time. It's really interesting. One of the things that's been fascinating is seeing how much this change, this different type of institution that you want to build, goes hand in hand with redesigning.

I mean, you literally, this came out of in some ways you designing or helping design a different regulatory regime to enable this type of thing, right? It's a different way of thinking of how to design it and then a different application of the business. So I wanted to go back, I guess, to what we've lived through in the last couple months. You announced, Devante, like I said, just as it was really starting to hit home in the U.S. that this was going to be a thing. How has the narrative for this, the motivation for it, or just the way that people perceive it, changed since that announcement?

What are new challenges or what are new tailwinds that are helping your cause? Well, actually, it's been a tailwind. I must say on the engineering team hiring, our CTO, Brian Bishop, who's amazing, has said it usually would take three to four months to find the engineers with the skills that he's looking for and he's able to find them in relatively short order. So that's been something that's been an advantage to us. The other piece of this is, I think, the idea of having a non-lending bank, you know, when I first started talking to folks about this in January, a lot of folks were saying, you know, how would you? would that be able to compete with a bank that can lend? Because a bank that can lend can make money off the leverage and can subsidize the cost of doing business in a way that you would not be able to because you're not making a spread on your customer's deposits. And so ironically,

the fact that interest rates are back down at zero now, and in fact, now we actually have some interesting questions. What do the balance sheets of traditional banks actually look like. The truth is no one knows. The decision has been made that the loan losses are not going to have to be recognized this year. So 2021 is going to be the time when loan losses are, you know, when the actual cash flow losses are going to have to be recognized, even though they're not going to be recorded as much on an accounting basis up front. So we won't know how well capitalized the banks are until 2021. And that's about the time when the speech. banks will be hitting the market.

And so the customers are going to have an interesting choice. Would you rather deposit your money at a bank that's not paying you interest but is leveraged? Or would you rather deposit your money at a bank that's not paying you interest but isn't leveraged? That's a pretty, in my view, pretty easy choice. Hey, I want to go back to the point on lending because I may have confused faults when I talked about the no re-hypothecation because, yes, a speedy bank can lend, but it's a non-eastern lending bank, and that may seem like a logical contradiction, here's the difference. And it comes down to the fact that the crypto custody business is done out of the trust department of the bank. It's

not lending for the bank's own balance sheet. So a customer can direct that its deposited crypto be lent out to a willing lender, but the lender will not be the bank itself. So essentially all the bank is doing is basically just providing a marketplace to match borrowers and lenders. We don't intend to to have a lending product up and running immediately. I'm laying out, though, that the statute in Wyoming does permit that. Wanted to make that clear just in case. I was assuming there'll be Twitter questions about that. Wait a minute.

How do you lend out of a non-lending bank? So hopefully now I answered it. Yeah, sure. It sounds like it all comes back to the same principle of your money, like the property rights. It's like the assets that you deposit with us are your assets. And we help you do things with them, but we don't take the title to them. So, but a last question to wrap us up.

Do you think the country is ready for this fundamentally different conversation about money and banking, or at least more ready maybe than we were before this crisis hit? Oh, yes. I think actually one of the things that a lot of folks have been talking about and leading up to the halving is how many of their friends and family have been asking them about Bitcoin for the first time. Now, it's been in the news, in part because of the having. I get that. But I actually think that it's not as much in the news as it was, you know, in the prior having and the prior soft fork and the bull market, obviously.

This is different. It's a different level of conversation with folks. And the other piece of this is the institutional interest. When Paul Tudor Jones came out and said that he's got 1 to 2% of his portfolio in Bitcoin, wait till you see what happens with institutions. There are more coming. We will have some announcements. Avanti is an institutionally focused bank or will be, assuming we get our charter.

And we're very focused on bringing in a new type of investor who hasn't been in this asset class before in large part because the services around the asset class, the infrastructure that's been built, was built for a retail customer base. and it's not up to par on institutional standards. If you just go look at the legal terms and conditions, some of them are just a joke. And institutional attorneys for the by the side for big pension funds, big foundations, big endowment, sovereign wealth funds, right? I'm not talking about hedge funds. Hedge funds are known to take more risk and hopefully have higher reward.

Pension funds and the like have much higher standards, and they just can't touch fly-by-night organizations. They want their custodians to be banks. And they need serious institutional quality, legal terms and conditions, and legal certainty with regard to whether their transactions will be final and will be recognized in a legal dispute. Those kinds of things we've been very focused on. Those are the bricks and mortar in Wyoming that we've built that other states just can't offer. And so I think the fact that we will hopefully now have an institutional custody.

bank that can custody crypto and have direct access to the Fed and service institutions with the standards that they require, that is likely to bring in big institutional money. And we're seeing it step by step by step. And that's what's different. It's not just the friends and family. It's also the big institutions. Well, it's going to be super exciting to watch. I wish you nothing but luck.

Caitlin, I'm sure I'll talk to you again soon. Thank you. Take care. Nice job on this conference, by the way. Yeah, well, speaking of, it's a perfect segue. So this is, we're wrapping up the end of the first phase. I mean, this conference is going on all weekend. There's a million other tracks.

We'll talk about that at the top of the show or the end of the show. But we're kind of coming to the close of the 24-hour nonstop virtual event. The team who put this together knew as soon as it became clear that New York blockchain week and consensus were going to have to shift, that they were going to have to reimagine something. So to wrap this up, I'm joined by a deal. June Ian Wong, who is one of the lead producers on this event, who's been with Consensus for a long time, doing this event, thinking through this event. And I want to actually kind of just get into how, I want to put this in a historical perspective, basically. So, June, let's go back to the beginning.

What were the first Coin Desk consensus events that you worked on? And maybe how did it even come about as an institution? Yeah, sure. So, you know, we started consensus back in 2015, which makes it this year the sixth edition, although it feels far longer than that. I guess, you know, crypto time is much quicker than human time. We started in 2015, you know, really on a shoestring. You'll recall that the Bitcoin, that was the year Bitcoin had a big run-up and a subsequent run-down.

And so, you know, the markets were not very frothy. and there wasn't actually that much interest or hype around cryptocurrencies, right? This was one of those times when, you know, again, the obituary for Bitcoin was being written. And so we really did it as a response to the fact that up until that point, there had been a big annual conference put on by the Bitcoin Foundation. And that year, there wasn't one. And so we really tried to fill that gap a little bit, and we thought, how can we create a platform for people to meet

that reflects the diversity of fields that cryptocurrency and blockchain is, right? It's not enough to just get, you know, say, software developers in a room. You have to get the software developers and the economists and the whales and the day traders, all of these people, the regulators, all of these people in the room for this thing. to really work. And so that was the thinking behind the first consensus. And it turned out that people were looking for this kind of diverse space. And it turned out that coined us was the entity that could convene all of these different, very hard to convene groups. So take us through. I know the events grew in size precipitously alongside the industry.

2018 was crazy, right? I mean, that was notable. That's where a lot of people started to kind of had their first consensus experience. It's one of the craziest, most overcrowded, overwhelming, but really exciting things ever. Was that a high point, a low point, or a both on the consensus journey?

So I'll caveat that by saying, so I started consensus back in 2015, but 2018, I attended it as an attendee, right? I had left Coin Desk. I was a reporter with courts. I attended that like any normal attendee. You know, from my perspective that year, I thought it was kind of the perfect encapsulation of the industry, right? It was a perfect proxy for what was going on in the markets, how people viewed the whole space.

It was crazy. It was wild. You know, people were parking lambos outside. You know, in my view, it was a highlight, really. Yeah, yeah. Now, I think that's a great way to put it. Okay, so when you think about, when you guys switch to this move to virtual, what was most important to preserve about the offline experience versus what had to be rethought? Yeah, you know, I'm just thinking back to the soft money show I hosted earlier with Annalise Milano, and we were talking about a lot of these issues, right? You know, what makes money money? This is a multi-century, multi-thousands of years debate, right?

Is money valuable because of the thing it is made of, right? The metal ore that is dug out the ground like gold? Or is it valuable because of the credit value theory of money, which says it's as good as the other person's word, right? And I think this is where events in particular and in our industry in particular plays such a pivotal role because what is a new form of money except for the social consensus

around what that new form of money should be, right? You know, in the 19th century, people like John Stuart Mill talked about the veil of money, right? Which is this notion that money is really a neutral thing which hides the true economic activity of people bartering and exchanging goods and services. And then down the line, people thought,

well, actually, maybe money isn't that neutral. Like, you know, money has its own agency, right? And this is the notion that people like Robert Schiller say put in place, which I think you'll agree with, this notion of narrative economics, contagious ideas are the things that cause economic activity, right? It's not just some kind of rational calculation of, this or that. And so putting all of those things in the context, money is a deeply social activity and conferences are, you know, one manifestation of this attempt for everyone to agree on what this

money thing is. So for us, really, this social dimension, you know, this sort of shelling point for the industry was critical, right? We needed to make a thing that was big enough to be seen across the internet and big enough that lots of people could convene, coalesce, and fry and form some kind of consensus based on, you know, Brownian motion. Well, listen, I, you know, I've had a front row seat to a lot of the production and seeing you guys shift into this different model has been incredibly impressive. Kudos to you, to Joanne Poe, to Michael Casey, Nolan Bowerley, Dasha, Aaron Stanley, Bailey Roetzel, Lauren Lano, so many people on the team who figured out.

how to shift this and I want to make sure that people understand as we wrap up this special breakdown session that there is consensus distributed as being going on programming throughout the week you can go to the coin desk homepage and to the up to the top to the events button you can register and once your umbrella you can go through a huge array of content there's something like 112 sessions going on between now and Friday you can find discussions about protocol developments in the foundations track you can can watch panels on investing in the markets track. You can get technical instruction in the unlocked track. So a huge number of different things to extend your consensus experience.

And even more, there's online workshops and programming for partners, the World Economic Forum, the IEEE, the Oxford University. So, and I guess the last piece is there's actually even networking through this platform. So you guys have left no detail on turn. I'm super impressed. And June, thanks so much for hanging out. And to the whole team again, congrats. Thanks so much to Hill. If I may also call out the great work of Stephanie, Rio, and Peter Borders, helping to keep the trains running on time behind the scenes. We need an extra show just for the list of people who made this possible. So thank you to all of them, the ones mentioned and not.