The Chris Voss Show - The Chris Voss Show Podcast – Web3: Charting the Internet’s Next Economic and Cultural Frontier by Alex Tapscott

Episode Date: September 19, 2023

Web3: Charting the Internet's Next Economic and Cultural Frontier by Alex Tapscott An essential introduction and guide to navigating the next Internet revolution—everything from the metaverse and NFTs to DAOs, decentralized finance, and self-sovereign identity—from the co-author of the international bestseller Blockchain Revolution. The Web, and with it the Internet, are entering a new age. We’ve moved from the “Read-only Web,” which had little functionality for interacting with content, to the “Read-Write Web,” which offered seemingly endless collaborative opportunities, from sharing with our favorite people to shopping at our favorite brands. But the profusion of cyberattacks, data hacks, and online profiling have left many of us to view digital life as a Faustian bargain in need of a major rethink. That rethink is Web3, the “Read-Write-Own Web”—a decentralized Internet where individuals own their own identities and can securely trade assets like money, securities, intellectual property, and art peer to peer. Made possible by blockchains, the foundational technology of bitcoin, Web3 promises the biggest shake up of business since the invention of double-entry bookkeeping in the Middle Ages. It is the Internet’s new frontier. In Web3, award-winning author and technology investor Alex Tapscott provides a cutting-edge guide to the Internet’s next era. Covering everything from the metaverse and non-fungible tokens to DAOs, decentralized finance, and self-sovereign identity, this indispensable, forward-thinking book describes the building blocks and often hidden technologies that will be foundational to our cultural and economic progress. About the Author Alex Tapscott is an entrepreneur, writer, and seasoned capital markets professional focused on the impact of emerging technologies, such as blockchain and cryptocurrencies, on business, government, and society. Alex is the Managing Director of the Digital Assets Group at Ninepoint Partners, one of Canada’s leading investment firms, with more than $8 billion in assets under management (AUM). Ninepoint launched the world’s first carbon-neutral Bitcoin ETF, which reached over $400 million in AUM. Alex is also co-author of the critically acclaimed non-fiction best-seller, Blockchain Revolution, translated into more than 19 languages and which has sold more than 500,000 copies worldwide. His other books, Financial Services Revolution and Digital Asset Revolution were published in 2020 and 2022 respectively.

You wanted the best. You've got the best podcast, the hottest podcast in the world. The Chris Voss Show, the preeminent podcast with guests so smart you may experience serious brain bleed. The CEOs, authors, thought leaders, visionaries, and motivators. Get ready, get ready, strap yourself in. Keep your hands, arms, and legs inside the vehicle at all times because you're about to go on a monster education roller coaster with your brain. Now, here's your host, Chris Voss. Hi, folks. Chris Voss here from thechrisvossshow.com, thechrisvossshow.com. Wow, my voice is cracking. I got to go back to my opera lessons and see what's going on there. Welcome to the big show, my family and friends.

We certainly appreciate you guys being here. You guys are the greatest audience in the world, the smartest people, 14 years and 1,400 episodes. If you guys aren't the damn smartest people by now, we'll go back and listen to all 1,400 episodes. We're putting out two to three new episodes a week. Simon Schuster and harper auto booking all of our uh podcast guests and we have uh all sorts of other great brilliant

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He's got a brilliant new book that's coming out. And we'll be talking about his thoughts on Web 3. Alex Tapscott is on the show with us today. His book comes out September 19th, 2023. It's called Web 3, Charting the Internet's Next Economic and Cultural Frontier. So we're going to be getting into all the deets, as the kids like to say, the deets on all that stuff, and finding out more about his background and what goes into it. He is an entrepreneur, writer, and seasoned capital markets professional focused on the impact of emerging technologies such as blockchain

and cryptocurrencies on business, government, and society. He's the managing director of the Digital Assets Group at Nine Point Partners, one of Canada's leading investment firms. With more than $8 billion in assets under management, Nine Point launched the world's first carbon neutral Bitcoin ETF, which reached over 400 million in AUM. And he's the co-author of the critically acclaimed non-fiction bestseller, Blockchain Revolution, translated into more than 19 languages and has sold more than half a million copies worldwide. His other books, Financial Services Revolution and Digital Asset Revolution were published in 20 and 22 respectively. Welcome to the show, Alex. How are you? Chris, I'm great. It's an honor to be here. It's an honor to have you as well, sir. Congratulations on the new book. These are always fun. Give us a.com or wherever you want

people to find you on the interwebs. Yeah, absolutely. You can learn more about me and the book, www.alextapscott.com. Pretty simple one to one to remember the books available for pre-order through that website and also on amazon barnes and noble and wherever you get your books there you go and now what is this internet you're speaking of what is this about is that the tubes in the sky that one politician said one time there's like some pneumatic things up there and data goes back and forth yes a series of tubes i think is what he what he described it at back in the 1990s yeah that was that was during a time when on capitol hill there are 100 senators and only one of them had an internet connection and that person was ted kennedy and i can only

speculate as to why he needed an internet connection well i mean he had to order booze or uh i gotta or uh order the that's my worst Ted Kennedy ever. We had the governor of Boston on and did my Ted Kennedy impression for him. And he said, I don't like you anymore. No, he did. He was very gracious. So give us a 30,000-foot overview. We're beating up on Ted Kennedy.

What kind of show were you on, really? I didn't beat up on Ted Kennedy. Too soon. Too soon. He was ahead of the game with his internet connection back when everyone thought it was a series of dudes. I mean, maybe he was looking for excuses on people you drove off a bridge. Anyway, I don't have to take any of your jokes. So my new book is called Web 3, Charting the Internet's Next Economic and Cultural Frontier.

And it's about how the web and with it the internet are really entering a new era. And it's helpful just to understand a little bit of history. So the internet is a little different from the web. The internet itself was actually created in the late 1960s as an initiative of the Department of Defense. And it was designed actually to be a decentralized network that would stay up and running in the event of a nuclear attack. And it stayed basically that way for 20 years as a tool used by governments and people in academia and scientists and so forth. It wasn't until the 90s with the invention of the World Wide Web and the web browser that the web and the internet itself became a commercial tool, a tool that people like you and I were using. And people might recall the early web,

what we now call the dot-com era, as a period of of dial up, right, where you had to hold one of your one of your phone lines and so that you can download images at 10, 10 or 15 kilobits per second. And the early web, web one, as we call it, was static and was primitive. It was primarily a way to consume information. In the 2000s, the dot-com crash and the creation of some new technology created the conditions for a new web, what we call Web 2. And this new web, or the read-write web, became a tool for people to communicate and collaborate and share information online. So like the dominant business models of Web 2 are social media companies. And although individuals, you, me, and every other person in the world, you know, creates all the value that contributes to the communities that we create online, you know, we upload data, we upload our thoughts, we upload photos and images and so forth, most of the value is captured by big platforms. So Web 3 promises a major rethink of the web. Instead of an internet controlled and dominated by big platforms, this new decentralized web allows individuals to own their own data, own their own identities, and to own their own virtual goods and digital assets.

And that's a big leap forward that's going to transform a lot of different business models and marketplaces. There you go. Here I thought World Wide Web was, you know, when the Indians had the smoke thing, you know, the whole, they get on the thing, the Native Americans. I'm going to have to do submitting on this show. I already have notes. Let me make a pause here. Sorry about that, Alex.

I'm going to cut the Kennedy joke and the Indian comment. Got to say PS or PR or whatever the fuck it is. So we'll cut those um so what i want to do with the web 3 there's a question i have and i'm not sure if it's right place for it anyway this is all good edited clearly um so let me ask you this i've heard rumors that uh or not let me rec that. So let me ask you this. I've heard people, you know, I've seen people arguing on the internet, you know, namely Anderson.

What is it? Anderson Horowitz. Anderson Horowitz, Jack from, of course, Twitter, Elon Musk, you know, and there's been a big argument that maybe there are certain VCs that are kind of more interested or have control or maybe big investments or I'm not really sure what it is because that's why you're here as a specialist. But I've heard all these arguments about it. And can you clarify some of that, you know, kind of information that we're hearing as to what's true, what's not and what Web3 maybe really is? Sure. Well, I think the argument is primarily a semantic argument. You know, there are people who are pushing the terminology Web3 while others are pushing

terminology crypto. And I think honestly that the two are frankly not as far apart as a lot of people might think. I mean, I view crypto assets, you know, scarce digital goods that individuals can hold and then send peer to peer and may have other utility as an important area of Web3 development, you know, in the same way that, you know, email is an important component of the internet or, you know, the web browser is an important component of the internet, but the internet itself, this canonical internet, you know, is an umbrella term that captures more than just any single use case or application. So, you know, I try not to get involved in those kinds of debates. I mean,

sure, there are some VCs who have made investments into Web3 startups. I think that the allegation is that, you know, they control a lot of these entities and they're trying to like pump their investments. But if you actually dig down and look at the holdings you know their positions are relatively small and i think most of the growth of this industry which in which i would also by the way include bitcoin and ethereum and the you know the other very large and established protocols as being all being part of web 3. uh you know the the helpful way to think about web 3 is as the read write own web so what that means simply is that the internet is not only a tool to consume information to read it's not only a tool to uh for computation for us to upload data and to program the web that's right but it's also got a new um framework for us to

actually own digital goods now bitcoin is the first example of Web3 in action, in my opinion. Now, Jack and others might disagree because they view Bitcoin as being superior to other assets, and that's a different argument. But basically, the idea that Bitcoin allowed us to program digital scarcity for individuals to hold their own money, to be their own bank, and send that money peer-to-peer to anyone around the world, regardless if they had a bank account or an identity, as a clear proof point and use case for blockchain, the underlying technology and Web3 in action. But what's important to understand is that Bitcoin is the beginning of the story. It's not the end of the story.

You know, in the same way that in the early 1990s, the killer app for the Internet was email. But eventually we got the web browser, we got the mobile web, smartphones, we got the cloud, we got, you know, geospatial technology, you know, apps like Uber and Airbnb. We got all these new innovations and email remains critical. You know, we communicate over email. Email is a protocol that billions of people use and it's enormously valuable. If you could put a value on it, it would be valuable in the same way that Bitcoin is and will continue to be very valuable. But it doesn't mean it's the only innovation of this whole space. It just simply means that it's proof that this technology works. There you go. Now, we're going to talk about a lot

of things today. So people don't tune out on me. We're going to talk about the metaverse. We're going to cover chat GPT. We're going to cover crypto. We're going to cover uh what have i missed here web web 3.0 we're talking about now i think there's another uh thing that uh is big vr maybe ar something the new apple stuff and and uh metaverse headsets um so stay tuned for all of it we're gonna we're gonna get the deets on it all hi voksters faz here with a little station break hope you're enjoying the show so far we'll resume here in a second. I'd like to invite you to come to my coaching, speaking, and training courses website. You can also see our new podcast over there at chrisvossleadershipinstitute.com. Over there, you can find all the different stuff that we do for speaking engagements

if you'd like to hire me, training, training courses that we offer and coaching for leadership, management, entrepreneur ism, uh, podcasting, corporate stuff, uh, with over 35 years of experience in business and running companies as CEO, and be sure to check out Chris Voss leadership institute.com. Now back to the show. Um, so this is pretty interesting with web three. You talk about it in your book where, uh, you know, like you mentioned before, we move from the read-only web to the read-write web. And you frame it as the Web3.0 or Web3 is the read-write-own web. And tell us about what that means.

Sure, absolutely. So in the book, we talk about different transformations. And the first major transformation is to assets themselves. Assets are foundational to all economic activity. It's how we represent value in every sector and every business. And assets are going through their biggest reinvention in centuries, potentially. So, you know, in the early period of human history, when I, this is, this is worth it, the payoff is worth it. So bear with me. So like in the, in the feudal era, the main asset was land because the main industries were farming, logging and mining, right? And so the most, the wealthiest people in the world were the people that own the most land. Wealth was also highly concentrated during that period. A catalog of who owned what in medieval England basically showed that the king and his favorite lords owned about three quarters of the wealth and the rest of the people owned basically nothing. In the 17th, 18th and 19th

century, we got the early stages of the industrial age. And that really kicked into gear in the 19th century with the invention of like industrial capitalism. And so there, the most important assets became not land, but industrial plants and equipment, but also this new invention, stocks, bonds, you know, bills of lading, paper assets, sort of abstractions of value. So Cornelius Vanderbilt was not the richest guy in the world because he had the most farmland. He was the richest guy in the world because he had the biggest share of public companies that owned railroads and owned steam engines and owned steam ships, right? And so that was the way in which we kind of, like wealth was created. Even

today, who are the wealthiest people in the world? it's elon musk and it's jeff bezos and others they their wealth is primarily in shares of public companies and you know as the economy became more complex the assets that represent value became more abstract we're now entering this new period where our economy is becoming more complex it's becoming increasingly digital and now we have a new digital toolkit to express value. And that is this thing called tokens, right? So in the same way that as the economy becomes more digital and becomes more abstract, it makes sense that assets are becoming more abstract. But also tokens give us new ways for assets to become more democratized, for individual internet users to become individual internet owners and to participate more fairly in the value that they create online. So a token, you know, a lot of people confuse Bitcoin and crypto and tokens and

all these other terms, right? But fundamentally, you can just think of a token as a container for value in the same way that a website is a container for information. So a website can be anything, right? Like it can be a podcasting studio. It can be where you get the news, where you get the weather. It can be at the social media site. It can be how you get your health records. It can be where you get the sports scores, whatever. It's a tabula rasa for information of any kind, photos, images, video, text, you name it. In the same way that the website is a container for information. A token is a container for value and it can be programmed to contain anything of value, money, financial assets, art and collectibles.

But we commonly call NFTs. It can be used to contain shares of a company, other forms of financial assets, even votes in an election or IP or other scarce assets. It's something that is infinitely programmable. And once you wrap your head around that basic concept, you realize that the sky is effectively the limit on what tokens can do in the economy. There you go. And one thing you talk about is this is more about giving people their own in individual identities i mean uh now is that is that with web three more so or i know it's technically web two or you correct me if i'm wrong i'm just gonna work off my assumptions here let me make that clear um you know people kind of became a brand

you know like people on instagram you know everywhere i go i'm a brand you know chris voss.com you know whatever i don't have chris voss.com, you know, whatever. I don't have chrisvoss.com. That got away from us early on. chrisvoss.net, the Chris Voss Show. You know, I have Chris Voss LinkedIn, Twitter, Instagram, all the Chris Voss is pretty much on social media, except for TikTok. Damn, Chris Voss won. I got behind on that one. But that's my identity. Like people go hey man there's that's the dude and stuff and I think that might have been web 2.0 was it but and now how is it going to be even maybe more so on web 3.0 yeah it's great I mean your examples illustrate the model of how web 2 worked which is that there's a virtual me out there and there's a virtual Chris Foss out there and you know that

Chris Foss exists across many different platforms yeah Yeah there's two of them too. Really? Well that makes things harder. It's worse yeah. I hope he's not your evil twin or something. No but he did sidejack our brand in 2016 so but that's another story. Sorry I digress. Well there's a web-based solution to that as well. But the thing about Virtual You is it's not owned by you right? It's owned by Instagram, it's owned by LinkedIn solution to that as well. But the thing about the virtual you is it's not owned by you, right? It's owned by Instagram. It's owned by LinkedIn. Oh, that's right. It's owned by all these different platforms.

And you provide all this data. You provide the social graph. You provide the content, all those platforms. And in exchange, you get access to a free service. Maybe you get to build your brand and your network. But the actual value of your brand, the data that helps to drive advertising revenue to those platforms, you actually don't really own or participate in it. Yeah, I don't get any checks for that. Exactly. I get checks from YouTube. Some creators, yeah, well, exactly. Like on YouTube and other platforms, creators are receiving some compensation, but in general, the bargain of Web2 is you provide all this data and

we'll provide you with a free service. And it's a trade-off we made implicitly without even really thinking about it. But over time, I think a lot of people are viewing it as a Faustian bargain, a deal with the devil, where we're providing all this information about ourselves, which we can't monetize and might undermine our privacy and might even lead to identity theft as you've described it, right? So the Web3 solution is one where basically you have a wallet. It's like a secure vault. And in that vault is all of your digital goods. And those digital goods can include things like Bitcoin and it can include art and collectibles, but it can also include attributes of yourself, elements of your reputation

and your identity. And that information is information that you control and you own. And only you can decide how it gets used, where it gets used, and if it gets monetized. And if it gets monetized, then you can get compensated for the use of that data. So there are several different companies and brands that are exploring how this might work in practice. You know, a good example would be, you know, a consumer brand that wants to use your data to sell sneakers. Well, you know, if that data is used, maybe you get discounts on your next pair or something like that so um and and that's something that you would have to provide consent in order to get act to for the company to get access to now this is something that you know applies to consumer businesses but it's also something that is more fundamental to the next big challenge uh for

humanity and that is around artificial intelligence i'll big challenge for humanity. And that is around artificial intelligence. I'll stop there. A follow up question on that, because people think of Web3 and crypto and artificial intelligence as being distinct realms, right? They're separated from each other. But in fact, they're quite interlinked. Let's get into AI then, because and this will end up on the podcast to plug folks for the AI podcast. The, you know, we've seen chat GPT just explode. I have friends that are addicted to it. They can't get off it. It's like early Twitter basically for that. And so what's your vision as to how that's going to play out? And of course, like you said, as you mentioned, it's not different. It's all

part of the same big vision. Well, I mean, the idea of ChatGPT is that, you know, a large language model processes, you know, reams and reams and reams of data, human speech, text, and so forth. And from there is able to predict or anticipate how to answer questions and to create content. So, you know, we used to think of AI as something, some sort of like raw compute power that could, you know, process, you know, huge amounts of data information. But actually, you know, AI, as we, as it exists today, is mimicking human expression and human behavior. So, you know, AI, like ChatGPT and these other large language models, aren't just, you know, figuring out, you know, orbital patterns of stars and planets, which is what we think of computers as doing, but they're also writing poetry, writing sketch comedy.

They are writing screenplays. They're creating art, or not, depending on your perspective. But they're creating visual representations of things, which in my view can be quite you know striking and uh and quite stunning but it's all derivative it's all derived from um things that have come before so it's you know human human writing and human art and human expression and human graphic design and all that other stuff and so you know it's not doing anything original um necessarily so what's happening is that in order to get access to to create a large language model that creates you

know a lot of useful valuable outputs you need a lot of inputs, you need a lot of data inputs. And there's a lot of questions right now about if these large language models are actually using data without the consent of the people who provided that data. You know, what is the, what they call the provenance? What is the origin of all this information that's getting fed into the machine? And also how reliable is it? You know, what is the veracity of this information? What's so funny about ChatGBT is the only thing it seems to do really, really well all the time is creative stuff like write poetry. If you actually give it like a math problem or ask it to answer a factual question, a lot of times it gets it wrong because the information, yeah,

the information going in is sometimes really useless. There's a really funny case of a lawyer who basically had ChatGP write his entire argument in front of the court. And then he didn't bother to check the data that ChatGP was using. The thing was absolutely riddled with errors. And he had to basically admit in front of the judge that he had had AI plagiarize his brief or whatever it was called. He might lose his law license. He probably will. They're not happy with it. We should look at that up, actually. So anyway, so what has this got to do with Web3 and the intersection with AI?

Well, for one, if individuals control their own data and they're the ones who provide permission for how it's used, then they can provide permission and authorization for large language models to use their data, number one. Number two is that if they do provide it, they can actually receive compensation for it. So, you know, a really good example would be a platform like, say, Reddit. So Reddit recently announced that it's jacking up the fees for third-party developers to access its API. And the argument is basically, you know, it costs a lot of money to provide access to these APIs, and, you know, Reddit ought to be getting

paid for it in some way. Well, one of the ways that they could compensate it is basically for individual users who are providing all this. Reddit is like a goldmine of large language model data. It's all this people talking about stuff constantly and providing facts and data and opinions and so on and so forth. What if you had a model where instead of jacking up the price of the API, you simply pass through whatever benefit there was to the individual users? What if they received a

token that allowed them to get paid fairly for the value and data that they're creating? So you have ways for both proving the provenance and also ensuring the content creators get paid fairly. The best, an easy analogy or way to think about this is like, imagine if all the data, you know, imagine it's like a literal piece of data on a piece of paper it going into the machine imagine it's a literal machine has a watermark and that watermark says who owns it and every time it goes through it it scans it and sends a payment back to the person that would be prohibitively expensive and complex with existing payment tools but it would be easy to implement the token so in order if we want chat if you want these large language models to continue to get reliable, useful data, and we want people to get paid fairly when their data

gets used, the Web3 solution is the only way to do it. There you go. It's going to be an interesting world here coming up the future, trying to adopt to all the new things and everything else. The metaverse, you know, has basically flopped recently, and Apple just announced their new VR headsets, or AR, I guess, more so headsets, that technically aren't going to come out until next year. But it appears that if, you know, anybody who knows what Apple does, I mean, they've resurrected podcasts, they've resurrected a lot of stuff, and they make it mainstream and popular, although, I don't know, for, what is it, $5,000 or $3,500 a headset?

$3,500 a headset? I'm just adding zeros at this point. It's a little harder, I think, to go mainstream. It becomes kind of an elitist product for people that have money, and so I don't know. I imagine it'll set a foundation but uh they kind of did the old trick guru they we always talk about technology of the pioneer gets all the arrows so they let mark zuckerberg at facebook take all the arrows and yeah and uh now they're doing that what do you see the future of that do you do you put any money in uh in in that

succeeding or vr and ar and all that stuff Or is it still like a long ways out? I think that we're at an important inflection point. And I think that's actually true, Chris, for a lot of new technologies. You know, VR and AR, I mean, that's a technology, an overnight success story that's been 50 years in the making. You know, I don't know if people remember, what was it called, the Nintendo headset

that I got as a kid in the 1990s, you know, where you could play Mario Tennis. I mean, it was a disaster. It was a flop of a product because, you know, the technology was not ready for prime time. And even a lot of this Oculus stuff that Facebook has released, it's one of those things that's found product market fit with early adopters. You know, for example, gamers really like it because it creates an immersive experience, but it's not an mainstream product. And if you look at other technologies, actually, that have become really kind of popular or feel like they're hitting that inflection point recently, they, too, have had decades of false starts and flame outs and bubbles and everything. That's true for AI.

That's true for the Internet of Things and connected devices. It's true for self-driving cars. You know, remember five years ago, everyone was talking about, oh, in five years, you're going to have a self-driving car. And when it didn't happen, we all forgot about it. But actually, right now, self-driving cars are on the road in San Francisco. And I think in a few years, they're going to be rolled out nationwide. So, you know, there's nothing so powerful as an idea whose time has come again, to paraphrase the expression. And I think we're seeing that playing out across a lot of these new technologies.

Now, having said that, there's this view out there that, you know, the metaverse and Web3 and virtual reality are all kind of jumbled up together and they're all like the same thing or they're all related topics. And it's true that they are related, but there are some really important differences. So, first of all, you can have virtual reality without the metaverse. You know, if you put on a VR headset to, say, watch a movie or to, you know, play a video game, you're in a self-contained environment. You're consuming content through a new medium. If for there to be, you know, and then from there, there are virtual worlds. And that's the idea that, you know, you enter into a shared virtual space with other people who are also in that shared virtual space and that virtual space is persistent and it's constantly rendered and it's constantly updated and you can you can consume content do transactions have interactions

and so forth that's like what we consider is considered like virtual worlds but for me in order for a metaverse to reach its potential in order for the metaverse to have a second life if you will you need to basically have the same kinds of conditions in a virtual world that exist in the physical world. And one of the big conditions that exists in our world is that we have control over ourselves and we also have rights over our property. So digital property rights can only exist in a metaverse with Web3 tools. So for example, like if you use Facebook's Oculus headset and you enter their virtual reality, you're not really like creating a new version of our reality. You're entering Disney World. And, you know, Disney World is lots of fun.

You know, you can go on rides. You can buy stuff. You can have experiences. But fundamentally, it's all fake. And in the end, it all benefits one single company. Wait, Disney World's fake? You mean Snow White isn't real? And those dwarves?

I don't know. You know, so if we think people are going to spend more time online and more economic activity is going to move online, and maybe we go from a two-dimensional web that we look on our phones with a spatial web that's integrated with this technology, if that's really where we're headed, and I think that the launch of Apple's Vision Pro was a watershed, then I think that we need to have all the same rights in the real world that we uh in online that we have in

the real world and the only way that's that that's possible is with web 3's toolkit of things like tokens for example so instead of for example in instead of you know paying a 30 fee to the house every time you buy something in in youberg's metaverse, imagine you can transact peer-to-peer. Just like today, if you go on Etsy or you go to a store or something and you buy something, there's not a 30% tax necessarily paid to some single company. If you want to trade a piece of art, an NFT between different people, you're not paying a 50% fee to the house, which is what Facebook had envisioned. And even today, you know, I think that what worries me is that a lot of these new virtual reality and augmented reality

initiatives, like Vision Pro, are going to end up just perpetuating the same model that we have in Web 2, which is that, you know, you can get access to a rich array of services and you can have fun, but in the end, there's one single platform that's capturing most of the value. I think for it to reach its potential, we need to have those peer-to-peer tools. There you go. I mean, I like to get paid for all my BS a whole lot more than I post all my dog photos on Facebook. I like to get some money for that. Well, you're broke, but a peer-to-peer, like a Web3 social network would do something basically like that. So it's an interesting thing, you know, to consider. It's like how much are my little dog photos really worth?

Like how much is my BS really worth? I think you're underselling yourself because you've got a great brand. Oh, wow. No, but in all honesty, it's like, well, how exactly do we monetize that? And so in a lot of Web3 applications, the way that they launch is with a token. And basically, the earlier an adopter you are and the more value you add to the platform, then the more of the platform you earn. So, you know, I was in university when Facebook came out and, you know, I was an early adopter. I created a huge social network on Facebook.

I added lots of photos and content. And I did it because it was fun. And it was sort of like early internet, early Web 2 stuff. And it felt kind of innocent. But in retrospect, you know, it would have been nice if as an early adopter who helped them to achieve critical mass and build that network effect, that I'd actually gotten paid for it in some way or gotten compensated. You know, if I'd had ownership and governance rights. Well, that's basically how most Web3 applications are launching today. So if you're an early adopter of a Web3 application, you know, Uniswap, decentralized exchange, or, you know, Compound, like a lending platform, you know, the more you do on the platform, the more of it you earn. SX Network, the peer-to-peer sports betting website, basically, instead of paying 5% of the house, every time you bet, you earn tokens that gives you a share in the actual entity itself. Yeah, some really cool examples of how we're changing the economic model where internet users are becoming internet owners, owners of the platforms and services that they use. And that's something that's really important. Now going back to your example of, you know, your dog photos and, and, and your posts about what's going on in your life. You know,

a lot of models are based on power users, right? So like there are certain power users like in video games. So most video games today use what's called a free to play model, where basically 98% of gamers aren't paying any money, but 2% of gamers are paying a lot of money. Now you might say, okay, the 2% of gamers are the ones that matter the most. They're the ones that are the most valuable customers. And in a way, of course, they are. But actually, if it weren't for the 98% creating the environment and creating the rich gameplay of those worlds, the 2% wouldn't be there to begin with. So actually, the people who aren't paying or who aren't like the power users or the big value creators are still getting a ton of or creating a ton of value. The same is true on platforms like YouTube,

like big content creators may be creating tons of value, but they wouldn't be valuable if it weren't for their fans, right? So the idea of Web3 is can we create models where everybody who's contributing to the success of something share somehow in the upside? There you go. You know, i remember back in the day on youtube i was valued as a creator and part of their creator program that was exclusive back then and you know we made a lot of money off of it but then they changed the rules on us what what what with all these different new web 3 platforms you talked about where you know we can get paid for our value what's to keep this from happening again with web 0.2 where they

where they're like oh you guys are making a lot of money now we need some of that back and you know my checks just go yeah well you've described the central difference between web two and web three which is that you know as a you're you may be a content creator on youtube and you might be very valuable and you may get compensated for it but you don't have any say in how YouTube as a platform is run, right? You have no governance rights. The difference with Web3 is that as an early, let's say you, in your example, you were an early contributor to YouTube and you were creating a lot of value for the platform. Well, if you'd earned a token, then that would have given you the ability to vote on matters that are relevant to that platform. So if they wanted

to change their economic model and say, content creators are going to get paid less share, well, you'd have the ability to have a say about that, right? Like right now, you're subject to the central bank of YouTube, so to speak, where they devalue the currency, right? They're like, OK, all of a sudden your contribution is worth a quarter less than it was before. And that just is what it is. So in the Web3 model, the idea is that the contributors, the creators, the users, by earning a share in those platforms can actually have a say in how they're run. And by the way, they may decide that as a protocol, as a community, they don't want advertising.

Maybe the goal isn't to make money. Maybe the goal is something else. It's user experience. And that would be up to them to decide how that works. I think that's why I like podcasting so much because we pretty much control it. Although, you know, if Apple wants to kick off their platform, you know, they do most of the traffic for podcasting. But for the most part, we kind of control our own destiny, I think, for the most part. Other than if Apple just decides to go bankrupt one day,

which won't happen, but you can really, other than you're entirely beholden to one platform. Exactly. Yeah. I mean, I mean, we're on Pandora and I have radio and Spotify and all the places,

but the people who deliver a lion's share of the business are Apple. And I really have some good changes they have coming out, uh, coming down the pike. Uh, let's get some, let's get to crypto in here uh now full disclosure we're recording this early in uh june 21st 2023 and so some of the data i'm going to give out here is applicable then the book comes out september which is when this will be released. So don't send me nasty comments about how I got this wrong in September. But right now, Bitcoin pricing at the beginning of the year was close to $15,000.

January 1st, it was $16,605, which was pretty much running around its bottom there for a couple months. And now it's up to, as of today's date june 21st 2023 through 3172 it's almost doubled this was in 2000 i think of doubling so uh given you know what's going on with bitcoin it seems to be doing a resurgence but then there's also right now and then also the time is applicable the justice department just went after i think uh coinbase and bit uh who's the other who's the other big uh exchange i think you're referring to that the sec not the justice the sec i'm sorry sued sued binance and coinbase binance there we go uh so that's kind of interesting what's going on it almost seems like a real attack from you know as we mentioned earlier show there's there's real

democratization going on that's actually kind of potential to appeal up upheave governments where uh you know it goes up against you know their ability to sell their currencies and use them i mean the the american currency the dollar is up until recently you know the top producing and i think it still is, but there's some challenges that are going on with Brazil, Russia, and China, is, you know, what everything is bought and sold on. And it gives us our economic power in ways we don't even realize, at least most of us.

So what's your thoughts on cryptocurrency? You know, there's still the FTX thing that has to process. There's been a lot of fallout, bankruptcies and creepy things going on with the crypto bros, as they like to call them. Tell me some of your thoughts on that. Maybe, is it going to get better under Web3 or maybe you might have more control

from getting ripped off? A lot of great stuff in there. So let me try and unpack it one by one. I threw you the whole kitchen sink there. Well, I'll tell you what, which is that because it's June 21st, anything I say about the price of any asset will be out of date by September. And the book Web3, the book I've written, is less about making, it's not really at all about making price predictions or calls on the value of any asset. It's more about some of these enduring themes and ideas. But I do think it is notable that, you know,

we are seeing a resurgence today in the value of a lot of these different platforms. You know, right, there's a couple of things I could talk about. And I don't want to go into too much detail because it will be out of date. But right now, Bitcoin and Ethereum, two largest platforms, collectively represent 70% of the market value

of all crypto assets. That is a higher percentage than it has been in a few years. There was a time, of course, when Bitcoin was the only game in town, and it was 100%. Now, my expectation is over time, and probably by the time people listen to this, I could be wrong, that that share will have declined. And it will have declined for a couple of reasons. Number one, the number one reason why those names are succeeding more than others is because there's a lot of concern and uncertainty about the other assets, the other kinds of crypto assets that exist, namely based on the SEC's suits against those companies. Are those considered securities? And if they are considered

securities, then are any exchange or any platform that does business in those acting as an unregistered securities exchange? My opinion is that the issue is complicated and that many, if not most of those assets are not securities. And the problem is that we've got a set of rules that were developed in the 1940s. The primary test the government uses to determine if an asset is a security is a thing called the Howey test, which was used in a case involving an orange grove in Florida. So I'm not sure we should be applying the effect of a Florida orange grove 80 years ago to a new novel asset class that's got fundamentally different properties than stocks and bonds and other financial assets. I think that in the next few months, we're going to see

some more information come out of these suits, but also maybe a move from lawmakers to try and define these assets, what they are, and more importantly, what they are not. So going back to what's the connection to Web3, well, a lot of these really awesome models that I've described, the idea of like a user-owned platform for sharing content or user-owned market for, you know, wagering on sports or user-owned, you know, exchange for trading stocks and bonds, all of those things involve the issuance of a token. And that token would get issued to people based on their contribution. So my view is that governance token is a new thing. It's a new primitive, as they call it. It's a new fangled technology.

It's not a stock, it's not a bond, it's not some traditional financial asset. But there's a lot of concern that the government's position on this matter will lead to them concluding that basically every single crypto asset in the entire world, with it may be the exception of Bitcoin and Ethereum, is a security. If that ends up happening, I think that would be really unfortunate for the industry. You know, in terms of, you know, the suits themselves and the approach the government has taken, you know, the idea that this is all tech bros or crypto bros all trading, you know, digital play things is not rooted in any fact whatsoever. In fact, crypto asset adoption.

So the adoption of, say, Bitcoin or stable coins as a payment tool is far more popular in parts of the world where people are typically underbanked or where the local currency is unreliable or where in general incomes are a lot lower. So, for example, the company Chainalysis has ranked countries like Venezuela, Ukraine, Thailand, Nigeria and Kenya as having higher adoption of this technology in this asset class than most Western European countries. For example, in the United States, people of color are more likely to own Bitcoin and own crypto assets, as are people who are unbanked. So people don't have access to a bank account. And it makes intuitive sense, because if you need a way to move and store value, whether it's in some native asset like Bitcoin, or just in dollars, and what's called a stable coin, this is a very easy and simple way to do it. There are so many places

in the world, Chris, where, you know, the majority of people have access to a smartphone and an internet connection, but they don't have a bank account. Well, this is an easy solution to that problem. So, you know, we have to read past the, there's a lot of, you know, takes in the media, which are frankly not rooted in fact. It doesn't mean we put on rose colored glasses, but we have to look at these things on their merits. And on their merits, I think that, you know, in both, in both of these instances, both in the need for greater clarity and also in the facts of who uses this, we see a much brighter picture than what you read in the news. Wow. You know, there's been more talk about, which is, it's kind of ironic, and again, we'll cite the date here, June 21st, 2023.

You know, we have to do that, too, because people are watching the YouTube video 10 years from now and give me crap about stuff. And you're like, did you look at the date on the YouTube video? They're like, yeah, it's 99 cents on Amazon right now. It's not $500, Chris. And I'm like, that's I think it's the chat GPT CEO just basically was talking with Congress about how, yeah, we need AI laws, which is kind of interesting because it's the close the door behind you sort of strategy. We've arrived. Now we need laws. We robbed the bank and now we need, it's kind of like what – we mentioned the Kennedy.

It's kind of like what John Kennedy's father – what was his name? Joe Kennedy. Joe Kennedy. It's kind of like what Joe Kennedy did back in the – before the Great Depression in the early Wall Street days. He was the guy who knew the best scams on the, on the wall on wall street. And then I think it was FDR appointed him head of the sec when they formed it because he knew all the games. Um,

so it's kind of interesting to me that we need more regulation on that. We need regulation for, uh, automation AI and we need, you know, all those sort of new digital stuff. And what's disturbing is when you see these, you know, you mentioned earlier how Ted Kenney was the only one who had internet access. It's just disturbing to see a lot of these politicians, they do these Capitol Hill interviews and they have no idea what's going on. They're just like, I'm going to log into Facebook.

And then, you know, the Google people are sitting there going, are you serious? Like, why are we here? So hopefully we can figure out a way to bridge this gap. Well, I think what you're describing, you're describing a couple of things. One is like the idea of regulatory capture, right? Which is like, you know, big companies get established for big market position and then use their proximity to power to create rules that prevent competition, right? And that's something we've seen play out in lots of different industries.

The other thing you're describing is the so-called moral panic, where basically every time a new technology arrives, everyone like starts waving their hands in the air about how it's going to destroy jobs and everything else. You know, we've just seen this play out since the dawn of the industrial age. You know, you've probably heard the term of Luddite. You know, Luddites were people who were opposed to mechanized looms in early industrial England. And they were worried that, you know, the introduction of industrial looms were going to take jobs away from artisanal cloth makers. What ended up happening is that tens or hundreds of thousands of new jobs were created in the

textile business because the technology improved productivity. Now, there were some negative consequences of that. It's not like people working in factories were getting treated all that well or paid all that fairly. But the concern about jobs was unfounded um you know but but it did bring us kim kardashian so it was pretty much a downer did it is it like we saw the looms turned out kim kardashian went right to kim kardashian yeah the mechanical the the loom in in manchester and then there's a straight line rotary phones

kim kardashian yeah you know that meme of like the bricks, the guy like knocks over one domino and it hits a bigger one and a bigger one and a bigger one. It's like guy eats a bat and then it's like tick, tick, tick, tick, tick, pandemic. And the next thing is the Terminator, yeah. Yeah, exactly. Where was I going with this? Oh yeah, so moral panics.

And so, you know, look, we've seen this before time and again. This isn't even the first moral panic for AI. I mean, we've had concerns about AI forever. AI is a big part of pop culture. I mean, the Terminator is probably one of the most iconic examples of sort of the moral panic around artificial intelligence and computers in general. But you've got to ask yourself, like, is there like a fixed amount of labor

and fixed amount of economic opportunity? And if people don't, if machines do it, people won't. Or will machines augment human behavior? You know, in the same way that, you know, the invention of the car maybe put a few furriers out of business. People made horseshoes. But it also created a heck of a lot more jobs and prosperity in the process. You know, the invention of the computer, people thought that was going to reduce the need for data processors, people who handle punch cards, but it actually created way more jobs in data processing and also a whole bunch of other higher level,

higher skilled activities that computers enabled people to do. And so like, I don't know how this is going to play out. Maybe this time is different for real this time, who knows. But I've got this feeling that, you know, the concerns that we have around a lot of these technologies is something that humans seemingly have to go through every single time something comes along. And by the way, the same is true for Web3, you know, and even the internet. So in the case of Web3, the concern is these are digital play things. It makes it easier for people to speculate and gamble. And oh, and by the way, it's a tool that criminals use to avoid law enforcement. You know, in the early 1990s, the criticism was this internet thing, it's full of misinformation, it's full of radical

extremists, and it's only used for spreading and disseminating pornography. And there was actually, speaking of senators, there was a senator, I can't remember his name, but he used to walk around Capitol Hill. He used to have one of his aides go to Ted Kennedyedy's office and print off a bunch of internet pornography and then he would carry this pornography around with him and waving waving it in his hands for congressional purposes yeah for congressional purposes only and you know this is all they have on the internet it's just this thing for porno you know and it's just like it just strikes me time and again that you know it's like sound familiar um the moral panic we see around you know web three okay so people got their own you know a new way to move and store value yes criminals will use it but you know, it's like sound familiar. The moral panic we see around, you know, Web 3, okay, so people got their own, you know, a new way to move and store value. Yes, criminals will use it, but you know who else will use it? Hundreds of millions of other people. You know, we've got AI

and this AI, you know, could it be used to, you know, write hate fiction or something or do something awful? Yeah, of course it could, but it could also be used for something else. You know, ISIS uses email and WhatsApp. You know, we shouldn't judge the value of a technology on who its end users are. We should view it based on, you know, as a whole, how it's used by humanity. And so I think it's too early to say for things like AI, but I get a feeling the concern here is overblown. There you go. Well, you put it into context really well and box it up. I like the concept of how we have this fear of new technologies.

I think one of our biggest problems too is stuff is moving so fast. It's like every week I'm like, what do I have to keep up with now? I was getting really comfortable with the model that I had before. And a lot of my friends are freaking out right now they're you know a lot of them are in pr they're like oh god we just got replaced there's even people you know like hey podcasts are getting replaced by ai which is like sure go for it i don't care if you can be as funny as i am sometimes uh go for it um and and so people have a lot of fear of this stuff uh last before we go out let's let's uh get a squeeze in here for NFC or NFTs.

NFCs, you know, that's a whole different thing. NFTs. I don't know what's going on with me today. I'm just thrown off from the whole thing. I'm just overwhelmed by the technology. So what are your thoughts on that? That seems to have bombed hard. And do you think there's a future in Web3 for NFTs?

Well, I think, again, you've got to separate what the underlying technology is from, you know, how it's priced in the market. I mean, like when the dot-com bubble burst in the early 2000s, like we didn't call it quits on the Internet. You know, when there was a panic in 1873 and a bunch of railroad stocks went under. Didn't mean that the technology was not useful. It just meant that things had become overhyped and we needed a bit of a washing out. And I think that's what we've seen in NFTs. I mean, an NFT is fundamentally a provably unique digital asset. So, you know, something like, say, a Bitcoin is not provably unique. Every Bitcoin has got the same sort of value, right?

So if you have a Bitcoin and I have a Bitcoin, we can exchange them and we bitcoin has got the same sort of value right so if you have a bitcoin and i have a bitcoin uh we can exchange them and we end up with the same amount of value with an nfp they're unique and a lot of other things in our world are unique you know art is unique your house is unique you may even if you live in a subdivision where every house is the same the price is going to be different for every home because of certain differences, right? Lots of agreements, business agreements, contracts are unique. You know, patents, every patent is unique and so forth. So there's all these different assets in our world already that are provably unique. NFTs are a superior tool to use to define something that is provably unique.

I'll give you an example. So a piece of art. So traditionally in visual art, if someone sells a piece and then it gets resold, they have no way of capturing any value from the resale of that. Whereas with NFTs, you can program the asset so that if you create a piece of art and sell it to someone and they sell it again for something more than what they bought it for, then you actually receive a share of the proceeds and so far nfts have paid out over 1.9 billion dollars of royalties on 45 billion dollars actions yeah so if you think about even the value of 45 billion dollars of transactions a lot of that is from original

sales of assets and you compare that to say like spotify so last year spotify paid out uh five billion dollars to creators in the form of music royalties. So in a single year, NFTs created more value for creators than Spotify did. Holy crap. Yeah. So NFTs are a really powerful, you know, new technology, new tool that we have to express something that is unique and valuable and to ensure that the owner gets compensated fairly for when it's sold and resold. And that's really all there is to it. So, you know, it's like a lot of people go blow money on art, Chris,

and then that money becomes worthless. And like, you know, the same is true for NFTs. A lot of people blew a lot of money on a bunch of stupid, you know, cartoon characters and stuff like that. And those things became worthless. But that doesn't mean that, you know, visual art and paintings are not valuable or that some can't be or that, you know, something that is unique and scarce digitally can also have the same kind of value.

There you go. So anything more you want to tease out in your book before we go? Well, I will simply say that, you know, the book is meant for anybody who, you know, cares about the future and wants to play a role in shaping it. It's called, the book is called Web 3, Charting the Internet's Next Economic and Cultural Frontier. Now, some frontiers are for experts only or require Herculean strength or tons of capital. You know, if you're climbing Mount Everest or you're venturing to Mars, only a few people can do that. But sometimes and often the most bountiful of frontiers have been sort of driven forward by people who either by way of circumstances or because of ingenuity pushed them forward. And the good news about Web3 is that it's everyone's

opportunity to push that frontier forward. You know, they said in the 1990s and 2000s that Silicon Valley was a tech Galapagos, meaning simply that it had the special combination of capital and talent and tech and government R&D that led to this unique and curious species of technology company that went on to kind of dominate the industry. All I can say is that this time is different. Web3 is emerging at a time when technology tools and capability and access and capital are more distributed than ever before. And it's not going to Web3 is not something that's going to be created in any single place. It's going to be created everywhere by everyone. And it's all happening kind of at once. So just to paraphrase

the movie. So, you know, they say if technology is really something that makes the world flatter, Web3 is going to be a steamroller. And this new flatter world, the more connected world, is what I think that also might be more prosperous as well. And that, more than anything, is a reason to root for this technology and to understand it a lot better. And I hope you can check out my book as a result. Definitely do. They really should.

Alex, it's been wonderful to have you on. Very insightful. And we'll see how this data holds up three or four months from now. Maybe the whole world will end and it'll be a nuclear bomb and everything will have died technology-wise by September 19th, but hopefully it won't. If that's true, then data on a podcast will be the least of our worries. That's true.

I don't have anybody writing comments on my thing like, you were wrong! So there you go. Order up, folks. Our fine books are sold September 19th, 2023, Web3, Charting the Internet's next economic and cultural frontier. Alex, give us a.com too for you before we go so people can find you on the interwebs. Sure.

People can find out more at www.alextapscott.com. And also, you can follow me on Twitter at Alex Tapscott. Posts a lot of great stuff, or at least I think it's great. My mom thinks it's great. But lots of good stuff on Web3 for people to check out. There you go. My mom's the only one who listens to the show. In fact, I hate it when she listens because she'll give me suggestions. She's like, you should not swear on the show and stuff like that. Anyway, thank you, Alex, for coming on.

Thanks to our great audience for tuning in. We certainly appreciate you guys. Go to goodreads.com, 4Chess Chris Voss, youtube.com, 4Chess Chris Go to Goodreads.com, 4Chest Chris Voss. YouTube.com, 4Chest Chris Voss. LinkedIn.com, 4Chest Chris Voss. See us on TikTok, Chris Voss 1. And Chris Voss, The Chris Voss Show podcast on TikTok. There's two channels over there. And also, if you want to be on the new news list of all the cool things that are coming out and the great authors we have putting out, go to ChrisVoss.info. ChrisVoss.info.

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